Apr 25, 2025
April has been one of the most volatile months in market history, and as we head into the final days of the month next week, equities have returned almost to where they were in late March. Whether the market can build up enough momentum to break above resistance just under 5,500 remains to be seen, but so far it’s been quite a round trip over the last month or so.
Just like equities, the US Treasury market has been volatile. Despite all the concerns of a mass exodus out of the Treasury market, the 10-year yield is also around the same levels it traded at in late March.
While stocks and bonds have made a lot of noise with little to show for it, the dollar has maintained its downhill path. After peaking in early January, the US Dollar Index lost about 5% through late March, and Liberation Day only accelerated the slide. Since late March, we’ve seen an additional decline of nearly 5%, taking the Dollar Index to 52-week lows.
The dollar’s slide plays right into the hands of what the Administration seems to want. Stephen Miran, the Chairman of the White House Council of Economic Advisers, has actively advocated for a weaker dollar to reduce the trade deficit and make US exports more competitive. In his 41-page essay “A User’s Guide to Restructuring the Global Trading System”, Miran outlines his thesis about how to address the economic imbalances resulting from the dollar’s overvaluation due to its role as the world’s reserve currency. Miran endorses the idea of tariffs as one useful tool of several to help re-engineer global trade. The key to success, though, would hinge on execution as Miran concludes with the observation: “There is a path by which the Trump Administration can reconfigure the global trading and financial systems to America’s benefit, but it is narrow, and will require careful planning, precise execution, and attention to steps to minimize adverse consequences.” Maybe the sequence of events since Liberation Day was part of some orchestrated plan, but there has seemingly been nothing ‘careful’ or ‘precise’ about any of it.
Apr 25, 2025
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“I always tell the truth. Even when I lie.” – Al Pacino
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
To view yesterday’s interview on CNN’s OutFront, click on the image below.
After three strong days for stocks following the plunge to start the week, the week looks to be ending on a down note following the publication of an interview by Time magazine with President Trump. The interview took place on Tuesday, so the comments are for intents past their shelf life based on the White House news cycle, but they reinforce the notion that when it comes to this Administration, policy is a moving target.
Earnings news was mixed overnight, but the most high-profile report came from Alphabet (GOOGL), and the stock is trading up in response. The only economic report on the calendar is Michigan Confidence. Investors will be watching the inflation expectations component of that report. Even as it has become incredibly polarized based on political leanings, the general trend has been higher, which the Fed doesn’t want to see.
Day-to-day volatility in the market has picked up since late February, and the historic 9.5% rally from April 9th sticks out like a big middle finger. That big gain also overshadows a nearly impressive run of three straight daily gains of 1.5% or more in the S&P 500. Outside of the big gain on 4/9, any of these days would have qualified as among the best days in the last six months, but having them occur on a back-to-back-to-back basis is extraordinary.
As impressive as the daily gains have been, yesterday’s rally only took the S&P 500 back to levels it opened at right after the Liberation Day ceremony in the Rose Garden and then the level it traded up to on 4/9. For bulls to breathe easier, we’ll need to see the market maintain its momentum and break above this resistance, which happens to coincide with the downtrend line from the February high.
Apr 24, 2025
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“The lack of a sense of history is the damnation of the modern world.” – Robert Penn Warren
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After two days of solid gains, US equity futures are lower this morning but off their lows as the S&P 500 is indicated to open down 0.31%. After the last several trading days, though, investors could probably use a breather, as four of the last five trading days have seen gains or losses of at least 1.5%. Overnight, Asian stocks were mixed but mostly higher, even as the Chinese government pushed back on claims from the US Administration that the two sides are talking to de-escalate the trade war between the world’s two largest economies. In Europe, equities are seeing very modest losses.
Outside of equities, Treasury yields are lower with the 10-year trading down to 4.34%, oil is 1% higher, gold is rebounding after Wednesday’s sharp decline, and Bitcoin is down 1% but still over $92K.
Earnings news since yesterday’s close has generally been positive, but a negative reaction to IBM’s results has the stock trading down 7%, which is contributing to a more than 100-point decline in the Dow.
On the economic calendar, we’ll get Durable Goods Orders and Jobless Claims 8:30, followed by Existing Home Sales at 10 and the KC Fed regional manufacturing report at 11. Of these reports, jobless claims will be the most important to watch for any signs of weakness due to the impact of tariffs.
