ANGLES.

Trump’s simmering resentment towards Fed chairman Powell for not bowing to his demands for an immediate interest rate cut was set off again over the weekend by a widely-read pro-Powell opinion article in the Wall Street Journal which described the president’s tariff policy as a “tax” and an “error”.

One analyst described any undermining of the Fed’s sacred independence as a “welcome to the jungle” moment that would accelerate the increasingly popular “Sell America” trade and be extremely damaging to US financial markets. While Wall Street does not currently believe that Trump will ditch Powell (because he legally can’t), the fact it’s even a thing that’s being talked about is now proving very troubling.

The US Dollar’s recent slide steepened, longer term interest rates spiked, gold reached all-time highs and the moment the opening bell rang in New York on Monday, stocks dived sharply lower across the board and then spiraled even further down as Trump, clearly triggered by the WSJ article, escalated his attack on Powell who he called a “major loser”. By the end of a hideous session, all the major stock indexes had diminished by about 2.5% with the pain pretty evenly distributed across all sectors. Long end interest rates zoomed higher.

Tuesday saw a bounce-back in stock prices initially on a sense that Monday’s rout may have been overcooked and about half of the previous day’s damage was undone within minutes of the open. This upward trajectory rapidly accelerated after Treasury Secretary Bessent called the tariff standoff with China “unsustainable” and expected the situation to de-escalate “in the very near future”. Monday’s losses were reversed. Longer term interest rates stabilized.

Markets reacted positively on Wednesday to Trump’s rather absurd claim that it had never even crossed his mind to fire Powell. Slightly more conciliatory tariff language from the White House implied to financial markets that the adults in the room may finally be having a moment. All this pushed stocks further into the green and the indexes ended the session nicely higher.

Thursday saw a third straight up-day for stocks (historically a more uncommon occurrence than you might think and one that can often precede sustainable rallies in equity prices) and interest rates whipsawed dramatically lower after multiple Federal Reserve officials publicly mused about possibly cutting interest rates in the near future (June, maybe?).

After the close, Google parent and major index fund component Alphabet reported sensational Q1 revenues and profit that blew through expectations and was rewarded in the after-market by a tasty jump in the stock price. The word “tariff” appeared nowhere in the report.

Friday rolled around with the indexes feeling a little soft at the open after China laughed off Trump’s evidence-free boast that bilateral trade talks were ongoing as well as the temptation for institutional traders to take profits on the three-day price spike.

This was offset however by Wall Street continuing to be impressed by the mostly favorable Q1 earnings reports so far and specifically cheering Google’s numbers. Stocks finished a touch higher on the day but substantially up for the week, which was something which had looked like a lost cause following Monday’s ugly price action.

There’s been much talk of late about the potential erosion of “American economic exceptionalism”. Here’s what that means in plain English: the US economy is the most resilient and innovative in the world and US financial markets are by far the most liquid, transparent and well-run on earth. It has been that way for decades. At the heart of US exceptionalism is the assumption of an unwavering rule of law and rock-solid structure of the US government and financial markets.

Put plainly, global investors buy US assets and come here to innovate because 1) they know the rules and the court system is well-established and broadly viewed as impartial and 2) these rules don’t change based on the latest election cycle or on who is in control in Washington DC. Even just floating the idea that this environment might possibly be at some kind of risk is remarkably unhelpful to US assets.

So much of the pain experienced in financial markets this year seems self-inflicted and, frankly, so infuriatingly unnecessary. Trump raging at Powell last week like an insecure schoolyard bully is a great example of that. That had no business crashing stock prices. But it did. It shouldn’t have made long term government bonds act like fricking Gamestop. But it did.

Strange times.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

“We’ve been looking in the abyss since the run-up to Liberation Day on April 2nd. We’re all tired of it. Trump got tired of it too.”

Things have definitely changed over the last week or two. Great update from Josh Brown on where things stand now ..

.. AND I QUOTE ..

“Time can be a thief, but it can also deliver outcomes you never thought possible through the magic of compounding. Investing works the same way. Compounding can take your portfolio to levels you can’t even fathom—literally, because our brains think linearly, not exponentially.”

Callie Cox, Ritholtz Wealth Management

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Technology (two biggest holdings: Apple, Microsoft) ⬆︎ 8.2% for the week

Last week’s worst performing US sector: Consumer Defensive (two biggest holdings: Costco, Walmart) ⬇︎ 1.0% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price rose 4.7% last week, is down 6.0% so far this year and ended the week 10.1% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 4.3% last week, is down 12.1% so far this year and ended the week 19.9% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.32% (4.34% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.74% (3.81% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.88% (3.95% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.29% (4.34% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.75% (4.82% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.74% (4.80% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.81%

One week ago: 6.83%, one month ago: 6.66%, one year ago: 7.17%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on May 7th?

* Unchanged from now .. ⬆︎ 91% probability (86% a week ago)

* 0.25% lower than now .. ⬇︎ 9% probability (14% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed interest rate cuts in 2025?

* ⬌ 4 (unchanged from a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market close on Friday. Data courtesy of CME FedWatch Tool.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffet.

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the …

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

If I were a cynic (heaven forbid!), I might suggest that Apple chairman Tim Cook’s large donation to Trump’s inauguration fund may be starting to pay off. The president blunted his Chinese tariffs over the weekend by temporarily diluting levies on smartphones and other consumer electronics and brought overdue relief to the likes of Apple who saw its range of products benefit from the latest climbdown.

Asian and European stock markets moved cautiously higher in reaction to the news on Monday. By the time New York opened, there had been some walk-back blather from both Trump and Commerce Secretary Lutnick who contradicted each other about the dilution in yet another example of the administration’s constant bungled messaging of its whole tariff strategy which continues to baffle financial markets.

Wall Street decided to guardedly take the dilution at least semi-seriously and stocks rose somewhat, but without a lot of conviction, buoyed by more positive early Q1 earnings reports and interest rates turned south. After the closing bell, Trump unnerved markets by floating with little detail some kind of a so-called “trade probe” into semiconductors and pharmaceuticals which could be viewed as a potential precursor to sector-specific tariff impositions.

Stocks had a choppy Tax Day Tuesday but stayed within a relatively narrow band and finished a touch lower. Interest rates continued to pull back moderately. Both stock and bond markets were clearly mindful that things could turn nasty on a dime (or a tweet) at any moment and traders did not want to get caught offside.

Positive Retail Sales data for March came in pre-market on Wednesday, driven by a (likely short-lived) rush in panic purchases, especially autos, from consumers trying to get ahead of tariffs. However, that prospect of US levies and international trade restrictions broadening specifically into semiconductors, pharmaceuticals and even critical minerals weighed heavily on the indexes from the start, especially those with a high weighting to Nvidia (now down by 25% this year), AMD and Tesla which all got absolutely hammered.

After lunch, Fed chairman Powell sent markets into a tizzy simply by stating in a major speech in Chicago what is obvious to everyone, that tariffs will definitely drive up US inflation and he also acknowledged the risk of stagflation. He reiterated that the central bank is not going to be rushed into an interest rate decision by the chaotic environment and was continuing with its “wait and see” approach.

