Value stocks and volatility   

May 23, 2025

Value has outperformed when investors needed it the most this year, with many characteristics that both insulate from and capitalize on policy changes.

Although the spread between value and growth has narrowed recently, value’s outperformance has been the strongest when volatility has surged; when the VIX peaked at 52 on April 8, value was outperforming growth by 10.3%-points YTD.

Value may capitalize on policy shifts include tariffs, reindustrialization and deregulation.

Moody’s downgrade and Treasury yields  

May 21, 2025

Moody’s downgraded the U.S. from Aaa status to Aa1, the last major credit rating agency to do so following Standard & Poor’s (S&P) and Fitch downgrades in 2011 and 2023. Moody’s cited the increase in government debt and rise in interest costs as reasons for the adjustment.

Key takeaways for investors:

• The U.S.’s weakening fiscal position is not new news.
• The downgrade could embolden fiscal hawks to push for a lower price tag on the reconciliation package and delay the goal of passage by July 4.
• We expect limited near-term impact on institutional demand.
• Anticipate some volatility in investment grade credit ratings but balance sheet health and default risk are most important for spreads. 

Inventories and tariff front-loading 

May 19, 2025

Many businesses appear to have built up inventory ahead of tariffs. As shown in the chart, categories like home furnishings, chemicals and autos saw inventory growth in March well above 12-month averages, providing a buffer that has delayed price hikes. 

U.S.-China negotiations 

May 14, 2025

Despite low expectations for the U.S.-China meeting in Geneva, both countries agreed to cut tariffs for 90 days:

• Chinese imports to U.S. at 41% (10% “reciprocal” + 20% “fentanyl” + 11% starting point)
• U.S. imports to China at 27.5% (10% retaliatory tariff + 17.5% starting point), with sector adjustments and exemptions still in place. China also agreed to remove all export bans.

Key negotiation issues for the next 90 days include:

• Trade deficit/reciprocity: The 2018-19 trade war ended in January 2020 with the signing of the Phase One Deal. China agreed to purchase $200 billion more from the U.S., but China didn’t make any of the extra purchases, partly due to COVID-19.
• Fentanyl: The administration has appeared firm on maintaining this tariff, but for the first time, Secretary Bessent indicated that fentanyl tariffs could be lowered, noting China's willingness to collaborate on the issue.
• Strategically important products: The administration continues to evaluate tariffs on strategically important goods, such as semiconductors. 

U.S. Chip export control impacts

April 25, 2025

Ultimately, the semiconductor supply chain wasn’t built to align with geopolitics—it was built for efficiency. Even so, the direction is clear: chip supply chains are becoming more politicized. In this new environment, investors should watch for:

1. AI Diffusion Rule enforcement
2. Tariff escalation risk
3. Global responses
4. Supply chain realignment

Historical tariff experiments 

April 23, 2025

Major tariff experiments in American history include:

1. The Tariff Act of 1890 (McKinley)
2. Dingley Tariff Act of 1897
3. Smoot-Hawley Act of 1930

Political pressure and economic damage prompted the reversal of tariffs in the examples above, even if the goal was structural change. 

American exceptionalism to American resilience 

April 14, 2025

The U.S. economy remains remarkably resilient and could yet escape its current problems without slipping into recession. However, resilience is not the same thing as exceptionalism and investors need to consider whether a continued gradual deterioration in U.S. economic performance warrants both a more cautious stance overall and a broader diversification into international assets.

Key updates:

• Tariffs: 90-day pause on reciprocal tariffs (apart from a 10% universal tariff), with exceptions for computers, smartphones and electrical equipment. Exclusions on 25% tariffs on imported vehicles and auto parts being considered. China tariff rates raised to 145%.
• DOGE: Staff reductions and buyouts adds up to almost 280,000 workers, but less than 40,000 are actual layoffs so far, with the rest being planned layoffs, buyouts and administrative leave.
• Immigration: Fewer than 12,000 encounters on the southern border in both February and March, down very sharply from roughly 100,000 per month in 4Q24 and 250,000 per month in 4Q23.  Deportations are running at similar pace to the prior administration at less than 1,000 per day. The data do not show a downturn in immigrant visas.
• Budget: We expect the 2025 omnibus reconciliation bill to contain an increase in the debt ceiling, higher funding for border security, a full extension of the 2017 TCJA cuts, a cut in the corporate tax rate from 21% to 15% for domestic production and a restoration of full expensing of R&D and equipment purchases, also for domestic production.

