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“There is nothing either good or bad, but thinking makes it so.” – William Shakespeare, Hamlet

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It’s been quite a week for equity markets, and Wednesday hasn’t even started yet! After a 2%+ decline on Monday, the S&P 500 rebounded more than 2% yesterday, and after some less confrontational comments from President Trump after the close yesterday related to Powell and China, futures are up another 2%+ in the pre-market! Even US treasuries are rallying. And gold is down!

One comment from the President that encouraged markets was when he said that the 145% tariff on Chinese imports were “very high, and it won’t be that high. … No, it won’t be anywhere near that high. It’ll come down substantially. But it won’t be zero.” That’s encouraging, although at 145%, there a lot of room for tariff rates to come down significantly and still be incredibly high! 70% is less than half of 145%, but that would still be a crushing rate. Remember, back on April 2nd, the President thought he was going easy on countries with the rate of reciprocal tariffs. We’ll see how this all plays out, but until the next headline comes out that contradicts yesterday’s, markets can rally.

The pace of earnings news has really started to pick up in the last couple of days and will only get busier in the days ahead. On the economic calendar this morning, we’ll get flash PMI readings for the Manufacturing and Services sector at 9:45, which will likely show weakness, and then New Home Sales at 10 AM.

When the market is stuck in a downtrend, one key trend to watch for signs of a reversal is when stocks stop going down on bad news. When that happens, it’s usually taken as a sign that all the bad news is finally ‘priced in’ to the market. So, while an economic or earnings report may be ‘bad news’ in terms of coming in weaker than expected, if the broader market or an individual stock rallies on it, it can actually be considered good news.

Yesterday, the market got some bad news from the IMF regarding global growth forecasts, but considering the 4%+ gain in the S&P 500 since then (including today’s move in the futures), it must have been good news, right? Obviously, there were other factors behind the rally, but it does illustrate that this ‘news’ from the IMF was already well known by the market.

For the world in general, the IMF cut its overall estimated rate of global growth down by half a percentage point. For advanced economies, the growth rate was lowered for every country and region except Spain (+0.2 ppts). The US saw the sharpest downgrade to growth forecasts (-0.9 ppts), second only to Mexico’s drop of 1.7 ppts. In emerging and developing economies, growth forecasts saw nearly across-the-board cuts. The only country where the IMF upgraded global growth forecasts was Russia. Russia!

With the new GDP growth forecasts from the IMF, global growth in 2025 is expected to be slower in most economies. Again, the US is expected to see the sharpest deceleration relative to 2024, with growth declining by a full percentage point while Japan (+0.5 ppts) and Germany (+0.2 ppts) are the only two advanced economies expected to see growth accelerate in 2025 relative to 2024. In EM and developing economies, Russia is expected to see the sharpest slowdown (-2.9 ppts), but Mexico, Brazil, Europe, and China are all expected to see sharp slowdowns in GDP growth. The only economies in this group expected to see growth acceleration are Saudi Arabia, Middle East & Central Asia, and South Africa.

As the charts above illustrate, the US has seen among the sharpest downgrades to GDP growth estimates, but among developed economies, it is still expected to show relatively strong growth (+1.8%), second only to Spain’s expected growth rate of 2.5%. So, while the IMF may be cutting the rate of US growth by more than other advanced economies, its economy is still expected to see much stronger growth than other developed economies.  In EM and developing economies, however, most countries are expected to see much stronger growth, as Mexico is the only economy expected to contract. As a result of the stronger growth in emerging and developing economies, overall global growth is expected to come in at 2.8% for 2025.