SINGAPORE: What a difference a few months make. This time six months ago, United States Federal Reserve chairman Jerome Powell was the main character in every market story. Interpreting Fedspeak became a major pastime on Wall Street. Markets moved every time the Fed lowered rates or suggested that prices were still high.

Today, interest rates are no longer the main factor moving markets. It’s the White House that has investors on edge, fretting about recession, stagflation and trade disruptions caused by the Trump administration’s new policies. Wall Street is whiplashed every time there is a new statement or signal from Washington.

The S&P 500 stumbled into correction territory on Mar 13, closing more than 10 per cent below its all-time high in February. Meanwhile, the Magnificent Seven stocks - Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia and Tesla - are down some 15 to 20 per cent from their 2024 peaks as questions about their valuations swirl in the aftermath of the emergence of DeepSeek and other China-originated technology. 

Talk of recession, once on the sidelines, is now front and centre.

Commerce Secretary Howard Lutnick told CBS News earlier this month a recession would be “worth it” to implement President Donald Trump’s policies. Mr Trump - who in his Jan 20 inaugural address promised Americans a “golden age” - has declined to rule out the possibility of a recession, saying there will be a “period of transition” and “disruption”.

Going forward, markets remain angsty about the impending Apr 2 Trump tariffs.

US EXCEPTIONALISM IN QUESTION

While Mr Powell calmed nerves by playing down the chances of a US recession and hinting that the Fed remains on course for rate cuts this year, the question is whether such cuts will have the same impact on the economy where policy uncertainty triumphs over geopolitical and trade norms. 

Meanwhile, falling consumer sentiment and spending, potential slowdown in hirings, falling factory output, dim...