Wednesday sell-off disappointing, but stocks "in a better place" vs 4/7-4/8. Thus, notion of structural low still intact. Array ( [cookie] => ac8730-6facc9-21c75e-68ee11-4bcd6c [current_usage] => 1 [max_usage] => 2 [current_usage_crypto] => 0 [max_usage_crypto] => 2 [lock] => [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 0 [user_id] => 0 [reason] => Usage under limits [method] => ) 1 and can accesss 1

NO VIDEO TODAY: I am on a flight today so unable to record a video

The S&P 500 had a rough session Wednesday, falling -2.2% and the Nasdaq 100 falling an even greater -3%. In this post-Liberation day environment, “headlines” not fundamental developments drive market moves, and we discuss the prominent headwinds below (NVDA charge-off and Powell statements). Our overall takeaway is that this pullback is disappointing (but not surprising) and markets are in a much better place Wednesday compared to 4/7-4/8 last week when the S&P 500 was probing 4,800. Thus, to us, we are not too bothered by this pullback:

• We are not in a “normal” market at the moment, and the 3 (maybe 4) headlines pressuring markets on Wednesday:
  – overnight: NVDA announced a $5b charge due to the future restriction of its H20 chip sales to China
  – overnight: US increases China tariffs to a further absurd 245%
  – noon: US negotiating with 70 nations to disallow China to ship goods thru to USA
  – 1:30pm ET: Fed Chair Powell at Eco Club Chicago states Fed “wait and see” mode on tariffs
• Do these headlines fundamentally cut the value of the US stock market by $1 trillion? Nope.
• Do these headlines meaningfully increase the odds of a US recession? Nope.
• Do these headlines increase the risk of higher inflation? Nope.
• Do these headlines make investors nervous? Yes.
• The point of the above is just to highlight that stocks fell because markets got nervous and this is why the VIX rose 8% to 32. It’s not great to see the VIX rising again, but 32 is still way better than 40 and way better than 60.
• This gets to our point about the equity market footing is in a better place Wednesday than it was 4/7-4/8 when we were staring at S&P 500 4,800:
  – White House is showing flexibility by deferring reciprocal tariffs
  – White House is deferring China tariffs on semis and other goods
  – China is signaling some “back channel” willingness to speak
• Fed Chair Powell Wednesday stated a view consistent with his stance when he spoke at the business writers conference about 10 days ago. Basically, the Fed is on “wait and see”:
  – foremost, the tariff impact cannot be known because the tariff plan not finalized
  – the inflation impacts might seem larger than prior expectations, so inflation impact larger
  – Fed sees anchoring inflation expectations as key, which means Fed needs to wait
  – Fed is not in a position to counter a weakening economy, unless economy really tanks
• This is exactly what Powell said on Friday 4/4 and that day equities also fell. But this is not incrementally new. However, there is something new:
  – on 4/4 Powell at NABE: US 10-yr 3.90% to 4.05%, +15bp
  – Wednesday Powell at EC Chicago: US 10-yr 4.35% to 4.28%, –7bp
• Big difference, yields surged on 4/4 and fell Wednesday on Powell’s comments. So, we think this tells us bond markets are taking his comments positively (containing inflation risk) and not suggesting there is a mounting market crisis.

BOTTOM LINE: US markets are in a better position Wednesday versus 4/7 to 4/8

In our view, we believe markets are in a better position Wednesday compared to 4/7 to 4/8 and even going forward, we believe incremental headlines can have a “positive tilt”:

• Better tariff headlines: Tariff headlines, in our view, can have a positive tilt. After the close Wednesday, President Trump at 5:50pm ET posted on TruthSocial:
  – “A Great Honor to have just met with the Japanese Delegation on Trade. Big Progress!”
  – this is a good sign and we know there are 5 nations the US is prioritizing, including Japan
• China offering possible “olive branch:” China has suggested it is open to talks if the US names a “point person” — so it seems like the backchannel doors are open or staying open. This is positive progress.
• Yields no longer surging: Yields are well off the recent highs of 4.50% and have been drifting lower. Is the unwind of the basis trade behind us? That would be a positive. Recall, last week investors worried about the flight out of the US leading to higher long-term rates. That is gone.
• Weaker dollar helps US multinationals: Similarly, the dollar is weaker today. While it’s not great to see weaker dollar, this does help US multi-nationals as this boosts exports and also raises the FX benefit of overseas revenues.
• Stocks seem to be in a better place
• So we believe this makes sense to put on the investor hat, rather than the tactical hat.

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Key incoming data April:

• 4/1 9:45 AM ET: Mar F S&P Global Manufacturing PMI Tame
• 4/1 10:00 AM ET: Mar ISM Manufacturing PMI Tame
• 4/1 10:00 AM ET: Feb JOLTS Job Openings Tame
• 4/2 10:00 AM ET: Feb F Durable Goods Orders MoM Tame
• 4/3 8:30 AM ET: Feb Trade Balance Tame
• 4/3 9:45 AM ET: Mar F S&P Global Services PMI Tame
• 4/3 10:00 AM ET: Mar ISM Services PMI Tame
• 4/4 8:30 AM ET: Mar Non-farm Payrolls Hot
• 4/7 9:00 AM ET: Mar F Manheim Used Vehicle Index Tame
• 4/8 6:00 AM ET: Mar Small Business Optimism Survey Tame
• 4/9 2:00 PM ET: Mar FOMC Meeting Minutes Mixed
• 4/10 8:30 AM ET: Mar Core CPI MoM Tame
• 4/11 8:30 AM ET: Mar Core PPI MoM Tame
• 4/11 10:00 AM ET: Apr P U. Mich. 1yr Inf Exp Hot
• 4/14 11:00 AM ET: Mar NYFed 1yr Inf Exp Mixed
• 4/15 8:30 AM ET: Apr Empire Manufacturing Survey Tame
• 4/16 8:30 AM ET: Mar Retail Sales Tame
• 4/16 10:00 AM ET: Apr NAHB Housing Market Index Tame
• 4/16 4:00 PM ET: Feb Net TIC Flows Tame
• 4/17 8:30 AM ET: Apr Philly Fed Business Outlook
• 4/17 9:00 AM ET: Apr M Manheim Used Vehicle Index
• 4/23 9:45 AM ET: Apr P S&P Global Services PMI
• 4/23 9:45 AM ET: Apr P S&P Global Manufacturing PMI
• 4/23 10:00 AM ET: Mar New Home Sales
• 4/23 2:00 PM ET: Apr Fed Releases Beige Book
• 4/24 8:30 AM ET: Mar P Durable Goods Orders MoM
• 4/24 8:30 AM ET: Mar Chicago Fed Nat Activity Index
• 4/24 10:00 AM ET: Mar Existing Home Sales
• 4/25 10:00 AM ET: Apr F U. Mich. 1yr Inf Exp
• 4/28 10:30 AM ET: Apr Dallas Fed Manuf. Activity Survey
• 4/29 9:00 AM ET: Feb S&P CS home price 20-City MoM
• 4/29 10:00 AM ET: Apr Conference Board Consumer Confidence
• 4/29 10:00 AM ET: Mar JOLTS Job Openings
• 4/30 8:30 AM ET: 1Q A GDP QoQ
• 4/30 8:30 AM ET: 1Q ECI QoQ
• 4/30 10:00 AM ET: Mar Core PCE MoM

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023: