March 18, 2025
If you’re preparing for investment banking recruiting, this is the kind of week where you don’t want to memorize headlines. You want to connect them.
The cleanest thread is margin pressure. Tariffs threaten input costs. Delta cut guidance because domestic travel demand weakened. Kohl’s sold off despite beating quarterly expectations because its forward outlook looked ugly. Inflation cooled, but not enough to make the Fed’s job easy. And the labor market is still holding together, though less convincingly than before.
That’s a much better recruiting answer than, “Markets were volatile because of tariffs.” The more useful point is that management teams are being forced to plan around uncertainty, and that uncertainty flows directly into revenue forecasts, cost structures, working capital, capex decisions, and valuation.
Tariffs are becoming an operating model problem, not just a political headline
President Donald Trump backed down from a proposed 50% tariff on Canadian steel and aluminum after Ontario paused a 25% surcharge on electricity exports to the U.S. The Ontario surcharge would have affected electricity exports to Michigan, Minnesota, and New York, and it triggered the tariff threat before discussions between U.S. and Canadian officials helped de-escalate the situation.
But this wasn’t a full reset. The original 25% tariff on steel and aluminum imports, including those from Canada, was still set to take effect.
That matters because Canada is a major supplier of both materials to the U.S., accounting for 41% of aluminum imports and nearly a quarter of steel imports. When the supplier base is that important, a tariff is not just a line item in a macro summary. It becomes a real issue for manufacturers, builders, automakers, appliance companies, and any business that depends on metal-heavy inputs.
The market reaction showed the pressure quickly. The Dow fell 478 points at one stage, and the S&P 500 moved near correction territory before losses eased after the joint statement between U.S. and Ontario officials.
For interviews, the better way to frame this is through company behavior. General contractors are already stockpiling lumber, windows, cabinetry, and steel ahead of potential tariff effects. Some are renting yards to hold inventory. That sounds tactical, but it has broader financial implications:
- Working capital rises because companies are carrying more inventory earlier than planned.
- Cash conversion can weaken if those materials sit before being used or sold.
- Margins become harder to forecast when input costs can move based on policy headlines.
- Financing needs may increase for builders already facing softer demand and higher prices.
That last point is especially important. Homebuilder confidence, measured by Wells Fargo’s Housing Market Index, dropped to its lowest level since September. Existing home inventory remains low by historical standards, while prices are at all-time highs. So builders are dealing with an awkward mix: expensive inputs, uncertain policy, difficult financing, and consumers who may already be stretched.
The Fed setup is still “wait,” not “victory lap”
The inflation data improved, but not enough to make the Federal Reserve’s decision simple.
In February, the U.S. Consumer Price Index rose 0.2% on a seasonally adjusted basis after a 0.4% increase in January. Annual inflation cooled to 2.8%, down from 3.0%. Core CPI, which excludes food and energy, also rose 0.2% for the month and was up 3.1% year over year.
That’s progress, but it’s still above the Fed’s 2% target. Shelter costs rose 0.3% in February and were up 4.2% over the past year, marking the smallest 12-month shelter increase since December 2021. Energy prices rose only 0.2% for the month, while gasoline fell 1.0%. Food rose 0.2%, with egg prices up 10.4% because of a bird flu outbreak.
The Producer Price Index also gave the Fed some room. Final demand PPI was flat in February after rising 0.6% in January. On a year-over-year basis, PPI rose 3.2%, down from 3.7% in January. Goods prices rose 0.3%, partly because food prices jumped 1.7%, with egg prices up 53.6%. Services prices fell 0.2%, the largest decline since July 2024.
Core PPI, excluding food, energy, and trade services, rose 0.2% and was up 3.3% over 12 months.
The interview answer here should be balanced. Inflation is cooling, but it’s not clean. Tariffs on Canadian and Mexican imports could push costs higher again. That’s exactly why a rate cut in March would still look premature. The labor market is cooling, but not cracking.
The economy added 151,000 jobs in February, below expectations of 170,000 but above January’s 125,000. Unemployment ticked up to 4.1% from 4.0%. Healthcare added 52,000 jobs, transportation and warehousing added 18,000, while retailers lost 6,000 jobs and food services and drinking places lost 27,500 jobs.
Job openings rose to 7.7 million in January from 7.5 million in December. Hiring held at 5.4 million, separations were roughly stable at 5.3 million, and quits increased to 3.3 million, the highest level since July 2024. Layoffs declined to 1.6 million.
So the Fed has a reason to wait. Inflation is still above target, labor is still resilient, and tariff uncertainty could reintroduce cost pressure. That’s the simple version. The more polished version is that monetary policy is being pulled between easing inflation data and new supply-side risks.
