(APRIL IS HERE - WHEN THE TARIFF UNCERTAINTY MAY BECOME A KNOWN CERTAINTY)

March 31, 2025

Hello everyone

WEEK AHEAD CALENDAR

MONDAY, MARCH 31

9:45 a.m. Chicago PMI (March)

10:00 a.m. Dallas Fed Index (March)

7:30 p.m. Japan Unemployment Rate

Previous: 2.5%

Forecast: 2.5%

TUESDAY, APRIL 1

12:30 a.m. Australia Rate Decision

Previous: 4.1%

Forecast: 4.1%

9:45 a.m. S&P PMI Manufacturing final (March)

10:00 a.m. Construction Spending (February)

10:00 a.m. ISM Manufacturing (March)

10:00 a.m. JOLTS Job Openings (February)

WEDNESDAY, APRIL 2

8:15 a.m. ADP Employment Survey (March)

10:00 a.m. Durable Orders final (February)

10:00 a.m. Factory Orders (February)

10:00 a.m. New York Federal Reserve Bank

Deputy SOMA Manager Julie Remache speaks at a seminar in Monetary and Fiscal Policy at Vanderbilt University, Nashville.

8:30 p.m. Australia Trade Balance

Previous: A$5.6B

Forecast: A$5.6B

THURSDAY, APRIL 3

8:30 a.m. Continuing Jobless Claims (03/22)

8:30 a.m. Initial Claims (03/29)

8:30 a.m. Trade Balance (February)

9:45 a.m. PMI Composite final (March)

9:45 a.m. S&PPMI Services final (March)

10:00 a.m. ISM Services PMI (March)

FRIDAY, APRIL 4

8:30 a.m. Hourly Earnings preliminary (March)

8:30 a.m. Average Workweek preliminary (March)

8:30 a.m. Manufacturing Payrolls (March)

8;30 a.m. Nonfarm Payrolls (March)

Previous: 151k

Forecast: 128k

8:30 a.m. Participation Rate (March)

8:30 a.m. Private Nonfarm Payrolls (March)

8:30 a.m. Unemployment Rate (March)

9:00 a.m. New York Federal Reserve Bank

Director of Research Kartik Athreya speaks at the 2025 New York Fed Innovation Conference, New York.

April is tariff month, I think, unless President Trump changes his mind.

The stock market is on tenterhooks waiting for some known path forward.  Investors are similarly agitated as policy changes from the White House have kept everyone off balance and confused about what is the best area to buy into and which sectors should be sold off.

It may be that come April 2, the market will have enough certainty to get some sort of boost – a temporary relief rally.  But that would be a sell into space as tariffs are a negative any way you look at them.  They will be disruptive to the US and global supply chains, negative for US and global growth and, for the US and economies that retaliate, inflationary.

And tariffs are just one slice of the economic picture, which is looking increasingly challenging.  Consumer sentiment is showing weakness, inflation is expected to surge, and unemployment numbers are rising.  Recession signs are showing up everywhere.

The U.S. share market fell 2 percent last Friday.  It’s down more than 9 percent since Trump announced his plan for reciprocal tariffs in the middle of last month – with the tech-heavy Nasdaq market down 2.7 percent and the “Mag Seven” mega-tech stocks down 3.5 percent.

Most US business economists have been revising down their expectations of US economic growth this year from an original consensus of GDP growth of around 2 percent.  Some investment banks’ forecasts are below 1 percent.

With inflation remaining stubbornly high – above the Fed’s 2 percent target even before the core of Trump’s tariffs plans is unveiled, the risk of stagflation – falling growth even while inflation remains high – is rising.  Without a material fall in the inflation rate, the Fed will be forced to keep interest rates on hold.

Trump’s tariffs policy is a game where no one wins. It is doubtful that anything Trump does will materially shrink America’s trade deficit unless it results in a substantial reduction in US living standards and an America that lives within its (diminishing) means.  And it is something to think about that he might inadvertently actually achieve that.

