Issue #4: Turbulent Markets: Tariff Impacts and Key Earnings Calls 🤔

What’s in this issue;

In this week's newsletter, we tackle the seismic market shifts triggered by recent U.S. tariffs and analyse their global impacts. With major U.S. indices experiencing significant declines, we explore what this means for investor confidence and market stability.

We'll also cover top winners and losers among S&P 500 stocks and look at commodities and forex fluctuations. As we anticipate the fallout from President Trump's tariff announcements, we spotlight the U.S. and global economic concerns, including the national debt discussions and inflation forecasts.

Additionally, we highlight notable upcoming earnings from key companies, and delve into intriguing stories like Lidl’s rapid TikTok Shop success.

Join us as we navigate these unprecedented market dynamics and prepare for what lies ahead.

Feel free to share our newsletter with friends and family: Click here to spread the word.

We'd love to hear from you! Send your feedback to [email protected].

Weekly Movement

U.S. Indices

• Dow:-7.9% to 38,315

• S&P 500:-9.1% to 5,074

• Nasdaq:-10% to 15,588

• Russell 2000:-9.7% to 1,827

• CBOE Volatility Index:+109.3% to 45.31

S&P 500 Sectors

• Consumer Staples:-2.2%

• Utilities:-4.5%

• Financials:-10.3%

• Telecom:-8.4%

• Healthcare:-6.5%

• Industrials:-9.4%

• Information Technology:-11.4%

• Materials:-8.3%

• Energy:-14.1%

• Consumer Discretionary:-8%

• Real Estate:-5.4%

World Indices

• London:-7% to 8,055

• France:-8.1% to 7,275

• Germany:-8.1% to 20,642

• Japan:-9% to 33,781

• China:-0.3% to 3,342

• Hong Kong:-2.5% to 22,850

• India:-2.7% to 75,365

Commodities and Bonds

• Crude Oil WTI:-10.6% to $61.99/bbl

• Gold:-2.5% to $3,035.4/oz

• Natural Gas:-5.6% to 3.837

• Ten-Year Bond Yield:-0.2 bps to 3.999

Forex and Cryptos

• EUR/USD:+1.18%

• USD/JPY:-1.94%

• GBP/USD:-0.37%

• Bitcoin:+1.2%

• Litecoin:-1.2%

• Ethereum:-0.8%

• XRP:-0.1%

Top S&P 500 Gainers

• Lamb Weston (LW):+9%

• Dollar General (DG):+8%

• Molina Healthcare (MOH):+7%

• Ross Stores (ROST):+4%

• The TJX Companies (TJX):+3%

Top S&P 500 Losers

• APA (APA):-27%

• Micron Technology (MU):-27%

• Microchip Technology (MCHP):-26%

• Western Digital (WDC):-25%

• GE HealthCare Technologies (GEHC):-24%

What is Moving the Markets This Week

1. U.S. Tariffs Announcement

• President Donald Trump has introduced a 10% tariff on all imports to the U.S., targeting nations with existing levies on U.S. goods. This major policy shift is a key component of Trump’s 2024 campaign.

2. Targeted Tariff Increases

The order significantly impacts several countries:

• China: New 34% tariff on $460 billion in annual imports.

• Japan: 24% tariff increase on $152 billion in goods.

• European Union: 20% tariff on $605 billion in imports.

• Lesotho: Faces the highest tariff increase at 50% on $350 million in goods.

3. North American and Auto Tariffs

• Mexico and Canada will contend with an existing 25% tax, excluding free trade agreement goods. A similar 25% increase applies to all foreign autos.

4. Market Concerns

• While aimed at promoting U.S. manufacturing and addressing trade imbalances, these tariffs raise fears of inflation and potential trade conflicts.

5. Tesla's Vehicle Deliveries

• Tesla reports 336,681 vehicle deliveries in Q1, marking a 13% year-over-year decline. Despite this, shares rose on speculation that CEO Elon Musk might leave his role for a government position.

Hot Take: A Tipping Point for Markets?

