Apr 7, 2025
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“By 1864 Wall Streeters had spies in the Confederate high command and could learn southern battle plans before colonels in the Army of Virginia did.” – Mike Wallace
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures are sharply lower again this morning, although off their overnight lows, as investors look for signs of a break in the selling vortex. You’ll hear all sorts of opinions as to when and where the market will bottom out, but they’re all guesses, so ignore them. No one knows at this point. You could make the argument that President Trump can end this as fast as he started it, but that’s not guaranteed either. The longer markets remain in their current state, the more control he loses as other issues and factors start to pop up, and the more likely it is that this decline stretches out into a more prolonged decline. What’s that old Warren Buffett quote about what happens when the tide goes out?
How bad have things gotten? Just now on CNBC, there was an interview with a former Federal Reserve official and two topics of conversation were whether we were entering another Smoot-Hawley-type era and if the dollar had the potential to lose its reserve currency status. In the past, bringing up either of these issues would get you laughed off the set, and now they’re both legitimate topics to bring up, from a former Federal Reserve official no less!
The one thing the President has working for him is that foreign markets are starting to feel just as much, if not, more pain than the US. The day after the tariff announcements on Wednesday, US markets significantly underperformed foreign markets, but on Friday, the declines were more equally distributed. Today, at least so far, it is foreign markets that are generally feeling the most pressure. The more foreign markets underperform the US, the more likely it is that foreign countries come to the bargaining table. On the other hand, seeing foreign stocks underperform could only embolden the President more.
Futures are currently down around 2%, so we wanted to provide an update on where this decline stands relative to history. At current levels, the S&P 500 would be down 12.85% over a three-trading day span, which ranks up there as among the worst since late 1952 when the five trading day week in its current form started. At these levels, the decline is right around the worst of the three-day declines experienced during Covid and the Financial Crisis, and the only one that was meaningfully worse was the 1987 crash. This is a decline of historical proportions.
The chart below shows every prior three-day decline of 10%+ with a red dot. Outside of the three periods mentioned above, the only two others were in 1998 (Russia’s Debt Default) and 2011 (US debt downgrade). One period that didn’t make the cut was the 9/11 attacks. In the four trading days when the market re-opened after those attacks, the S&P 500 declined around 12%, but it never reached a double-digit percentage decline in three days.
Given the market is coming off one of its worst two-day declines in history, you wouldn’t expect to see many stocks on the list of winners from Thursday and Friday, but we were surprised to see that not a single stock in the S&P 500 was up on both Thursday and Friday of last week.
On Thursday, 95 stocks in the S&P 500 finished higher on the day as investors tried to initially distinguish between winners and losers from Liberation Day, but Friday was more about investors coming to the realization that there wouldn’t be much in the way of winners from Trump’s plans. As shown in the table below, of the 34 stocks that traded 2%+ higher on Thursday, they were all primarily defensive in nature and names you turn to when you’re expecting a market or economic decline.
On Friday, just 14 stocks in the S&P 500 finished the day higher. 11 of them were from the Consumer Discretionary sector, and eight were either homebuilders or related to the housing sector. While these stocks traded higher on Friday, they have all been weak for months now, and the one-day rally was a bounce in reaction to the yield on the 10-year which plunged below 4%. Other winners included Lululemon (LULU), Nike (NKE), Target (TGT), and Dollar Tree (DLTR) which all fell 10% or more on Thursday in their immediate reaction to Liberation Day.
Turning back to the market macro, not even considering today’s weakness, the S&P 500 and most sectors all had their worst two-day periods since March 2020 last week. Think back to the way you felt in the Spring of 2020. While the two periods are incredibly similar in terms of the rampant levels of uncertainty, the causes of the uncertainty came from very different directions. In March 2020, people had no idea how Covid would impact the economy, how long it would last, or how to control it. Today, the cause of the uncertainty is incredibly under control and could be turned off just as fast as it was turned on. Whether that happens before it’s too late is the biggest question mark, and financial markets increasingly view the switch being turned off or at least dialed back as unlikely.
Apr 4, 2025
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“There is nothing more corrupting, nothing more destructive of the noblest and finest feelings of our nature, than the exercise of unlimited power.” – William Henry Harrison
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
There’s nothing to say this morning except it’s bad out there. Yesterday was an awful day and today isn’t looking much better. In some cases, it’s even worse given the scope of the declines in other areas of the market outside of US equities. Foreign equities are plunging, credit spreads are blowing out, commodities are sharply lower, the VIX is above 45, and the 10-year treasury is comfortably below 4%. The President and his administration wanted lower yields, and they got them. Whether they intended to get here the way we did, we don’t know. We’ve seen a lot over the years, but nothing quite like this.
Yesterday’s nearly 6% decline in the Nasdaq was the largest since March 2020 and the 47th decline of 5%+ in the index’s history. The charts below show the Nasdaq’s daily change over time (top chart) while the second chart shows each occurrence of a 5%+ decline over time. A large share of these declines came during the dotcom bust as there were 20 in the two years from 2000 to 2001 alone while another ten were in 2008.
