/ April 03
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Thursday:
Initial Jobless Claims (225K exp.)
ISM Services PMI (53 exp.)
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Friday:
Non Farm Payrolls (128K exp.)Unemployment Rate (4.2% exp.)
Fed Chair Powell Speech
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Thursday:
N/A
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Friday:
N/A
Daily Briefing
*The stock market closed with gains across the board, but the real action occurred in the after hours session as investors responded to Trump’s tariffs announcement; barring that, the Dow Jones Industrial Average (+0.6%) jumped more than 200 points while the S&P 500 and Nasdaq Composite gained +0.7% and +0.9%, respectively;
*There was some optimism that the tariffs will be less robust than feared; CNBC reported that a 20% universal tariff is unlikely and there's also some hope that tariffs are still largely being used as a bargaining chip to bring other countries to the negotiating table; that turned out to be partially true, but overall, the tariffs were higher than feared;
*SPY’s focus now moves to the downside, as the AH reaction was brutal and negative; 2 levels come into play at the moment: the recent lows at $549, and our general equity exposure stop loss level of $544; given the current circumstances, we would say that recent lows holding by Friday’s close would be a win for the bulls — but that seems to be very far away at the moment; any break below firmly puts the $505 downside in view for the medium term;
*While the MACD signal was technically positive at yesterday’s close, today’s expected price action will probably cause a negative crossover;
*Let’s break down the tariff announcement and try to understand exactly how much higher than expected these numbers were:
China
Announced: 34% (on top of existing)
Expected: Around 25%
Vietnam
Announced: 46%
Expected: Likely 20-25%
European Union
Announced: 20%
Expected: Possibly 10-15%
Taiwan
Announced: 32%
Expected: Likely 20-25%
Auto Imports
Announced: 25%
Expected: 25%
Baseline Tariff on All Imports
Announced: 10%
Expected: Most expectations leaned toward targeted tariffs (e.g., a 15 countries list) rather than a universal rate; this was unexpected
*The administration insists this strategy will reset the global trade scoreboard, making up for decades of asymmetric tariffs and weak enforcement;
*Tesla (TSLA , +5.3%), NVIDIA (NVDA, +0.3%), Apple (AAPL, +0.3%), and Amazon.com (AMZN, +2.0%) rose during the cash session, but fell in the after hours trade by sizable amounts: TSLA, -4%, NVDA, -3.3%, AAPL, -7.2%, AMZN, -5.3%;
*It turns out that hedge funds and institutions alike were wrong about the current set-up; dark pools volume data and gamma exposure signals were broadly positive ahead of the tariff announcement;
*Dark Pools recorded more buying volume than selling at least at the sector ETF level (56% positive on average for yesterday and 58% for the past 5 sessions); SPY did see more sellers than buyers, however, with only 46% buying volume, down from an 52% on the week;
*The EU has released the following statement meanwhile:
“At the same time, we are prepared to respond. We are already finalizing a first package of countermeasures in response to tariffs on steel. And we are now preparing for further countermeasures, to protect our interests and our businesses if negotiations fail. We will also be watching closely what indirect effects these tariffs could have, because we cannot absorb global overcapacity nor will we accept dumping on our market As Europeans we will always promote and defend our interests and values. And we will always stand up for Europe. But there is an alternative path. It is not too late to address concerns through negotiations. This is why our Trade Commissioner, Maros Šefcovic, is permanently engaged with his US counterparts."
-EU President von der Leyen
*We can only surmise that the path forward entirely depends on how other nations respond to the planned tariffs and how long they stay in effect;
*In other news, the JOLTs report shows that job openings dropped to a six-month low of 7.568 million; rates for hires, quits, and layoffs remain low, indicating that the labor market is not very active; even though new hires are down, there are few resignations or layoffs; keep in mind that the JOLTs report is released a month before the BLS employment report, so any recent government layoffs may not be reflected yet;
*The ISM manufacturing survey indicates a return to economic contraction at 49, down from 50.3 last month; employment and new orders have declined further, leading managers to express concerns about the current economic situation; prices paid increased to 69.4, up nearly five points from last month, suggesting that manufacturers are worried about tariffs and the costs of goods;
*Treasuries saw an unwinding of safe-haven trading, which got reversed in the after hours session; the 10-yr yield rose four basis points to 4.20%, and the 2-yr yield rose four basis points to 3.90%;
*TLT slipped -0.07%, remaining in its recent technical range; we’ll see if a breakout occurs today;