by Louis Navellier
February 24, 2026
The Supreme Court’s 6-3 ruling on Friday said President Trump’s “use of emergency powers” without Congressional authorization are prohibited, but Wall Street celebrated the move. Chief Justice John Roberts wrote, in part, “Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly.” Although President Trump responded by saying “their decision is incorrect,” he added, “It doesn’t matter, because we have very powerful alternatives.” Trump initially announced a 10% across-the-board tariff on imports, and a day later he raised those new tariffs to 15%.
The Supreme Court did not address whether the federal government would have to pay back the tariff revenue it already collected. Since the Court offered no remedy to enforce its decisions, the lower federal courts will now need to enforce the Supreme Court’s ruling, which means companies which have paid $170-billion in tariffs will have to request their money back via the federal courts. It’s also important to recall these tariffs were originally raised in an effort to try to force our leading trading partners to lower their own high trade barriers, and America needed to remedy these unfair trade practices for a long time.
So, in this 250th anniversary year of our Declaration of Independence, America is telling the world we need not depend on their trade if they continue to keep their own barriers high. Secretary of State Marco Rubio gave a stirring speech at the Munich Security Conference touching on Europe’s need to bring down trade barriers. Rubio stressed Western values the U.S. and Europe share, plus our NATO alliance.
Many European officials appreciated Rubio’s speech but did not announce any tariff reversals and said they intend to stick to their NetZero carbon emission goals. They also demanded to be at the negotiating table for any peace talks between Ukraine and Russia. French President Emmanuel Macron has openly accused President Trump of trying to break up the EU, but Macron needs Trump as an external opponent since Marine Le Pen now controls the French Parliament. EU elections in 2027 are likely to elect many anti-EU parties, so it appears Macron is just trying to stir up his base – and other traditional EU parties.
There is now a growing rift between France and Germany, destabilizing the EU. Germany and Italy have formed a near-term alliance, since their respective manufacturing industries do business with each other. Poland’s economic growth has made it the new star in the EU. Ironically, a Polish representative at the Munich Security Conference says his nation agrees with the EU’s Net Zero goal, which is a bit ironic since Poland burns a lot of coal for electricity. However, Poland’s cheaper electricity is helping it grow.
The Wall Street Journal described the relationship between the U.S. and Europe as a “Marriage of Convenience.” Despite Rubio’s warmer tone (than J.D. Vance’s) of respecting European disagreements, with Europe being excluded from the Ukraine/Russian negotiations, plus the U.S. quest to buy Greenland from Denmark, still has many European allies grumbling, but Secretary of State Rubio has been better received than the U.S. President or Vice President with his eloquent yet respectful speeches there.
On the other major war front now, Iran has apparently proposed a pause in its uranium enrichment and even proposed possible business deals with the U.S. Naturally, this is not enough to meet U.S. demands, so President Trump said, “I don’t think they want the consequences of not making a deal,” and added “They want to make a deal.” Vice President J.D. Vance said, “It was very clear (President Trump) has set some red lines the Iranians are not yet willing to acknowledge and work through.” Due to progress so far, gold prices moderated a bit, even though any final deal between Iran and the U.S. seems unlikely.
Iran conducted some military operations to shut down part of the Strait of Hormuz, which looked like a threat of how Iran could cut off critical crude oil supplies. The U.S. and Iran are expected to meet again, and those negotiations will be very closely watched. In the meantime, the U.S. has built up its largest show of forces in the region since the Gulf War. The U.S. is reportedly ready to strike Iran within days if negotiations stall. This caused crude oil prices to rise on anticipation of possible military action.
Inflation Keeps Slowly Retreating – Giving the Fed Room to Cut Rates
Last week, the Fed’s most-watched inflation index, the Personal Consumption Expenditure (PCE), was released, up 0.4% in December and 2.9% in the past 12-months. The core PCE, excluding food and energy, rose 0.4% and 3% in the past 12-months and consumer spending also rose 0.4%.
Treasury yields declined to their lowest rates this year in the wake of the slower growth in the Consumer Price Index (CPI), now running at a 2.4% annual pace, so speculation about another Fed key interest rate cut is reviving. However, Kevin Warsh will not take over the Fed until May, if he is confirmed by the Senate. Since Warsh has called for a closer relationship between the Fed and Treasury Department, this is raising speculation of yield curve management and open market actions by the Fed which would apparently be coordinated between the Fed and Treasury Department. On Fox Business News, President Trump told Larry Kudlow if Warsh “does the job he’s capable of,” then “we can grow at 15%…or more.”
