Two the Point — Resilient Data vs Weak Fundamentals

Markets continue to wrestle with policy-driven uncertainty as early signs of economic strain emerge. In this week’s update, we highlight the tension between resilient headline data and weakening fundamentals, and what it could mean for portfolios ahead.

Key Insights:

• Average GDP and EPS decline during recessions: –2.3% and –11%, respectively (post-WWII historical average).
• U.S. jobless claims remain low at 215,000, while retail sales rose +1.4% month-over-month in March.
• Leading indicators like single-unit housing permits declined –2.0% m/m, pointing to softening momentum.
• Consensus 2025 S&P 500 EPS estimates have fallen from $287 in January to $265—just +8% growth vs. +13% earlier. Margins are now in focus, as sharp contractions often coincide with major market drawdowns.
• The tariff impact is likely to act as a level shift in prices, not persistent inflation, but a drag on demand and corporate profits.
• With sentiment deeply negative and markets already down ~20%, contrarian setups may be forming beneath the surface.