The tone of his message was a stern reminder (as if one was needed) that it is not the Fed’s job to shield investors from short term losses. The S&P 500 big names dived again and it ended up being a really, really ugly day for the indexes.

With financial markets around the world closed the following day including in the US, Thursday was a synthetic Friday. Before the opening bell in New York, the European Central Bank (ECB) cut local interest rates by a quarter point for a seventh time in the past year.

Trump lashed out at Powell for not cutting US rates in an extraordinary onslaught, bellowing that“termination cannot come fast enough” for the Fed chairman, whose term runs through May 2026. Aware that the president does not have the legal authority to fire the Fed chairman or interfere in interest rate decisions, Wall Street mostly brushed off the attack as just another posturing hissy fit and stocks were steady at the open and remained rangebound for the rest of the day.

The major indexes were down over the course of the holiday-shortened week, but mostly as a result of Wednesday’s shocker and the generally horrible performance from the so-called Magnificent Seven (see LAST WEEK BY THE NUMBERS below). The “S&P 493” actually turned in quite a decent show, all things considered.

Largely under-reported by US media, the “American brand” is getting severely damaged overseas at the moment and the US Dollar is crumbling in response in the kind of conditions in which it usually strengthens as a “safe haven”.

This is being reflected in the bond market where foreign bondholders dominate. Keep a close eye on the 10 year Treasury rate (see INTEREST RATES below). If it moves above, say, 4.85%, that will be a flashing red light for stock markets.

The tariffs themselves are no longer even the biggest problem for stocks, it’s the amateur chaos, uncertainty and brazen misrepresentation surrounding them that is now the main driver of lower prices.

A turbulent market with the S&P 500 bouncing around in the high-4,000s to mid-5,000s range (it closed last week at a little under 5,300) is a reasonable expectation until some kind of policy clarity begins to replace the perpetual communication incompetence and the untrustworthiness of the information provided by the administration and its people.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

Whether you realize it or not, there are a host of behavioral biases that impact how you approach saving and investing. Here are the main ones, including “the most important concept in finance”.

.. AND I QUOTE ..

“Economic uncertainty has never felt this uncertain”

Justin Fox, Bloomberg.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Real Estate (Prologis, American Tower) ⬆︎ 3.6% for the week

Last week’s worst performing US sector: Technology (two biggest holdings: Apple, Microsoft) ⬇︎ 2.3% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 1.3% last week, is down 10.2% so far this year and ended the week 14.1% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 1.3% last week, is down 15.6% so far this year and ended the week 23.1% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬌ 4.34% (4.34% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.81% (3.96% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.95% (4.15% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.34% (4.32% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.82% (4.91% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.80% (4.85% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Used as a basis for determining many consumer loan rates such as credit cards, home equity and auto.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.83%

One week ago: 6.62%, one month ago: 6.66%, one year ago: 7.10%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on May 7th?

* Unchanged from now .. ⬆︎ 86% probability (79% a week ago)

* 0.25% lower than now .. ⬇︎ 14% probability (21% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed interest rate cuts in 2025?

* ⬆︎ 4 (up by one from a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market close on Friday. Data courtesy of CME FedWatch Tool.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffet.

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: …

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

So much to talk about this week, so let’s get right to it ..

The weekend break did nothing to calm the stock market’s shredded nerves as the Trump administration met the widespread condemnation of its tariff policy (“idiotic” was one of the kinder adjectives used) with only denial and defiance coupled with juvenile advice like “be cool” , “hang tough” and “take the medicine”. There were more gigantic losses in Asia on Monday (Chinese stocks crashed by another 10%, Hong Kong fell by 13% and Japan was down 8%) followed by further slaughter in Europe.

When it opened, Wall Street was hit by a ferocious bout of two-way volatility with stocks chaotically swinging from down 4% to up 3% and then back down again in the face of a deluge of contradictory tariff-related rumors, rogue tweets and scuttlebutt.

Trump reacted to China’s retaliatory tariffs by slapping on an additional punishment tariff of 50% on imports from that country. This, of course, is exactly how things get out of hand and stocks took another leg lower on the announcement. By the end of an exhausting session and massive trading volume, the S&P 500 was fractionally lower on the day and the NASDAQ fractionally higher.

Alarmingly however, interest rates suddenly began to turn dramatically higher, especially longer term maturities (see INTEREST RATES below), amidst signs of panic in the bigger, scarier bond market and rumors that both China and Japan were dumping some of their mammoth holdings in US Treasury bonds. This would prove crucial a couple of days later.

Asian markets bounced back on Tuesday. Clearly, traders felt that four days of carnage was enough for the moment at least and it was time to pick through the rubble looking for opportunities and the same sentiment prevailed in Europe. Wall Street did not disappoint at the open and the indexes quickly jumped higher by as much as 4%, a small rehabilitation given the enormous damage of the last couple of weeks but the bleeding was at least stopped for a while after Treasury Secretary Bessent cryptically described tariffs as being like “a melting ice cube”.

But the real melting ice cubes were those brief initial gains and by the close of a wild day, the indexes had slipped back well into the red zone again as both the US and China appeared to be digging into more deeply entrenched positions. Once again it was Big Tech and AI that got hit the hardest with the NASDAQ getting absolutely brutalized.

The global trade war intensified pre-market on Wednesday with China reacting to the launch of 104% US tariffs on its goods by the imposition of an additional retaliatory tariff and the EU joined the party, slapping its own levies on American imports.

A little before 2pm ET with the stock indexes weakening again, another earthquake hit markets as Trump blinked (see ARTICLE OF THE WEEK below) and suddenly announced a 90-day pause on the so-called reciprocal tariffs for non-retaliating countries while at the same time jacking up tariffs on China (which was not eligible for the pause because it had responded in kind) to 125%.

Wall Street was entirely caught offside and reacted by furiously buying everything that it had been frantically selling for weeks in a historic monster face-ripping rally. What traders regarded as the “good news” in Trump’s statement (the pause) completely crowded out the potentially damaging “bad news” (the ever-increasing China tariff). Analysts scrambled to pull their recession calls. The spike in interest rates came to an abrupt halt.

Within a couple of minutes of the announcement, the S&P 500 had soared by 7% and the NASDAQ had exploded by 9% and by the end of the session, these gains had risen to over 9.5% and more than 12% respectively. It was the largest intra-day swing from losses to gains in stock market history.

Wednesday’s euphoria failed to follow through to US markets on Thursday, although Asia and Europe did just fine. The pre-market release of the usually closely-scrutinized but very backward-looking Consumer Price Index (CPI) retail inflation data went virtually unnoticed (it was better than expected, falling to a 2.4% rate).

Exhilaration quickly flipped back to deep unease as focus switched from The Pause to fears that the rapid escalation of the trade war between the two biggest economies on the planet will bring severe damage to global growth, especially after the White House said US tariffs on China had been raised yet again to an unfathomable 145%. Stocks reversed sharply lower again and about a third of Wednesday’s huge gains was immediately wiped out.

Overnight on Friday, China punched back by raising its tariffs on US goods from 84% to 125%. Q1 2025 earnings season kicked off with decent numbers from some of the big banks, but this season is going to be all about forward guidance. Backward-looking reports from a quarter with no tariffs is of limited use to investors right now. We also saw a big drop in the Producer Price Index (PPI) measure of wholesale inflation, confirming the favorable CPI reading.