MARKET UPDATE

S&P500

The view of a major top since Feb. remains.  There is scope for further consolidation/ranging before a strong resumption of the downtrend resumes.

Support: $5555/65/$5500

Resistance:  $5675/85 and $5795

GOLD

Gold has pushed to another new high, but the market is seen within the final up leg in the rally from the Feb 28^th low (wave v) as well as the larger up move from the Nov. low at $2537, which suggests a rising risk of a peak for at least a few months. 

Support: ~$3050/$3025/$2995

Resistance: $3095

BITCOIN

No change.  Bitcoin is still seen basing in a large correction, with eventual new highs above that $109 area after.  As I have already pointed out, we could see lower lows in the low $70’s or even the high $60’s, before the correction is exhausted.

Support:  $81.5k/$77k/$73.5k

Resistance: $$88/$89 area/$92/$99.5k

QI CORNER

HISTORY CORNER

On March 31

SOMETHING TO THINK ABOUT

Cheers

Jacquie

(MARKETS ARE DEFINED BY UNCERTAINTY)

March 24, 2025

Hello everyone

WEEK AHEAD CALENDAR

Monday, March 24

8:30 a.m. Chicago Fed National Activity Index (February)

9:45 a.m. PMI Composite preliminary (March)

9:45 a.m. S&P PMI Manufacturing preliminary (March)

9:45 a.m. S&P PMI Services preliminary (March)

Tuesday, March 25

9:00 a.m. FHFA Home Price Index (January)

9:00 a.m. S&P/Case-Shiller comp. 20 Home Price Index (January)

9:05 a.m. New York Federal Reserve Bank President and EO John Williams speaks at the 2025 New York Fed Regional and Community Banking Conference.

9:10 a.m. New York Federal Reserve Bank Director of Research and Head of the Research and Statistics Group Kartik Athreya speaks on the National Economic Outlook.

9:30 a.m. New York Federal Reserve Bank Head of Microeconomics Research and Statistics Group Jaison Abel speaks on the Regional Economic Outlook.

10:00 a.m. Consumer Confidence (March)

Previous: 98.3

Forecast: 94.0

10:00 a.m. New Home Sales (February)

10:00 a.m. Richmond Fed Index (March)

10:15 a.m. New York Federal Reserve Bank Head of the Supervision Group Dianne Dobbeck moderates panel discussion: Views from Community Bank C-suite

Earnings: McCormick & Co

Wednesday, March 26

3:00 a.m. UK Inflation Rate

Previous: 3.0%

Forecast: 2.9%

8:30 a.m. Durable Orders preliminary (February)

Earnings: Dollar Tree

Thursday, March 27

8:30 a.m. Continuing Jobless Claims (03/15)

8:30 a.m. GDP final (Q4)

Previous: 3.1%

Forecast: 2.3%

8:30 a.m. Initial Claims (03/22)

8:30 a.m. Wholesale Inventories preliminary (February)

10:00 a.m. Pending Home Sales Index (February)

11:00 a.m. Kansas City Fed Manufacturing Index (March)

Friday, March 28

8:30 a.m. PCE (February)

Previous: 2.5%

Forecast: 2.7%

8:30 a.m. Personal Income (February)

8:30 a.m. Michigan Sentiment final (February)

10:00 a.m. Fed Vice Chair for Supervision Barr discusses at the 2025 Banking Institute, Charlotte, North Carolina

The market has a cloud of uncertainty hanging over its head.

Trump’s policy agenda is driving markets – and they are showing an unsteadiness as they endeavour to navigate the dynamic landscape.

Investors won’t get clarity on tariffs until April 2 when the number of levies is expected to take effect.

Those worried about a worst-case scenario have allocated more toward Treasurys and gold, as well as other liquid defensive areas.

Also, on deck this week are key economic reports.  PCE and several sentiment surveys are also set to be released.  The data should be quite telling about the consumer’s health and the perceived impact of Trump’s tariffs.

