4/4/25 Recap

The SPY gapped down enormously on retaliation from China with their own 34% tariffs this morning as the tit for tat game with President Trump is entering its next phase. The market is down 10% in 2 sessions, that is remarkable in a historical context, not really something that happens often. I meant what I said yesterday when I said if we close below 550 you need to be out of anything you’re not planning on holding long term because look at the followthrough we got today. There really isn’t much interesting to me right now, everything is so badly broken I really haven’t seen anything like this since covid, but that was a real crisis, this is a manufactured crisis and I’m not seeing anything that says we’re near a bottom. You look at yesterday we closed at lows, Powell just ended his speech and we sank to new lows. So I’m telling you do not be a hero right now, the market has to find a bottom, it will do that by reclaiming the 21 ema, look how disconnected from even the 8 ema we are right now, it is way up near 550 and we’re at 512. This stuff takes time and right now, you may get a deadcat bounce next week because we’re so oversold, but there is nothing suggesting we’re anywhere near reclaiming the 21 ema.

On a weekly basis we touched the 100 week today, we had not done that since late 2023 when the recent uptrend we were in began. If this doesn’t hold at 513 or so, you potentially have room to just below 475 and the 200 week.

To put into context how broad this selling is, take a name like, EPD, that is an MLP, the price of energy doesn’t even impact it, just the volume of energy flowing through its pipelines and even with a 7% dividend and a fairly defensive name, it is down almost 9% today on nothing material as everyone is just selling everything indiscriminately. We’re seeing things like megacaps such as Meta falling 20% in 2 days. NVDA got its first downgrade today which sent all semis into a tailspin. Amazon went negative under Andy Jassy who became CEO in 2021. The panic going on right now is immense and the real tug of war is between Powell and Trump. Trump is trying to force his hand into cutting rates and Powell is speaking right now actually and said “the Fed does not need to be in a hurry” and “we have time” so that is not what Trump wants to hear.

The gameplan right now for Trump is simple right now: force stocks lower which will force Powell cut rates and then we refinance the debt at lower rates before likely doing QE and pushing equities back higher all while not causing inflation with said QE. If it seems ridiculous, that’s because it is. The tariffs, those will be gone in time, this is all about getting rates lower and since Powell refused to cut rates, this was how Trump was going to force him into doing so, with a threat of recession and now we’re pricing in 5 rate cuts this year but we may not even need that as the 10 year is now under 4% on its own. What a complete mess and the market is throwing a tantrum over the chaos being caused right now. The hard part of what Trump seeks is the fact that he is on office for only 4 years. The lead time of such a drastic move like bringing your companies manufacturing over is a serious thing and very few are going to do it to appease someone who is in office for such a short period.

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