“You Retire Once… I Help People Retire Everyday”
The April 2nd “Liberation Day” announcement in the Rose Garden sent shockwaves around the globe as a new world order as it relates to global trade was being declared right before our eyes.
While the unveiling of hefty reciprocal tariffs at the beginning of the month sent U.S. equities close to bear market territory, a series of tariff reversals by the Trump administration gave room for the S&P 500 to rebound and end April virtually unchanged, albeit still trailing overseas equities.
In any event, the message sent by financial markets to Washington could not be clearer: the U.S. tariff strategy is misguided, and the policy reversal must continue.
Time will tell. For now, uncertainty may be the new normal. In response, markets have been extremely volatile to say the least. In April, theS&P 500 experienced 11 trading days where the index finished the day +/-1.5% from the previous close. It’s not that we’ve never seen volatility before— we know that’s part and parcel of investing. The difference now is that markets are hanging on, and reacting to, every little positive and negative policy pronouncement from the U.S. administration. Mind that these aren’t actual policy changes, just clarifications and thoughts about what policy could look like.
In response to this tariff situation, the market is constantly trying to sort through the fog while betting markets have increased the odds of a risk of recession. For now, the economic damage remains mainly confined to sentiment surveys (consumers, businesses, investors), perhaps more tangible signs of a slowdown start to appear in the coming months. Fundamentally, the economy remains to be on reasonable stable footing judging by the positive results stemming from Q1corporate earnings calls and the latest jobs report released last Friday.
In the short term, a pivot away from disruptive tariffs—which must happen quickly with China—and toward more growth-friendly policies by the US government could continue to fuel hope in the stock markets.
Click below to read the full edition of ‘MonthlyMarket Perspectives’ where I dive into and recap financial markets in April, discuss the market moving events surrounding and proceeding ‘Liberation Day’, and highlight some glimmers of bullish signals as we move into May.
Thanks for Reading. AP
