2025 vibes are all wrong
The Sandbox Daily (2.25.2025)
Welcome, Sandbox friends.
Today’s Daily discusses:
the vibes are off
Let’s dig in.
Blake
Markets in review
EQUITIES: Dow +0.37% | Russell 2000 -0.38% | S&P 500 -0.47% | Nasdaq 100 -1.24%
FIXED INCOME: Barclays Agg Bond +0.62% | High Yield +0.25% | 2yr UST 4.092% | 10yr UST 4.291%
COMMODITIES: Brent Crude -2.35% to $73.09/barrel. Gold +0.49% to $2,933.3/oz.
BITCOIN: -3.51% to $88,351
US DOLLAR INDEX: -0.02% to 106.284
CBOE TOTAL PUT/CALL RATIO: 0.97
VIX: +2.37% to 19.43
Quote of the day
“When we are no longer able to change a situation, we are challenged to change ourselves.”
- Viktor Frankl
The vibes are off
Today we learned the Conference Board’s Consumer Confidence Index fell 7 points in February to a below-consensus reading of 98.3 – the lowest level in eight months, its third consecutive decline, and the biggest one-month drop since August 2021.
The index is tracking near the low end of its range over the past three years.
This gauge tracks the same ground as many others of late – rising put-call ratios, an elevated VIX, scores of data showing a wide-deleveraging event, retail investor pessimism running rampant, sagging retail sales, and the University of Michigan’s own sentiment readings.
Bottom line, the vibes are off.
Inflation expectations, the looming trade wars, and policy uncertainty are finally taking a toll.
In a note to clients, Carl Weinberg, chief economist at High Frequency Economics, wrote: “Based on all the indicators showing declining consumer and business confidence and sentiment, we are expecting a slowing economy.”
The most recent string of economic data, combined with a pessimistic turn among American households, does not bode well for the U.S. economy.
In fact, the U.S. Citigroup Economic Surprise Index – a widely followed indicator that provides a quick-and-dirty snapshot of how the economy is faring against expectations – has just fallen below the zero line and flipped outright negative for the first time since September 2024.
Surprise indexes show how economic data (yes, all of it) compares with consensus analyst expectations. Higher numbers mean data has been better than expected; lower numbers, worse.
The chart below indicates our economy is gradually cooling.
When you zoom into just the recent data, the deterioration in the hard data is without question.
And yet, the trend of global equities is higher despite U.S. economic weakness.
Why does an economic surprise index matter to you?
Its significance is confirmed by the market because yields have been moving lower to reflect this weaker economic data being reported.
A lower level of surprises has historically been more bearish for stocks and favors defensive sector leadership.
This tells me the U.S. economy is in a more fragile state and will have a harder time working its way through short-term periods of intense growth scares.
Sources: Bloomberg, Yardeni Research, Ned Davis Research
That’s all for today.
Blake
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Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
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