April 7, 2025
(WELCOME TO THE RIDE – SEATBELTS PLEASE!)
April 7, 2025
Hello everyone
Welcome to the roller coaster!
WEEK AHEAD CALENDAR
MONDAY, APRIL 7
3:00 p.m. Consumer Credit (February)
8:30 p.m. Australia Consumer Confidence
Previous: 4%
Forecast: -0.9%
TUESDAY, APRIL 8
6:00 a.m. NFIB Small Business Index (March)
10:00 p.m. New Zealand Rate Decision
Previous: 3.75%
Forecast: 3.5%
WEDNESDAY, APRIL 9
10:00 a.m. Wholesale Inventories final (February)
2:00 p.m. FOMC Minutes
Earnings: Constellation Brands, Delta Air Lines
THURSDAY, APRIL 10
8:30 a.m. Consumer Price Index (CPI)
8:30 a.m. Hourly Earnings final (March)
8:30 a.m. Average Workweek final (March)
8:30 a.m. Initial Claims (04/05)
8:30 a.m. Treasury Budget (March)
Earnings: CarMax
FRIDAY, APRIL 11
8:30 a.m. Producer Price Index (PPI) (March)
10:00 a.m. Michigan Sentiment preliminary (April)
Previous: 57.0
Forecast: 54.5
11:00 a.m. New York Federal Reserve Bank President and CEO John Williams speaks on Economic Outlook and Monetary Policy, Puerto Rico.
Earnings: Morgan Stanley, Wells Fargo, JPMorgan Chase, Fastenal, The Bank of New York Mellon, BlackRock.
Wednesday’s tariff announcement started The Ride. We have gone from free trade and globalization to tariffs and a trade war in the blink of an eye. It will make everything more expensive for the U.S. consumer. Wallets will close, growth will slow, and unemployment will rise. Welcome to stagflation!
Extreme volatility across financial markets saw US equities swing fiercely lower on the rollercoaster. A retaliatory response from China has already appeared. The US dollar also experienced dramatic swings with a pattern of initial weakness followed by significant strengthening into the weekend.
Volatility is likely to carry into this week with countries preparing their response to the proposed tariffs. The US stock market may find a bottom this week and attempt to recover from its sharpest decline since 2020.
Around $110 billion was wiped off Australia’s share market on Monday. It is possible we will get several rate cuts this year to attempt to patch the economic damage.
The next three-five years will be messy in the markets, but cycles suggest we should see the start of a new bull market by 2030. It is at this time when we should see the start of a commodity super cycle.
During the next five years, the greatest threat to the economy is the weather cycle. We could see droughts/floods causing food shortages, with prices skyrocketing, which is likely to drive up inflation and see impacts worldwide.
MARKET UPDATE
S&P500 – the index has been belted and has fallen to a low (Monday, my time) of $4801.04 in the futures market thus far, (which is the area I indicated where the market would target $4700-$4800). It gapped down from the Friday close of $5074 with strong selling pressure. It is also likely the retail investor is selling (at a loss) the stocks they bought last week, which is adding to the bearish momentum. There is a possibility for further market falls (to around $4500 max) when the US market opens, (because of forced liquidations from traders who were bullish), however, I do expect $4400 to hold.
Margin calls and forced liquidations set up great opportunities – and now is one of those times. The market is oversold and now has the potential for a 7-8% snapback. I would start viewing the market here as a great opportunity to buy. You could consider call options on the S&P500, a call spread on the SPX. If you want to be conservative set in-the-money call spreads, and if you are aggressive, you can enter out-of-the-money call spreads. You could also look at selling deep out-of-the-money puts.
But, be warned, volatility is at its highest, so everyone needs to expect wild swings. Keep your trades at a manageable size. You are not looking for a home run in every trade. Making 50% often will eventually build a moat around your castle.
Resistance: $4970/$5080/$5400/$5660
Support: $4800/$4660/85
GOLD
Gold rallied to another high last week reaching $3168. As I have been warning, a top is near and could be starting to form now. We need a fall in gold of around $250 over the next few months to confirm that a medium-term high is in place. Until then expect the rally in gold to continue, but maybe with a slowing momentum. The downside move could last a few months.
Resistance: $3045/55/$3085/95 and $3160/70
Support: #3010/$3020 and $2965/75
BITCOIN
Bitcoin was the only sector that ended last Friday in + territory. I anticipate that crypto will continue its messy bottoming pattern in the near term with eventual gains above the $109 former peak. As per last week, there remains scope for a fall toward the low 70’s or the high 60’s before a solid low is found. On Monday morning (my time) Bitcoin gapped down to around $77k. We may get a tradable low soon.
Resistance: 88/93.5k
Support: 73.5/75
QI CORNER
HISTORY CORNER
On April 7
SOMETHING TO THINK ABOUT
Thank you to all those who attended my Jacquie’s Post March Zoom Meeting last Friday.
As promised, I include a link here to the interview between Scaramucci and Simon Hunt. Ten minutes of this interview were included in the monthly meeting presentation.
Cheers
Jacquie
