The Week That Was: Market Recap and What’s Next (March 25)
“I may give a lot of countries breaks on tariffs,”
Introduction: A Pivotal Macro Week (Again!)
Good morning, happy Tuesday—or at least, happier than last week. We’re back in our usual slot to dissect another pivotal seven-day stretch. I know I keep saying this, but it genuinely feels like every week lately has been ‘make or break’ for the markets. Still, by next Tuesday, we’ll hopefully have clearer insights into the tariff impact following the April 2 announcements. Let’s dive straight into it—I’ve got charts, tweets, leaked headlines (and even an extraordinary Signal chat leak!) galore!
Trump Tweets, Signal Leaks, and Market Moves
What a difference a week makes! Thanks to optimistic weekend tweets and leaked reports suggesting autos and chips might dodge upcoming tariffs, the market’s mood swung swiftly from gloomy to gleeful. Trump’s recent ‘carrot-over-stick’ comments significantly improved market sentiment.
However, the most remarkable development was a jaw-dropping security blunder involving senior U.S. national security officials, who inadvertently included a journalist in a highly sensitive Signal chat. This unprecedented leak revealed operational details of planned U.S. military strikes against Houthi targets in Yemen, sparking severe national security concerns. It also disclosed candid internal discussions among top Trump administration officials, including Vice President JD Vance, who openly criticized Europe’s dependence on U.S. naval protection, labeling their stance as “pathetic.”
The Good, The Bad, and The Green
- Tesla surged after weeks of overselling, boosted by shorts scrambling to cover positions.
- Tech stocks broadly recovered, with laggards like Palantir and Meta bouncing off key support levels.
- Regional banks saw impressive rebounds, stabilizing market sentiment further.
Tariffs: A Cloud with a Silver (or Possibly Golden) Lining?
The upcoming tariff announcement on April 2 is the big one to watch. Based on recent surveys and market sentiment, the most likely outcomes include:
- Reciprocal tariffs hitting around 15-16 countries, notably India, Mexico, Vietnam, and China.
- Possible 10% auto tariffs, especially targeting EU exports, potentially benefiting domestic automakers like Tesla.
- Lower likelihood of hefty tariffs on Canada and Mexico (much to their currencies’ relief).
Markets currently appear cautiously optimistic, though the economic impact remains uncertain, highlighted by companies like FedEx already adjusting forecasts based on tariff uncertainties.
JD Vance’s Europe Criticism: A Pathetic Outlook?
Vice President JD Vance’s blunt comments, as revealed by the leaked Signal conversation, underscored the administration’s frustration with Europe’s perceived inability to shoulder security responsibilities. Vance’s explicit criticism of Europe’s “pathetic” reliance on U.S. naval protection highlights deepening transatlantic tensions and growing impatience within the administration over Europe’s contribution to global security.
Sector Spotlight: Chips, Gold, and Copper
Chips Under Pressure
Chipmakers, particularly Nvidia and Broadcom, remain under scrutiny. Concerns linger over earnings projections and competitive pressures reminiscent of Cisco during the TMT bubble era. Although valuations appear reasonable, investor sentiment remains cautious.
Gold Continues to Shine
Gold remains buoyant, driven by:
- Inflation uncertainty
- Dollar weakening narratives
- Robust global central bank buying activity
Expect volatility, but view any dips as potential buying opportunities.
Copper: Riding the Chinese Stimulus Wave
Copper continues to benefit from ongoing Chinese stimulus discussions. China’s potential large-scale economic interventions (think “Eat Out to Help Out”—but far bigger) underpin bullish commodities sentiment.
Economic Data and Fed Expectations
This week features critical economic data points:
- Durable goods orders (expected to decline significantly)
- U.S. GDP numbers (projected to fall)
- Fed’s preferred inflation measure, the PCE index (potential increase)
Hawkish commentary from Fed officials like Bostick has highlighted that inflation may not be transient, complicating the Fed’s rate-cut outlook.
Technical Insights: Are We Out of the Woods?
- Technically, we’re experiencing a rebound from significantly oversold conditions:
- S&P futures positioning flipped dramatically from short to significantly long.
- The recent correction was among the swiftest historically, facilitating a technical bounce.
- Seasonal trends now favor a bullish outlook, at least in the short term.
However, caution remains essential, as the market continues to trade heavily on tariff-related headlines and geopolitical developments.
Global Asset Allocation Shifts
A notable trend shaping the markets is the shift in foreign investment away from U.S. equities, driven by:
- Europe’s aggressive fiscal stimulus and reindustrialization (defense and infrastructure)
- China’s ongoing economic stimulus
- A weaker U.S. dollar enhancing attractiveness for emerging markets
This gradual reallocation could pose sustained headwinds for U.S. equities moving forward.
Final Thoughts: Trading the Rebound
While the current rebound in markets is encouraging, investors should approach it with caution. This appears to be a tradable technical bounce rather than a confirmed long-term recovery. Pension fund rebalancing flows (~$30 billion equities buying expected) this week provide temporary tailwinds, but clarity around tariff policies remains crucial.
Key takeaways:
- Market sentiment has dramatically improved, but cautious optimism is advised.
- Closely monitor the critical April 2 tariff announcements.
- Diversification and risk management remain paramount in this volatile, headline-driven environment.
Let’s hope for fewer tariff-related tweets and more market clarity by next week!
Stay safe, stay informed, and good luck out there.