Apr 3, 2025
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“The signing of this act is a momentous occasion in the world’s quest for enduring peace.” – Harry Truman
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
77 years ago today, President Truman made the comments above about his signing the Economic Assistance Act, better known as the Marshall Plan, into law. The Marshall Plan’s primary purpose was to help Western and Southern European countries recover from World War II by rebuilding cities and industries devastated by the war, removing trade barriers between European countries, and creating a more conducive environment between Europe and the US.
By almost all accounts, the Marshall Plan was a big success. But just one day shy of 77 years later, President Trump declared “Liberation Day” and signed an executive order instituting new punishing tariffs on countries around the world. While the tariffs were referred to as reciprocal, the levels were shocking and sent stocks plunging after hours.
Arguments can be made that other countries have been ripping the United States off by charging high levels of tariffs to US exporters. Unlike the Marshall Plan, though, which was meant to aid international economies and foster open trade between countries (even if they placed the US at a disadvantage), last night’s executive order did the opposite. The tariffs enacted by “Liberation Day” will enact a slew of protectionist policies for domestic industries and restrict international trade. If the Marshall Plan was a helping hand to the rest of the world, “Liberation Day” is a big middle finger.
What’s most ironic about last night’s tariff announcements and the rhetoric we’ve heard since Trump came into office is that while the President says he is acting to help US companies, it’s the US stock market that is down the most. The table below shows the performance of the ETFs that track the ten largest global economies. For each one, we show their YTD performance through yesterday’s close and then where they’re trading this morning. Heading into yesterday’s tariff announcement, the US was already the worst performing of the ten largest global economies, and since the announcement last night, the S&P 500 is off 3.4%, as measured by SPY, while none of the other nine ETFs are down as much.
With global markets lower and US futures sharply lower, the S&P 500, as proxied by the SPDR S&P 500 ETF (SPY), is on pace to break below the lows from earlier this week. The next level of potential support is the post-Labor Day September lows and then the lows from last August. That said, markets are rudderless at this point as the level of tariffs outlined last night will only exacerbate consumer and investor concerns about the outlook and create more uncertainty.
Today’s decline will be SPY’s seventh straight downside gap at the open. That ranks as the longest streak since early 2016 and is only one of only seven streaks with as many or more consecutive days of negative selling pressure at the open. The longest streak was ten days in August 2015.
Apr 2, 2025
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“There is no terror in the bang, only in the anticipation of it.” – Alfred Hitchcock
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The S&P 500 put in a closing low on March 13th that established the first major low of this correction. So far, we’ve managed to hold above that level, but it’s the one to watch going forward. A close below the 3/13 low will mark a resumption of the downtrend that’s in place. For bulls, the next step in breaking the downtrend would be a close above last Tuesday’s high and then a series of higher highs and higher lows that eventually takes the index to new all-time highs. You can see the process that played out when we had the last major pullback in July/August in the chart below:
Apr 1, 2025
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“On April Fools’ Day, believe nothing, trust no one, just like any other day.” – Unknown
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Below is a review of asset class performance in Q1 using our ETF matrix. For domestic index ETFs, it’s been a nasty run, although we’d note that seven of the eleven US sector ETFs finished the quarter higher.
Outside of the US, however, there was green nearly everywhere in Q1. While the S&P 500 (SPY) was down 4.3%, the all-world ex-US ETF (CWI) gained 5.9% during the quarter, and country ETFs like Brazil (EWZ), China (MCHI), France (EWQ), Germany (EWG), Italy (EWI), Spain (EWP), and the UK (EWU) were all up 10%+.
Commodity ETFs outside of agriculture also posted solid Q1 gains. Both gold (GLD) and silver (SLV) gained more than 15%, while natural gas (UNG) rose 28.6%. Fixed-income ETFs posted solid Q1 returns as well.
Within US equities, the mega-caps accounted for nearly all of the S&P 500’s Q1 drop. As shown below, the five largest stocks in the S&P all fell more than 10% in Q1, and the ten largest are down an average of 11.4% YTD. The rest of the stocks in the S&P 500 are down an average of just 0.6% YTD.
Mar 31, 2025
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“At its best, life is completely unpredictable.” – Christopher Walken
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
If Christopher Walken was right, why do the markets feel so terrible? You’ve seen all the different ways of measuring the extreme levels of uncertainty in the markets, and it only seems to get worse with each passing day. After President Trump spent much of last week downplaying the degree of tariffs that would be announced on April 2nd, so-called “Liberation Day”, last night the Wall Street Journal reported that the Administration is now re-considering an across-the-board 20% tariff. So, if you thought you had no idea what was going on, you’re not alone. Adding to that, if you think we’ll suddenly start to see certainty come Wednesday, good luck with that.
Equity futures are sharply lower to start the week even after Friday’s plunge. While the rest of the world appeared to have avoided America’s cold, that’s not the case this morning. Europe’s STOXX 600 is down close to 2% relative to Friday’s close and nearly 6% from its YTD high. Asian stocks were also lower overnight. The Nikkei plunged over 4% and is now down 12% from its high in December.
S&P 500 futures are down just about 1% this morning, and that puts the lows from mid-March into play as the current level of the SPDR S&P 500 ETF (SPY) is right between its intraday low ($549.68) and its closing low ($551.42) from March 13th. If the intraday lows from that day don’t hold, the next potential level of support is the post-Labor Day lows.