Economists expect more signs of stalling inflation in the Personal Consumption Expenditures (PCE) release due Wednesday.  Economists expect annual “core” PCE – which excludes the volatile categories of food and energy – to have clocked in at 2.7% in February, up from the 2.6% seen in January.  Over the prior month, economists project “core” PCE at 0.3% unchanged from January.

Inflation remains a big hurdle for consumers, and the sticky price pressures are likely to linger longer than expected.

MARKET UPDATE

S&P500

The index remains higher from the Mar 13^th low at 5505.  The bounce could continue.  Any break over $5790/15 area would argue at least another few weeks of gains, while remaining below argues further downside.  The long-term view of a major top remains.  Any bounce, even a deep bounce, will be seen as a correction & part of the significant topping pattern.

Resistance: $5745/$5825

Support: $5500/10 area

GOLD

Gold is overbought after the recent surge since November.  Nearing the end of this rally – rising risk of a top for at least several months.  We may see marginal new highs and/or more consolidation before the topping formation is complete.

Resistance: $3058/63

Support: $2988/$2951/$2915

BITCOIN

Bitcoin is still undergoing a correction.  There is scope for more choppiness and further lows first, before we see new highs.

Resistance: $87.0/$87.5K and $$90.9k/$92/$93k

Support:  $79/$80 and $76/$77/$74.

QI CORNER

HISTORY CORNER

On March 24

SOMETHING TO THINK ABOUT

Cheers

Jacquie

(THE TARIFF FIX)

March 19, 2025

Hello everyone

We all know that markets and uncertainty don’t mix well.  And right now, there is a lot of uncertainty surrounding U.S. trade policy.

While the Trump administration tariffs on Mexico and Canada have been delayed for a month, the 10% tariff on Chinese goods has gone into effect.  The move has rattled markets, leaving many American businesses and consumers wondering what comes next.

Tariffs are a double-edged sword.  On the one hand, they can serve as a powerful negotiating tool, as President Trump has pointed out.  The U.S. economy is the largest in the world, and many countries rely on American consumers to buy their goods.  By imposing tariffs, the U.S. can pressure trading partners into more favourable deals and protect domestic industries from unfair competition.

On the other hand, tariffs raise costs for businesses and consumers. About half of America’s annual imports – more than $1.3 trillion annually – come from China, Canada and Mexico.

We know that certain sectors will be impacted harder than others.  The automotive industry, for instance, relies heavily on parts from Mexico and Canada.  Energy prices could spike as well, given that over 70% of U.S. crude oil imports come from these two countries. Let’s also not forget about gas.  Just in the Midwest alone, gas prices could rise by as much as $0.50 per gallon, according to the Council on Foreign Relations. And then there’s something we all rely on – food.  Mexico supplies over 60% of the fresh vegetables and nearly half of all fruit and nuts consumed in the U.S.  Higher import costs could mean higher prices at the grocery store.

A historical perspective on Tariffs

Historically, tariffs used to be a major source of government revenue.  Between 1798 and 1913, they accounted for anywhere from 50% to 90% of federal income.

Then, times changed.  Over the past 70 years, tariffs have rarely contributed more than 2% of federal revenue.  Free trade was the typical landscape.

For example, last year, U.S. Customs and Border Protection collected $77 billion in tariffs – just 1.57% of total government income.  Since the 1930s, the U.S. has moved away from protectionism in favour of trade liberalization.  Agreements like the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), have dramatically lowered global tariffs.  Today, roughly 70% of all products enter the U.S. duty-free.

Trump’s approach marks a shift back toward tariffs as a policy tool.  Arguably, the U.S. has more leverage than most countries – as many economies depend on access to the U.S. market – but tariffs aren’t without consequences.

China has already retaliated, imposing its own tariffs on U.S. goods.  These include a 15% duty on coal and liquefied natural gas (LNG), as well as 10% tariffs on agricultural machinery, crude oil, and some vehicles.  Beijing has also launched an antitrust investigation into Google – likely as a form of economic retribution.

