Indices
Dow 39,142, -1,070or -2.66%.
Nasdaq 16,286, -438or-2.62%.
S&P 5,282, -81or -1.51%.
MSCI EAFE 2396.20, +98.5or +4.29%.
USD10Y 4.333%, -16.0bpor -3.56%.
WTI Crude $64.45/bbl, +$2.97or +4.83%.
The Fed and Corporate America State the Obvious
The three major indices fell for the third consecutive week since “Liberation Day.” Fed Chair Jerome Powell came out and stated the obvious: that tariffs will likely create additional inflationary pressures and place the Fed’s dual mandate under pressure (translated: rate cuts may not be as plentiful or as forthcoming as the markets had hoped). Corporate America voiced their uncertainty as many firms declined to increase their forward guidance despite good first quarter results (Albertson’s, Johnson and Johnson, Bank of America, American Express, Taiwan Semiconductor and Citigroup). Goldman Sachs CEO, David Solomon, noted that policy chaos had had a chilling effect on their banking business and that the tariff policy has “created material risks to the U.S. and global economy.” Bank of America (BAC) warned that slowing M&A and IPO activity could doom growth prospects for 2025. Already their M&A sector has seen a 13% decline in the first quarter. Dutch semiconductor equipment maker ASML (ASML) missed their net bookings number for Q1 and warned that the uncertainty surrounding tariffs may force them to guide to the lower end of their guidance.
Additional Tariff Tantrum Fallout
- Nvidia (NVDA) fell -6.36% this week after announcing a $5.5 billion charge as their H20 chips that were previously approved for sale to China will now require a license to export.
- China has reportedly instructed its domestic airlines to stop accepting deliveries of Boeing (BA) made airplanes and U.S. made aircraft parts.
- Already 80 sailings originating from China have been cancelled due to the trade war according to freight company HLS Group.
- Tariffs on Chinese goods now stand at 245% with some exemptions and China raised tariffs on American goods to 125% last week.
The Upcoming Week: Apr 21 – Apr 25
Economic data is light again this week. The earnings calendar sees two Mag Seven members Tesla (TSLA) and Alphabet (GOOG), two airlines Southwest (LUV) and American (AAL) and two consumer staples giants Pepsi (PEP) and Proctor and Gamble (PG) all reporting.
Economic Calendar
Monday – March U.S. Leading Indicators. Earnings: N/A.
Tuesday – N/A. Earnings: Tesla (TSLA).
Wednesday – April U.S. Flash S&P Manufacturing and Services PMIs. Earnings: Chipotle Mexican Grill (CMG), Lam Research (LRCX).
Thursday – Initial Jobless Claims, March Durable Goods Orders. Earnings: American Airlines (AAL), Pepsi Co (PEP), Proctor and Gamble (PG), Southwest Air (LUV), Alphabet (GOOGL).
Friday – April Final Consumer Sentiment. Earnings: N/A.
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Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets...Bitcoin, Ethereum, Solana, ACHR, BITB, NVDA, and RIVN.