Much like the exasperated runner at the end of Radiohead’s iconic “Karma Police” music video, this week President Trump effectively threw a lit match into a stream of gasoline that was connected to global markets.

The Street has started coming around to our view of more challenged equity market returns and lower GDP growth for the year, singing “Goodbye, Sunshine” to bright S&P 500 targets and cutting estimates for the full year. The median YE 2025 forecast for the S&P 500 has been trimmed from 6,600 in mid-February to 6,430 today (Bloomberg).

Spring has barely sprung, but our expectations for wide and choppy ranges in both interest rates and stock prices in 2025 have already been met…and then some. What markets do on a day-to-day basis – and what new policy announcements may drive them – has begun to feel like a coin toss.

Individual fear is an inevitable emotion when markets are lurching lower and headlines are filled with talk of recession, but as the above analysis shows, when aggregate fear spikes and becomes the consensus emotion, it usually behooves investors to find that “long overdue immunity” to their own individual fears and embrace contrarian optimism.

Investors have now lived through several weeks of heightened market volatility, driven primarily by a combination of disappointing economic data and erratic policymaking. As we’ll point out in this piece, the amount of market churn – especially intraday – has been unusually high while the peak-to-trough declines in most major indexes have not…at least, not yet.

In many ways, investors are facing a similar harsh reality of change today, as they confront how different the world, markets, and policy priorities are in 2025 than they were in, say, 2017.

Thursday and Friday saw the beginnings of an unwind of the ultra-dominant U.S. large cap momentum trade (think of the momentum factor as the Newton’s First Law factor, “an object in motion stays in motion”, with momentum capturing the dynamic that if a stock has been performing well it will continue to perform well).

It’s never fun to write about disappointment on Valentine’s Day, but Pat Benatar would agree that this week’s inflation data was more “love taker” than “dream maker”.

It would be wonderful to live in the cozy world of only-happy Surprise Surprise, but the reality in 2025 is likely to be far more balanced between potential positive and negative surprises coming out of DC.