It was a historic week for markets—and not in the way investors might have hoped. President Donald Trump's sweeping tariffs announcement on "Liberation Day" has hit U.S. stocks with a seismic shockwave reminiscent of the COVID-19 market crash in 2020. The introduction of the steepest American trade barriers in over a century has not only battered global sentiment but also darkened U.S. growth prospects and spiked recession fears.

Caught off guard by the severity of Trump's tariffs, traders reacted predictably—abandoning equities for safer havens like the dollar and bonds. The benchmark S&P 500 index has plunged over 9% in just one week, dragging it deep into correction territory. The Dow isn't far behind, having slipped 14.9% from its most recent peak, while the tech-heavy Nasdaq has crashed into bear market territory with a dizzying 22.7% decline.

Investors, hoping for a soothing word from Federal Reserve Chair Jerome Powell, were instead told the economic impact of these tariffs could be more significant than anticipated. Powell's cautious stance—waiting to see how events unfold before adjusting interest rates—hardly instills confidence amid growing economic uncertainty.

While the surprisingly robust March nonfarm payrolls report offers a faint glimmer of hope, many economists believe it could be the last hurrah. The week's dramatic sell-off—S&P down 9.1%, Nasdaq down 10%, and Dow down 7.9%—underscores a volatile and uncertain future.

This week might just be the tipping point that makes or breaks market confidence in the coming months. As traders and investors brace for what's next, the strategy must now pivot from reactionary to adaptive in this new era of unpredictability.

Top Economic News This Week

1. Impact of U.S. Tariffs on the UK

• The UK is preparing for potential market disruption following U.S. President Donald Trump's tariff announcement. British ministers are considering possible retaliatory tariffs on American goods like bourbon whiskey and motorcycles, though immediate action is unlikely due to a four-week consultation period announced by Trade Secretary Jonathan Reynolds.

• Despite hopes for an "economic deal" to mitigate these tariffs, the FTSE 100 hit a three-month low, echoing the Dow's nearly 4% drop, as global markets react to heightened recession risks.

2. UK Economic Growth Concerns

• Experts warn that the UK's economic growth, projected at 1% this year, could see a reduction of up to 0.5 percentage points due to the tariffs. This puts Chancellor Rachel Reeves’s fiscal plans at risk, with potential consequences for future public spending or tax adjustments.

• Grocery price inflation has risen, with supermarket prices up 3.5% compared to last year, raising consumer concerns alongside energy costs.

3. Gold Prices Surge Amid Uncertainty

• Gold prices have surged to a record high amid market volatility following Trump's tariff plans. Spot gold touched $3,148.88 (£2,443.83) an ounce as investors turn to safe-haven assets in response to global economic uncertainty. This rally is supported by central bank demand and potential Federal Reserve interest rate actions.

• Other precious metals showed mixed results, with silver declining and palladium gaining slightly in the wake of these developments.

Market Outlook for Next Week

Markets have a busy week ahead, with several key economic indicators and the start of the first quarter earnings season taking center stage.

1. Key Events to Watch

• U.S. Tariff Fallout: The market's reaction to the recent U.S. tariffs imposed by President Donald Trump remains a major focus. Investors are questioning whether markets have bottomed after a significant two-day global rout, or if more volatility is on the horizon.

• Inflation Data: The March Consumer Price Index (CPI) report, scheduled for Thursday, is crucial. Investors will assess whether cooling inflation (forecasted at 2.5% headline, 3.0% core) bolsters the argument for potential rate cuts by the Federal Reserve.

• Federal Reserve Speakers: Throughout the week, various Fed officials will discuss the economic outlook. Traders will eagerly listen for insights on how tariffs could influence monetary policy.

2. First Quarter Earnings Highlights

Notable Earnings Releases:

• Monday, April 7: Levi Strauss (LEVI), Dave & Buster’s (PLAY)

• Tuesday, April 8: Tilray Brands (TLRY), RPM International (RPM)

• Wednesday, April 9: Constellation Brands (STZ), BBB Foods (TBBB), Delta Air Lines (DAL)

• Thursday, April 10: CarMax (KMX)

• Friday, April 11: JPMorgan Chase (JPM), Wells Fargo (WFC), Morgan Stanley (MS), BlackRock (BLK), Unity Bancorp (UNTY)

3. Other Key Economic Indicators

• Monday: Germany Trade Surplus (forecast: $17.4B) - Robust exports could indicate strength in Germany's industrial sector amid tariff challenges.