Stock indexes had a relatively steady day by recent standards, closing higher despite more data confirming consumer sentiment plunging to its worst levels since 1980 and soaring inflation expectations, to cap what was the best week of for stocks since November 2023, but mostly fueled by the colossal spike of just one day.

At the heart of the dramatic market decline from the February all-time highs is the fact, not resolved by The Pause, that Trump is still not telling markets what he really wants at the end of all this. Global tariff reduction? Boost Federal government income to fund tax cuts? Force the Fed to cut interest rates? Or simply a stick with which to beat nations he doesn’t like? Any of these could be true and none of them could be true.

This information vacuum is the underlying problem, so anything that clearly articulates and defines the ultimate goal of the policy is would be ever so helpful. Unfortunately there’s no sign of this yet. Tariff chaos is far from over.

I sent out a brain dump of ideas last week about how I believe you should respond to current volatile market conditions. In case you missed it, you can read it here.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE(S) OF THE WEEK ..

WTF just happened??!! Why Trump blinked on Wednesday.

.. AND I QUOTE ..

“The COVID-19 bear market is a misleading guide to what comes next. The government threw everything but the kitchen sink at it to revive sentiment. This time, to use the horror-film trope, the call’s coming from inside the house.”

Spencer Jakab, The Wall Street Journal.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Technology (two biggest holdings: Apple, Microsoft) ⬆︎ 8.8% for the week

Last week’s worst performing US sector: Real Estate (Prologis, American Tower) ⬇︎ 0.1% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price rose 5.7% last week, is down 8.9% so far this year and ended the week 12.8% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 1.8% last week, is down 16.6% so far this year and ended the week 24.0% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.34% (4.28% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.96% (3.68% a week ago)

* 5 YEAR TREASURY ⬆︎ 4.15% (3.66% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.32% (4.01% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.91% (4.44% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.85% (4.41% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com …

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Markets began last week as they had finished the previous one, in a world of pain. This was always going to be Tariff Week with Wednesday the key day of announcements, but the prospect of any walk-back of any kind diminished by the hour and the looming reality of tariff turbulence, its inevitable stagflationary effect and a resulting body blow to stock markets really began to set in.

Asian and European markets sold off heavily on Monday, the last day of an exhausting quarter (see my Q1 2025 Market Review). This set up another harrowing day for Wall Street which was in full risk-off mode at the open.

Some bottom-fishing after lunch pulled the indexes back to close to flat on the day, but the buy-the-dip mentality has resulted in a punch in the face for investors lately and would prove to be so again. Traders were glad to see the back of March, the worst month and quarter for stock indexes since 2022.

New month, new quarter, same angst on Tuesday, April Fools Day. Even on Tariff Eve, upcoming policy was still shrouded in mystery, leaving markets frustrated and fatigued, with no playbook on how to proceed. Like deer in headlights, traders seemed frozen, not really knowing how to react in preparation and the indexes bounced around within a narrow range for the whole session, eventually finishing the day a touch higher.

Possibly the most consequential single day for stock markets in many years finally dawned on Wednesday although, interestingly, the details of the tariffs were not going to be made available until 4pm ET, right when stock markets close. Conventional wisdom was that tariffs below 10% could see a relief rally, 10-15% .. probably status quo and 20%+ .. look out below.

Wall Street strapped in for a day of theories, rumors and leaks but nothing even resembling clarity emerged during opening hours. The outcome was a modest, unconvincing drift higher into the close, but all bets were going to be off at 4pm ET.

In a rambling address in the Rose Garden at the White House, Trump announced a baseline blanket tariff rate of 10% on all imports to start on April 5th and additional levies to take effect on April 9th on dozens of “bad actor” specific countries and regions (China 34%, Japan 24%, South Korea 25%, Taiwan 32% and the EU 20% were among the highlights), bringing to an end a decades-old era of globalization.

Importantly, he failed to mention any carveouts, exemptions or off-ramps. This was all at the worst case end of the spectrum of market expectations and US stock prices plunged in the after-market.

With the China tariff rate now at a stacked cumulative 54% (in fact, 79% if they keep buying oil from Venezuela) and other Asian nations singled out for particularly harsh treatment, local stock markets were brutalized. When their turn came, European stocks also melted down and New York traders woke up to a sea of red on their blood-spattered trading screens on Thursday morning.

The carnage spared no-one. Stocks, crypto, interest rates, the US Dollar, oil etc. all crapped out. Just about the only thing that was higher was the analyst probability of a coming self-inflicted recession in America.

Within seconds of the opening bell, almost $2 trillion was wiped off US stock market values with the so-called Magnificent Seven (who collectively generate 50%+ of their revenues from outside the US) looking anything but, as they once again led the charge lower on colossal trading volume.

Things went from bad to worse as the day progressed with pretty much unanimous feedback from financial market professionals, analysts, independent economists and international trade agencies that tariffs at these levels were a disaster for the US economy. The stock indexes had their worst single session since the horrific early days of COVID in 2020.

There was no relief on Friday as Asia and Europe dumped again. China responded with a 34% tariff on American imports, effective April 10th. And as if there wasn’t enough going on over here, there was also the small matter of a critical pre-market Jobs Report which showed a much higher than expected 228k new payrolls added in March and an unemployment rate of 4.2%. Under normal circumstances, this would have cheered the market somewhat but the numbers were utterly overwhelmed by tariff market panic and deemed to be “out of date” already given the seismic changes that we are undergoing.

US markets were massacred yet again. Indeed, the annihilation was even worse than the previous day. The NASDAQ, which hit a new all-time record high just a few weeks ago, fell into an official bear market and the S&P 500 isn’t too far behind doing the same. Fed chairman Powell came out said the damaging economic impact of new tariffs is likely to be significantly larger than previously expected and that the central bank must make sure that doesn’t lead to a growing inflation problem. Translation? .. Stagflation could be on the horizon.

Wall Street intensified its freakout after hearing what Powell had to say and stocks went into free fall as traders sold pretty much anything they could get their hands on, but reserved a special place in hell for - you guessed it - Big Tech/Mag 7/AI stocks (Tesla lost 10% of its total value in 390 minutes) as well as the banks. The indexes finished at the lows of the day.

One of the notable things about the ongoing rout was the fact that the US Dollar was also tumbling. That isn’t how it typically works. In bouts of volatility, the US Dollar tends to do well, serving as a safe haven. It may be reflecting that investors are starting to question American economic exceptionalism under this administration.

Bloodied and bruised, traders staggered home on Friday evening having experienced a historically savage week during which the S&P 500 shed about 10% on record-breaking volume with little sign of the cavalry arriving on Monday morning.

On the upside, bonds are doing their job in providing a ballast in properly-allocated portfolios. Interest rates are diving lower (see INTEREST RATES and FEDWATCH INTEREST RATE TOOL below) with investors shifting from equities to fixed income, pushing bond prices higher. This is in marked contrast to 2022 when both asset classes fell in unison for one of only a handful of times in the last hundred plus years.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

“Real freedom isn’t just about having more hours in the day—it’s about having both the resources and the purpose to make those hours count.” What financial freedom actually means. The Ski Bum Paradox.