Webcast replay: Recent tariff poicy changes and investment implications 

April 14, 2025

Dr. David Kelly, Chief Global Strategist, and Gabriela Santos, Chief Strategist of the Americas, discuss the recent tariff postponement and its implications for markets and the economy.

Countries’ responses to tariffs 

April 11, 2025

Other countries are responding to the U.S.’s reciprocal tariffs:

• China: In a tit-for-tat move, China retaliated against the U.S.’s very restrictive 145% tariff by hiking its own rate on U.S. goods to 125%. It also added six U.S. firms to its unreliable entity list and 12 U.S. entities to its export control list.
• Mexico/Canada: Mexico has largely decided not to retaliate against the U.S. due to the shaky state of its economy. President Sheinbaum has been praised for skillfully navigating negotiations, increasing oversight of border crossings and drug trafficking. Canada has taken a more aggressive stance, announcing 25% tariffs against targeted U.S. goods and non-USMCA compliant vehicles.
• European Union: On Wednesday, European officials voted to retaliate against $23bn of U.S. goods but later delayed their implementation after the 90-day pause announcement.
• Asia ex-China: Even outside China, EM Asia was hit hardest by the “reciprocal” tariff announcements, given steep trade deficits with countries like Vietnam (-$109bn in 2023). Southeast Asian governments have been more conciliatory, such as Vietnam offering to lower tariffs on U.S. imports to 0%. On the other hand, Korea’s and Japan’s negotiations with the White House seem to be off to a good start.

Mag 7 and tariffs 

April 9, 2025

The Trump administration’s sweeping “Liberation Day” tariffs have sent shockwaves through global markets. While intended to level the playing field, these measures have placed significant pressure on America’s leading tech companies.

• Up to 75% of the Mag 7’s suppliers are located overseas, particularly in East and Southeast Asia. Apple relies heavily on Chinese and Vietnamese facilities for iPhone assembly, Nvidia and AMD depend on Taiwanese and Korean fabs for chip production and Tesla imports EV components from China—even for its U.S. production lines.
• These companies don’t just build abroad, they sell there too. Apple, Microsoft, Google and others generate over half of their revenue overseas.
• Tariffs could squeeze margins and hamper innovation. Electronics, semiconductors, server infrastructure—all areas dominated by the Mag 7—are at the center of the new tariff lists. Capital expenditures may also slow, with steel, aluminum and copper tariffs increasing the cost of the data center buildout.
• Foreign retaliation adds another layer of risk. The EU and China have weighed retaliation by targeting the massive U.S. services trade surplus—largely driven by U.S. tech companies. 

Drivers of the trade deficit 

April 7, 2025

Our trade deficit can be ascribed to two factors: 

1.  If government spending exceeds taxes and private investment equals private savings, then imports will exceed exports.  Our huge budget deficit is a key cause of our huge trade deficit.  
2.  For many years, the U.S. dollar exchange rate has been too high to achieve trade balance.  Put simply, our stuff is expensive so foreigners don’t want to buy it while their stuff is cheap so we consume it with gusto. 

If we want to achieve trade balance, a better approach would be to reduce the budget deficit and try to work with other countries to gradually reduce the exchange rate to a more reasonable level. 

Immigration and labor supply

April 7, 2025

As native population growth has decelerated, the U.S. has leaned on a growing immigrant population to drive long-term economic growth. While the number of monthly deportations is still in line with the average under the Biden administration, unauthorized border crossings have declined significantly.

Industries like construction, professional and business services and other services, including personal care and repair and maintenance, are particularly vulnerable to any slowdown in immigration. Conversely, sectors less reliant on immigration, such as financial services and information, are also those with the highest wages.

Webcast replay: Tariff Turmoil and Investment Strategy 

April 7, 2025

Dr. David Kelly, Chief Global Strategist, and Gabriela Santos, Chief Strategist of the Americas,  discuss the recent tariff announcement and its implications for markets and the economy.

Tariff announcements exceed expectations 

April 3, 2025

On April 2^nd, President Trump announced much higher than expected tariff rates on imports from around the world, on top of previously announced measures.

What happened with tariffs?