The minutes from the January Federal Open Market Committee (FOMC) meeting revealed the vast majority of voting members want to hold interest rates steady. Since then, the Treasury yield curve has become the steepest in four-years. Nonetheless, the FOMC minutes said, “The risk of more persistent inflation remained.” Furthermore, according to those minutes, most Fed officials worried the progress on getting inflation down to their 2% target “might be slower and more uneven than generally expected.”
In other economic news, the Commerce Department announced durable goods orders declined 1.4% in December, better than the consensus estimate of a 2% decline. Excluding volatile transportation orders (down 5.3%), durable goods orders rose by 0.9% in December so, overall, this was a positive report.
The other big news last week also came from the Commerce Department: The U.S. trade deficit rose to $70.3-billion in December and $901.5-billion for all of 2025. In December, imports surged 3.6% to $357.6-billion, while exports declined 1.7% to $287.3-billion. Economists were expecting the trade deficit to be only $55.8-billion in December, so this was a big miss, causing economists to lower their fourth-quarter GDP estimates. In fact, in the wake of the announcement of the December trade deficit, the Atlanta Fed lowered its fourth-quarter GDP estimate to 3%, down from its previous estimate of 3.6%.
The Commerce Department also announced its preliminary estimate of fourth-quarter GDP growth at 1.4%, substantially below estimates of 2.8%. Federal government spending declined 16.6% last quarter, due largely to the federal government shutdown, a 1% drag on overall GDP growth. A higher-than-expected trade deficit was also a drag on GDP growth. For all of 2025, GDP rose 2.2%. Treasury yields meandered lower after the GDP report, which should raise the odds of another Fed key interest rate-cut.
In closing, I should probably update you on my major concern over a potential future private credit bubble. One firm in the field, Blue Owl, recently announced permanent restrictions on investors from exiting one of its retail funds, namely Blue Owl Capital Corp II. This news caused the prices of Ares Management, Apollo Global Management, KKR, Blackstone and TPG to sell off. Complicating matters further, BlackRock slashed the value of some of its private credit holdings in the past month.
The former head of Pimco, Mohamed El-Erian, asked, “Is this a ‘canary-in-the-coalmine’ moment?” Since private credit is now a $3-trillion per year industry and does a lot of the lending the Dodd Frank bill made difficult for banks, businesses have now created this “shadow banking system.” In the event of a private credit “Black Swan” event, the Fed may have to step in to provide liquidity to these lenders.
As we near the end of February, experience tells us life goes on, despite all these threats, and we may see the national mood turn progressively better as 2026 unfolds. First, investors are expected to cheer up in the Spring as it warms up after a brutally cold and snowy winter. Second, when the Fed meets in May for their Federal Open Market Committee (FOMC) meeting and Kevin Warsh takes over as the new Fed Chair, the FOMC is expected to cut key interest rates and provide guidance for additional rates cuts. Finally, S&P 500 earnings have been growing faster than sales for 10-straight quarters, which signals a rise in operating margins and productivity, so earnings growth should stay in double-digits for all of 2026.
Since 2026 is a mid-term election year, President Trump is expected to become the “cheerleader in chief” to explain how he has tamed inflation and sparked rising GDP growth. Naturally, President Trump is trying to retain Republican control in the House, which will be a tall task, since incumbent presidents usually lose several House seats in mid-term elections. Nevertheless, if gasoline prices remain low and prosperity rises, President Trump may be able to pull off a historic mid-term election victory. Although he has many outspoken critics, there is no doubt he is striving to boost GDP growth and prosperity.
Whether GDP growth hits 5%, as I predicted over a year ago, or 6% as Howard Lutnick has predicted, there is no doubt 2026 will go down as the strongest year for GDP growth since at least 1984. With an accommodative Fed cutting key interest rates due to AI productivity gains, the stock market is expected to gather even more momentum in the upcoming months, so I hope you enjoy the ride – and have some fun!
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
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A Look Ahead by Louis Navellier
America’s New “Declaration of Independence”
Income Mail by Bryan Perry
A Preliminary First Quarter Scorecard – Despite Some Speed-Bumps
Growth Mail by Gary Alexander
Don’t Panic, NASDAQ Investors: “The NAZ” Will Rise Again
Global Mail by Ivan Martchev
A “Tariff-ic” Week for the Stock Market
Sector Spotlight by Jason Bodner
This Sector Rotation May End Soon
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