March 25th Market Overview

Happy Tuesday.

Markets took a breather today after yesterday's big moves. Consumer confidence numbers didn't help but I’m more interested in the PCE numbers coming in on Friday.

Tesla reported registration numbers were actually pretty impressive given everything that's happening in Europe and even the reputation built up here over the last few months.

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Let's dig in...

Executive Summary

• Consumer confidence falls to 92.9 with expectations index at 12-year low (65.2), below recession signal threshold
  

• Trump delivers mixed tariff signals: country exemptions possible while targeting autos and pharmaceuticals
  

• $TSLA ( ▲ 0.7% ) achieves best weekly registrations of 2025 with 17,400 vehicles despite European market challenges
  

• Atlanta Fed's Bostic cuts 2025 rate cut projection to one from two, pointing to persistent inflation concerns
  

Market Overview

Key Market Drivers

1. Tariff Uncertainty: Trump indicated he “may give a lot of countries breaks” while still planning duties on pharmaceuticals and autos. Reports suggest a potential two-step approach combining immediate duties with longer-term investigations.
   

2. Consumer Sentiment Deteriorates: March consumer confidence fell to 92.9, below the expected 93.5. The expectations index plummeted to 65.2 – its lowest level in 12 years and well below the 80 threshold that typically signals recession risk.
   

3. Housing Market Shows Resilience: Home prices in major U.S. cities accelerated slightly in January, with the S&P CoreLogic Case-Shiller 20-City Index rising 4.7% annually, exceeding expectations by 0.1 percentage point.
   

4. Fed Officials Signal Fewer Rate Cuts: Atlanta Fed President Raphael Bostic reduced his projection from two cuts to one for 2025, noting inflation will likely remain “bumpy” without clear movement toward the 2% target.
   

Stock Spotlight

Lyft ($LYFT ( ▲ 0.09% ) ) jumped after activist investor Engine Capital nominated director candidates to the board, signaling potential governance changes.

Cloudflare ($NET ( ▲ 1.89% )) advanced on Bank of America's double upgrade to "buy" from "underperform," citing improving fundamentals and AI exposure.

KB Home ($KBH ( ▲ 0.04% ) ) declined after Q1 miss with EPS of $1.49 on $1.39B revenue versus $1.58 and $1.5B expected, along with lowered 2025 guidance.

UniFirst ($UNF ( ▼ 0.26% ) ) dropped after Cintas terminated acquisition talks valued at $275 per share, citing lack of engagement on key terms.

Carvana ($CVNA ( ▲ 4.44% ) ) gained on Morgan Stanley's upgrade to Overweight with price target raised to $280 from $260.

Big Name Updates

Tesla ($TSLA ( ▲ 0.7% ) ) gained as Piper Sandler maintained Overweight rating ($450 target) citing 17,400 weekly registrations, the best of 2025. Cathie Wood projected $2,600 per share within five years, representing 834% potential upside.

Meta ($META ( ▼ 1.87% ) ) plans $14 monthly charges for ad-free Instagram or Facebook access, diversifying revenue streams.

Apple ($AAPL ( ▼ 0.19% ) ) nears resolution of EU browser antitrust concerns while reportedly placing $1B order for Nvidia ($NVDA ( ▲ 1.35% ) ) GB300 systems for AI development.

Alphabet ($GOOGL ( ▼ 1.74% ) ) targets 2026 commercial robotaxi service in Washington D.C. through Waymo division.

Other Notable Company News

Trump Media ($DWT ( ▲ 0.1% ) ) gained on partnership with Crypto.com to launch "Made in America" ETFs later this year.

Alibaba ($BABA ( ▼ 1.48% ) ) to restart hiring after 12 quarters of headcount reduction, while Chairman Tsai warns of potential U.S. AI bubble.

eToro ($ETOR ( 0.0% ) ) filed for Nasdaq IPO with Goldman Sachs, Jefferies, UBS and Citigroup as underwriters.

Illumina ($ILMN ( ▼ 0.63% ) ) added Corvex Management's Keith Meister to board with former FDA chief Scott Gottlieb becoming chairman Friday.

Boeing ($BA ( ▼ 2.36% ) ) met with China's commerce chief, receiving calls to strengthen aviation sector ties while prioritizing safety.

Ally Financial ($ALLY ( ▲ 0.37% ) ) downgraded to sell by BTIG due to doubts about meeting near-term net interest margin targets.

Sector Watch

Bond Market

The market appears to be pricing in fewer rate cuts than previously expected, aligning with Atlanta Fed President Bostic’s revised outlook for just one cut in 2025.

Policy Watch

President Trump weighs a two-step tariff implementation plan for April 2nd, potentially combining immediate duties (up to 50%) under emergency trade laws while launching formal investigations for broader action. India has signaled willingness to slash tariffs – possibly to zero – on over 55% of U.S. imports worth $23 billion.

Tech CEOs and foreign allies urge Trump to revise AI chip export restrictions, with $NVDA ( ▲ 1.35% ) and $ORCL ( ▼ 0.52% ) leading this advocacy effort.

The Bank of Japan minutes revealed that additional rate hikes remain under consideration, potentially affecting global liquidity conditions.

What to Watch

1. GDP and PCE Reports This Week: These economic indicators will provide further clarity on inflation pressures and economic growth trajectories, potentially influencing Fed policy expectations.
   

   • Thursday’s GDP revision will reveal whether Q4 growth remains at 3.2%

   • Friday’s PCE report, the Fed’s preferred inflation gauge, could shift rate cut expectations
     

2. April 2nd Tariff Announcement: Trump’s upcoming tariff decision will have significant market implications.

   • Watch for country-specific exemptions that could ease market concerns

   • Monitor specific industry targets, particularly autos, pharmaceuticals, and semiconductors
     

3. Tech Earnings Season Approach: With Q1 ending this week, attention will soon shift to earnings.

   • Tech sector performance has diverged from broader market recently

   • AI investment narratives will face scrutiny against actual financial results

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Thanks for reading 🙂

- John