April 21st Market Overview

Happy Monday.

I hope everyone had a great weekend and got to eat some good food with some good people. Not a great start to the week, but I didn’t expect much with the long holiday weekend risk. Trump is attacking Powell with direct criticism, labeling him a loser. The tariff blanket is in place, and there’s little to negotiate.

Now, the Fed faces pressure from this administration. This is making the markets a bit anxious. I’m ready for anything, as we know, sentiment can go positive within a day in these markets.

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Let's dig in...

Executive Summary

• Markets sold off sharply as President Trump intensified criticism of Fed Chair Powell, calling him “a major loser” and demanding immediate rate cuts
  

• The Dow dropped over 1,000 points amid increasing evidence of tariff impacts, including South Korean export declines and shipping disruptions
  

• Gold ripped past $3,400 to a new record high while the US Dollar hit a three-year low, reflecting waning international confidence
  

• Major tech stocks led declines, though Netflix ($NFLX) bucked the trend following positive analyst commentary on its recent earnings
  

Market Overview

Key Market Drivers

1. Fed Independence Under Threat: President Trump demanded immediate rate cuts as National Economic Council Director Hassett confirmed the administration was studying Powell's potential removal. This direct political pressure contributed to market volatility and dollar weakness.
   

2. Trade Uncertainty Intensifies: Japan's Prime Minister refused to "yield to all U.S. demands" while China warned against deals that would isolate Beijing. South Korean exports to the US fell 14% in April, and DHL suspended high-value US shipments due to customs delays.
   

3. Investor Confidence Waning: The "Sell America" trade accelerated with the US Dollar Index at its lowest since March 2022. Dow Jones Market Data shows the last time stocks, bonds, and the dollar simultaneously weakened this early in the year was during the 2008 financial crisis.
   

4. Defensive Positioning: AAII survey data revealed investors favoring mixed portfolios (36.4%) and dividend stocks (35.6%) over growth (9.6%) and small caps (2.5%), signaling a clear shift toward defensive assets.
   

Stock Spotlight

Tesla $TSLA ( ▲ 9.8% ) declined ahead of Tuesday's earnings report. The company delayed its lower-cost Model Y launch while Barclays cut its price target. Options markets suggest a 9.7% post-earnings move.

Netflix $NFLX ( ▲ 0.43% ) gained following strong results. Canaccord raised its target to $1,200 and Goldman Sachs to $1,000, with the company reporting no tariff impacts.

Hertz $HTZ ( ▼ 4.05% ) fell after last week's 112% rally on Bill Ackman's 19.8% stake. Bank of America maintained Underperform, suggesting the investment could help Hertz raise capital.

NVIDIA $NVDA ( ▲ 4.3% ) dropped as Huawei prepares to ship its competing 910C AI chip next month. NVIDIA's CEO recently visited Shanghai, calling it "an important R&D base."

MicroStrategy $MSTR ( ▲ 5.24% ) gained after purchasing 6,556 Bitcoin for $555.8 million at $84,785 per coin.

Big Name Updates

Amazon $AMZN ( ▲ 1.31% ) fell after Raymond James downgraded to Outperform, cutting its target to $195. The company is reportedly preventing vendors from passing tariff costs.

Meta $META ( ▲ 2.65% ) marked its seventh straight day of losses, down over 17% in its worst streak since April 2023.

Disney $DIS ( ▲ 0.3% ) received an upgrade to Outperform from Wolfe Research with a $112 target, citing undervalued parks and streaming assets.

Ford $F ( ▼ 0.2% ) halted shipments to China as retaliatory tariffs push duties on US vehicles to 150%.

Apple $AAPL ( ▲ 0.44% ) declined amid the broader tech selloff and ongoing tariff concerns.

Other Notable Company News

UnitedHealth $UNH ( ▼ 1.32% ) : Truist lowered its target to $580 while maintaining Buy. Healthcare sector $IHF fell 5%.

Uber $UBER ( ▼ 0.45% ) dropped after FTC sued over Uber One subscription billing practices.

Spotify $SPOT ( ▲ 2.44% ) : Morgan Stanley reiterated Overweight ($670 target), citing a "deepening competitive moat."

Wolverine World Wide $WWW ( ▼ 1.24% ) and Norwegian Cruise Line $NCLH ( ▲ 0.47% ) gained on analyst upgrades highlighting tariff resilience.

QXO $QXO ( ▲ 1.02% ): Goldman Sachs launched a $4.5B debt deal for its Beacon Roofing acquisition, the first major LBO financing since tariff announcements.

Kroger $KR ( ▼ 1.89% ) reached an all-time high, while Cognizant $CTSH ( ▲ 0.07% ) and DocuSign $DOCU ( ▲ 1.4% ) expanded their partnership.

Sector Watch

Bond Market

Treasury yields moved higher with the 10-year yield climbing to 4.41%

• This occurred while equity prices fell and the dollar weakened

• Foreign investors appear to be reducing US asset holdings across multiple classes

Policy Watch

Multiple policy concerns weighed on markets:

• Fed Independence: President Trump's criticism of Chair Powell and the White House studying his potential removal created uncertainty around central bank autonomy

• White House Engagement: Trump met with executives from Lowe's $LOW ( ▼ 0.51% ), Home Depot $HD, Target $TGT, and Walmart $WMT ( ▼ 0.78% ) to discuss tariff impacts

• Corporate Uncertainty: Companies are withdrawing earnings guidance, with Bank of America reporting only eight S&P 500 companies offering projections this month

• Supply Chain Disruptions: DHL suspended high-value US shipments due to customs delays, while India announced a 12% temporary tariff on steel imports

What to Watch

1. Tesla’s Earnings Report: Tuesday’s post-market release will be critical following Q1 delivery miss, Model Y delay, and tariff headwinds. Investors will scrutinize any commentary around CEO Elon Musk’s political involvement and its impact on the brand.
   

2. Trade Developments: Watch for any concrete progress in negotiations with Japan or China. The July expiration of the 90-day reciprocal tariff pause looms as a potential volatility catalyst that analysts increasingly highlight.
   

3. Federal Reserve Response: Any statement from Chair Powell or other Fed officials regarding central bank independence could significantly impact market sentiment and potentially stabilize the dollar.
   

4. Economic Impact Data: Upcoming economic reports will provide the first tangible evidence of how tariffs are affecting broader US economic activity. Early warning signs from South Korea’s export data suggest impacts may be materializing faster than expected.

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- John