Indices
Dow 38,314, -3,269or -7.86%.
Nasdaq 15,587, -1,735or-10.02%.
S&P 5,074, -506or -9.07%.
MSCI EAFE 2281.20, -170.17or-6.94%.
USD10Y 3.985%, -24.0bpor -5.64%.
WTI Crude $62.32/bbl, -6.72or -9.73%.
Liberation Day Begets Wealth Destruction
The administration needlessly fired the first shots of a brewing global trade war after the close on Wednesday of last week. It was quickly suspected that the administration used a large language model (such as ChatGP) for their formula which included tariffs on the island of Diego Garcia (on which sits a major U.S. military base) as well as the uninhabited island of Heard and McDonald. For countries that actually have populations and trade with the United States, the lowlights include the following levies; 10% base level on 180 different countries, China 54%, Europe 20%, Vietnam 46% and Taiwan 32%. China immediately announced retaliatory duties of 34% on all U.S. goods.
As one would expect, markets traded down violently on Thursday and Friday, with the S&P shedding more than 11% during those two trading sessions. The good news that many prognosticators were expecting over the weekend has yet to be produced and the Dow futures have opened down another 3.5%.
While we did not expect this type of selloff, we have been justifiably worried considering the collective incompetence of the people currently in charge of policy and have derisked the portfolios under our management through both the January rebalance and through a rare mid-cycle rebalance in the mid-March. At the time of this writing, we are constructing a trading strategy to execute at market open tomorrow morning to further protect our portfolios.
The Upcoming Week: Apr 7 – Apr 11
Among all the other headline risks we will see this week, Q1 earnings season begins with Delta Airlines (DAL), JPMorgan Chase (JPM), Blackrock (BLK), and Wells Fargo (WFC) the preeminent names on the calendar. Do not be surprised if the news regarding future guidance is overwhelmingly negative with 2025 projections slashed. Inflation data returns with both March Consumer Price and Producer Price Indices published Thursday and Friday respectively.
Economic Calendar
Monday – N/A. Earnings: N/A.
Tuesday – N/A. Earnings: N/A.
Wednesday – March FOMC meeting minutes. Earnings: Delta Air (DAL).
Thursday – Initial Jobless Claims. March Consumer Price Index (CPI). Earnings: N/A.
Friday – March Producer Price Index (PPI). April Preliminary Consumer Sentiment. Earnings: JPMorgan Chase (JPM), Blackrock (BLK), Wells Fargo (WFC).
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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.