April 11th Market Overview

Happy Thursday.

Howdy everyone - markets helping ignite the good vibes to start the weekend off. I shorted the volatility yesterday, and the $VIX is down 10% but $VXX is down barely 2%. This is why I stick to equities…

White House expressed optimism about a potential China trade deal while consumer sentiment hit multi-year lows. Bond yields ripped.

P.S. Sorry about yesterdays Sponsor, it was a one click subscribe to a news outlet that leaned heavily to a political side. The Ad copy was awkward as hell and I didn’t see it before running it(its a code snippet inserted). This wont happen again and I’ll give a BOLD warning if something is one click subscribe.

I’m in the business of free daily market overviews not politics.


Let's dig in...

Executive Summary

• Markets rebounded as White House officials indicated President Trump feels “optimistic” China will seek a trade deal
  

• Consumer sentiment plunged to its lowest reading since June 2022, with one-year inflation expectations hitting 6.7% - the highest level since 1981
  

• China raised retaliatory tariffs on US goods to 125% in response to the confirmed 145% US rate on Chinese imports
  

• Bond market experienced historic volatility with the 10-year Treasury yield recording its largest weekly gain since 2021

Market Overview

Key Market Drivers

1. Trade Policy Developments: Stocks moved higher Friday afternoon following White House comments indicating optimism about a potential China deal. This came after China announced it would increase duties on US imports to 125% from 84%, effective Saturday. The 90-day pause on tariffs for approximately 75 countries announced Wednesday continued to influence market sentiment.
   

2. Consumer Confidence Collapse: The University of Michigan survey showed sentiment dropped to 50.8 from 57 last month, falling below the expected 53.8. One-year inflation expectations jumped to 6.7% from 4.9%, reaching the highest level since 1981. Long-run expectations also rose to 4.4% from 4.1%.
   

3. Heightened Volatility: The CBOE Volatility Index remained elevated near 44 after spiking above 50 earlier this week. The major indices experienced historic swings, including the S&P 500’s third-largest single-day gain since World War II on Wednesday, followed by a sharp reversal Thursday.
   

4. Safe Haven Shift: Gold reached a new record above $3,200 per ounce while Treasury bonds sold off. This unusual pattern suggests investors are reconsidering traditional safe-haven assets amid current economic uncertainty.

Stock Spotlight

Apple $AAPL ( ▲ 2.21% ) shares climbed Friday. The stock moved toward a weekly gain after earlier losses when US tariffs against China increased. The company remains particularly exposed to US-China trade tensions.

JPMorgan Chase $JPM ( ▼ 0.63% ) advanced after reporting Q1 revenue of $46.01 billion, exceeding analyst expectations of $44.11 billion. The bank kicked off earnings season for major financial institutions.

Nvidia $NVDA ( ▼ 0.2% ) rose Friday and led the “Magnificent Seven” stocks for the week. The AI chipmaker benefited from Wednesday’s broad market rally following the tariff pause announcement.

Tesla $TSLA ( ▲ 0.02% ) declined after removing the “order” button for its US-made Model S and X vehicles on its China website. The company also introduced a cheaper Cybertruck trim in the US market.

Frontier Group $ULCC ( ▼ 6.23% ) shares fell after the airline cut its Q1 outlook and withdrew full-year guidance. The company cited weaker-than-expected demand and economic uncertainty.

Big Name Updates

JPMorgan Chase $JPM CEO Jamie Dimon stated the economy faces “extreme turbulence” from geopolitics, tariffs, and trade wars. He noted clients show increased caution on deals and investments while consumer spending holds steady.

BlackRock $BLK CEO Larry Fink offered a stark assessment: the US economy is “very close to, if not in, a recession now.” He emphasized uncertainty will cause “a slowdown across the board” until there’s more clarity on trade policy.

Morgan Stanley $MS ( ▲ 0.92% ) beat expectations with earnings of $2.60 per share on $17.74 billion revenue, compared to analyst projections of $2.20 per share and $16.58 billion.

Wells Fargo $WFC ( ▲ 0.94% ) reported a 16% year-over-year increase in Q1 earnings. CEO Charlie Scharf supported addressing trade barriers but stressed that “timely resolution which benefits the US would be good for businesses, consumers, and the markets.”

Other Notable Company News

Home Improvement sector data from Bank of America shows spending declined 2% year-over-year in March after an 8% drop in February. Consumers shifted from DIY projects toward professional services, with 6 out of 10 building categories seeing year-over-year gains. $HD ( ▲ 0.94% ) 

Retail sector analysis from JPMorgan $JPM ( ▼ 0.63% ) warned most retailers face higher tariff pressure despite the 90-day pause. Companies with more grocery/consumable sales should see less margin impact due to greater domestic sourcing.

Stellantis $STLA ( ▲ 5.64% ) reported global shipments fell to 1.2 million vehicles in Q1, representing a 9% year-over-year decline. Lower North American production, extended holiday downtime, and product transitions contributed to the drop.

Steel industry contacts cited by Morgan Stanley $MS ( ▲ 0.92% ) indicated prices have peaked and should decrease as customers work through inventory accumulated ahead of tariff announcements. Prices may fall to around $800 per short ton later this year.

Sector Watch

Bond Market

The Treasury market faced extreme volatility this week (everything did):

• 10-year yield reached 4.53% - largest weekly gain since November 2021

• 30-year yield hit 4.93% - biggest weekly rip since June 1982

• Rising yields signal falling bond prices and waning appetite for US debt

• Boston Fed President Collins: markets "continue to function well" despite turmoil

Policy Watch

• Current US tariff structure features three tiers: 145% duty on Chinese goods, 25% tariffs on specific items including aluminum and certain goods from Canada/Mexico, and a baseline 10% levy on most other imports. A 90-day pause applies to approximately 75 countries to allow time for deal negotiations.
  

• China’s finance ministry stated further US tariff hikes would “no longer make economic sense” and that there is “no longer a market for US goods imported into China” at these rates.
  

• New York Fed President John Williams revised his outlook dramatically, now projecting economic growth “below 1%” this year, inflation reaching 3.5-4%, and unemployment rising to 5%. These figures mark a significant downgrade from the Fed’s March projections.
  

• The European Union’s trade representative heads to Washington on Sunday to “try and sign deals,” indicating ongoing efforts to navigate the complex trade environment and potentially avert wider tariff implementations.
  
  

What to Watch

1. US-China Trade Developments: Watch for official statements from both governments about potential negotiations.

   • The White House claims phones are “ringing off the hook” from countries seeking deals

   • Any direct communication between Presidents Trump and Xi would signal potential progress
     

2. Consumer Behavior Response: Future spending reports will reveal whether the sharp drop in sentiment translates to reduced economic activity.

   • Retail sales data and corporate earnings will provide early signals

   • Home improvement sector continues showing a shift from DIY to professional services
     

3. Bond Market Stability: Monitor whether the unprecedented yield movements stabilize or continue.

   • Further volatility could indicate deeper concerns about US debt sustainability

   • Watch for any signs of Federal Reserve intervention in markets
     

4. Earnings Season Narratives: As more companies report Q1 results, listen for how they describe tariff impacts.

   • Tech companies with China exposure will provide valuable insights

   • Supply chain adjustments and pricing strategies will reveal corporate adaptations to the new trade landscape

P.S. 

Please fuel my coffee pot with a quick click to our sponsor today.

Thanks for reading 🙂

- John