Week ahead: Tariff whiplash, Fed flirting, and a Dollar losing friends fast

Global equities have been dancing on the edge — in and out of bear market territory, with that textbook 20% drawdown flashing on screens from New York to Tokyo. Sure, the recent 90-day tariff pause President Trump announced gave stocks some breathing room, and US indices have been swinging hard ever since. But let’s not confuse whiplash with recovery.

The setup for a real, sustainable rebound just isn’t there yet.

To flip the script into the next bull cycle — the kind where we enter that juicy 'hope' phase with a powerful re-rating — we either need a transparent Fed put or Trump put to backstop risk… or valuations to take another leg lower. Until then, this feels less like a transition and more like a holding pattern, with chop and churn as the path of least resistance.

On the macro front, and I will be honest — this is a bit simplistic, and maybe it is. Extra tariffs on China? We’re deep into diminishing returns territory. If U.S. importers had viable substitutes outside of China, they’d have pivoted well before now. If they haven’t, that’s your tell — they can’t. So, at this point, we’re still selling firms that can’t substitute at a competitive price point( I think that is done)

That’s why I’ve been calling this popcorn time for a while now — we crossed that threshold long before last week’s headline escalation barrage.

But zoom out, and the macro picture is starting to crystallize. U.S. inflation is poised to surge, even with that deceptively soft CPI print we just got. The street is already flagging that the tariff pass-through will bleed into the inflation data within a couple months. And I agree.

We’ll probably see one last sugar rush in retail — front-loading ahead of the tariff hits — but after that? The squeeze is coming. And it’s going to show up in margin compression, slower hiring, and a Fed that’s caught between the optics of “cooling inflation” and the reality of structurally higher costs.

Look, I’m not going to pretend I’ve got a crystal ball — or some secret weekend chatroom alpha from my trade war-hardened crew who’ve seen more market carnage than most care to remember. The truth is that visibility is virtually non-existent right now. Price discovery is shot. Next week, investors will be grasping any shred of guidance they can get — from the White House, Treasury, or the Fed.

But let’s be honest — the only credible pathway to even start undoing the damage is through olive branches aimed at reversing U.S.-China tensions. Sure, the tit-for-tat tariff drama might provide great entertainment for the geopolitical crowd, but the optics are harsh from the desk's perspective. Superpower brinkmanship isn’t exactly market-friendly, even if the actual economic pain remains a few thresholds below full-blown recession levels. 

The truth? U.S.-China trade ties were thrown into the shredder long ago — we’re just now witnessing the remnants getting fed through the cross-cut for good. And while the market’s trying to gauge “how bad is bad,” it’s clear that unless both sides find a way out, the volatility premium won’t be coming out of this tape anytime soon.

But there’s at least some light peeking through the trade-war fog — and it’s showing up right in your portfolio. Apple and Nvidia just scored a much-needed reprieve, as the Trump administration carved out exemptions for smartphones, computers, and key electronics from the reciprocal tariff barrage.

Call it what it is — a major breather for global tech. The exclusions, dropped late Friday by U.S. Customs and Border Protection, effectively shield these core products from both the 125% China-specific slug and the 10% baseline global tariff that was threatening to hit nearly every other country.

It may be temporary, but make no mistake — this is a win for anyone long on tech. In a market where every basis point matters, keeping Apple and Nvidia out of the crosshairs buys time, stabilizes sentiment, and maybe, just maybe, puts a temporary floor under the broader risk complex. It buys enough time for handshake diplomacy to turn the tide. I know it’s wishful thinking.

I’m still leaning toward some kind of Fed backstop. It's not a rate cut but a stealth move to address the dislocation at the long end of the curve. On Friday, the Fed floated the “we’ll act if needed” line — which basically means the internal memo everyone was whispering about just went public.

But here’s the thing — keep your eyes on the recession odd-o-meter. When the probability of a U.S. recession is basically a coin flip, capital preservation becomes job #1. That’s drilled into every fund manager’s playbook. It’s the cue for CIOs to quietly tell even their rockstar traders: trade smaller and hedge everything. That cascades into thinner liquidity, and in turn distorts price action — even vanilla-size flows start moving markets.

Over the weekend, I wrote about the three things that could turn last week’s relief rally into something more durable:

Was the correction technical or sentiment-driven? Recency bias has doomsday written all over the headlines; that’s hard to shake.

Will the Fed or another policy cavalry show up? The Fed’s stuck on inflation optics, but they’ve got more tools than just the rate lever. Think: stabilizing bond market ops.

Is this the beginning of a structural reset? And if so, does it demand a repricing of everything?