.. AND I QUOTE ..

“The narrative is moving from US exceptionalism to US alienation.”

Kok Hoong Wong, head of institutional equities sales trading at Maybank Securities in Singapore.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing U.S. sector: Consumer Defensive (two biggest holdings: Costco, Procter & Gamble) for the second week in a row ⬇︎ 4.4% for the week

Last week’s worst performing U.S. sector: Technology (two biggest holdings: Apple, Microsoft) for the third week in a row ⬇︎ 16.5% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 10.0% last week, is down 13.8% so far this year and ended the week 17.6% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price fell 9.0% last week, is down 18.0% so far this year and ended the week 21.7% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.28% (4.33% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.68% (3.89% a week ago)

* 5 YEAR T…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Multiple reliable news outlets reported over the weekend that Trump’s April 2nd tariff bender would be more “targeted” in nature than had been initially feared, with a number of companies and even entire sectors maybe getting some kind of temporary reprieve. This gave the tiniest bit of hope that maybe peak tariff chaos might have now passed. Dip buyers jumped all over this on Monday and went bargain-hunting. Stocks opened significantly higher and kept heading north all day to score solid gains for the session.

On Tuesday, confusing signals were sent out by different parties about progress in Ukraine negotiations and there was more fallout from the astonishing Signal classified information leak with White House officials scrambling to try (and mostly failing) to wordsmith their way out of any blame. More tariff barking from Trump and his minions, including about so-called “secondary tariffs” shattered the previous day’s fleeting dreams that maybe the infuriating bedlam might possibly be coming to an end.

The brief stock rally came to a grinding halt and the indexes swung between small gains and losses, mostly shrugging off some horrendous sentiment data showing plunging levels of confidence and optimism of a clearly very rattled American consumer, to finish the day barely changed.

Markets now seem resigned to not having any idea what April 2nd Tariff Day is going to look like until it arrives and came into Wednesday in a glum mood, with stocks falling hard at the opening bell. Trump then scheduled a fresh tariff announcement for right after the market close.

It certainly caught Wall Street’s attention and triggered another leg down in stock prices. The Magnificent Seven in particular had a frightful day (Nvidia and Tesla were each crushed by over 5% over the course of the session), severely dragging down the indexes of which they form such a large part.

When it came, the announcement was a 25% tariff on all finished cars and trucks coming in from outside the US as well as all imported car parts, effective April 2nd, including on vehicles that are assembled overseas by American car companies. No carve outs, no exemptions, no delays (at least, not yet).

Half of all vehicles sold in the US are imported and a third are from Asia. Price increases to American consumers in the thousands of dollars per vehicle are inevitable as a result of the policy. Auto prices are an important component of inflation calculations.

Asian and European stock markets nosedived in response, with the stocks of many automakers getting butchered. When US markets opened on Thursday morning, the sellers were all fired up and got to work. But the punishment was relatively selective, with mostly car companies and chip firms being taken behind the woodshed (Tesla, with a primarily US manufacturing base, was spared and actually moved higher). Things stabilized a bit late on, but the indexes all still had a losing day.

Asia and Europe dumped further on Friday and the US followed suit at the open after the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, showed a sticky rate of 2.6% with other sentiment readings showing alarmingly elevated inflation expectations in the medium/long term.

Anxiety about the fallout from April 2nd, now just days away, began to reach fever pitch (not helped by anecdotal stories of buyers swarming car dealerships all over the country to try and get ahead of tariffs) and the bears took complete control as the session went on, transforming the week from slightly green to firmly red. Once again, Big Tech/AI led the charge lower, with the NASDAQ having another shocker.

We have gone from a market priced for perfection only when the S&P 500 was above 6000 to a price level that is far more suitable to the current unsettled conditions. In other words, stock markets are now at a much more appropriate valuation than they were just a couple of months ago. That said, we will likely see more violent moves until some kind of economic clarity and/or political rationality emerges and we must acknowledge the possibility of a further decline.

I will publish my Q1 2025 Market Review next week. Keep an eye out for it in your inbox.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out for a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

The case for owning global stocks, not just US. Do You Know The Muffin Man?

.. AND I QUOTE ..

“Used cars don’t face the same import tariffs. The spread between new and used vehicles could expand. There might be better deals to find on the used-car lot in 2025. Eventually, however, things adjust. We would expect the inflationary impact on new cars to trickle down to used cars by a similar amount.”

Rajat Gupta, JP Morgan auto analyst.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing U.S. sector: Consumer Defensive (two biggest holdings: Costco, Procter & Gamble) ⬆︎ 1.3% for the week

Last week’s worst performing U.S. sector: Technology (two biggest holdings: Apple, Microsoft) for the second week in a row ⬇︎ 3.8% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 1.8% last week, is down 5.2% so far this year and ended the week 9.3% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price fell 2.1% last week, is down 9.3% so far this year and ended the week 17.4% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬌ 4.33% (4.33% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.89% (3.94% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.98% (4.00% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.27% (4.25% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.65% (4.60% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.64% (4.59% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Used as a basis for determining many consumer loan rates such as credit cards, home equity and auto.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.65%

One week ago: 6.67%, one month ago: 6.76%, one year ago: 6.79%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on May 7th?

* Unchanged from now .. ⬇︎ 84% probability (86% a week ago)

* 0.25% lower than now .. ⬆︎ 16% probability (14% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed interest rate cuts in 2025?

* ⬌ 3 (unchanged from a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market close on Friday. Data courtesy of CME FedWatch Tool.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffet.

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand.

Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment.

Extreme Greed readings can be associated with possibly too-frothy prices and a sense of “FOMO” with investors chasing rall…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

A Fed week began on Monday with financial markets pretty much on hold. While there was zero probability of an interest rate cut announcement, the Wednesday March meeting of the interest rate-setting committee was still set to include the “Dot Plot & Statement of Economic Projections”; members’ quarterly estimates of where they believe interest rates, inflation and economic growth are heading in the coming months and years. This was bound to make interesting reading in the current uncertain market conditions.

Retail sales data before the open showed an increase in February but less of a rebound from a poor January than had been expected. However, markets mostly took the day off, chilling out ahead of Wednesday’s Fed meeting. Stocks drifted aimlessly around the unchanged line before a bit of a late surge saw the indexes all finish Monday in the green on what was a thankfully drama-free day on the tariff front.

Geopolitics, however, were in motion. Mass death returned to Gaza as the ceasefire unravelled. Trump and Putin began to cozily plot the carve-up of Ukraine. Germany’s parliament voted in historic constitutional changes to allow heavily increased defense spending, massively impacting the economy of Europe’s largest nation.

Stocks opened sharply lower on Tuesday after the respite of two days of gains since the S&P 500 entered a correction. Tech/AI got slaughtered again on the sense that all this stuff is quite simply overpriced right now as a result of an unjustified level of euphoria over the last two years. Tesla’s catastrophic price crash just since New Year’s Day approached 50% after nine straight weeks of declines (another Cybertruck recall and increasing product and showroom vandalism around the world isn’t helping) and Nvidia’s slump in only the last month got to close to 20%. Meta/Facebook had previously been the lone Magnificent Seven stock to escape the carnage of 2025 but it, too, finally went negative for the year on Tuesday. It was another wretched session for the indexes, especially the NASDAQ.

