"Life sounds good on people.” – Alison Krauss

Good evening, 

Last week's rally extended into the early part of this week before sputtering out midweek, dragged by auto tariffs and a slide in consumer confidence. The declines accelerated Friday after the release of weakened consumer sentiment data. Though this week ultimately ended with the S&P 500 down 1.56%, Fundstrat Head of Research Tom Lee believes that equities bottomed on March 13. To be sure, there appears to be some degree of market uncertainty ahead of April 2, aka "Tariff Liberation Day," but Lee sees parallels between the market's reaction to Trump 2.0's tariff regime and the tariffs of Trump 1.0. 

In 2018, Trump made remarks about tariffs at Davos on Jan. 26, triggering a plunge until Feb. 19, when the VIX surged and equities bottomed, with the S&P 500 retreating to support above the 200-day moving average. Investor sentiment measures showed bearishness continuing well after that bottom. "If we fast-forward to 2025, a similar pattern appears to be unfolding," Lee noted, so "if the 2018 comparison holds, equities could be poised for sustained upside." 

If so, Lee suggested that the market recovery might "evolve into a V-shaped recovery – a so-called 'face ripper,' especially after April 2." He noted that further support for the risk-on thesis could emerge as investors recall the possibility of pro-growth tax cuts and lower regulatory costs as Trump's term continues.

Head of Technical Strategy Mark Newton holds a similar – if not precisely identical – view. From his perspective, the market is on a “two-steps forward, one-step backward" trajectory, and the week's pullbacks "[haven't] proven damaging to this recovery effort," noting that the S&P 500 remains nearly 200 points above the point at which he views it as having bottomed two weeks ago. Newton also notes a potential near-term bullish tailwind from the likely pension rebalance as the end of the month and first quarter approach. 

U.S. exceptionalism 

Of late, international equity markets have outperformed the U.S. stock market. Lee and Newton offer two perspectives on this. Our Head of Technical Strategy acknowledged recent underperformance by the S&P 500 relative to the All-Country World Index (ACWI 0.58% ), but he believes that enthusiasm for international equities "might be an overreaction." 

Newton noted that when viewed as a ratio, SPY 0.80%  versus ACWI 0.58%  "has not violated long-term uptrends going back more than a dozen years." He added, "Overall, I like overweighting U.S. stocks vs. ACWI for 2025. My view is that the U.S. dollar decline won’t persist into 2026 and that tariffs likely won’t prove as damaging to the U.S. economy and by extension, the U.S. stock market as many are suggesting."

Lee, for his part, has a similar view on tariff uncertainty, seeing possible signals about economic policy in recent non-U.S. outperformance. He suggested that this could be viewed as "optimism around tariff negotiations" among investors abroad – a view that the tariff rhetoric is possibly more of a negotiation strategy rather than an actual desire to start a trade war. We see this illustrated in our Chart of the Week. For now, all eyes are on April 2.

Elsewhere

The death toll from a Friday 7.7 quake in Myanmar is expected to rise steeply, with reports of major structures collapsing in both Myanmar and Thailand. The Stock Exchange of Thailand suspended trading on Friday afternoon in response. The quake was so powerful that even in southwest China, more than 800 miles away, roads cracked and bridges partly collapsed. As of Friday afternoon, the death toll was at least 144 in Myanmar and 10 in Bangkok, with hundreds unaccounted for.

A recent poll found that 75% of U.S.-based scientists are considering leaving the country due to Trump's attacks on science that include funding cuts and research restrictions. The sentiment, as seen in a poll of 1,600 scientists conducted by Nature, has not gone unnoticed, with Germany and France both working to incentivize any decisions to move and facilitate the process for those who decide to seek greener pastures.

Trump suggested he might reduce tariffs on Chinese goods in exchange for Chinese approval of a TikTok sale. A previously signed executive order regarding the sale of TikTok by its Chinese parent ByteDance has an April 5 deadline, though Trump suggested it could be extended.

As Signalgate continues to unfold, U.S. downloads of the messaging app have surged, doubling on a week-over-week basis. The increase has not gone unnoticed, with the app's co-founder, Matthew Rosenfeld (aka Moxie Marlinspike), joking about how his app offers "the opportunity for the vice president of the United States of America to randomly add you to a group chat for coordination of sensitive military operations." Jun Harada, Signal's head of growth and partnerships, described the week's surge in downloads as "the largest U.S.-growth moment [in Signal's history] by a massive margin."

Trevor Milton, the founding CEO of Nikola who was convicted of securities fraud in 2022, was pardoned on Friday. Milton, who was represented by Brad Bondi, brother of U.S. Attorney General Pam Bondi, was alleged to have lied to investors about Nikola's electric-truck technology. 

And finally: The University of Maryland has named Kermit the Frog as its 2025 commencement speaker. University officials described Kermit as a well-known environmental advocate, best-selling author, Peabody Award-winner, and international superstar. (Kermit's creator, Jim Henson, was a UMD alumnus, class of 1960.) As of this writing, there was no word if Miss Piggy would be in attendance.