UBS On-Air: Market Moves Top of the Morning: CIO Strategy Snapshot - Digesting the data and policy
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Feb 18, 2025 Jason Draho, Head of Asset Allocation Americas at UBS Chief Investment Office, provides keen insights into current economic data and policy shifts. He analyzes January's inflation trends and disappointing retail sales, unveiling mixed signals in the U.S. economy. The conversation also highlights the intricate federal budget negotiations and their potential impact on market stability. Draho shares key strategies for navigating uncertainty, focusing on the resilience of the S&P 500 and tech sectors, while emphasizing inflation hedges for investors.
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Retail Sales and Economic Outlook
- January retail sales fell short of expectations, possibly due to holiday spending payback or consumer uncertainty.
- This weakness, combined with rising inflation expectations, suggests a potential economic pivot.
Inflation Data Analysis
- January CPI data exceeded expectations, causing market reactions.
- However, this might be a seasonal effect, and core inflation remains around 2%.
Spending Cut Analysis
- The impact of potential spending cuts under the new administration remains uncertain.
- Discretionary spending represents only 15% of the total federal budget, limiting Doge's potential impact.