The stock market seems unconcerned about tariffs, inflation, or the turmoil in Washington. This calm may soon be replaced by a storm.On Wednesday, the S&amp;P 500 index reached a record high, rising slightly after the Federal Reserve released the minutes of its meeting, which did not change the narrative regarding interest rate cuts—according to federal funds futures, there is still no possibility of rate cuts in March and May, and the possibility of a quarter-point cut in June remains contentious.However, some factors that the market is currently ignoring may peak in March and April, undermining the optimistic outlook supported by artificial intelligence, tax cuts, and policies from the Trump administration.The three major concerns are:President Donald Trump implementing more tariffs and retaliatory actions from U.S. trading partners;Inflationary pressures potentially disrupting the Fed's interest rate cut outlook;And the imminent struggle in Washington over the federal budget and the U.S. debt ceiling, both of which must be resolved during March and April.First, there are tariffs. So far, the market has believed that Trump views tariffs as a negotiation tactic, and their actual implementation is manageable for companies and consumers.“Tariffs could slow growth and take the economy away from a soft landing. But I don’t think a 25% tariff will happen. This may just be an opening statement,” said Chip Rewey, Chief Investment Officer of Rewey Asset Management.Tariffs may soon shift from a threat to reality. Trump stated on Tuesday that the U.S. plans to impose about a 25% tariff on auto imports, as well as on drugs and semiconductors, starting in early April. Trump also hinted on Tuesday that these tariffs could be “significantly increased” within the year. The new tariffs will be added on top of the announced reciprocal tariffs on countries that plan to impose tariffs on U.S. exports.A 10% tariff on imports from China effective February 4, and a 25% tariff on steel and aluminum effective March 12. Trump has also set a deadline of April 1 for reviewing U.S. trade policy to look for “any unfair trade practices,” which could lay the legal groundwork for more tariff measures.Another impending risk is inflation, which appears to have remained above the Fed's 2% consumer price target. The consumer price index rose 3% year-on-year in January, the highest increase in seven months. The CPI report for February will be released in mid-March, while March's inflation data will be published a few days after the April 2 deadline for more tariffs. Tariffs could push up U.S. goods prices, complicating the Fed's path to further rate cuts.Uncertainty also includes: Congress must pass a new budget by mid-March to avoid a government shutdown. Although the Republicans control Congress, their majority in the House is so slim that just a few defections could prevent the budget from passing, while Democrats may seek to leverage this for maximum political gain, leading to a government shutdown.House Speaker Mike Johnson “may have to rely on Democrats to pass the budget. This will complicate the process,” said John Velis, a macro strategist at Bank of New York Mellon, in a report. The budget “reconciliation” negotiations may also include discussions to extend the tax cuts from President Donald Trump's 2017 tax policy, which are set to expire at the end of this yearThe debt ceiling must also be addressed, as the Treasury is currently using &#34;extraordinary measures&#34; to continue paying U.S. debt. It is unclear when this will end, but analysts expect these temporary measures to be exhausted after the first quarter. Trump has expressed a desire to eliminate the debt ceiling, although this may be a daunting task for the fiscal hawks in Congress.Investors typically dismiss the political struggles over budgets and the debt ceiling, but during times of increased market volatility due to tariff uncertainties, the market could react sharply if all issues erupt simultaneously.History offers little reference. In 2018, Trump's tariffs triggered some sharp sell-offs, but at that time, the market was also concerned about the Federal Reserve's interest rate hikes and other currently less prominent factors. Additionally, multinational companies and countries like China have been preparing for Trump 2.0 by diversifying supply chains and seeking other ways to cope with more tariffs.Currently, investors do not seem worried about the development of a full-blown trade war. The Cboe Volatility Index (VIX) hovers around a relatively low level of 15, showing no signs of panic.Some CEOs are sounding the alarm, especially in the automotive industry. Ford Motor Company's (F.N) CEO Jim Farley warned that tariffs on Canada and Mexico &#34;will have a huge impact on our industry, wiping out billions of dollars in industry profits.&#34; Farley also cautioned that this would have an &#34;adverse impact&#34; on U.S. employment and that &#34;tariffs will also mean higher prices for customers,&#34; which he commented on during the company's recent earnings call.What truly matters to investors is corporate earnings and the outlook for this year. In this regard, we will begin to get clues when the first quarter earnings reports are released in early April.It is also worth noting that the market has not experienced a correction since the fall of 2023, defined as a 10% pullback from recent highs. Therefore, it can be said that the stock market is poised for more volatility. It would not be surprising to see the VIX rise.&#34;The market is very volatile. It feels like we are chasing every day, every moment. News comes faster than anyone can reasonably react to the headlines,&#34; said Clayton Allison, portfolio manager at Prime Capital Financial.Should the adage &#34;sell in May and go away&#34; be executed a month early? Not necessarily.Katie Nixon, Chief Investment Officer at Northern Trust Wealth Management, believes investors should remain patient. In a recent report, she wrote, &#34;There will be news—and noise—in the coming months, and we think it is unwise to try to reposition portfolios before any clear action,&#34; adding, &#34;We encourage clients to remain patient during this uncertain period.&#34;Nevertheless, investors may wisely continue to rotate out of large tech stocks and other momentum stocks, shifting towards more value-oriented sectors that have already begun to catch up, such as banking and other financial services, healthcare, and industrials.Small-cap stocks may finally be rebounding. The expected price-to-earnings ratio for the S&amp;P SmallCap 600 Index in 2025 is only 16 times, which is a larger discount compared to the S&amp;P 500 Index than usual&#34;Funds are flowing into stocks with more attractive valuations,&#34; said Mike Rode, Senior Investment Director at American Century Investments. &#34;Overall, small-cap stocks have been overlooked, but investors are starting to look for other profit opportunities beyond large-cap stocks.&#34;Rode told Barron's that an expected increase in merger and acquisition activity this year will also benefit smaller companies.The overall market may face pressure this spring. In the stormy weather of April, investors may still find good safe havens

.SPX

The stock market rose slightly after the release of the Federal Reserve's Minutes, with the S&P 500 Index reaching a new all-time high. However, the market may be overlooking the upcoming risks, including potential new tariffs that Trump may implement, inflationary pressures, and the budget and debt ceiling struggles in Washington. These factors could peak between March and April, impacting the optimistic outlook for economic growth

- The stock market remains largely unaffected by tariffs, inflation, or political turmoil, with the S&P 500 reaching a record high.  
- However, concerns over potential tariffs from President Trump, rising inflation, and upcoming budget and debt ceiling negotiations could disrupt the current optimism fueled by AI and tax cuts.  
- Investors are advised to remain patient amid uncertainty, while some are shifting focus to undervalued sectors like banking and healthcare, anticipating increased merger activity benefiting smaller companies.

JIN10

The Stock Market Masquerade: In March and April, will the storm tear apart the calm disguise?