April 10th Market Overview

Happy Thursday.

Alright we are all back in the thick of it aren’t we? My positive take from this week is - Tariff talk and trade agenda is steering towards China rather then the whole world.

I think that helps price discovery become more efficient in the markets vs what was happening prior. Things are slowly becoming more “certain”. I think the next big move is making a deal with China or them retaliating and raising Tariffs higher.

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Let's dig in...

Executive Summary

• Markets reversed a good bit of yesterday's gains as US-China trade tensions escalated
  

• White House confirmed tariffs on Chinese imports total 145%
  

• March CPI showed inflation cooling with prices down 0.1% month-over-month
  

• Energy sector led declines as oil fell below $60 per barrel

Market Overview

Key Market Drivers

1. US-China Trade War Intensifies: The White House clarified that tariffs on Chinese goods total 145%. This combines a 125% base rate with a 20% fentanyl-related duty. Rabobank analysts called it "a direct confrontation between the US and China." Selling accelerated on this news.
   

2. Inflation Cools: March CPI data showed headline inflation up 2.4% year-over-year, below the 2.5% forecast. Prices fell 0.1% month-over-month versus an expected 0.1% increase. Core CPI rose just 0.1% monthly and 2.8% annually. Housing costs increased at their slowest pace since November 2021.
   

3. Uncertainty Rules: Renaissance Macro's Neil Dutta described the environment as "more 'sell the rip' than 'buy the dip'" due to "prolonged uncertainty." Northwestern Mutual's CIO Brent Schutte stated, "There's more uncertainty as we negotiate and figure out what actually happens towards the end of the next 90 days."
   
   I don’t know if I personally agree with that sentiment. We are in a more certain place then we were a few days ago.
   

Stock Spotlight

Tesla $TSLA ( ▼ 0.04% ) fell after yesterday’s significant gain, with focus returning to the company’s exposure to Chinese manufacturing and potential retaliatory measures

CarMax $KMX ( ▲ 2.87% ) dropped after reporting quarterly earnings that missed expectations, compounded by tariff concerns impacting the used car market

U.S. Steel $X ( ▼ 1.98% ) declined after President Trump stated he doesn’t want the company “to go to Japan,” casting doubt on Nippon Steel’s $14 billion acquisition bid

Nvidia $NVDA ( ▲ 3.12% ) pulled back from recent highs as investors reassessed potential supply chain disruptions related to trade tensions

Big Name Updates

Apple $AAPL ( ▲ 4.06% ) fell amid vulnerability to escalating US-China tensions given its significant manufacturing presence in China

Meta Platforms $META ( ▼ 0.5% ) declined despite having less direct Chinese manufacturing exposure

Amazon $AMZN ( ▲ 2.01% ) dropped as investors weighed potential retail pricing impacts and consumer demand effects

Microsoft $MSFT ( ▲ 1.86% ) showed relative resilience compared to other tech giants

Alphabet $GOOG ( ▲ 2.59% ) demonstrated the least volatility among major tech names

Other Notable Company News

Harley-Davidson $HOG ( ▲ 4.89% ) fell following board member Jared Dourdeville’s resignation, adding governance concerns to tariff worries

Homebuilders Toll Brothers $TOL ( ▲ 1.22% ), D.R. Horton $DHI ( ▲ 1.62% ), and Lennar Corporation $LEN ( ▲ 0.72% ) faced pressure after Wells Fargo warned tariffs would drive up construction costs

Constellation Brands $STZ ( ▲ 0.48% ) dropped after issuing full-year guidance below analyst expectations

Janover $JNVR ( ▲ 13.88% ) bucked the broader trend, rising after announcing completion of its first purchase of Solana token

Capri Holdings $CPRI ( ▲ 0.14% ) declined following news that Prada Group agreed to acquire the Versace brand for $1.375 billion

Carvana $CVNA ( ▲ 1.25% ) fell alongside other used car retailers amid softening demand and pricing concerns

Sector Watch

Bond Market

• 10-year Treasury yield fell to 4.38% amid market uncertainty

• U.S. budget deficit now exceeds $1.3 trillion for first half of fiscal 2025

• March interest payments reached $93 billion; year-to-date total hits $582 billion (up $60 billion from last year)

• Capital Economics' Paul Ashworth identified bond market weakness as a key factor driving the administration's tariff pause decision

Policy Watch

• Trump on extending the 90-day tariff pause: "We'll have to see what happens at that time"

• European Union announced a matching 90-day pause on retaliatory tariffs against U.S. goods

• Commerce Secretary Lutnick predicted a "Golden Age" with an "exploding" economy

• Treasury Secretary Bessent downplayed market volatility: "Up two [and] down one isn't a bad ratio"
  
  

What to Watch

1. Fed Response to Tariff Inflation:

   • Kansas City Federal Reserve President Jeffrey Schmid expressed concern about tariff-induced inflation rather than slower growth

   • Watch for signals about how the Fed might adjust its rate path if trade policies drive up prices
     

2. Corporate Earnings & Guidance Adjustments:

   • Companies may use tariff uncertainty as cover for withdrawing guidance or announcing efficiency measures

   • Delta Air Lines $DAL and Walmart $WMT have already adjusted forecasts

   • Pay attention to upcoming earnings reports for similar adjustments and commentary on navigating the tariff landscape
     

3. Tariff Negotiations Progress:

   • The 90-day window creates space for potential trade deals

   • Monitor communications about possible extensions or expiration as the deadline approaches

   • Any signals about changes will likely impact market certainty
     

4. US-China Relations:

   • China recently escalated its tariffs against U.S.-made goods to 84%

   • Watch for signs of further escalation or potential dialogue between the world's two largest economies

   • The interaction between these nations will significantly influence market direction

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Thanks for reading 🙂

- John