Robertson Stephens Weekly Commentary – May 5, 2025

A recent meeting with a Pentagon officer yielded a phrase that he surely would be amused to see deployed to economic thinking: “Fog and Friction.” The conventional application of the term is to the battlefield, and it refers to the difficulty of gathering relevant intelligence (fog) to build a strategy, accompanied by the challenge of tactical execution (friction). The S&P 500 returned +2.9% to complete a stunning rebound and recover all losses since “Liberation Day” (April 2). News of increased diplomacy with China on trade and a jobs report that showed a labor market that is cooling but resilient calmed markets. While the GDP report showed that the economy contracted in the first quarter, other data showed cooling inflation and continued consumer spending. On the wealth planning front, we discuss the congressional budget and provide a tax update.