Time will tell how well the U.S. economy navigates the changing trade policy.

Bitcoin and its short to medium-term movement

Bitcoin is attempting to form a base.  There is a possibility it could fall to make a third point, (see the trendline drawn above) thereby making two points makes a third pattern, which is usually bullish.  Or it could rally from its present position.  Another week or so of messy price action is possible before a move to the upside is seen.

Cheers

Jacquie

(THE FED MAY PUT RATES ON HOLD THIS YEAR)

March 14, 2025

Hello everyone

Good inflation reports mean lower rates, right?  The Fed may not see it that way.

Inflation reports, which showed better-than-expected slowdowns in consumer and wholesale prices last month, may be hiding an unpleasant surprise.  Progress on the Fed’s favourite indicator has possibly stalled.

Bank of America economists said the monthly increase in core Personal Consumption Expenditure (PCE) may have picked slightly up to 0.4% in February, with the year-over-year changes also picking up slightly.

Economists Jeseo Park and Stephen Juneau from Bank of America have indicated to clients that their forecast for PCE inflation reinforces their view that inflation is “unlikely to fall enough for the Fed to cut this year, especially given policy changes that boost inflation.”  Furthermore, they expressed the view that they expect “policy rates to stay on hold through year-end unless activity data really weakens.”

The Federal Reserve meets next Wednesday to decide on interest rates.

In contrast to BofA’s views on the economy, Comerica (CMA) expects that the PCE report will be benign for markets but added that the outlook for inflation now depends on tariffs, deportations, and the Department of Government Efficiency (DOGE)

Today’s benign PPI report wasn’t enough to support stocks after President Trump said he’d impose 200% tariffs on alcohol imported from the EU, escalating the trade war.

QI CORNER

Recording of February 2025 Jacquie’s Post Zoom Meeting

https://www.madhedgefundtrader.com/jacquie-munro-meeting-replay-february-2025/

(I have included the link here in case any of you could not open the recording I sent out last week).

Cheers

Jacquie

(WELCOME TO THE WHIPLASH MARKET)

March 10, 2025

Hello everyone

WEEK AHEAD CALENDAR

TUESDAY MARCH 11

6:00 a.m. NFIB Small Business Index (February)

10:00 a.m. JOLTS Job Openings (January)

WEDNESDAY MARCH 12

8:30 a.m. Consumer Price Index (February)

8:30 a.m. Hourly Earnings final (February)

8:30 a.m. Average Workweek final (February)

2:00 p.m. Treasury Budget (February)

THURSDAY MARCH 13

8:30 a.m. Continuing Jobless Claims (03/01)

8:30 a.m. Initial Claims (03/08)

8:30 a.m. Producer Price Index (February)

FRIDAY MARCH 14

8:30 a.m. Michigan Sentiment preliminary (March)

Expiration of Congressional continuing budget resolution from December

Cyclone Alfred has given me a couple of sleepless nights here on the Gold Coast.  In my area, there are huge branches and some trees down, powerlines down across roads, traffic lights out, people missing, presumed dead, in raging floodwaters, and major shopping centres closed due to power outages.   If this had been a Category 4 or 5, the coast would have been wiped out.  The buildings here are not built to withstand that type of ferocity. 

It's Sunday morning as I am typing this, and we are still without power. (I’m relying on battery power.)  Thursday evening, the power went out, and I have no idea when it will be reconnected.  It could be up to a week before we have power again, so it is all about making do.

It’s Monday morning, and at long last, it has stopped raining. 250,000 people are still without power, and I am one of them.   In the last 24 hours, Brisbane had its wettest day in 51 years, with 275mm of rain falling.

Since Thursday evening last week, I have been working by torchlight and daylight.  Reading books in my downtime.   Listening to howling winds and rain belt the roof, windows, and doors, and hoping that the building structure can withstand all the punishment mother nature throws at it.