While the last two trading days have been strong for US stocks, performance over the last five trading days has been weak, lagging the rest of the world. As shown in the snapshot below, the SPDR S&P 500 ETF (SPY) is down 0.41% over the last five trading days, which keeps it over 5% below its 50-day moving average (DMA) and down over 8% for the year. Relative to other regional international ETFs, SPY is the only one down YTD, and along with Emerging Markets (EEM), the only one below its 50-DMA as well.
The weakness in US stocks has been extremely evident in investor sentiment. This week’s survey from the American Association of Individual Investors (AAII) showed that bearish sentiment declined from 56.9% to 55.6%, but that still extends the streak of readings where bears were at 50% or more to a record nine weeks. In the entire history of the survey dating back to 1987, there have only been three other periods where bears were at 50% or more of total respondents for even five straight weeks.
Apr 23, 2025
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“There is nothing either good or bad, but thinking makes it so.” – William Shakespeare, Hamlet
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s been quite a week for equity markets, and Wednesday hasn’t even started yet! After a 2%+ decline on Monday, the S&P 500 rebounded more than 2% yesterday, and after some less confrontational comments from President Trump after the close yesterday related to Powell and China, futures are up another 2%+ in the pre-market! Even US treasuries are rallying. And gold is down!
One comment from the President that encouraged markets was when he said that the 145% tariff on Chinese imports were “very high, and it won’t be that high. … No, it won’t be anywhere near that high. It’ll come down substantially. But it won’t be zero.” That’s encouraging, although at 145%, there a lot of room for tariff rates to come down significantly and still be incredibly high! 70% is less than half of 145%, but that would still be a crushing rate. Remember, back on April 2nd, the President thought he was going easy on countries with the rate of reciprocal tariffs. We’ll see how this all plays out, but until the next headline comes out that contradicts yesterday’s, markets can rally.
The pace of earnings news has really started to pick up in the last couple of days and will only get busier in the days ahead. On the economic calendar this morning, we’ll get flash PMI readings for the Manufacturing and Services sector at 9:45, which will likely show weakness, and then New Home Sales at 10 AM.
When the market is stuck in a downtrend, one key trend to watch for signs of a reversal is when stocks stop going down on bad news. When that happens, it’s usually taken as a sign that all the bad news is finally ‘priced in’ to the market. So, while an economic or earnings report may be ‘bad news’ in terms of coming in weaker than expected, if the broader market or an individual stock rallies on it, it can actually be considered good news.
Yesterday, the market got some bad news from the IMF regarding global growth forecasts, but considering the 4%+ gain in the S&P 500 since then (including today’s move in the futures), it must have been good news, right? Obviously, there were other factors behind the rally, but it does illustrate that this ‘news’ from the IMF was already well known by the market.
For the world in general, the IMF cut its overall estimated rate of global growth down by half a percentage point. For advanced economies, the growth rate was lowered for every country and region except Spain (+0.2 ppts). The US saw the sharpest downgrade to growth forecasts (-0.9 ppts), second only to Mexico’s drop of 1.7 ppts. In emerging and developing economies, growth forecasts saw nearly across-the-board cuts. The only country where the IMF upgraded global growth forecasts was Russia. Russia!
With the new GDP growth forecasts from the IMF, global growth in 2025 is expected to be slower in most economies. Again, the US is expected to see the sharpest deceleration relative to 2024, with growth declining by a full percentage point while Japan (+0.5 ppts) and Germany (+0.2 ppts) are the only two advanced economies expected to see growth accelerate in 2025 relative to 2024. In EM and developing economies, Russia is expected to see the sharpest slowdown (-2.9 ppts), but Mexico, Brazil, Europe, and China are all expected to see sharp slowdowns in GDP growth. The only economies in this group expected to see growth acceleration are Saudi Arabia, Middle East & Central Asia, and South Africa.
As the charts above illustrate, the US has seen among the sharpest downgrades to GDP growth estimates, but among developed economies, it is still expected to show relatively strong growth (+1.8%), second only to Spain’s expected growth rate of 2.5%. So, while the IMF may be cutting the rate of US growth by more than other advanced economies, its economy is still expected to see much stronger growth than other developed economies. In EM and developing economies, however, most countries are expected to see much stronger growth, as Mexico is the only economy expected to contract. As a result of the stronger growth in emerging and developing economies, overall global growth is expected to come in at 2.8% for 2025.
