April 15th Market Overview

Happy Tuesday.

Markets edged around flat as U.S.-China trade tensions escalated. China targeted Boeing directly, instructing airlines to halt new plane orders. Financial stocks provided a bright spot with Bank of America and Citigroup beating earning expectations.

VIX falling below 30 from last week's peak near 60 is a good sign people are feeling a bit more stable with their positions.

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Let's dig in...

Executive Summary

• China escalated trade tensions by instructing its airlines to stop placing new orders for $BA ( ▼ 1.58% ) jets and requiring approval for deliveries of aircraft already ordered.
  

• Wall Street trading desks are capitalizing on market volatility, with bank earnings exceeding expectations thanks to strong trading revenue.
  

• President Trump announced he is considering at least 15 trade proposals and wants to personally sign off on all deals, with the White House suggesting some agreements could be announced “very soon.”
  

• Market volatility has decreased significantly, with the VIX falling below 30, indicating reduced immediate fear among investors.
  

Market Overview

Key Market Drivers

1. Trade Tensions Escalate: China moved beyond simple tariffs by directly targeting Boeing $BA, ordering airlines to halt new plane orders. Beijing’s multi-pronged approach includes:
   

   • Implementing 125% tariffs on U.S. goods

   • Adding dozens of companies to export-control lists

   • Restricting rare-earth exports needed for defense equipment
     

   President Trump declared “the ball is in China’s court,” reinforcing his firm stance. Meanwhile, his hint at pausing auto tariffs temporarily lifted automotive stocks.
   

2. Bank Earnings up on Volatility: Market turbulence has become a profit center for Wall Street trading desks. Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley all reported strong trading revenue in Q1. Their performance lifted the entire financial sector, with the SPDR S&P Bank ETF $KBE ( ▲ 1.5% ) climbing nearly 2%.
   

3. Economic Signals Show Mixed Picture: Contradictory indicators have emerged about economic health:
   

   • Bank of America CEO Brian Moynihan reported “consumers are still spending”

   • Albertsons observed customers becoming more budget-conscious

   • Import volumes at major West Coast ports declined in March after earlier front-loading

   • Former Trump advisor Gary Cohn warned of elevated recession risk while noting it’s not imminent if consumer spending holds
     

4. Market Fear Subsides, Caution Remains: The VIX dropped below 30 from last week’s extreme levels near 60, suggesting immediate panic has eased. However, experts warn volatility isn’t over:
   

   • JPMorgan strategist Dubravko Lakos expects continued market sensitivity to headlines

   • Investor Steve Eisman (“The Big Short” fame) reported reducing portfolio risk, anticipating “volatility for quite a while”

   • Wolfe Research noted “peak fear” may have passed but maintains a near-term downside trend
     

Stock Spotlight

-Boeing $BA ( ▼ 1.58% ): Shares moved lower after Beijing directed Chinese airlines to halt new aircraft orders and seek approval for existing deliveries, directly impacting America’s largest exporter.

-Bank of America $BAC ( ▲ 3.78% ): Stock gained following Q1 results that surpassed analyst estimates, driven by outperformance in net interest income and trading revenue within its markets segment and wealth management arm.

-Citigroup $C ( ▲ 2.53% ): Shares advanced after the bank reported Q1 earnings and revenue exceeding expectations, attributing the strength partly to higher trading fees generated from market volatility.

-Hewlett Packard Enterprise $HPE ( ▲ 5.29% ): Jumped after activist investor Elliott Management acquired a $1.5 billion stake, intending to discuss strategies for enhancing shareholder value.

-Johnson & Johnson $JNJ ( ▼ 0.63% ): Beat Q1 earnings expectations and raised its 2025 sales forecast but maintained earnings outlook, citing a projected $400 million cost impact from tariffs this year (excluding potential pharma levies).

Big Name Updates

-JPMorgan Chase $JPM ( ▼ 0.63% ): CEO Jamie Dimon urged the Trump administration to engage in trade negotiations, particularly with China, suggesting Treasury Secretary Scott Bessent should lead the effort. “I know him a little bit. I think he’s an adult,” Dimon told the Financial Times.