========================================================================

So, to the markets.  And this week, investors will be looking for some reassurance and clarity about trade and economic growth.  And that is going to be difficult to capture, when President Trump keeps changing his mind on the timing of trade tariffs and their extent, and Musk keeps executing his DOGE agenda.

But inflation data out on Wednesday may settle some nerves about the economy.  According to economists polled by FactSet, the consumer price index is set to have risen 2.9% on an annual basis, down from 3.0% in the prior report.  Core inflation, excluding food and energy prices, is expected to have risen 3.2%, down from 3.3% previously. 

The Producer Price Index on Thursday is also expected to have eased to 3.1% year over year, according to FactSet consensus estimates.  That’s down from 3.5% previously.  Core inflation is expected to have fallen to 3.5% from 3.6%.

But these numbers could go pear-shaped if companies start to pass along higher costs to consumers and inflationary pressures from Trump’s tariffs eventually start to show up in the data.  That could be like a big black storm cloud over the market/economy.  At the moment, no one is thinking recession.  Remember that data is a lagging indicator.

MARKET UPDATE

S&P500

The S&P500 failed to breach the 6000-mark last week. The index has fallen through the 5773 mark, which I marked as a bearish break/the base of a rising wedge. This significant break arguably confirms that the S&P500’s rally from the October 27, 2023, low of 4103.78 is finally over.   It would be no surprise to me to see the S&P500 make a sustained break through 5700 this week.  I am anticipating a break of 5400 by around mid-April, or even sooner.  (That will depend on the whiplash we are getting from Trump’s “change of mind” notions, which seem to happen almost daily now).   Investors should use all the rallies to exit equities or to buy put options or (SH) for hedging.  S&P500 has multiple supports between 5693 and 5650, so if you want to take profits, do so in a pullback toward 5773 to 5850. 

Support =$5655/75 and $5570/95

Resistance =$5775/85/ $5845/55 and $5895/10 areas

GOLD

Gold’s April futures made a new all-time high of 2968.5.  Gold closed at 2908.09 on Friday. Most see gold’s movement from the Feb 24^th high at $2956 as corrective and believe gold will show eventual new highs after some consolidation.  Yes, that’s possible.  But there is another point of view here.  Gold could continue to show further weakness if it falls and holds below 2845 levels.  And the bigger confirmation of a bearish move for gold would be if/when it closes below USD 2700 levels.  This down move could continue for many months and may even take gold towards USD 2000-2250 levels.  So, with this outlook, you should be looking to book profits in every rally and sell short once the sell signal confirms.  The risk reward matrix may have moved away from the buyers.  Trade carefully.

Support =$2887/92 and lower down $2857/62

Resistance = $2928/33

BITCOIN

Bitcoin remains lower from the Jan peak at 109.4k. In the big picture view, the downside is seen as corrective and with eventual new highs after.   There is potential for further weakness below the Feb. 28^th low at 78.2k, although that weakness would likely be short-lived and part of that larger correction.   A break/close above the $95.0 area would argue that the large correction since January is complete.

It is important to note that once Bitcoin does reach its $128-$160 target, the coin may possibly fall into a bearish phase, where it could see a level of $32,000 or so.  So, after this rally, I would be a seller.

And remember, keep a sell-stop in place at $70 or at a maximum low of $60k, as it could spike down to these levels before it rallies.  If it breaks these levels, observe your sell-stops.

Last week, Trump signed an Executive Order relating to the establishment of a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile, as well as the first Crypto Summit at the White House.  This marks the first time Bitcoin has been formally recognised as a reserve asset of the United States government and sets a powerful precedent – not just for sovereign entities but also for corporations, financial institutions, and institutional investors.

Support = $78k/$70k

Resistance = $92.5k/$95.0k area

QI CORNER

HISTORY CORNER

SOMETHING TO THINK ABOUT

Cheers

Jacquie