The Impact of DOGE Has Just Begun

and Investors Are Just Beginning To Notice

The Department of Government Efficiency (DOGE) is slashing government spending—everything from Social Security fraud to federal jobs. Fraud? We all agree fraud must go. The job cuts? It depends on your situation. So, what concerns me the most about all of this? The impact DOGE will have on the economy and your portfolios.

Chart of the Week

Every government spending cut ripples through the economy. Lost jobs are already tanking the D.C. housing market. Even fraud and waste that are eliminated will be an economic drag. We will break down the potential impact on investors, along with an update on a few signals over the last week below.

Market Update

I added gradually to consumer staples stocks in Q4 of 2024, especially in December. In January, I recommended the sector in this newsletter. Looking at this year-to-date chart, the green line (consumer staples) has climbed beyond the S&P 500 (red), a night-and-day difference. It’s been so good that I am selling it. It will add value if we get a 20% drop in stocks (bear market), but I see better opportunities in other areas—the overweight is over. The proceeds of this sale were used to move back into the broader market. I continue to hold some of the other defensive sectors discussed in previous newsletters.

Any further drop over the next two weeks will likely trigger a large bounce. I will wait for one of my indicators before making any changes. Those changes will be documented in a future edition of this MarketPoint commentary.