By coinnews 
00:00 Speaker A
And we’re also seeing that traders are now fully pricing in a Fed rate cut in June, previously that was July. I wonder, Liz Ann, how you are thinking about how these tariffs frame the markets reaction to economic data moving forward. Are we going to be back to bad economic news being good news, because it gives the Fed an excuse to cut earlier?
00:29 Liz Ann Sonders
Uh I doubt it. Uh I think, and at some point you you get to that uh component or that piece in the cycle where is your monetary policy sufficient to kind of right the economic ship? But I I think it’s premature to say that any kind of bad news, particularly on the labor market front, simply because it allows the Fed to ease. I’m not sure, you know, a 25 basis point cut in the Fed funds rate, um, sort of cures the ills of what we’re uh likely to see in terms of tariff related impact. Not to mention the Fed is still in a bit of a pickle, because in an environment where the economy really deteriorates, given tariffs, you’re probably not going to see that commensive deterioration on the inflation front, which means they have to make decisions in the context of both sides of their mandate not sending the same message.
01:51 Speaker A
How do you think this ultimately settles? If we’re if the Federal Reserve can’t do it with a 25 basis point cut, will we have to see greater clarity on the trade side, on the fiscal side? I mean, what are you looking for to to get a sense that we may be uh at extreme volatility or markets may be bottoming out?
02:22 Liz Ann Sonders
I think it has to be more clarity or or just an improvement to the trade backdrop. Uh again, I think just a simple shift in the monetary policy reaction function to being biased back in easing mode doesn’t seem like that is going to cut it. I think we also have to get through first quarter earnings season and reporting season because it it I think it’s a fairly easy guess that what companies are going to uh discuss on their conference calls is is any profit margin pressure they see. And what is still a consensus expectation for double digit earnings growth in 2025, albeit down from where we were at the beginning of the year, is still predicated on very healthy profit margins and not much compression. And I think that is a clear uh sort of forward-looking trajectory that’s now being called into question. So I think we would need to see some stabilization there, and I think we’re just at the beginning of the process of of any kind of rerating that’s going to happen on the profit margin side.