Delta and Kohl’s show what demand risk looks like in the income statement
Delta’s guidance cut is one of the most useful company-level talking points from the week.
The airline now expects total revenue growth of 3% to 4% for the quarter ending March 31, down from its earlier forecast of 7% to 9%. Operating margin guidance was cut to 4% to 5% from 6% to 8%. Earnings per share are now expected to land between $0.30 and $0.50, well below the prior estimate of $0.70 to $1.00.
Management pointed to lower consumer and corporate confidence tied to macro uncertainty. Domestic demand was especially weak, while premium, international, and loyalty revenue growth remained in line with expectations.
That split matters. It suggests the pressure is not evenly distributed. Higher-end or international segments may be holding up better, while domestic discretionary demand is more vulnerable. Consumers are cutting travel spending, and businesses are reducing travel expenses or using virtual meetings instead.
The stock reaction was sharp. Delta fell more than 10% in premarket trading before recovering to a 7.5% decline. American Airlines and United Airlines also fell, down nearly 6% and about 7%, respectively.
Kohl’s tells a similar story from retail. The company beat expectations on fourth-quarter earnings and revenue, but the stock fell more than 24% after management issued weak guidance. Revenue is expected to decline 5% to 7%, comparable sales are expected to fall 4% to 6%, and EPS guidance of $0.10 to $0.60 came in below the analyst projection of $1.23.
The company is also dealing with internal restructuring. The CEO pointed to past strategic mistakes, including overemphasis on new product categories and discounting only popular brands. Kohl’s is cutting 10% of its corporate workforce and closing 27 underperforming stores by April. Even with a 13% increase in beauty sales tied to its Sephora partnership, net sales fell by $530 million versus the prior year.
For banking interviews, use Delta and Kohl’s to show that “consumer weakness” doesn’t hit every business the same way. Airlines feel it through load factors, fare mix, corporate travel budgets, and operating leverage. Retailers feel it through comparable sales, inventory, markdowns, store closures, and brand positioning.
Germany, China, and energy add useful global context
There are also a few global points worth keeping in your back pocket.
China’s consumer prices fell 0.7% in February, the first contraction since January 2024 and the lowest level in more than a year. The Lunar New Year timing played a role because the holiday fell entirely in January, pulling travel and spending forward. Excluding the holiday effect, consumer prices were estimated to have risen 0.1%.
Still, China’s Producer Price Index fell 2.2% in February, continuing a 29-month decline. Weak consumer spending and employment trends remain concerns, even as Beijing targets 5% growth and plans measures to address the slowdown.
Germany offered a more constructive but still fragile picture. Industrial output rose 2% in January after a 1.5% decline in December, beating expectations for a 1.5% increase. Automotive production rose 6.4%. But German exports fell 2.5%, and manufacturing capacity utilization remains extremely weak, comparable only to levels seen during the 2008 financial crisis. A planned $500 billion defense investment could support industrial activity, but tariff risk remains a headwind.
In U.S. energy, wind and solar produced more electricity than coal for the first time. Wind and solar accounted for 17% of the power mix, while coal fell to 15%. Solar generation rose 27% from 2023, and wind rose 7%. Natural gas remained the largest source at 43% of total energy capacity, and natural gas generation increased 3.3%.
How I’d use this in a recruiting conversation
If an interviewer asks what you’re following, don’t try to cover every data point. Pick one clean thesis and support it with two or three examples.
“I’m watching how macro uncertainty is flowing into margins. Tariffs on Canadian steel and aluminum could raise input costs for manufacturers and builders, while companies like Delta and Kohl’s are already showing demand-side pressure through lower guidance. Inflation is cooling, but the Fed probably still waits because core inflation remains above target and tariffs could reintroduce cost pressure.”
That answer is concise, but it shows you understand the chain: policy uncertainty, company behavior, margins, guidance, and rates. That’s what banks care about. Not trivia. Causality.
And if you want one final angle, Waymo’s expansion is a useful contrast. While cyclical sectors are managing demand and cost pressure, Waymo is adding 27 square miles of robotaxi coverage in Silicon Valley across Mountain View, Los Altos, Palo Alto, and parts of Sunnyvale. It already had 200,000 paid rides per week across San Francisco, Los Angeles, and Phoenix, and it generated $400 million in revenue in the fourth quarter. That’s a reminder that even in a cautious macro backdrop, capital and attention still flow toward platforms with visible growth and scale.
The market doesn’t pause because macro is messy. It just starts rewarding cleaner stories.