This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
The biggest question facing markets right now is not when Nvidia (NVDA) stock will begin to go up every single day again.
Sorry to burst your bubble.
The biggest question staring markets in the face is this…
Does US economic growth in the first half of the year represent just a slowdown that settles in at a short-term bottom while still increasing? This would be an example of economic resilience in the face of major policy uncertainty out of D.C. Said slowdown, I can argue, is about nearly priced into stocks.
Or does the budding economic growth slowdown go off a cliff into a recession as businesses and consumers tighten up their spending, with tariffs permeating and Trump’s tax cut extensions being unknowns? I fancy a recession is not priced into stocks.
“Things feel slower,” one CEO of a large-cap consumer company told me over drinks this week.
A beverage company CEO remarked to me on the phone this week that Trump’s tariff war is causing them to rethink spending plans for 2025 and 2026.
JPMorgan strategist Bruch Kasman made some hay this week by calling out a 40% recession probability for this year. To my knowledge, this is the second-highest recession probability on the Street behind BCA Research’s veteran forecaster Peter Berezin — he’s at 75%.
Read more: What is a recession, and how does it impact you?
But comments like this aren’t just playing out over cocktails or in hard-to-get research notes. They are beginning to surface on earnings releases and calls by large public companies. And the market is moving fast to price in something more than a simple economic slowdown.
“The current environment, however, is adding uncertainty to demand. We continue to work closely with our customers to help them adapt to this evolving market,” FedEx (FDX) CEO Raj Subramaniam said on his Thursday evening earnings call.
Another FedEx staffer on the call mentioned uncertainty in the “industrial economy.”
FedEx’s stock was clobbered on Friday.
Ditto Nike’s (NKE) stock the same day.
Investors were hit with a cold splash of reality on Nike’s earnings call: A big ship in Nike doesn’t turn around overnight, especially against the backdrop of a global trade war.
The focus appears to be on Nike’s guidance for the next quarter. Sales are projected to decline by a mid-teens percentage, which came in worse than estimates. Margins will also be under pressure again due to tariffs and aggressive discounting to clear slow-selling styles.
