Weekend Update, April 14th, 2025
Index, Sector & Asset Performance
There are decades where nothing happens; and there are weeks where decades happen”–Vladimir Ilyich Lenin. The S&P 500 index traded in a very wide 12% range last week, 4854 low to a 5448 high, as investors fretted about ‘on again/off again’ tariffs alongside stresses in interest rates markets. Prior to last week, since 1950, only in 1987, 1998, 2008 and 2020 had the S&P500 dropped -10% in only 3 days. All except 2008 proved to be “The Low”. Late Wednesday’s +9.5% rally was the third largest single-day advance and the fifth largest move in either direction. Last week’s volatility was previously only by the extreme volatility seen during the Global Financial Crisis and 1987 crash.
Even with all this, S&P 500 finished the week up +5.7%. The rally was triggered by President Trump’s announcing a 90-day pause on reciprocal tariffs. The S&P 500 is down just under -9% on the year. The Nasdaq 100’s +12.2% one-day move was its largest since 2001. The VIX Index finishing near 40 demonstrates investors’ current stance on volatility and shirt term risk. Chinese stocks tanked -8% as the U.S. upped tariffs to 145% on China.
Many sell side investors are pricing in economic risk, and many Wall Street shops are now calling for recession. Others, like Goldman Sachs, can’t seem to make up their mind hour by hour.
Over the weekend, the administration pivoted a bit on tariffs. Apple (AAPL), Nvidia (NVDA), Dell (DELL), Taiwan Semiconductor (TSM), Super Micro Computer (SMCI) and other technology product makers won a huge exemption from President Donald Trump’s “reciprocal” tariffs. On Sunday, Commerce Secretary Lutnick said the reprieve is temporary.
Whether it is foreign government purchases of USA technology goods and services, or foreign manufactured and sourced hardware backed by American designed IP, think DELL and Apple, almost 50% of technology sales are made outside the US. More specifically in relation to recently announced technology, smart phones, and electronic exemptions according to government data, the U.S. Imported almost $390 Billion of semis and computers in 2024, including U$100bn or 23% of total imports from China. According to Rand China Research, the biggest category related to China is smartphones. Last year, the US imported phones worth around $41billion. Smartphones alone, accounted for almost 9% of total imports from China. Thank you, Apple. Computer hardware accounted for another $36 billion in 2024, think of the likes of Dell, HP, and other AI box makers. Altogether, the new “exemptions” cover semiconductors and consumer electronic worth almost 22% of Chinese import in 2024.
Apple, Nvidia and other notable techs are materially higher this Monday. Smartphones, laptops, PCs, servers, memory chips, flat-panel displays, solar cells and hard drives are exempt from the additional 125% tariff on Chinese goods and 10% baseline levy on imports from other countries, the U.S. Customs and Border Protection announced late Friday. The electronics products still face a 20% tariff on Chinese goods imposed earlier this year.
A summary of last week’s negative returns, ex-Gold, from FS Investments:
The 10-year surged +50 bps to 4.49. Much of the rise came from the term premium, suggesting investors are demanding more to hold longer term Treasury bonds. The Bloomberg Agg fell -2.54%, bonds’ worst week since the Treasury market seized up in March 2020 during Covid. There was much talk of hedge funds blowing up in a “basis trade”. Here’s more on that topic from Morningstar.
Economic Indicators and Earnings Commentary
Lost in last week’s tariff turmoil, the U.S. CPI report showed inflationary pressures cooling in March with core CPI rising only 0.1% m/m. This week look for producer price growth to ease to 3.1% y/y in March.
Gold shot higher finishing above $3,200/oz for the first time ever. Bitcoin looks like its trying to base at $85k.
The U.S. dollar continued lower to 100, down -10% from its 4q24 peak when most strategists were worried about its strength.
Oak Harvest Weekly Stock Talk
“Tariff”ied Air: Inside Liberation Day, Tariff Chaos, and Market Fallout
Past performance is no guarantee of future results. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.
The preceding discussion is for informational purposes only. Investing involves risk and no reference to any security listed above should be considered a buy or sell recommendation. Past performance is no guarantee of future results. Advisory services are provided through Oak Harvest Investment Services, LLC, a registered investment adviser.