• On April 2^nd, the President issued an Executive Order based on a “national emergency” including two main tariff announcements: 1) 10% universal tariff on U.S. imports with the goal of raising revenue (going into effect April 5^th) and 2) Higher tariff rates on 25+ of the country’s biggest trading partners based on their trade deficit with the U.S. (going into effect April 9^th).
  • These “reciprocal” tariffs were much higher than expected, ranging from tariffs of an additional 34% on China (for a total tariff increase of 54%pts this year), 20% on the European Union, 24% on Japan, 26% on India and higher tariffs on Southeast Asia.
  • Canada and Mexico were spared this round, as a separate USMCA discussion continues.
• These announcements added to previous tariffs: 25% on non-USMCA compliant goods from Mexico and Canada (10% on Canadian energy and 10% on potash), additional 20% on China, 25% on steel and aluminum and 25% on imported autos and auto parts.
• We estimate that this brings the average effective tariff rate to 25%¹, an early 1900 high.

What happens now?

• Additional sector-specific tariffs may still be forthcoming (on semiconductors, pharmaceuticals and certain critical minerals).
• The duration of these tariffs will matter for the growth outlook. The 10% universal tariffs are likely to be permanent given the revenue raising goal, but the additional tariffs are likely to be the start of a negotiation with individual trading partners and could come down over time.
• Trading partners may decide to retaliate with their own tariffs on U.S. exports and U.S. companies (including services like technology).
• Fiscal and monetary policy responses will be key. U.S. additional tax cut discussions are likely to be accelerated and fiscal stimulus overseas can increase further (especially in Europe and China). Central banks (including the Fed) are likely to focus on responding to the growth hit by lowering rates more than the inflationary impact. Some EM central banks may decide to devalue their currencies to maintain export competitiveness (led by China). 

What are the economic and market impacts?

• The short-term economic impacts of tariffs tend to be stagflationary. Some of the one-time increase in tariffs may hit U.S. businesses’ bottom line, while some may be passed on to the end consumer, raising prices. Important business decisions (investment and hiring) may be postponed or canceled and consumers may pull back on bigger purchases. 1Q growth was already looking soft and further softening in 2Q will depend on the duration of tariffs.
• Previously, recession risk had increased due to policy uncertainty and may increase further depending on the duration of these tariffs.
• The extent to which global companies and economies are hit will depend on their policy responses and the external vs. domestic focus of specific companies.

What’s the investing playbook amid the trade turmoil?

1. Multiple defenders needed to cushion portfolios from shocks: Core bonds can help during growth shocks, with the U.S. Aggregate index up 3% year-to-date. Other diversifiers are needed when inflation and fiscal concerns take the lead again, with real assets (infrastructure, real estate), gold, certain hedge funds and hedging strategies are top of mind. “Safe haven” currencies like the Japanese Yen, Swiss Franc and even the Euro can strengthen further.
2. Diversify equity exposure: After two years of concentrated U.S. equity performance, expectations are high and portfolios are concentrated exactly in the previous winners. So far this year, investors have been rewarded for being diversified, with value outperforming growth by 1,000bps and international outperforming the U.S. by 1,100bps (biggest since 1989). Companies with lofty valuations and low quality continue to be the most vulnerable.
3. Active management to separate winners and losers: Companies and sectors will be impacted unevenly. Companies that are domestically oriented, services-oriented and have higher pricing power are likely to fare better.      

Tariff preview ahead of April 2^nd

March 28, 2025

The markets eagerly await clarity on tariff policy on April 2. Here are some of the key considerations:

On reciprocal tariffs:

• Will tariffs be placed on specific product categories with the largest tariff gap or on a regional/country level?
• Will there be any exemptions?
• Will differences in VAT be considered? 

Are the proposed tariffs going to be additive on top of existing tariffs?

• Will they be phased in or effective immediately? How much room will there be for negotiation?
• Will the Administration clamp down on transshipments through China? How will that be executed?
• Will the Administration be more lenient on economies that have a free trade agreement with the U.S.?

On potential retaliation:

• For tariffs implemented so far, China and Canada have retaliated, while the EU and Mexico have both delayed retaliations to pave way for negotiations.
• Will the U.S. be willing to negotiate individually with smaller economies given their size?

Who is vulnerable to reciprocal tariffs?

• The EU, India, Japan, Taiwan and Thailand have a relatively high tariff gap, implying a higher probability of being scrutinized.
• China’s tariff gap has likely narrowed as a result of the recent 20% tariff hike from the U.S.

Which industries are most vulnerable to sectoral tariffs?

