THE BLINK MOMENT
Hello and once again thank you for reading this week’s No Straight Lines Investments blog, I appreciate your time and attention.
The week began with a buyers strike in equities on Monday, volumes 35% below the ytd average and investors exhausted by the negative tariff and Jerome Powell rhetoric.
After Monday’s close, the S&P 500 had fallen more since inauguration than under ANY other presidency since 1928, thank you Bespoke Investments:
Table from Bespoke Investments
President Trump and his team have repeatedly denied that they care about the stock market.
However
There is an enormous difference between disappointing stock market returns and presiding over the worst market performance of any President in history.
President Trump blinked. If you don’t get my reference, you need to watch the excellent murder/mystery The Residence, on Netflix.
It simply means that the President revealed his true self when he insisted he was not going to fire Chair Powell, and Secretary Bessent indicated a path to lowering tariffs with China substantially.
President Trump most definitely cares about his legacy.
For those of us who have maintained that the peak of tariff uncertainty was Liberation Day on April 2, the walk back from the brink by the President was a welcome reprieve.
And yet, tariffs as currently constructed, exceed levels imposed under the disastrous Smoot-Hawley.
Most economists (GS, EvercoreISI, JPM) believe that tariffs will settle in the 15% range.
Whilst it is impossible to know what is truly priced into the market, the tally of bounces in the major indexes this week, suggests pessimism had reached extremes: (SPX +4.6%, NAS100 +6.4%, TSX +2.1%, STOXX600 +2.8%).
Q1 earnings season thus far (36% of S&P 500 companies have reported) has been better-than-feared, with the caveat that Q1 was mostly unaffected by tariffs and therefore not representative of the go-forward business climate.
In attempting to decipher where the market goes from here, I will be referencing a combination of fundamental, technical, flow and other data.
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If this is it, thanks for reading and the best of luck with your investments!
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