April 1st Market Overview

Happy April fools day (I promise no tricks here.)

Tomorrow is the big day - we finally step out of the trade policy shadow zone.

I’m bracing for volatility. The numbers themselves matter less than the implementation timeline and exceptions (if any). What worries me isn’t the market's first reaction. It’s the growing international response. The coordinated moves from Asia could catch the market off guard. Only time will tell of course, I’m looking forward to some certainty and some direction.

P.S. Need to start an LLC? Consider using Doola to do it for you.


Let's dig in...

Executive Summary

• The White House says tariffs will start right after tomorrow's announcement. Reports hint at a 20% tax on most US imports.
  

• The manufacturing sector shrank in March. The ISM index fell to 49. At the same time, price pressures rose to 69.4, the highest since mid-2022.
  

• Consumer discretionary stocks went against the trend today. They are still the worst-performing sector this year. Tesla led the gains.
  

Market Overview

Key Market Drivers

1. Tariff impact: Washington Post reports Trump administration considering 20% tariffs on most imports. White House confirmed these will take effect immediately following tomorrow’s announcement.

2. Manufacturing weakness: ISM index fell below expansion threshold in March. Prices component jumped significantly to highest reading since mid-2022, signaling accelerating inflation pressures.

3. Labor market cooling: February job openings decreased to 7.57M (below 7.6M estimates). Ratio of openings to available workers fell to 1.07:1.

4. Market volatility: S&P 500 whipsawed between gains and losses before closing positive, similar to Monday’s session.
   

Stock Spotlight

Tesla ($TSLA ( ▲ 0.02% )) - Gained despite mixed delivery news. March deliveries up YoY and MoM, but sales dropped significantly in Denmark and France. Wells Fargo maintains Tesla as its only underweight tactical idea.

PVH Corp ($PVH ( ▲ 2.05% )) - Beat Q4 earnings and revenue. Q1 guidance slightly light, but FY2025 EPS guidance ($12.40-$12.75) well ahead of consensus.

Johnson & Johnson ($JNJ ( ▲ 1.73% )) - Dropped after US bankruptcy judge rejected $10B talc settlement plan.

Hims & Hers Health ($HIMS ( ▲ 3.97% )) - Deal to sell Eli Lilly’s Zepbound and Mounjaro weight loss drugs.

CrowdStrike ($CRWD ( ▲ 0.2% )) - Nvidia-backed AI cloud company rebounded from Monday’s drop below $40 IPO price.

Big Name Updates

Amazon ($AMZN ( ▼ 1.49% ) ) - Mizuho maintained outperform ($285 target). AWS survey showed softer indicators but customers still projecting YoY budget growth.

Apple ($AAPL ( ▲ 2.21% ) ) - Citi: “risk reward looks attractive” ahead of WWDC. Plans to expand Apple Intelligence to new languages including Chinese.

Meta ($META ( ▼ 2.22% )) - Pushing Trump administration to fight expected EU fine over Digital Markets Act, which could force ad-free access options.

Major Airlines - Jefferies downgraded sector ($AAL, $DAL to hold; $LUV ( ▼ 2.41% ) to underperform) citing macro uncertainty and weak sentiment.

Other Notable Company News

Intel ($INTC ( ▲ 2.89% )) - Plans to spin off non-core businesses possibly this year.

Boeing ($BA ( ▲ 1.56% )) - Denied 737 MAX production swing reports. JPMorgan added to focus list.

Chevron ($CVX ( ▼ 0.23% )) - Selling 70% stake in East Texas gas assets.

GlobalFoundries ($GFS ( ▲ 0.99% )) - Reportedly exploring merger with Taiwan’s UMC.

ARM Holdings ($ARM ( ▲ 1.03% )) - Explored acquiring Alphawave but walked away from deal.

Live Nation ($LYV ( ▼ 0.93% )) - Pressured after Trump signed executive order against ticket scalping.

Keurig Dr Pepper ($KDP ( ▲ 1.56% )) - Morgan Stanley upgraded to overweight, citing underappreciated sales growth potential.

PayPal ($PYPL ( ▼ 0.51% )) - Bernstein lowered target, calling it “either a multi-bagger or a structural short.”

MicroStrategy ($MSTR ( ▲ 3.82% )) - Monness Crespi Hardt cut to sell from neutral.

Sector Watch

Bond Market

Traders are bracing for volatility ahead of tomorrow's tariff announcement. Defensive positioning reveals concerns about:

• Economic weakness evident in manufacturing data

• Accelerating price pressures despite slowing growth

• Risk that disappointing jobs numbers could push markets back to the 5500 support level

Commodities positioning continues to strengthen, particularly in Gold, Silver, and Oil, as investors seek hedges against potential market disruption.

Policy Watch

The White House confirmed Trump's tariffs will take effect immediately upon tomorrow's announcement. Key details emerging:

• Rumored reports suggest potential 20% levies on most US imports

• Administration still debating between a flat-rate approach or country-specific tariffs

• Deutsche Bank analysis shows investors anticipate 50% tariffs on China and roughly 10% on other countries

The global response is already forming. China, Japan, and South Korea are coordinating retaliatory measures, while the EU prepares potential tariffs on US digital services.

Market impact will extend beyond the tariff rates themselves, with Deutsche Bank warning that retaliation, fiscal responses, potential tax cuts, and possible yuan devaluation could amplify economic effects.

What to Watch

1. Trump’s tariff announcement tomorrow: Focus on specific rates by country and implementation timelines.

   • Watch for exemptions or carve-outs

   • Monitor immediate market reaction in consumer discretionary and technology sectors
     

2. International retaliation: Speed and severity of counter-measures will determine economic impact.

   • China, Japan, and South Korea joint strategy could amplify volatility

   • EU digital services tariffs would target U.S. tech giants
     

3. April jobs report (Friday): Following weaker JOLTs numbers, monthly employment figures crucial.

   • Significant weakness could accelerate Fed rate cut expectations

   • Wage growth data important amid rising price pressures
     

4. Corporate earnings guidance: Q1 reporting season approaching.

   • Companies with international supply chains will provide valuable insights

   • Revised outlooks will help quantify expected economic impact

P.S. 

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Thanks for reading 🙂

- John