Markets surf the expected tariff tsunami: S&P dips to 5,488, Gold shines

• Well, it’s over – the Quarter came to an end.

• While the indexes suggest doom – individual sectors tell you otherwise.

• Bonds rally, Oil rallies and gold rallies.

• We are hours away from tariff announcements – European mkts are UP.

• Try the Roasted Chicken Thighs with Sausage and Potatoes.

A fresh wave of instability washed across the global markets yesterday – just 48 hours ahead of the tariff rollout….……Markets in Asia and Europe also hit by the volatility that has been the US stock market. The major indexes plunging in the early morning – with the S&P trading down to test the lows of March – 5504 (which I had been calling for) – in fact not only did it test it – but we created a new low into a NEW century….5488- before erasing those losses late in the day – bringing the erratic 1st quarter to an end….it felt like an appropriate end to a volatile month…..and volatile quarter.

At the closing bell – the Dow registered a gain of 475 pts or 1%, the S&P up 31 pts or 0.5%, the Nasdaq lost 24 pts or 0.15%, the Russell lost 12 pts or 0.6%, the Transports gained 154 pts or 1%, the Equal Weight S&P added 53 pts or 0.75% while the Mag 7 continued to lose ground – falling 88 pts or 0.4%.

But – here is how we ended for the qtr. – the Dow lost 1.3%, the S&P lost 4.6%, the Nasdaq gave up 10.4%, the Russell lost 9.8%, the Transports lost 7.2%, the Equal weight S&P gave up 1% and the Mag 7 down 16%. But the damage is worse – if we look at where the indexes are vs. their most recent highs – we see most of the indexes well into correction territory.

The Dow is – 8.2%, the S&P – 10.15%, the Nasdaq is down 15.25%, the Russell is off 18.1%, the Transports are down 18%, the Equal Weight S&P is off 8.5% and the Mag 7 is down 23%.

While that looks ugly - if you look at the 11 S&P sectors – you just might be surprised at what you see - there were some out performers (think winners)….- Energy ended the qtr. +9%, Healthcare + 6.1%, Utilities + 4.2%, Consumer Staples +3.5%, Financials & Real Estate ended up +3% while Basic Materials were up 2.2%. Leading the way lower were Consumer Discretionary – 12%, Tech – 11.2%, Industrials – 0.5% while Communications ended down 0.4%.

Down the chain – Aerospace & Defense +5.3%, Big Pharma +5.6%, the Value Trade was flat – which is a WIN, while Gold surged by 25%, Silver was up 17.7% - In fact the Bloomberg Commodity index gained 8.5% for the quarter, Bonds also ended the quarter higher….the TLT + 4.25%, the TLH + 4.25% while the AGG gained 2%. Across the globe – we saw Emerging Markets up 4.5% while European Markets gained 12%! (See, there really is a silver lining….)

Losers for the quarter included: Homebuilders -7.2%, Retailers – 14%, Airlines -18%, Disruptive Tech – 16.2%, the Growth Trade – 8.5%, Semi’s down 12.7%, Cybersecurity -0.7%, Robotics and Automation – 11%. Bitcoin lost 12%, Ethereum lost 45% while XRP was down 0.3%.

And if you played it from the short side – give yourself a hand! You also made money…. Short Disruptive Tech was up 24%, DOG + 1.8%, PSQ + 8.6%, SH +5.1%, the VIXY gained 11.6% and the Triple Levered S&P Short put 13.4% in your pocket.

Ok – enough of the percentages…..All I know is that stocks are struggling right now….as we prepare for auto tariffs, reciprocal tariffs, the start of earnings season and tax day……Now earnings season and tax day are usually enough to cause angst in early April, but this year we get to toss in the whole tariff argument – and so the anxiety is amplified.

All of this is causing street analysts to cut their year-end targets while at the same time being cautious until the story changes….Which doesn’t mean they are telling you to sell, sell, sell – they are telling you to make sure you have a shopping list and continue to pick away at opportunities when they present themselves. Note the advancers last quarter that we discussed above. In any case, I think the nervousness is overdone….. but that doesn’t mean there won’t be continued volatility.

This morning, we see that stocks in Asia ended their Tuesday higher…. with Taiwan in the lead – up 2.8%, South Korea +1.6%, Australia +1%, Hong Kong +0.4%, Japan & China ended the day flat.

In Europe this morning – markets across the zone are in rally mode ahead of the Trump tariffs…..…. Germany in the lead + 1.6%, Euro Stoxx up 1.3%, Italy up 1.25%, France +1.1%, the UK and Spain both up 0.9%. EU’s Ursula Von Der Leyen – President of the EU Commission told us that the EU is open to negotiating with Donny, but will take firm measures if she is poked, all while UK Prime Minister Kier Starmer tells us that that UK/US talks are ‘well advanced’. In addition – Eurozone inflation dips to +2.2% - down from 2.3%. For the quarter – all mkt centers ended higher…with Spain in the lead up 14%, Germany + 13%, Italy + 12%, Euro Stoxx +8%, France up 6.8% while the UK ended up 6%.

US futures are mixed – Dow futures -16, S&P’s up 8, Nasdaq +60 while the Russell is up 5. Tariffs announcements and implementation are now just hours away… Eco data today includes – S&P and ISM Manufacturing PMI’s – both expected to be in contractionary territory…..and we have the all-important JOLTS number…Job Opening & Labor Turnover Survey…

The JOLTS report, or Job Openings and Labor Turnover Survey tracks job openings, hires, and separations (quits, layoffs, and other exits) across the U.S. economy. It is significant for several reasons:

Labor Market Health: Job openings signal demand for workers. Expected to be 7.655 million – down from 7.740 million.

