Core Viewpoint - Bank of America's Chief Investment Strategist, Michael Hartnett, anticipates that stocks will maintain upward momentum into the first quarter of 2026, supported by the Federal Reserve, the Trump administration, and retail investors [1][5]. Market Dynamics - Hartnett identifies a "bubble in expectations" rather than a financial bubble as the reason behind recent market weakness, citing government support for markets, optimism regarding Fed quantitative easing, and benefits from tax cuts and tariff checks [2][4]. - The outlook for the stock market is influenced by various factors, including interest rate expectations and liquidity, with easing financial conditions typically supporting stock markets [2]. Optimistic Factors - Three key reasons for optimism regarding stock momentum include: 1. The "Fed put," which suggests the Federal Reserve will ease monetary policy to support financial markets [6]. 2. The "Trump put," reflecting the administration's desire for a strong economy and stock market ahead of midterm elections [6]. 3. The "Gen Z put," referring to retail investors who are motivated by fear of missing out and act as reliable dip-buyers [6]. Economic Environment - The economic setup is described as "goldilocks," characterized by declining interest rates, steady profit growth, and productivity gains driven by artificial intelligence, which may help moderate inflation [4][5]. - Signs of a risk-off shift in markets are expected to emerge from bank stocks or widening credit spreads, indicating investor unease with rising debt levels as the Fed slows its monetary easing [5][7]. Uncertainty Factors - The economic outlook remains uncertain, exacerbated by the government shutdown that delayed the release of critical inflation and labor market data [8].

Do not fear, the Trump Put is here.The President has continuously announced measures at opportune times to support asset prices and he did it again yesterday. https://t.co/9m1uXQ3e9t ...

Core Viewpoint - The March 2025 non-farm payroll data in the U.S. exceeded expectations, with healthcare services and leisure hospitality being the main contributors. The slight increase in the unemployment rate is primarily due to a rise in labor force participation, indicating a healthy job market overall, although there are signs of marginal weakening [1][3][4]. Summary by Sections Employment Data - In March 2025, the U.S. added 228,000 non-farm jobs, surpassing the expected 140,000 and the revised previous value of 117,000. The unemployment rate was 4.2%, slightly above the expected 4.1% and the previous 4.1%. Year-on-year wage growth was 3.8%, below expectations and the previous value of 4%, while month-on-month growth was 0.3%, consistent with expectations and higher than the revised previous value of 0.2% [2][3]. Sector Contributions - The private sector added 209,000 jobs, exceeding the market expectation of 135,000 and the revised previous value of 116,000. Job gains were seen across various sectors, with the goods-producing sector adding 12,000 jobs and the service sector adding 197,000 jobs. Notably, education and healthcare services contributed 77,800 jobs, while leisure and hospitality added 43,000 jobs [3][4]. Labor Force Participation - The labor force participation rate in March was 62.5%, higher than the previous and expected values of 62.4%. The slight increase in the unemployment rate was attributed to this rise in participation, with the unemployment rate moving from 4.139% in February to 4.152% in March [4][5]. Federal Reserve's Stance - The March employment data did not raise concerns for the Federal Reserve, which prioritized inflation risks over economic growth pressures. Powell's statements indicated no intention for risk management-style rate cuts similar to those in 2019, reflecting a cautious approach to monetary policy amid rising inflation concerns [6][7]. Market Implications - The significant increase in non-farm payrolls and the slight rise in unemployment are viewed as a "calm before the storm" regarding tariff impacts. The market consensus suggests that the current employment data may not provide sufficient safety margins due to the unexpected breadth and depth of Trump's tariff increases, which could lead to economic adjustments [7][8]. Future Outlook - In the absence of a "Trump Put," market sentiment is expected to remain subdued, continuing to adjust in a "stagflation-like environment." The Federal Reserve's focus on inflation risks may hinder any immediate easing measures, despite favorable employment data [8][9].