/ April 11
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Friday:
Michigan Consumer Sentiment Prel (54.5 exp.)PPI MoM (0.2% exp.)
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Friday:
JPMorgan Chase
BlackRock
Morgan Stanley
BNY Mellon
Wells Fargo
Daily Briefing
*The jaw-dropping rally seen Wednesday after President Trump announced a 90-day pause on reciprocal tariffs for most countries did not have legs; major indices started the session lower and remained in negative territory into the closing bell, yet they did pare their losses in the afternoon trade;
*At their worst levels, the Dow, Nasdaq, S&P 500, S&P 400, and Russell 2000 were down -5.4%, -7.2%, -6.3%, -6.5%, and -6.5%, respectively, but they finished the day down -2.5%, -4.3%, -3.5%, -4.1%, and -4.3%, respectively;
*SPY got rejected from its lower trendline level; this is visible on the unadjusted chart presented below; not a good look from a technicals perspective, but at least most of Wednesday’s gains are still holding; resistance stands at $565, while support is at the recent lows of $507;
*Still coming off very oversold levels, the MACD signal will eventually turn into a BUY crossover from very low levels;
*Dark Pools buying was still soft at the mega cap level, with the majority of issues seeing bearish volumes; the average for the day was 42.2% buying volume, clearly below the 45% “neutral” threshold; besides WMT, which has been consistently bid during the last couple of sessions, institutions have been buyers of NVDA stock, a certainly interesting disposition;
*As far as major sectors ETFs are concerned, the market remains consistently in a negative GEX environment, with not a single security pointing positive;
*This Gamma Exposure profile is not surprising, since all sectors except Staples (XLP) finished with losses; the biggest loser was the energy sector (XLE, -6.4%), followed by information technology (XLK, -4.6%), consumer discretionary (XLY, -4.1%), communication services (XLC, -4.1%), and materials (XLB, -3.0%);
*The Philadelphia Semiconductor Index, up +18.7% on Wednesday, declined -8.0%; the Vanguard Mega-Cap Growth ETF (MGK), up +12.2% on Wenesday, declined -4.1%;
*The impetus for the pullback was rooted in the following dynamics:
The realization that the U.S. economy is not out of the woods; it is still only a "pause" on the reciprocal tariff action, and a baseline 10% tariff rate still applies; meanwhile, there is still the draconian tariff rate for China, which was clarified by the White House today as 145% (125% reciprocal tariff + existing 20% tariff related to fentanyl);
Renewed selling by skittish participants who saw Wednesday’s rally as a gift to sell at higher prices and minimize the pain of losses that followed the April 2 reciprocal tariff announcement — ourselves included;
Comments from various Fed officials making it clear the Fed is worried about tariffs driving up inflation and isn't inclined to cut rates soon;
Disappointing earnings results from CarMax (KMX 66.43, -15.62, -19.5%);
Deficit angst as the House passed a reconciliation resolution that includes tax cuts, which some fear will not be offset with enough spending cuts to avoid adding to the budget deficit;
Sharp losses for the dollar against other major currencies, which presumably stemmed from concerns about U.S. growth prospects, worries about the U.S. budget deficit, and waning confidence in U.S. investments on the part of foreign investors due to the policy volatility; the U.S. Dollar Index declined 1.9% to 100.98;
*The March CPI report brought good inflation news, but that didn't help sentiment because market participants are anticipating higher prices in coming months as tariff actions take root across supply chains;
*The annual inflation rate in the US eased for a second consecutive month to 2.4% in March 2025, the lowest since September, down from 2.8% in February, and below forecasts of 2.6%; Core CPI, which excludes volatile items like food and energy, eased to 2.8% in March 2025, down from 3.1% in February and below the market expectation of 3%;
Core CPI YOY
*Initial jobless claims increased by 4,000 to 223K, below 225K estimations;
*TLT declined -2.76% by the end of the session and is now sitting on technical support at $86;