Worker Confidence: The "quits rate" (voluntary separations) shows how comfortable workers feel leaving jobs, often for better opportunities. A high quits rate—like the 2.1% reported last month indicates a tight labor market where workers have leverage. Expected to show 3.185 million vs. 3.266 million.

Fed Policy Clues: A cooling labor market (fewer openings, lower quits) could ease wage pressures and inflation, nudging the Fed toward rate cuts—especially relevant after Tom Barkin’s recent caution on needing inflation to decline further.

Economic Trends: Separations and hires data reveal turnover dynamics. Layoffs ticking up could signal caution, while hires holding steady show hiring isn’t collapsing. In the end – this survey is not expected to be ‘too hot, or too cold."

In short, JOLTS is a pulse-check on labor dynamics, influencing monetary policy, investor sentiment, and economic forecasts. Let’s see how the market responds at 10 am.

Yesterday – we saw bonds rally…. (think safely) - the TLT went up 1% while the TLH was up 0.6%. Yields are holding steady at 3.86% for the 2 yr and 4.16% for the 10 yr. Now, while bonds have advanced (that’s good) – many worry that the advance might suggest weakness ahead. Higher bond prices mean:

Lower Growth Expectations: When bond prices rise (and yields fall), it often signals investors expect slower economic growth. They flock to bonds as a safe haven, betting that weaker growth will reduce inflationary pressures and possibly prompt central banks like the Fed to cut interest rates.

Lower yields often mean investors expect less need for high returns to offset rising prices, so they accept lower yields, pushing bond prices up.

Now – like a pendulum – the arm swings too far to the left and then too far to the right….giving us the contrarian view of - Overcrowding - If bond prices rise too fast, (just like any asset that rises to fast) it might suggest a bubble or herd behavior, where expectations overshoot reality. Sound familiar? A sharp rally in bonds could later reverse if growth surprises to the upside and rate cuts are taken off the table.

GOLD continues to push higher – up another $15 at $3,164/oz….. The chart is beautiful – gold is trading 6.5% above the closet trendline at $2,960….as buyers trip over each other to ‘get into the safety trade’ Remember – we discussed this yesterday - Gold is surging due to a combination of economic, geopolitical, and monetary factors, but like anything – this sharp rally will be met with some real profit taking ‘at some point’ – So, be strategic.

And……. Boom! Oil blasted right up and thru all 3 trendlines…. going from $69.50 to $71.50 yesterday and now up another 50 cts to $72 this morning…..The push? Yeah – concern over secondary tariffs imposed on Moscow, ongoing sanctions on Venezuela and Iran - along with ongoing attacks on the Houthi’s (Iran) which Trump made clear….. ‘Continue to disrupt trade and continue to fire on the US military in the region and we will put maximum pressure on you’. And so, oil traders took oil up and thru resistance – the ‘momo’ guys (momentum) jump on the wagon to push oil even higher….. this latest push could see oil trade up to $72.50 ish – but remember – the Saudi’s are supposed to raise production this month and that will offset any supply issue. Now, if they change their minds and do nothing – oil will surge to the January highs of $76.

Today we are scheduled to hear from the Richmond FED’s Tommy Barkin, and we know how he thinks…. he wants to see inflation move lower before he is voting to change policy…. let’s see if his story has changed. Tomorrow brings us Governor Adriana Kugler, Thursday Vice Chair Philly Jefferson and Governor Lisa Cook and Friday – it’s all about JJ Powell who will address the industry (and the country) at 11:25 am.

Remember - there is no reason to ‘rush out’ and be an aggressive buyer…. Patience is a virtue….…. April tends to be weaker in the first half of the month – and I don’t think that this trend changes this year.

The S&P closed at 5611 up 30 pts – but not before testing the March low at 5500…. Now, while we officially broke it – trading down to 5488 – we managed to take it back by end of day…. It’s a new month and a new quarter…while the story remains nervous – my sense is that it is calming down….but that does not mean we won’t test 5500 one more time at some point to see if it holds….and that could happen at any point in the next two weeks….think tariffs, earnings and tax day….all reasons to be a bit cautious….and remember – markets tend to ‘shoot first and ask questions later’, so make sure you are ready…..

Get comfortable by being a bit uncomfortable, stay defensive while being cautiously optimistic. Stick to your plan, don’t panic and if the recent pullback is causing you undue stress then maybe you need to reconsider your plan….…. Call me to discuss this on 561-244-2504.

Roasted chicken thighs with sweet sausage and potatoes

This is a simple yet hearty dish. Not complicated at all.

For this you need chicken thighs – skin on, sweet Italian sausage (you can use hot), Idaho potatoes cut in half and then quartered, butter, garlic, s&p, adobo and onions.

Preheat your oven to 400 degrees.

Rinse and dry your chicken pieces. Massage with a bit of olive oil and season with s&p and adobo. Set aside.

Slice and quarter your potatoes – season with s&p and adobo and then toss in melted butter.

Slice your onions.

Now – in a large baking pan – add the onions and garlic on the bottom of the pan, place the chicken thighs, potatoes and sweet sausage in the pan. Hit it with a splash of olive oil. Place in the oven – uncovered. You want chicken, sausages and potatoes to roast. Roast for an hour and then toss – raise the temp to 450 and roast for about another 30 mins, turn the oven to broil and give it a quick hit. You want the chicken to be crispy. Serve with a large mixed salad.