• Tuesday: Australian Consumer and Business Confidence - Weak sentiment could signal softer demand and investment.

• Wednesday: U.S. FOMC Meeting Minutes - Investors will analyse for guidance on future Fed actions.

• Friday: China's New Loans, UK Manufacturing Production, U.S. Producer Prices Index (PPI), and University of Michigan Consumer Sentiment.

The combination of economic data releases and corporate earnings will likely shape market sentiment and provide further clues regarding the broader economic outlook.

Finance News: Highlights from the Spring Statement

1. Fiscal Strategy and Taxation

• No new tax increases were announced in Chancellor Rachel Reeves's spring statement. Instead, the focus is on cutting welfare and benefits to address public finance gaps.

• Reeves emphasised her commitment to one major fiscal event per year, with the spring statement serving as a financial update rather than a platform for new taxes or spending.

• Despite no tax hikes, the government aims to raise an additional £1 billion by cracking down on tax evasion.

2. Economic Outlook and Challenges

• The Office of Budget Responsibility (OBR) has halved its growth prediction for the UK from 2% to 1% due to geopolitical uncertainty and global trade disruptions.

• Inflation is expected to rise to 3.2% this year, with the Bank of England's 2% target unlikely to be achieved until 2027.

• The Labour government's autumn budget surplus is forecast to transition into a deficit by 2029-30 due to rising interest payments.

3. Social and Business Impacts

• Changes to welfare include stricter rules for personal independence payments (Pips) and cuts to disability benefits, expected to save £4.8 billion by 2029-30.

• No adjustments to employers' national insurance contributions were announced, despite business leaders' concerns over increased costs.

• Critics argue that higher capital gains tax and reduced R&D tax credits may deter investment in the UK.

4. Modernisation and Technology

• A £3.25 billion "transformation fund" has been allocated to modernise government operations using AI, alongside investments in the probation service.

• Concerns were raised about linking AI adoption to job cuts; experts advocate for a focus on AI as an enhancement rather than a replacement.

• Defence spending will increase by £2.2 billion, emphasising AI-powered warfare technologies.

5. Employment and Welfare Initiatives

• Reeves highlighted investments in getting people back to work, including £1 billion for supporting youth employment and £400 million for job centers.

Target Updates: Companies I'm Watching

1. Microsoft (MSFT)

• I'm exercising patience as I wait for a potential price dip. Microsoft's strong fundamentals and strategic investments keep them ahead, with strong customer loyalty and opportunities for upselling thanks to their reliable infrastructure.

2. Nvidia

• I've recently added more Nvidia shares, reinforcing my confidence in their potential to become a tech giant. Nvidia is poised to drive future industries like self-driving cars, robotic employees, etc.

3. Other Favorites

• Aside from Microsoft and Nvidia, Taiwan Semiconductor Manufacturing Company (TSMC) is also on my radar as they play a pivotal part in the eco system.

Useful Info: Interesting Stories

Lidl's TikTok Success

• Lidl recently launched on the TikTok Shop, selling over 3,000 chocolate bars in just 18 minutes, earning £37k almost instantly.

Things I'm Paying Attention To

1. Visa vs. Mastercard for Apple Partnership

• Visa offers $100M to replace Mastercard as Apple’s credit card partner. Apple is exploring new issuers like Amex, Barclays, Synchrony, and JPMorgan. Whoever secures this partnership could significantly boost their transaction volumes and visibility.

2. U.S. National Debt Concerns

• The U.S. might hit the debt ceiling "X-date" as early as May, risking missed payments and increased market volatility. Current national debt is $36.1 trillion, 98% of GDP, which may lead to inflation and interest rate risks. Investors are cautioned to manage exposure to U.S. government-dependent sectors.

Engage with Me:

• Join my WhatsApp Group: Chat Link

• Interested in my investment thesis over 20+ growing stocks? Reply for access.

Disclaimer: This is not investment advice, just my personal opinions.