-Amazon $AMZN ( ▼ 1.38% ): Emailed third-party marketplace sellers asking for detailed feedback on how tariff policies are impacting their operations, including sourcing, pricing, and use of the company’s logistics services.

-LVMH Moët Hennessy Louis Vuitton: Reported sales drops, noting weakening Chinese and U.S. demand even before recent tariff escalations, sending ripples through the global luxury sector.

-Dow Inc $DOW ( ▼ 3.81% ): Shares fell after Bank of America issued a rare double-downgrade to “underperform,” citing a “perfect storm” of softening economic conditions, trade barriers, and rising U.S. feedstock costs.

-Goldman Sachs $GS ( ▲ 1.27% ): Strategists slashed their year-end S&P 500 target to 5,200 from 6,500, assuming reciprocal tariffs remain in place.

Other Notable Company News

-Albertsons $ACI ( ▼ 7.79% ): Stock declined after issuing a financial outlook that missed expectations. COO Susan Morris noted customers are “thinking about their budgets” and said the company has launched a task force to monitor tariff developments.

-Auto Sector: Shares across the global auto industry gained after President Trump hinted at potential tariff exemptions, allowing more time to adjust North American supply chains.

-VanEck Gold Miners ETF $GDX ( ▲ 0.78% ): Reached its highest level since November 2012, with companies like Agnico Eagle $AEM ( ▲ 1.51% )and AngloGold Ashanti $AU ( ▲ 2.73% )hitting 52-week highs as investors sought safe-haven assets.

-ON Semiconductor $ON ( ▲ 0.34% ): Announced termination of its offer to acquire Allegro MicroSystems $ALGM ( ▼ 10.09% ), stating there was “no actionable path forward.”

-Calpers: CEO Marcie Frost warned that tariff-related portfolio losses could extend through summer, noting the nation’s largest pension fund had already dropped $26 billion from its $532 billion peak.

Sector Watch

Bond Market

The U.S. Treasuries declined, benchmark 10-year note yield falling to 4.341%.

In munil bonds, key House Republicans signaled they do not support altering the tax-exempt status of interest payments. This provides reassurance to the $4 trillion muni market, which finances state and local infrastructure projects like schools, roads, and sewers.

Policy Watch

• The White House confirmed President Trump is reviewing at least 15 potential trade deals during the 90-day pause on some reciprocal tariffs and intends to personally approve each agreement.
  

• Regarding the expiring Tax Cuts and Jobs Act, the White House stated President Trump has not yet decided whether he supports raising the corporate tax rate as part of future negotiations.
  

• The Commerce Department is proceeding with investigations under Section 232 that could lead to new tariffs on pharmaceuticals and semiconductors, despite exemptions for some tech products.
  

• Vice President JD Vance expressed optimism about securing a U.S.-U.K. trade deal, suggesting it would be easier to achieve than deals with other European nations.
  

• South Korea announced expanded support for its semiconductor industry to roughly $23 billion, citing “increased uncertainties” related to U.S. trade policies impacting key exporters like Samsung and SK Hynix.
  
  

What to Watch

1. Federal Reserve Commentary: Fed Chair Jerome Powell discusses economic outlook on Wednesday.

   • His assessment of economic resilience and inflation trends in light of trade uncertainty will drive market sentiment

   • Any hints about potential policy adjustments will be closely scrutinized
     

2. Trade Negotiation Developments: Headlines related to the 90-day tariff pause and ongoing discussions.

   • Market remains highly sensitive to concrete developments regarding potential deals or escalations

   • Details on exemptions or new tariff targets could trigger sector-specific moves
     

3. Upcoming Earnings Reports: Results from Netflix $NFLX and United Airlines $UAL due this week.

   • Will provide insights into corporate performance and consumer behavior

   • Management commentary on tariff impacts will be critical for forward guidance
     

4. Consumer Behavior Indicators: Further data points on spending trends following mixed signals.

   • Consumer health remains crucial for U.S. economic growth

   • Signs of weakening could validate recession concerns and impact retail sectors
     

5. Tariff Implementation Details: Clarification from U.S. Customs regarding scope and duration of exemptions.

   • Definitive actions will have direct consequences for specific industries

   • Tech, pharma, and semiconductor sectors particularly vulnerable to policy shifts

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