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Tariff Saga Starts 2nd Week, Pre-Markets Down Big Again
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Monday, April 7, 2025
Pre-markets continue to boil down this morning, after closing at session lows on Friday for the worst week of trading since March of 2020. Forty-five minutes before the bell rings in a new trading week, the Dow is down an additional -900 points, the S&P 500 -125 points and the Nasdaq -425.
The American indexes are now reverberating off the market reactions around the world, with the Eurozone FTSE -4% heading into its Monday close, Germany and France -5%, Saudi Arabia -6% (on oil prices at $60 per barrel; these were in the high $70s a week before Trump’s inauguration), the Japanese Nikkei and Chinese Shanghai markets -7%, and the Hang Seng in Hong Kong -13%.
Thus far, the equities markets have shed -$9.6 trillion in value. More than half of the American public owns stock, including a clear majority of the middle class, via 401k’s and other investment accounts. The harsh tariff policies begun last Wednesday from the White House lawn are proving a very tough pill to swallow, and economists now look toward the chain-reaction: companies going broke, laying off workforces, and otherwise pointing trajectories toward recessionary conditions.
Over the weekend, administration reps like Treasury Secretary Scott Bessent and senior advisor Peter Navarro attempted to spin these developments as advantageous over the long term for the U.S. economy. The ongoing wealth destruction — including the aforementioned lower oil prices and a weakening U.S. dollar — is amounting to a re-set of economic balance which will offer lower bank rates over time, lower fiscal deficits and higher GDP. Just how current methods are set to accomplish these things is proving much murkier, however, although the last stanza always rhymes with “massive tax cut.”
Take lower rates, for instance. While it’s true the 10-year bond yield has currently shrunk down to +4.01%, this is still notably above where we were back in September of last year. The Volatility Index (VIX) is up +200% over the past year, mostly due to this recent tariff shock to the markets. The Fed is a data-driven agency that is not going to lower interest rates just because it might make it easier for President Trump to cut taxes.
What to Expect from the Stock Market This Week
Tariff clarity does not appears forthcoming. We are starting to hear from other countries regarding renegotiating tariff structures with the U.S. (aside from China, who countered with a new +34% tariff on U.S. imports), but that’s not the same thing as countries capitulating to Trump’s demands.
Later in the week, we’ll get March prints for Consumer Price Index (CPI) and Producer Price Index (PPI), both of which are expected to remain above optimal inflation rates according to the Fed: CPI looks to come down 30 basis points (bps) to +2.5%, while the PPI was back up over +3% a month ago.
In addition, Q1 earnings season unofficially begins Wednesday with the release of Delta Air Lines (DAL - Free Report) and big Wall Street banks like JPMorgan Chase (JPM - Free Report) and Wells Fargo (WFC - Free Report) hitting the tape. Arguably, just as important as the quarterly results will be the companies’ guidance as they try to translate a muddy tariff-based outlook.
Image: Bigstock
Tariff Saga Starts 2nd Week, Pre-Markets Down Big Again
Monday, April 7, 2025
Pre-markets continue to boil down this morning, after closing at session lows on Friday for the worst week of trading since March of 2020. Forty-five minutes before the bell rings in a new trading week, the Dow is down an additional -900 points, the S&P 500 -125 points and the Nasdaq -425.
The American indexes are now reverberating off the market reactions around the world, with the Eurozone FTSE -4% heading into its Monday close, Germany and France -5%, Saudi Arabia -6% (on oil prices at $60 per barrel; these were in the high $70s a week before Trump’s inauguration), the Japanese Nikkei and Chinese Shanghai markets -7%, and the Hang Seng in Hong Kong -13%.
Thus far, the equities markets have shed -$9.6 trillion in value. More than half of the American public owns stock, including a clear majority of the middle class, via 401k’s and other investment accounts. The harsh tariff policies begun last Wednesday from the White House lawn are proving a very tough pill to swallow, and economists now look toward the chain-reaction: companies going broke, laying off workforces, and otherwise pointing trajectories toward recessionary conditions.
Over the weekend, administration reps like Treasury Secretary Scott Bessent and senior advisor Peter Navarro attempted to spin these developments as advantageous over the long term for the U.S. economy. The ongoing wealth destruction — including the aforementioned lower oil prices and a weakening U.S. dollar — is amounting to a re-set of economic balance which will offer lower bank rates over time, lower fiscal deficits and higher GDP. Just how current methods are set to accomplish these things is proving much murkier, however, although the last stanza always rhymes with “massive tax cut.”
Take lower rates, for instance. While it’s true the 10-year bond yield has currently shrunk down to +4.01%, this is still notably above where we were back in September of last year. The Volatility Index (VIX) is up +200% over the past year, mostly due to this recent tariff shock to the markets. The Fed is a data-driven agency that is not going to lower interest rates just because it might make it easier for President Trump to cut taxes.
What to Expect from the Stock Market This Week
Tariff clarity does not appears forthcoming. We are starting to hear from other countries regarding renegotiating tariff structures with the U.S. (aside from China, who countered with a new +34% tariff on U.S. imports), but that’s not the same thing as countries capitulating to Trump’s demands.
Later in the week, we’ll get March prints for Consumer Price Index (CPI) and Producer Price Index (PPI), both of which are expected to remain above optimal inflation rates according to the Fed: CPI looks to come down 30 basis points (bps) to +2.5%, while the PPI was back up over +3% a month ago.
In addition, Q1 earnings season unofficially begins Wednesday with the release of Delta Air Lines (DAL - Free Report) and big Wall Street banks like JPMorgan Chase (JPM - Free Report) and Wells Fargo (WFC - Free Report) hitting the tape. Arguably, just as important as the quarterly results will be the companies’ guidance as they try to translate a muddy tariff-based outlook.
Check out the updated Zacks Earnings Calendar here.
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