Macro

President Donald Trump announced he fired Federal Reserve Governor Lisa Cook over alleged mortgage application discrepancies, but Cook rejected the move, stating he lacks legal authority. Cook, the first Black woman on the Fed board, plans to sue, challenging the legality of her removal under the Federal Reserve Act. Markets reacted with volatility, and the incident raises concerns about central bank independence and potential shifts in monetary policy.

Financial markets absorbed political headlines without significant disruption, as Trump’s firing of Fed Governor Lisa Cook and the labor stats chief triggered legal and institutional pushback but no immediate policy shifts. Despite concerns over central bank independence and data integrity, market participants viewed these as containment risks rather than systemic ones. Sector sentiment remained neutral, reflecting resilience to political turbulence amid stable monetary and credit conditions.

A hostile policy year: RFK Jr. as HHS Secretary rattled vaccine makers and FDA credibility, Trump's most-favored-nation order threatened to slash US drug prices to foreign levels, tariff threats loomed, and UnitedHealth crashed on a DOJ probe and guidance cuts. Broad…

Trump's tariff escalation raised construction and material costs and kept inflation and rates elevated, leaving housing sluggish and office CRE still distressed though bottoming in some markets; a grinding, modestly negative year for owners.

Mortgage rates are forecast to remain near 6% through 2030, with no return to the 3% lows seen during the pandemic. The base-case forecast combines 10-year Treasury yield projections from Deloitte (3.9% by mid-2027 through 2030), the CBO (4.1–4.3%), and Goldman Sachs (4.5% by 2035), plus a spread of roughly 2 percentage points to 30-year fixed mortgage rates. As of March 5, the 10-year Treasury yield was 4.09% and the 30-year fixed rate was 6.00%, reflecting a spread of 1.91 percentage points. A bull case sees rates near 5% by 2030 if inflation eases and the spread normalizes; a bear case sees rates climbing to 7% by 2027 before easing to 6.6% by 2030 if inflation persists and fiscal deficits widen. The analysis emphasizes that only a severe recession or other major disruption could push rates significantly lower.

Trump's sweeping April tariffs (10% plus reciprocal, China to 125%) raised import costs and hammered retailer and auto margins; the May US-China truce gave partial relief, but the tariff drag and September EV-credit repeal weighed all year…

Oil producers were squeezed as OPEC+ raised output into tariff-driven demand fears and prices tanked, but power generators, nuclear, and gas-for-electricity boomed on record capacity prices and relentless AI data-center demand; a brief June war spike round-tripped…

Reshoring accelerates; data-center power/electrical capex booms

Meta and Alphabet AI-ad strength kept owners positive, interrupted by the January DeepSeek shock and April's Trump tariff selloff that raised hardware-cost and recession fears. Positive with a spring dip.

AI dominated but with sharp shocks — the Stargate $500B venture, then DeepSeek's late-January rout wiped a record ~$589B off Nvidia; April's tariff shock hit chipmakers before the AI buildout (Nvidia-OpenAI $100B) drove a strong second-half melt-up.

The late-January DeepSeek shock briefly crashed our AI-power trade on fears demand was overstated, but the data-center buildout and nuclear and gas-turbine supercycle reasserted themselves, keeping owner sentiment strong through tariff-driven volatility.

Gold topped $4,000 for the first time on the debasement trade, silver and precious metals surged, and China's sweeping rare-earth export controls handed pricing leverage to Western critical-minerals producers, a euphoric year for hard-asset owners.

European rearmament (the EU 'ReArm Europe' plan), the June NATO 5% spending target, and the June Israel-Iran war with US strikes on Iran's nuclear sites drove euphoric demand; China's rare-earth export curbs added an input-supply risk but demand overwhelmed it.