Wednesday was Fed Day and stocks drifted a little higher in advance of the release of the Dot Plot as well as the interpretation of the tone of the Fed’s statement and chairman Powell’s 2:30pm ET press conference.

As expected, the Fed did nothing on interest rates but the Dot Plot implied expectations of two cuts over the rest of 2025 with more to follow in 2026. It marked up inflation forecasts while marking down estimates of economic growth, giving off a strong whiff of stagflation risk.

Powell pretty much admitted in the press conference that the central bank is flying blind right now given the mountain of policy uncertainty that it is up against and that the Dot Plot projections should be viewed as rapidly moving targets.

The stock market continued its march upwards with a sense that stagflation was a (big) problem for another day, but for now Wall Street was just going to enjoy the fact that interest rate cuts are still on the table for this year and next. Interest rates dropped and the indexes all closed nicely higher.

Thursday began with an as-expected Weekly Jobless Claims number and the Bank of England leaving local interest rates unchanged. Trump slammed Powell for not cutting rates and again threatened the sacred independence of the Fed. Stocks flip-flopped between gains and losses over the course of the session but ended up virtually unchanged.

Friday was a “triple witching” day. Wall Street braced for potentially elevated volatility in what is already something of a tinderbox environment. Stocks rolled over again at the open on fears of the approaching dreaded April 2nd expected orgy of tariff impositions which the president once again touted as “Liberation Day” , but recovered slowly after lunch and the derivatives-driven last minute activity inched the indexes just about into the green for both the session and the week.

It’s becoming clear that, given current policy uncertainty, nothing really “bad” has to happen for stocks to plunge like they did on Tuesday. The burden of proof in this market sits firmly with the bulls.

Market bets that enriched investors heading into this year have been mired in a world of pain recently. It’s the case with Big Tech shares, crypto, the US Dollar and the most revered investment strategy of them all: Buy The Dip. The result has been a nightmare stretch for retail bottom-fishers diving back into last year’s winners after a decline.

I happen to agree with a narrative that emerged last week among some analysts that stock markets, particularly tech/AI names, may to some extent be using tariff chaos as a bit of an excuse or smokescreen for orchestrating a pullback from very, very high valuations.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out for a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

Continuing my series of recommended articles on how to approach market corrections like this, “A sane take in a sea of panic” from Ritholtz’s wonderful Callie Cox is great way to think about things right now.

.. AND I QUOTE:

“The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they’re fine.”

Dr. David Kelly, JP Morgan Chief Global Strategist and Head of Global Market Insights Strategy.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing U.S. sector: Energy (two biggest holdings: Exxon Mobil, Chevron) for the second week in a row ⬆︎ 3.3% for the week

Last week’s worst performing U.S. sector: Consumer Defensive (two biggest holdings: Costco, Procter & Gamble) ⬇︎ 0.3% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price rose 0.4% last week, is down 3.8% so far this year and ended the week 8.0% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 0.6% last week, is down 7.8% so far this year and ended the week 16.0% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬌ 4.33% (4.33% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.94% (4.02% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.25% (4.31% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.60% (4.65% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.59% (4.62% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Used as a basis for determining many consumer loan rates such as credit cards, home equity and auto.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.67%

One week ago: 6.65%, one month ago: 6.85%, one year ago: 6.87%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on May 7th?

* Unchanged from now .. ⬆︎ 86% probability (72% a week ago)

* 0.25% lower than now .. ⬇︎ 14% probability (28% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed interest rate cuts in 2025?

* ⬌ 3 (unchanged from a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market close on Friday. Data courtesy of CME FedWatch Tool.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffet.

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Over the weekend, Trump went on TV and pointedly refused to rule out a tariff-fueled recession in the United States. Anybody who attended an eighth grade economics class already understood this risk of course, but for Trump to come out and finally admit it was a new development.

The administration's blasé attitude toward potentially setting off a severe downturn badly rattled Wall Street. The week got under way with no prospect of any clearing of the fog of uncertainty surrounding tariffs and market sentiment was decidedly gloomy as the session began on Monday.

The recent meltdown and non-stop churn of volatility rapidly intensified as investors rushed to get ultra-defensive. Dip-buyers yanked the safety net by sitting firmly on their hands and the session became an absolute horror show for the stock indexes. Big Tech/AI names got especially hammered with the tech-heavy NASDAQ index, which was down 5% at one point, enduring its worst day in years. Contagion spread to previously-well-behaved stock markets in Europe and Asia which also dumped.

There was a brief attempt to recover from the previous day’s wipeout at the open on Tuesday but it was very short-lived as head-spinning chaos quickly returned to tariff-world. At 10am ET, Trump came out and doubled the proposed metal tariffs on Canada to 50% (and at the same time reiterating his 51st state annexation nonsense) in retaliation for the retaliation of his northern neighbor.

This reminded Wall Street that a thin-skinned tit-for-tat tariff policy could get very nasty very quickly in a world where foreign reprisals against US-imposed tariffs is to be fully expected. Stock prices puked again, but then whiplash struck once more as Canada (specifically Ontario) relented on its retaliatory measures and by 2pm ET Trump had canceled the enhanced counter-counter-measures. The stock indexes changed direction to erase at least some of the day’s losses by the close. Traders trudged home dazed and confused.

After the closing bell, the House passed a bill to push back a government shutdown to September 30th and before the open on Wednesday, the Consumer Price Index (CPI) measure of retail inflation came in a touch cooler than expected at 2.8% annualized. A market starved of any good news lately gobbled up these developments and there was a rebound of sorts in the indexes and stocks ended the day a little higher.

It was a busy pre-market on Thursday. The Producer Price Index (PPI) measure of wholesale inflation experienced by manufacturers confirmed the slight softening of inflation. Weekly Jobless Claims were unchanged. The high stakes game of government shutdown chicken moved to the Senate.

Another day, another tariff. Trump turned his sights on Europe this time, floating a fantastical 200% levy on some alcohol and food imports from the EU, reinforcing the idea that there’s no plan here, just random angry noise.

It resulted in another horrible day for the stock market as an early swoon in prices rapidly accelerated into another rout caused by worries that the so-called “uncertainty tax” on the markets is just getting worse and worse. The S&P 500 retreated into official correction territory (the seventh fastest correction in history, representing a loss in total US stock market value of about $5.3 trillion in just 16 trading days), but once again it was Big Tech/AI names that were punished the hardest. As Josh Brown put it, the NASDAQ has become a meat grinder in 2025.

Overnight, breakthroughs were made in the federal shutdown impasse and by the open on Friday it was evident that yet another last moment can-kicking compromise would likely be cobbled together. BTFDers were finally triggered by the week’s bloodshed and went shopping.

Stocks at long last had themselves a really good session, despite data showing a massive dive in consumer sentiment about the outlook for the economy with long-term inflation expectations among Americans higher than at any time since 1993. But the day’s solid gains didn’t come close to rescuing what was a fourth straight week of losses.