I’d argue we checked all those boxes last week, but if this White House really is leaning into an economic reset — and with Bessent’s fingerprints all over what looks like phase one of a wealth redistribution project — then yeah, there’s going to be pain. But let’s be clear: 77% of U.S. GDP is service-based. A modest bump in domestic manufacturing could punch above its weight in terms of rebalancing.

So here we are. The bone is already broken — now they’re attempting to reset it. Will it heal straight… or leave a permanent limp? That’s still to be determined.

Forex week ahead

Will the ECB cut amid the tariff crossfire?

That’s the question every serious EURUSD trader is chewing on right now.

Now, you’ll hear pundits say the tariff disarray makes interpreting the ECB’s next move “unclear.” Nah — not if you’re actually trading this stuff.
We live in probabilities. We react when the tape turns. And right now? It just flipped.

Let’s rewind: the ECB looked locked for weeks and loaded for another 25 bp cut in April. March brought rates down to 2.50%, the lowest in two years, and with 150 bps already in the bag over the past year, a follow-up cut felt like a done deal.

Then came Liberation Day — the U.S. slapped a 20% blanket tariff on EU goods. It was no surprise, but once it printed, the game changed. Brussels didn’t flinch. Instead, they pulled out the playbook: retaliatory tariffs (Harleys and OJ on deck), dusted off the Anti-Coercion Instrument and went after the services deficit with America.

Even the hawks blinked.

Schnabel flagged “a dramatic surge” in global uncertainty. Nagel came out swinging, warning of a major deterioration in growth. By Monday, an April rate cut wasn’t just probable — it was priced in.

But then, boom — Wednesday happened.

Trump backed off. A 90-day pause on the reciprocal tariff barrage (not China, of course, but still). Europe shelved its €20B counterstrike — temporarily. Suddenly, the ECB isn’t staring down the barrel anymore. The political temperature dropped a few notches. Steel and aluminum tariffs still linger, but we’re squinting past the details now.

Here’s the real kicker: nobody wants to look like they’re weaponizing FX while the euro’s already getting legs.( ie Competitive Devaluation) At the March meeting, the ECB was split between a cut or a pause — mostly due to export worries. But with a truce in play and some breathing room, the urgency to act in April just isn’t there anymore.

My weekend call for the April ECB cut didn’t survive past breakfast on Wednesday. That’s how fast this tape is moving. Unless we get hit with another tariff torpedo, I’m positioning for no cut on April 17.

Random thoughts

This weekend, I’m not joining the doom-scrolling choir. Last Sunday was a clear reset, so we knew the tape would get scorched — and it did. But my setup, at least at the index bucket level , still leans toward an extension of the relief rally. That said, because of the spike in volatility (hello, VIX), my dip-buy last week was hugely sized down., so no, it's not a homerun win. Risk-reward just wasn’t screaming “back up the truck.”

One thing I’ve learned — and I can’t stress this enough — is that most traders are awful at adjusting position size when vol explodes. If S&P futures are swinging 40 handles one day and 120+ the next, you cannot keep the same size and stop structure. That’s how you end up margin-called into oblivion.

The easiest fix? Vol-adjust your size. Use a basic spreadsheet. Feed in ATR, VIX, or whatever metric you trust — and let that drive your risk parameters. It’s not rocket science, but it’s how the pros adapt when markets shift gears.

Your size should scale with volatility. Period. This is the cleanest, most automatic edge you can give yourself when the ground starts shaking.

Do you really want to understand what’s driving price? Then learn to tune into the narrative — the story behind the flow.

The what and the why behind every move are rarely clean. As you clock more years on the desk, you’ll see just how far off the mark most financial media explanations really are. The talking-heads TV circuit? It’s a wasteland of hyperbole, recycled tropes, and agenda-driven noise.

And let’s be blunt: should you care what Ray Dalio thinks this week, or what some bucket shop analyst is parroting from a bank’s macro note? Absolutely not.

This is your money. Your risk. Your P&L.

So never outsource conviction — and never ride on anyone else’s homework.

But here’s the kicker — and this is where the edge lives:

The narrative often turns before price. Price has inertia. It overshoots. It moves with trend momentum. It’s slow to admit the story’s changed.

Speculators riding the wave develop confirmation bias. They ignore the shift. They double down — until the price finally blinks. That window — where the narrative has flipped, but the price hasn’t — is pure alpha. That’s where traders get paid.

Those are the moments you live for:

When the tape’s telling one story, but headlines are still in the old loop.

Recognize that setup? Lean in. That’s your spot.