Summary – A top-down review of interesting calls and comments made last week in Treasuries, monetary policy, economics, stocks, bonds & commodities. TAC is our acronym for Tweets, Articles, & Clips – our basic inputs for this article.
Editor’s Note: In this series of articles, we include important or interesting Tweets, Articles, Video Clips with our comments. This is an article that expresses our personal opinions about comments made on Television, Tweeter, and in Print. It is NOT intended to provide any investment advice of any type whatsoever. No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Macro Viewpoints & its affiliates expressly disclaim all liability in respect to actions taken based on any or all of the information in this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerance.
1.”Serve them right“?
What a week it was! Many individual moments to remember. But the one that struck us as “serve them right” was a few minutes after 11 am on Friday morning. Actually that expression is the gentlest one we can find to express our true feelings. Look at the 1-day chart of Friday, April 4, 2025:
The Dow was down about 2,000 points just before 11 am when the news came of Vietnam leader’s call with President Trump saying they will drop the tariff on US to zero. As you can see, the Dow rallied about 1,000 points on that positive news.
Then Spake Powell. To begin with, we could NOT figure out why the Fed Chair would even want to give an address & take questions on a day filled with such angst & destruction. What might Powell have lost had he found an excuse to not make a public address on Friday? Nothing in our opinion. Stupid us! We thought Powell might remember the time honored First Do No Harm rule of Fed Chairs Greenspan, Bernanke & Yellen (Can’t speak of Volcker, Powell’s demi-god, because he was before our time). Look at the track record of previous Fed Chairs, (including Powell in 2020) at similar junctures:
- zerohedge@zerohedge – The last time the market dropped 9.5% in two days, the Fed unleashed a multi-trillion bailout of the economy including $500BN in QE, $1 trillion daily repo and tens of billions in junk bond ETF purchases
Frankly, all Powell had to do on Friday intra-day was to speak gently & give away nothing. Tempering fear & cooling down sentiment was the need of the moment. The most important line of Powell’s comments, per CNBC’s Steve Liesman, was the blunt statement “will not allow temporary inflation to be permanent“. And Liesman was right for a change. We waited for a corresponding “will not allow temporary slowdown to be recessionary” comment at least to appear balanced. It didn’t come.
We are simple folk & in our simple opinion, this action of Fed Chair Powell was appalling in its contempt not just of President Trump but of all investors whose investments are in the US stock market. What kind of a leader or even a human being, except a Hitler-type, express such scorn for the people of his country? If he hated Tariffs, even if he hated President Trump, double even if he thought Tariffs would lead to rampant inflation, there were other times & podiums to say what he wanted to deliver. But to do it in a one-liner absolute comment laced with contempt for Americans at a critical market juncture of a Friday late-morning?? We simply cannot comprehend it.
Look at the chart above to see what happened to the S&P after he finished speaking. It went straight downhill & was saved only by the market close.
And you know what is so unfathomable about Powell’s diktat? Inflation is nowhere to be found at this time, as veteran Jim Paulsen said after Friday’s close on CNBC:
- ” … no inflation is seen in the bond market; break-even rates are in a free fall; no inflation is seen in the commodity markets – they are plummeting; no inflation seen in inflation-sensitive stocks in the stock market; energy stocks were terrible today; my point is that Fed’s going to lose many voices in its favor; I think Fed is going to be forced to ease… “
Look what Bob Michele, JPMorgan Asset Management Chief Investment Officer and Head of the Global Fixed Income, Currency & Commodities group, said on Bloomberg Radio on Friday morning:
- “…. Bonds look great. … This isn’t a market with the Fed around zero-1%; the ECB at minus 0.5%, minus 0.75%. This is a Fed at 4.375% with a lot of firepower to bring rates down if there is no grand bargain and if these tariffs hit in full force & there is some retaliation, the Fed could bring rates down 200 bps to 2.25% – 2.5%. The entire Treasury curve goes down to the low twos”
But that was in the morning. Then came Fed Chair Powell with his contemptuous “Serve them Right” type remarks. Guess what happened after the close on Friday – JPMorgan’s chief Economist Michael Feroli sees
- “a two-quarter recession occurring in the back half of 2025 as GDP contracts by 1% in the third quarter of the year and by 0.5% in the fourth quarter. For the full-year 2025, Feroli’s team projects GDP will fall by 0.3%.”
Unless Fed Chair Powell understands his grievous arrogant mistake on Friday and steps up the time honored “Fed Chair during Crisis” plate, a recession later this year would indeed be probable. And given the shape of the Treasury Yield Curve, he has enough Fed-type reasons to ease & stay within the track record of illustrious Fed Chairs like Greenspan & Bernanke. For those who may not know, look what the Treasury curve looks like:
- Fed. Funds rate 4.375%; 1-yr rate 3.881%; 2-yr rate 3.673%; 3-yr rate 3.654%; 5-yr rate 3.724%; 7-yr 3.852%; 10-yr 4.015%; 20-yr 4.458%; 30-yr 4.43%;
The U.S. Treasury market, the largest & deepest in the world, has already lowered rates. Guess that doesn’t count at all for Fed Chair Powell!