Right now, there are only three things moving these markets:

* Tariff Threats/Policy Chaos

* Economic Growth

* Fed Policy Expectations

Those factors have all contributed to the recent correction and until we see improvement in each of them, it’s unlikely this pullback will meaningfully reverse.

Things get better if:

* it becomes clear that tariffs are ultimately just a negotiating tactic and nothing long-lasting is implemented. Alternatively, the administration finally provides a clear, realistic and consistent trade policy that reduces or eliminates uncertainty and whiplash.

* economic data remains solid and pushes back against the policy-driven growth scare that’s currently pressuring markets.

* Fed officials turn more dovish and a June interest rate cut becomes widely anticipated.

Things get worse if:

* Trump follows through with existing tariff threats, with April 2nd seeming a key date. Meanwhile, the headline chaos continues with no end in sight, paralyzing business decision-making/investment and consumer spending.

* major economic data points drop sharply, reinforcing a growth scare and increasing recession fears.

* higher inflation and/or tariff anxiety causes the Fed to hold off on making further interest rate cuts.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out for a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

The biggest global losers from all the tariff talk? You and me. The numbers don’t lie.

QUOTE ..

“Here’s the interesting thing about the stock market: it cannot be indicted, arrested or deported ; it cannot be intimidated, threatened or bullied; it has no gender, ethnicity or religion; it cannot be fired, furloughed or defunded ; it cannot be primaried before the next midterm elections ; and it cannot be seized, nationalized or invaded.

It’s the ultimate voting machine, reflecting prospects for earnings growth, stability, liquidity, inflation, taxation and predictable rule of law.”

Michael Cembalest, Chairman of Market and Investment Strategy for J.P. Morgan Asset and Wealth Management.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing U.S. sector: Energy (two biggest holdings: Exxon Mobil, Chevron) ⬆︎ 2.4% for the week

Last week’s worst performing U.S. sector: Consumer Cyclical (two biggest holdings: Amazon, Tesla) ⬇︎ 4.7% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 2.4% last week, is down 4.0% so far this year and ended the week 8.2% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price fell 1.5% last week, is down 8.2% so far this year and ended the week 16.3% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.33% (4.34% a week ago)

* 2 YEAR TREASURY ⬆︎ 4.02% (3.99% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.31% (4.32% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.65% (4.66% a week ago)

* 30 YEAR TREASURY ⬌ 4.62% (4.62% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Used as a basis for determining many consumer loan rates such as credit cards, home equity and auto.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.65%

One week ago: 6.63%, one month ago: 6.85%, one year ago: 6.74%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting me…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Exhausting deadlines about tariffs are not going away (Warren Buffet described them as “an act of war” last week) and market volatility is an inevitable result.

Despite the next tariff round looming within 24 hours, markets still seemed convinced on Monday morning that they would not in fact be implemented as promised and stocks initially moved higher at the open.

Trump then came out and said there was “no room left” for Canada, Mexico and China to avoid them, and that they were “all set” and would go ahead as planned the following day. He even went on to increase China’s additional levy from 10% to 20%.

Markets totally freaked out. Stocks went into a hard tailspin, experiencing their worst day of the year so far. The Tech and Energy sectors got particularly annihilated. Interest rates fell as investors abandoned stocks and fled into the perceived safety of bonds, which are now outperforming stocks since Trump was elected. Asian and European stock markets got the memo and nose-dived.

Tariff Tuesday arrived with no last minute reprieve. Canada and China immediately retaliated with powerful levies of their own on American imports. Retailers like Target quickly announced that resulting price increases to shoppers at their stores would take effect within days. Stocks resumed their dramatic slide. BTFDers were eventually triggered by the massacre and stopped the worst of the bleeding, eventually erasing some but far from all of the day’s losses.

After the close, confusion reigned as Commerce Secretary Lutnick implied that the tariffs could possibly be scaled back as soon as the next day. but there was no sign of such backtracking when Trump doubled down in his speech to Congress, identifying April 2nd as a key date for further and wider implementation, which he acknowledged may cause “a little disturbance”.

Stock indexes went into wait-and-see mode on Wednesday until more clarity emerged about rumored tariff carve-outs and they didn’t have to wait long as temporary relief for car-makers was announced by the White House. Wall Street’s reaction was moderately positive and equities finished the day higher. Interest rates reversed course and moved back up again.

That brief burst of optimism swiftly evaporated on Thursday. Stocks dropped like a stone at the open before tariff chaos blew up again with Canada and Mexico suddenly being granted partial reprieves until April 2nd.

But Wall Street is frankly fed up with all this amateurish day-to-day flip-flopping and clearly feels that the only safe thing to do right now is to sell stocks, so there was noticeably no positive bump on the news. We ended up with another heavy down-day on our hands. Highly-valued tech stocks continued to bear the brunt of the pain, with Tesla and Nvidia particularly brutalized.

The S&P 500 closed lower on Thursday than where it was on election day and also below its closely-watched 200-day moving average for the first time since the lows of October 2023. The NASDAQ index moved into official correction territory (down 10%+ from its recent record high achieved just two weeks earlier). And all that with the potential volatility of the Jobs Report and a big speech from Fed chairman Powell on deck for the next day.

The Jobs Report came out pre-market on Friday and markets breathed a small sigh of relief as the numbers proved to be fairly drama-free relative to expectations. The bullet-dodge, however, failed to lift stock prices which sank lower again amidst the continued backdrop of absurd tariff mayhem and uncertainty and a more broadly deteriorating geopolitical environment.

It took the calming tones of Powell to come to the rescue to restore confidence to markets. Finally, here was an adult in the room, acknowledging with his usual understatement that while there is increased uncertainty in the US economic outlook, the economy “continues to be in a good place”.

The indexes recovered to end up in the green for the session but still deeply in the red for what was a difficult week. Both the S&P 500 and the NASDAQ have recorded their largest three-week percentage decline since the dark days of 2022.

Worries about a risk of stagflation (rising inflation and stagnant growth) are rapidly growing on fears that the new administration’s policies will bolster consumer price increases and impede economic expansion. Stagflation is especially concerning because of the very limited range of tools available to deal with it.

Put simply, the Fed is in a pickle. Tariffs are incontestably inflationary and that is a major roadblock when it comes to Fed interest rate cuts. Yet the longer it waits to cut, the more the central bank risks pushing the economy towards the possibility of a recession that will be exacerbated by those very same tariffs.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out for a complimentary no-obligation discovery call.

ARTICLE(S) OF THE WEEK ..

Two great articles with some of the best advice I have seen on how to think about and deal with difficult stock market conditions. Please read them!!

Rubin Miller

Josh Brown

THIS WEEK’S UPCOMING CALENDAR ..

A quiet upcoming week on the economic data front but there are earnings reports due from Adobe, Dick's Sporting Goods, Kohl's, Dollar General, DocuSign and Ulta Beauty.

