Sonu Varghese
US-China Trade War 3.0? Now What
Just as we were bracing for some stock market volatility after a whopping 35% 6-month rally for the S&P 500, we got the perfect catalyst: tariffs. President Trump announced on Friday that he will be imposing additional 100% tariffs on Chinese goods. Some highlights: These embargo-level tariffs, which would put a complete halt to most …
Sonu Varghese
October 14, 2025
Big (AI) Wheel Keeps On Turning, The Economy & Markets Keep On Rollin’
Back in 2023 when we were writing our 2024 Outlook, we decided to call it Seeing Eye to Eye, with a bit of a pun on “AI to AI.” We knew then that the AI impact was coming but also knew we were in early days. In fact, we expected relatively little direct impact on …
Sonu Varghese
October 8, 2025
Never Mind the Shutdown, Here’s What Really Matters (in 11 Charts)
Welcome to Day Three of the government shutdown, thanks to which we didn’t get the September payroll report that would have been released on Friday, October 3. Right now prediction markets over at Kalshi are forecasting a 15-day shutdown, with the odds of a shutdown that lasts over 35 days at just 14%. I think …
Sonu Varghese
October 3, 2025
Is This Like 1929? Not Really
Here we go again. The crash guy has been let out of his box. The Wall Street Journal had an article this week, where a fund manager says he sees conditions akin to 1929, when stocks crashed. The “silver lining” here is that he thinks this is like the early part of 1929, when stocks …
Sonu Varghese
September 24, 2025
The Fed Cuts, but What Comes Next? Look to 2026
The Federal Reserve (Fed) cut rates 0.25%-points at their September meeting, taking their policy rate to the 4.0–4.25% range. This comes after a long nine-month pause but the move was widely expected, especially given recent data showing a rapidly cooling labor market. While investors did not expect an extra-large 0.5%-point cut (fed funds futures markets …
Sonu Varghese
September 18, 2025
S&P 500 Returns in 2025 Have Been a Story of Profitability
The Majority of S&P 500 Returns This Year Driven by Positive Fundamentals The S&P 500 price index has a year-to-date return of 12.0% (through September 12, 2025), and a total return (including dividends) of 13.0%. As many investors have witnessed, this has come on the back of a 25% total return in 2024, and 26.3% …
Sonu Varghese
September 18, 2025
The Fed Is Likely to Bet on Transitory Inflation
Inflation’s running quite hot, but I believe the Federal Reserve (Fed) is going to cut interest rates next week for two reasons: 1) the labor market is weak; 2) they’ll argue that hot inflation is transitory. Let’s start with the inflation data. The Consumer Price Index (CPI) for August showed that inflation is running hot. …
Sonu Varghese
September 11, 2025
The Labor Market is Flashing a Big Red Sign
The August payroll report was expected to be soft, and it was worse. The bottom line is that the labor market is in trouble, but that cements expectations for a rate cut in September. The economy created just 22,000 jobs in August but take that with heaps of salt – the number is going to …
Sonu Varghese
September 5, 2025
What’s Happening With Bond Yields, and What’s the Message?
Perhaps more than stocks, the bond market usually tells a tale of what investors expect in terms of economic growth, Federal Reserve (Fed) policy, and inflation expectations. It doesn’t mean the bond market will be correct, but it’s useful to understand what the message of the bond market is. We’ve seen the yield curve steepen …
Sonu Varghese
September 3, 2025
The Fed Has an Inflation Problem but They’re Going to Cut—That’s Bullish
As I wrote earlier this week, Fed Chair Jerome Powell opened the door to a September interest rate cut at the Jackson Hole Symposium. Powell argued that risks to inflation are tilted to the upside and risks to the labor market are tilted to the downside. But since policy rates are already in restrictive territory, …
Sonu Varghese
August 29, 2025