• Semiconductors, pharmaceuticals and automobiles and parts (25% tariff proposed)
• Copper, lumber, forestry

Fiscal considerations for the reconciliation bill 

March 24, 2025

• Extending the 2017 Tax Cuts and Jobs Act would cost $4.6 trillion from 2026-2034 using current law as a baseline since tax cuts are set to expire in 2026.
• However, Congress could also assume the current baseline today (in which the TCJA is in effect) is the starting point, leaving room to include other tax cuts proposed on the campaign trail.
• Congress could adjust the time frames, implementing an extension of tax cuts lasting only five years or have 10 years of spending cuts finance five years of tax cuts.

The Fed responds to policy uncertainty 

March 20, 2025

In the March FOMC meeting, Chair Powell acknowledged the uncertainty in Washington and that tariffs are expected to contribute to upward pressure on near term inflation: “Inflation has started to move up now, we think partly in response to tariffs and there may be a delay in further progress over the course of this year.”

Tariff turmoil or trade truce? 

March 19, 2025

Tariff turmoil, trade truce, or tax cut triumph? Test your portfolio to understand how these scenarios could impact your investments. 

Economic deceleration or acceleration from policy? 

March 17, 2025

Deceleration risks:

• Tariffs: Policies enacted have raised the average tariff rate on goods coming into the United States to 6.4% - its highest level since the 1960s.
• Immigration: Illegal border crossings have plunged to 12,000 encounters in February, compared to 100,000 per month in 4Q24 and 250,000 per month in 4Q23. Conversely, immigrant visas were up in January and deportations run at less than 1,000 per day.  However, labor supply could be limited if legal and illegal immigration slows.
• Job and spending cuts: 75,000 federal workers accepted the buyout offer and layoffs have occurred across various departments. Media reports suggest the administration plans to cut 45,000 IRS jobs, 55,000 Department of Defense civilian positions and 80,000 Veteran’s Affairs jobs. The House budget resolution envisions up to $2.0 trillion in cuts to federal government spending.

Acceleration opportunities:

• Tax cuts: The fiscal 2025 budget resolution that passed the House in late February authorizes up to $4.5 trillion in tax cuts, extending the 2017 tax cuts. However, additional tax cuts could be added by allowing tax cuts to expire within a few years while assuming spending cuts hold for a full decade.  Alternatively, Congress could decide to calculate further tax cuts relative to “current policy” rather than “current law”, thereby assuming no need to pay for an extension of the 2017 tax cuts and leaving more money available to cut taxes in other areas in 2026.  

Webcast replay: Recession risks, inflation fears and coping with a correction 

March 13, 2025

Dr. David Kelly, Chief Global Strategist, and Jordan Jackson, Global Market Strategist, discuss recession fears and coping with a correction. Ever-changing tariff announcements and weakening economic data, which have eroded consumer and business confidence, have sparked fears of persistent inflation and a looming recession. This has sent stocks tumbling toward correction territory.

In times like these,

• Rebalancing can help right-size portfolio exposures away from the most concentrated parts of the market
• Investors can use this sell-off to access quality companies trading at valuations that seemed unattainable just weeks ago
• Current yields across the fixed income universe offer attractive levels of income
• Core bonds can help better prepare portfolios for any shocks that may arise

Scope for DOGE savings from job and spending cuts

March 7, 2025

• The estimated annual compensation of a federal employee was ~$130k in FY24, and there are about 3 million federal employees. Of the $6.75 trillion spent by the U.S. government in FY24, only $388 billion (less than 6%) went toward federal employee compensation.
• Beyond workforce reductions, DOGE has explored pausing payments from federal grant programs. Federal grants-in-aid to state and local (S&L) governments totaled $953 billion in FY24, or 14% of total spending. Given S&L governments' reliance on these funds, large cuts could create challenges. In FY24, federal grants-in-aid represented ~24% of total S&L government receipts.

Webcast replay: The investment implications of new tariffs 

March 5, 2025

Dr. David Kelly, Chief Global Strategist, and Gabriela Santos, Chief Market Strategist for the Americas, discuss the implications of 25% tariffs on imports from Mexico and Canada (except Canadian energy at a 10% rate) and an additional 10% tariff on imports from China.

Trade turmoil investing playbook:

• Corrections are a feature not a bug of investing in risk
• Multiple assets are needed for defense (core bonds, real assets, hedge funds, gold)
• For offense, valuations and quality matter
• Active management to separate winners and losers

Economic impacts of tariffs 

March 3, 2025

“The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions.  Other than that, they’re fine.”