Oh, and the US government is scheduled to shut down on Friday.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing U.S. sector: Healthcare (two biggest holdings: Eli Lilly, UnitedHealth Group) ⬆︎ 0.2% for the week

Last week’s worst performing U.S. sector: Financials (two biggest holdings: Berkshire Hathaway, JPMorgan Chase) ⬇︎ 5.9% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 3.3% last week, is down 1.8% so far this year and ended the week 6.1% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price fell 4.3% last week, is down 6.8% so far this year and ended the week 15.1% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.34% (4.32% a week ago)

* 2 YEAR TREASURY ⬌ 3.99% (3.99% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.32% (4.24% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.66% (4.55% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.62% (4.51% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Used as a basis for determining many consumer loan rates such as credit cards, home equity and auto.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.63%

One week ago: 6.76%, one month ago: 6.89%, one year ago: 6.88%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on March 19th?

* Unchanged from now .. ⬇︎ 88% probability (96% a week ago)

* 0.25% lower than now .. ⬆︎ 12% probability (4% a week ago)

What is the most commonly-expected number of 0.25% Fed interest rate cuts in 2025?

* ⬆︎ 3 (up one from a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market close on Friday. Data courtesy of CME FedWatch Tool.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffet.

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicator…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

The German federal elections on Sunday panned out mostly as expected and hoped for by financial markets with political stability still within reach after some negotiation in the coming weeks, avoiding a nasty surprise that would have hurt global stock prices.

Wall Street briefly rebounded at the open on Monday morning after a difficult prior week, but doubts about the economy soon set in again, the BTFD crowd quickly went on strike and the S&P 500 slid below 6000 to finish in the red once more. The sell-off was led by Big Tech/AI names. Interest rates continued to slide to their lowest levels of the year.

Stocks tried to slip into a nice tranquil wait-and-see mode on Tuesday with highly-anticipated Nvidia earnings on deck the following day, but a general sense of unease about recent economic data, upcoming tariff deadlines, the chaotic federal workforce shakeout and geopolitical shenanigans pushed prices lower again for a fourth straight day of losses.

Again, Big Tech/AI were the clear laggards. The Seven are looking not so Magnificent any more, collectively moving into an official correction (down 10%+ from December’s highs).

Nvidia Day arrived on Wednesday with the earnings report due after the close. Stocks jumped sharply higher out of the gate, but then turned south following confused and contradictory messaging from Trump (who, stunningly, appeared not to have read the Tariff Timeline in my market report last week) on the timing of levies on Canada and Mexico and he also vaguely alluded to possibly some sort of upcoming European Union tariffs of some kind at some point. Maybe. And then there was also the excruciating sight of Musk babbling incoherently at a US government cabinet meeting (see OTHER NEWS below). The indexes ended the day with only marginal gains, but at least ended their losing streaks.

Nvidia reported rising sales and earnings figures that generally matched most expectations and gave an upbeat revenue forecast. The stock price reaction was muted in the after-market with traders accustomed to blowout results from the chipmaker appearing unsure how to proceed with a “good-but-not-great” report.

As was becoming something of a pattern, the indexes opened higher again on Thursday morning, but swiftly collapsed to finish the session significantly lower. The large decline was the result of more of what Goldman Sachs called “headline roulette”, with Trump insisting that tariffs on Canada and Mexico are set to start the following Tuesday (and not in April, as he had stated just the day before) and also announced he was tacking on yet more additional tariffs on China.

Markets also decided that, upon further review, they didn’t like the fact that the Nvidia earnings report was decent enough but still failed to blow estimates out of the water and that the AI boom might just be failing to live up to the hype. Nvidia’s stock sank 9% on the day, dragging most Mega Cap names down with it. By the closing bell, all of the S&P 500’s 2025 gains and all of the NASDAQ’s gains since the election in November had been wiped out.

The heavy selloff and risk-off sentiment spilled into Asia and Europe overnight but by the time the baton was handed back to New York on Friday morning, investor focus had at least temporarily shifted to the Fed’s preferred read on inflation, the Personal Consumption Expenditures Price Index (PCE) which came in right where it was expected to be at a mild 2.5% annualized rate.

Once more, stocks sprang out to another positive start when the opening bell rang, with signs that automated end-of-month program trading was kicking in and dip-buyers were staging a cautious return. The rally was temporarily derailed when Ukrainian “dictator” Zelensky met with Trump and Vance at the White House in what quickly dissolved into an unhinged hostile altercation in full view of the world’s press. A publicly-humiliated Zelensky was then unceremoniously booted off the White House grounds before any deals or joint statements could be signed off on.

No media outlet seems prepared to say this yet, but it seems to me now that the only foreseeable end to the conflict now is a Russian victory and what will be essentially a Ukrainian surrender, all enthusiastically endorsed and brokered by the United States.

Once they had picked their jaws up off the floor after watching the rumble in the Oval Office, traders resumed bottom-fishing for stocks after a rough couple of weeks and we finally had a session where prices ended nicely in the green.

The bottom line here is that this is a highly uncertain and volatile environment, but the underlying fundamentals of the post-October 2022 rally (solid growth, Fed rate-cutting still on the table, inflation declining) are still just about hanging in place.

However, the S&P 500 just completed just about its weakest month since April of last year, the NASDAQ and Small Caps did even worse and everything went under water for 2025. International (particularly European) stocks are kicking the US’ ass. A new crypto rout is well under way (see OTHER NEWS below). International trade tariffs might be actually be implemented in the next couple of days. The US government is scheduled to shut down on March 14th, at a time when it is going to war with its own federal workforce. The geopolitical landscape is undergoing a once-in-a-generation seismic shift as the 80-year old western security alliance fractures before our eyes.

Welcome to March 2025.

Strap in.

OTHER NEWS ..

Au Revoir, Auf Wiedersehen, Cheerio .. An anti-Musk backlash is showing up in Tesla’s sales, which plunged by 45% last month across Europe and saw a surge in demand for its rivals’ vehicles. While the electric vehicle maker’s numbers were hit by some production line issues, the main reason is seen to be Musk’s antics repelling European consumers, including cheerleading for Nazis in Germany (where Tesla sales fell by 60% in January alone) and openly calling for the overthrow and imprisonment of recently-elected UK Prime Minister Starmer.

Showrooms have been vandalized in the UK, the Netherlands and elsewhere. Longtime Tesla owners have slapped on bumper stickers publicly apologizing for their purchase and disavowing Musk.

Meanwhile, the stock price has been pounded. It has plummeted over 40% from its high of mid-December and has lost more than $400 billion in value since Trump's inauguration, that’s more than any other automaker in the world is even worth.

Tesla carries a high weighting in the S&P 500 and NASDAQ indexes.

Another Meltdown .. Carnage in crypto-world on the back of the massive hack the previous week, falling interest rates, the Magnificent Seven stock price retreat, institutional profit-taking, retail margin calls, a meme-coin scandal in Argentina and general uncertainty in an industry that is no stranger to periodic massive meltdowns. There’s some disappointment that its hero in the White House appears to be not particularly following through on his bullish campaign rhetoric aimed at getting the crypto bros onside for the election.

Sentiment has completely rolled over and the price of Bitcoin fell below $79k last week, a more than 25% drop from its recent high of just a month earlier and is now very much in an official bear market.

ARTICLE OF THE WEEK ..

Owning individual stocks rather than ETFs can be damaging to your wealth.

