Weekly Market Insights 03.24.25
Power and Progress, and the End of History
Financial Markets
U.S. equity markets ended the week with modest gains despite notable volatility. Investor sentiment was tested throughout the week by geopolitical developments, ongoing tariff discussions, and the aftermath of the latest Federal Reserve meeting.
Rather than reacting to fundamental economic data, markets were more responsive to the latest pronouncements from President Trump. His evolving stance on trade policies, especially tariffs, continues to unsettle global markets and introduce unwanted uncertainty. As we’ve noted in previous editions, markets tend to react poorly to uncertainty, and that remains the case today. Investors are currently navigating a landscape shaped by forces not present in recent decades, as broader political and technological shifts converge.
Economics
Over the long run, economic fundamentals guide financial markets. Since the mid-18th century, capitalism—championed by philosophers and political economists like Adam Smith, David Hume, and John Locke—has been a driving force for global economic development. Post–World War II, these ideas gained even more traction. By the mid-1950s, scholar Francis Fukuyama famously argued in The End of History and the Last Man that liberal democratic capitalism might be the final form of human government and economic organization. Later, Nobel Prize–winning economist Milton Friedman insisted that a corporation’s primary obligation is to its stockholders.
But the world has changed. Today, rapid technological progress and growing political polarization have challenged conventional assumptions. The popularity of figures like Donald Trump and Bernie Sanders reflects rising dissatisfaction with the status quo. Likewise, the 2024 Nobel Prize in economics was awarded for work suggesting that economic models must evolve to account for the growing influence of technology.
Back to the present. The U.S. economy remains solid, though growth has been slowing. Employers continue to add jobs, but the ongoing unpredictability in policy—especially around tariffs—may eventually slow new projects and hiring, raising the risk of a more pronounced slowdown.
Tariffs remain a critical concern. They create inflationary pressure by raising input costs, while simultaneously dampening demand—an unusual combination that puts the Federal Reserve in a difficult position. While both the Fed and the President have signaled a preference for lower interest rates, tariff-driven inflation could limit the Fed’s flexibility.
Conclusion
“The Times They Are A-Changin’” – Bob Dylan
Welcome to the techno-economy. This report is not a warning but rather an invitation to think differently about how modern economies function. Technological disruption and geopolitical instability are not just temporary factors—they are reshaping the economic landscape in real time. While the future is uncertain, remaining vigilant and adaptable will be critical. The interaction between politics, technology, and economic fundamentals will define the investment environment for years to come.
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