Sentiment indicators hint at uncertainty 

February 28, 2025

Sentiment indicators have pointed to some concerns about growth and inflation against the political backdrop:

• NFIB small business survey had the biggest monthly drop in “Plans to make capital outlays” since 1998 and the biggest monthly increase in uncertainty since the monthly survey began in 1986.
• University of Michigan 1-year inflation expectations jumped to 4.3% from 3.3% in February.
• Preliminary services PMI fell below 50 to a 25-month low, while manufacturing climbed to an 8-month high. Commentary noted, “New order growth also weakened sharply and business expectations for the year ahead slumped amid growing concerns and uncertainty related to federal government policies. The upturn in manufacturing output was also in part linked to the front-running of tariffs, hinting at merely a temporary boost.”

Reciprocal tariffs impacts 

February 19, 2025

President Trump introduced the "Fair and Reciprocal Plan" to address practices deemed unfair by his administration. This plan aims to equalize tariff rates and increase tariffs in response to non-tariff barriers, like VATs, government subsidies, regulations and legal actions against U.S. companies.

Equalizing tariff rates and targeting non-tariff barriers could cause significant economic disruption. As we approach the April 1 deadline, here are the markets most at risk:

• European Union: The U.S. and EU have similar average tariff rates on each other’s imports, but disparities arise at the product level. The EU imposes a 10% tariff on U.S. autos, whereas the U.S. applies a 2.5% tariff on European autos. In addition, the administration argues Europe’s value-added tax (VAT), which averages 20% vs. the average U.S. sales tax of 6.6%, disadvantages the U.S. If the U.S. retaliates against VATs, reciprocal tariffs could exceed 20%.
• Emerging Markets: Tariffs are common in emerging markets to protect nascent industries. India and Brazil have average tariff rates of 11.5% and 7.4%, respectively, on all imports. India, which had a $43B trade surplus with the U.S. in 2023, has begun reducing tariffs on certain products to ease tensions. Brazil, which maintains a slight trade deficit with the U.S., may face less targeting, though high tariffs on products like U.S. autos and ethanol are still pain points.

Labor supply: Immigration and government worker impacts 

February 18, 2025

• Early reports suggest deportations are still running below 1,000 per day, which could accelerate if ICE funding and arresting unauthorized immigrants increases.
• Migrant encounters at the southern border fell from 260,000 per month in 4Q23 to 100,000 per month in 4Q24.  They may have fallen further to 30,000 in January and are running rate of less than 15,000 in February. 
• Traditional immigrant visas rose to 670,000 in 2024 from 590,000 in 2023.
•  Roughly 70% of immigrants are between the ages of 18 and 64, so an immigration slowdown could have a large impact on labor supply. 
• In January, 77,000 federal workers accepted a buyout offer. These employees will be classified as “on paid leave” until September, so they will still be counted as employed in both the household and establishment surveys.
• Thousands of other federal employees received termination letters, targeted at roughly 220,000 recently hired federal workers on probation. The impacts are unknown, but should show up in the March employment report, due out in early April. 
• It now seems quite possible that civilian federal government employment will be 200,000 jobs lower at the end of 2025 than at its start.

Scoping out government employment 

February 10, 2025

The current administration aims to reduce the federal workforce as part of its fiscal strategy, proposing measures like severance packages, hiring freezes and potential agency eliminations. However, data suggests there may be limited scope for significant cuts. There are 3 million federal jobs (excluding active duty military personnel), representing just 1.9% of all jobs. In contrast, state and local governments account for 13% of total payroll jobs, but the federal government lacks authority over those positions.

Federal employees on average earn $106.5k annually, so a 10% reduction in the federal workforce would save only $32 billion per year or 0.5% of the 2025 federal budget. 

Lessons from 2018: Tariff and Tax impacts on Equities

February 7, 2025

There is deep uncertainty around how tariffs and tax reform may unfold, but 2018 can offer clues as to how these policies could impact profits, corporate activity and market performance.

• Earnings and Margins: The 2017 Tax Cuts and Jobs Act added roughly $13 to EPS when implemented in 2018. Profits grew an impressive 21% that year, and margins contributed to about half of that profit growth.
• Revenues: Revenues increased 7.2% in 2018, as consumers enjoyed an income tax cut. However, consumer spending decelerated throughout 2018 and the cumulative effects of tit-for-tat trade tensions began to weigh on revenue in 2019.
• Buybacks and M&A: Elevated margins from tax cuts invited a flurry of corporate activity. Announced M&A volumes leapt in 2017 to record levels, and while momentum slowed in 2018, overall volumes and deal count remained elevated. The value of announced S&P 500 buybacks jumped 68% in 2018.
• Capex: Capex intentions peaked in 1Q18 and gradually declined, echoing a rise in economic policy uncertainty likely arising from tariffs. We've already seen this dynamic emerge today: last month, capex intentions had the biggest decline in 30 years according to the NFIB.
• Market performance: Profits helped the S&P 500 notch 19 new all-time highs in 2018 and shrug off volatility generated by trade tensions, but a hawkish Fed soured markets, leaving the S&P down 6.2%. In the end, earnings contributed 16%-points to the S&P 500 return, but multiples subtracted 22%-points.