Watch the entire 3.5 minute clip of veteran Jim Paulson below. Paulson gives a sensible precis of what he sees & why he says we are near a “panic stage”. Then stop at minute 1:48 and watch the facial expressions & arrogant posture of CNBC’s host anchor Jon Fortt.
The only question Fortt had was about how Paulsen defines “panic”. Watch Fortt’s unconcerned posture & his disinterest in the carnage in the stock market. Also note the total lack of interest of his co-host Brennan. Can’t blame them because if you were paid multi-million dollar salaries without any real responsibility to learn & understand, you would coast along just as they do, right?
2. Re Trump Tariffs
First, did the current market action began with tariffs?
- Vincent Randazzo CMT@CMTRandazzo – It’s not about tariffs. It’s a new market regime. It’s been building for months. Only 90 Russell 3000 stocks hit new highs on the 2/19 all-time high. That’s not broad strength. New Lows don’t surge like this in bull markets (bottom panels). Something’s been shifting.
The next question is whether tariffs are inflationary. Amazingly the above CNBC clip of Jim Paulsen deleted the point Paulsen made on Live CNBC on Friday. Paulsen explicitly said that it was “a fallacy to describe tariffs as inflationary” and added ” all financial markets are telling you this in unison”.
Next, focus on the clip below by David Zervos, a strategist who has been right this year:
We urge you to listen to the above clip. A few excerpts below:
- ” I really think there is a silver lining to all this which is positive…. I think we are going to bring our trading partners to the table; they have a lot more to lose than we have to lose & we have a real chance of getting a fair co-operative outcome which gives huge benefits to the US.”
- “I looked at the price action at the beginning of 2018 when this tariff stuff started to come out in Trump 1.0. … We had a 10% correction in February, a 7% correction in March; the market got really spooked“
The later sections of the Zervos clip are interesting. He speaks of the de-toxification opportunity that this plan might deliver.
That brings us to the Absolute Must Watch clip of the week in our opinion – a one hour clip of Treasury Secretary Bessent that touches on many sections of the Trump Tariffs decision & plans. If Secretary Bessent is even 25% correct, then America would be happy. If he is 50% correct, every American would be overjoyed. That’s our view. You decide for yourselves.
Below are the topics covered & their approximate start times:
00:00 – Trump’s Tariff Plan
05:51 – Current State of Stock Market
08:26 – Will America see substantial Tax Cuts because of Trump’s plans
14:00 – How much money will America make through Tariffs
14:23 – Bringing Manufacturing Back to the US
20:24 Tariff Pushback from Foreign Countries
22;15 – Will China Retaliate?
25;48 – How will Europe be impacted?
33:19 – Is Upper Class out of touch with the Lower & Middle Class?
35:49 – Bessent’s Biggest Worries
42:37 – The Long Term Benefits of DOGE
46:23 – The Corruption of the Federal Reserve
49:34 – Why Gold is so critical right now?
52:54 – Zelensky’s Self-sabotaging Negotiation Tactics
1:00:19 – Trump Admin’s Message about the Economy
3. Markets Last Week
US Indices:
- VIX up 109.1%; Dow down 7.9%; SPX down 9.1%; RSP down 8.6%; NDX down 9.8%; SMH down 14.9%; RUT down 9.7%; MDY down 9.4%; XLU down 4.3%;
Key Stocks & Sectors:
- AAPL down 13.7%; AMZN down 11.2%; GOOGL down 5.5%; META down 12.7%; MSFT down 43 bps; NFLX down 8.2%; NVDA down 13.9%; MU down 26.7%;
- BAC down 17.4%; C down 17.8%; GS down 13%; JPM down 13.8%; KRE down 13.3%; EUFN down 9.9%; SCHW down 11.3%;
Dollar was down 88 bps on UUP & down 97 bps on DXY:
- Gold down 1.9%; GDX down 9%; Silver down 14.4%; Copper down 13.7%; CLF down 17.8%; FCX down 22.8%; MOS down 12.7%; Oil down 9.1%; Brent down 9.9%; OIH down 20.6%; XLE down 14.6%;
International Stocks:
- EEM down 7.5%; FXI down 8.9%; KWEB down 10.7%; EWZ down 5.7%; EWY down 6.8%; EWG down 8.9%; INDA down 4.1%; INDY down 5.5%; EPI down 4.8%; SMIN down 5.4%;
Treasury & Fixed Income:
- 30-year Treasury yield down 20.1 bps on the week; 20-yr yield down 19 bps; 10-yr down 23.8 bps; 7-yr down 26.1 bps; 5-yr down 25.1 bps; 3-yr down 24.4 bps; 2-yr down 23.9 bps; 1-yr down 16.1 bps;
- TLT up 3.1%; EDV up 4%; ZROZ up 4.8%; HYG down 2.6%; JNK down 2.9%; PFF down 4.7%; EMB down 73 bps;
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