CNR Speedometers^®

As we move through the first quarter of 2025, the market continues to show resilience, even with ongoing shifts in policy and global events.

The economy remains strong, corporate profits are holding up, and inflation, while still present, is moderating. But as always, there are adjustments to make. And this month, we've updated two key speedometers, the U.S. economic outlook and energy.

But before we get there, tariffs have been making headlines, and we know many of you have questions. President Trump recently announced new tariffs on China, Canada, and Mexico, but there have already been shifts. Canada and Mexico negotiated a short-term delay while making commitments to border security and drug enforcement efforts.

China, on the other hand, has responded with its own tariffs and is signaling that this could be an ongoing battle. While the immediate effects are still unfolding, we know that supply chains, inflation, and corporate margins all could be impacted.

For a detailed breakdown of the tariff situation and what it means for your portfolio, check out our latest analysis about recent tariffs here, or on LinkedIn, and Facebook. We'll continue monitoring developments, and we will update you as the situation evolves.

Dial 1: Economic Outlook, 1:19— Shifting back to the Speedometers®, after months of steady performance, we've upgraded the U.S. economic outlook to the green zone. Job growth remains solid, wage growth is steady, and inflation, though still a concern, is moving in the right direction. Consumer spending continues to support the economy, and corporate earnings are reflecting that strength.

Another key factor is policy. The current administration has made it clear that business-friendly policies are a priority, with deregulation and tax measures creating a more supportive environment for companies. Productivity is also getting a boost, thanks to technology-driven efficiencies in key sectors like manufacturing and services.

While there are still risks, such as geopolitical uncertainty and potential shifts in Federal Reserve policy, the underlying economic momentum remains strong. As a result, we now see a more optimistic path forward reflected in our shift to green.

Dial 2: Energy Costs, 2:08— The second change we made this month is in energy, which we've adjusted slightly beyond the midpoint of the range. This move reflects shifting policy decisions, supply dynamics, and geopolitical factors.

One key driver is the administration's push for lower oil prices and increased production. President Trump has been vocal about wanting energy security, but also about keeping prices in check to manage inflation.

In his recent speech at Davos, he directly called on Saudi Arabia and OPEC to bring down oil prices, putting pressure on Russia's energy-driven economy. At the same time, domestic energy production remains strong, with supply keeping up with demand. For investors, this means that while energy may see some volatility, prices aren't likely to spike dramatically, and lower energy prices could be helpful on the inflationary front and help to drive economic momentum.

In summary, while there are plenty of moving parts in the market right now, the bigger picture remains positive. The U.S. economy is showing strength, and despite some shifting policies, businesses continue to adapt. Our Speedometer® changes reflect this outlook. The economy is moving forward, and energy markets are stabilizing.