Lessons from 2018: Tariffs and Inflation 

February 5, 2025 

Overall inflation remained contained in 2018, though sectors that were exposed to tariffs did see upward pressure on prices. However, the limited scope of the 2018 tariffs confined price increases to just a few sectors, and in the generally benign environment of the time, these price rises were offset by price declines elsewhere. 

China’s potential responses to tariffs

February 5, 2025

China’s response to U.S. tariffs could resemble its 2018-2019 playbook:

• Retaliatory tariffs: Large-cap U.S. tech firms derive approximately 14% of their revenues and 16% of their inputs from China.
• Currency depreciation and export diversification: From peak to trough within the trade war period, the CNY depreciated by 16% vs. the USD, helping offset the impact of tariffs and facilitating trade diversification toward other markets.
• Export restrictions and U.S. company crackdowns: China could expand mineral export controls and challenge U.S. businesses operating in China.  
• Fiscal stimulus: Tariffs could hurt China’s GDP growth due to lower investment, consumption and reduced business confidence, requiring increased fiscal stimulus.

Webcast replay: The investment implications of new tariffs

February 3, 2025

Dr. David Kelly, Chief Global Strategist, and Giri Devulapally, Portfolio Manager of Large Cap Growth Strategies discuss implications of tariffs and the shifting AI landscape after developments around tariffs on Canada, Mexico and China were announced and DeepSeek rattled tech stocks. 

Tariffs on Mexico, Canada and China

February 3, 2025

Tariffs on Mexico, Canada and China are a moving target, but could significantly impact each economy:

• Announced tariffs imply an average import tax of 19% on those goods. Under the crude assumption that a 19% increase in prices results in a 19% decline in purchases, the tariffs proposed could raise $206 billion.
• Total U.S. consumer spending is $19.8 trillion. If all of the price increase were passed on to consumers, it could increase CPI by just over 1%.
• The administration may view tariffs as a strategic tool to address immigration, drug trafficking, trade deficits/disputes and China’s influence.
• Exports to the U.S. make up 32% of Mexico’s GDP and 21% of Canada’s
• Mexico and Canada account for 52% of U.S. auto part imports, while Canada alone makes up 60% of U.S. crude oil imports.

Inflation expectations by political affiliation

The latest University of Michigan survey of inflation expectations revealed a sharp increase. However, political biases are clear given the divergence by political affiliation: Republicans expect inflation to nearly stall at 0.1%, while Democrats forecast a surge to 4.2%. The message is clear: Don’t let how you feel about politics overrule how you think about investing. 

Drill, baby, drill: Boosting energy production

January 27, 2025

President Trump signed a slew of executive orders and made several declarations to boost U.S. energy production and deregulate oil drilling. However, the U.S. is already the world’s largest crude oil producer and LNG exporter. The difference between U.S. primary energy production and consumption has reached the highest levels in recorded history.

In addition, energy companies may not want to significantly ramp up supply as it would decrease oil and gas prices and impact profitability. Oil exploration and production firms need oil prices at $64 on average to profitably drill a new well, leaving little room for current prices to decline.

Executive Orders in Week 1

January 27, 2025

After the inauguration, the President:

• Revoked 78 executive orders signed by President Biden, including regulations imposed on the development of AI, public health and environmental issues
• Ended federal DEI programs
• Withdrew from the Paris climate accord and World Health Organization
• Declared a national energy emergency and reopening large swaths of federal land and federal waters to oil and gas drilling
• Put a 60-day freeze on new federal regulations

On balance, less federal regulation going forward could boost real GDP growth, although with hard-to-assess impacts on the risk of disaster, should something go wrong. Full analysis on week 1 here.

Webcast replay: The potential impacts of “Day 1” decisions

January 22, 2025

Dr. David Kelly, Chief Global Strategist, and Gabriela Santos, Chief Market Strategist for the Americas, discuss expectations for the First 100 Days of the new administration.

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