Here are the 15 stocks that have destroyed the most investor wealth in the last ten years.

THIS WEEK’S UPCOMING CALENDAR ..

Tuesday and Friday this week look like the days to watch out for.

Tuesday (possibly) marks the beginning of the promised Canada and Mexico tariffs and Friday is Jobs Day. The number of new payrolls in February is expected to be around +133k with unemployment anticipated to be stable at 4.0%.

There are still some earnings reports, mostly in the retail sector, to come out this week including from Target, Best Buy, Costco, Macy’s, Kroger and Burlington Stores.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtes…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

US markets were closed on Monday for President’s Day. This left the focus on Europe where local stock markets, which have outperformed US stocks so far in 2025, were priced for what they perceive as a near-perfect outcome from the high-stakes German federal election coming up this weekend, which of course raises the risk of a nasty surprise if that doesn’t happen. A chasm is also opening up between Europe and the Trump administration over both tariffs and the Ukraine conflict.

Most European stocks fell on Monday but defense names spiked dramatically on the prospect of increased military spending in the region and kept the indexes looking buoyant.

US markets reopened on Tuesday enjoying a well-deserved break from new tariff talk (see OTHER NEWS .. TARIFF TIMETABLE EDITION below) for the first time in what seemed like ages with Trump’s attention diverted by attempts in Saudi Arabia to resolve the Russia/Ukraine conflict by cozying up with Russia while sidelining Ukraine (who Trump blamed for Russia’s invasion and whose president he called a “dictator without elections” ) and its European neighbors from any discussions.

Interest rates pushed higher, but the stock indexes celebrated the slow news day by going nowhere until a late surge propelled the S&P 500 to a small gain, but it was still enough to establish a new all-time record closing high for the index.

The holiday from tariff talk was short-lived as Trump came out and alluded to “something like” 25% automobile, chip, wood & lumber and pharmaceutical & medical levies supposedly coming sometime in April. As usual there was no detail. He is said to have specifically threatened top pharma company executives with harsh targeted tariffs if they continued to use overseas plants to produce any of their drugs.

But Wall Street clearly has tariff fatigue, just rolling its eyes and getting on with life on Wednesday. Stocks climbed modestly higher on the back of what was described as a “nothing-burger” from the published minutes of the last Fed meeting, but obviously reaching yet more record highs in the process. Crickets in the bond market.

Stocks fell quite hard from their record-setting levels on Thursday as Walmart’s poor results infected the whole retail sector as it seemed to confirm the previous week’s fragile Retail Sales data. Anecdotal evidence is growing that consumers are dealing with stubborn prices and high borrowing costs by turning to credit cards and other debt to support their spending. And a steadily-rising amount of that debt is starting to go bad.

Increasing geopolitical name-calling on Thursday and the fact that the US administration is falling squarely in line behind Russia is casting doubt in the minds of Wall Street on the likely acceptability or sustainability of any kind of settlement that could be cobbled together between Trump and Putin and then imposed on an unwilling Ukraine.

Cryptocurrencies got smacked around after what may be the biggest crypto hack in history. Crypto exchange Bybit admitted it had lost almost $1.5 billion-worth of mostly Ethereum client tokens to hackers who took control of offline wallets. Investigators are already pointing the finger of blame at North Korea for the looting.

Stocks opened lower on Friday, partly dragged down by continued woes at UnitedHealth Group, now the subject of a Department of Justice fraudulent billing probe. Losses accelerated as the session wore on with disappointing housing data and consumer sentiment reported to be plunging on the back of tariff fears and sticky inflation. There was also the general profit-taking effect that can sometimes accompany new record highs for the S&P 500. It all added up to the worst day of the young year for stocks. Bonds rallied as interest rates continued lower.

Meta/Facebook and Amazon are the only Magnificent Seven names to have outperformed the S&P 500 index so far in 2025 and the group as a whole closed on Friday in negative territory. Meanwhile, the number of other companies outpacing the index’s gain has soared to start the year. As of last week, a full 48% of the S&P 500 stocks are outperforming the index in 2025, that’s double the 24% in all of 2024.

Solid economic growth is still just about supporting a stock market that is entirely priced for good news in the face of other headwinds, but if it suddenly slows further, then all of the other issues (tariffs, sticky inflation, geopolitics) will suddenly take center stage and potentially become much more of a negative influence on stock prices.

OTHER NEWS .. (TARIFF TIMETABLE EDITION)

* Tariff Threats That Have Been Implemented And Are In Force:

10% tariff on all Chinese imports. On 2/4, an additional 10% tariff on all imports from China (and this includes on electronics and other consumer items) was imposed. Because of inventory already in place, consumers likely haven’t experienced much of this price increase, but that will change in the coming weeks as fresh imports are shipped from China that are subject to the 10% duty.

* Tariffs That Have Been Announced With An Expected Implementation Date:

25% tariff on all steel and aluminum imports starting on 3/12. The Trump administration says it will impose a 25% on all steel and aluminum imports (so not just from China) starting in on that date, which will clearly increase the cost of foreign steel to US manufacturers.

* Tariff Threats That Have Been Delayed But Not Canceled:

25% tariff on imports from Canada and Mexico starting on 3/4. This is the date of the end of the one-month delay on the tariffs on Canada and Mexico and we’ll see if there can be enough concessions from the two countries to prevent implementation. If put in place, the key will be any carve-outs. If cars and energy (the two main imports from Mexico and Canada, respectively) are exempted, these tariffs will lose a lot of their bite.

* Declared Yet-to-Be-Determined Tariffs (No Implementation Date Set):

Reciprocal tariffs on major trade partners and trade reviews and tariff recommendations from other parts of government and 25% global tariffs on automobile, chip, wood & lumber and pharmaceutical & medical products. No details are available about the timing of these proposed levies or any possible exemptions.

ARTICLE OF THE WEEK ..

Big Tech Is Going Through A Mid-Life Crisis.

THIS WEEK’S UPCOMING CALENDAR ..

The last week of February will be a big one for Wall Street with Nvidia's earnings and the Federal Reserve's preferred inflation gauge serving as highlights.

In addition to Nvidia, Lowe’s, Home Depot, Salesforce, eBay, Hewlett Packard, Anheuser-Busch, Zoom, Warner Bros, Workday, TJX, Snowflake, Domino's Pizza and Autodesk will also report Q4 2024 earnings this week.

The Personal Consumption Expenditures (PCE) price index measure of inflation for January comes out on Friday. Forecasts are for a 2.5% year-over-year increase, down slightly from December.

We will also see the second estimate (of three) of Q4 2024 Gross Domestic Product (GDP) on Thursday.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing U.S. sector: Energy (two biggest holdings: Exxon Mobil, Chevron) ⬆︎ 1.4% for the week.

Last week’s worst performing U.S. sector: Consumer Cyclical (two biggest holdings: Amazon, Tesla) ⬇︎ 3.7% for the week.

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 1.6% last week, is up 2.4% so far this year and ended the week 2.1% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price fell 3.7% last week, is down 1.4% so far this year and ended the week 10.2% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.32% (4.34% a week ago)

* 2 YEAR TREAS…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com