Alright. This morning, let’s try to keep it simple. I’ll try to avoid giving you a detailed summary of what happened, since you already know, and anyway, you probably already have an opinion and don’t need mine. But still, we have to go back over the fact that we just had one hell of a shitty session. Yes, I know: “one hell of a shitty session” isn’t exactly polite language, but at this point in the bloodbath, it’s hard to open a thesaurus and find a phrase like: “the session wasn’t particularly pleasant from a mathematical point of view.” No, the session was crap, and it’s probably not over.
Not Historical, But Almost
So Trump reignited the trade war, lashing out at the entire world and apparently even managing to impose tariffs on uninhabited islands, just in case seagulls start producing semiconductors. This “declaration” of war triggered a tsunami on global stock markets. Yesterday, there were no survivors—everyone rushed for the lifeboats in full-on “my portfolio first, women and children later, if there’s still room” mode. The S&P 500 lost 4.8%, marking its worst day since June 2020. The Nasdaq took a 6% hit and basically got stomped on, dragged through the mud afterward. The Russell 2000 plunged 6.5% and officially entered Bear Market territory. The SOX (Philadelphia Semiconductor Index) got wiped out, dropping nearly 10%—9.88% to be exact—and at this point, we can’t even call it a Bear Market anymore, because the index is down 34% since July 2024. That’s a crash. The only thing missing is the speed of execution.
But the SOX!!! The SOX, which has been THE Leading Indicator for tech markets for years, our compass in the storm, our North Star in the night. The SOX is now in a state that means nothing. Or rather, it does mean something: it means that nobody will ever buy cutting-edge technology again. It means nobody will ever need semiconductors again—for phones, laptops, autonomous cars, dishwashers that tell you when they’re done rinsing, PlayStations to brighten our weekends, or even better: nobody will need chips to build Texas-sized data centers to run Artificial Intelligence and Quantum Computing.
If you’re wondering whether we’ve lost our minds, stop thinking. You’re absolutely right. The market is in full-on delusion, just like we were in full-on delusion when we were gaining 2% every day for days on end just because Jerome (Powell) might one day lower interest rates.
Exaggeration, extension—breathe, relax…
Markets are fascinating creatures. Fascinating because we’re capable of getting hyped up on flaky theories and buying anything at any price, as long as there’s a fitting narrative to go along with it and two or three people to tell us the story by the fireplace at night. Just as we’re capable of selling everything (like yesterday), using the exact same narrative we’ve been fed for months—just flipped the other way. What I’m trying to say is: we’re now experiencing the same kind of exaggeration we saw on the way up. Except this time, we’re living it on the way down. And it’s fascinating that we’re able to get just as carried away—in the exact opposite direction.
On February 19, 2025—exactly 44 days ago—the Nasdaq 100 was at 22,222. Yesterday, we closed the session at 18,521. That’s 16.6% lower and 9% below the 200-day moving average. And yet, in between, macro data hasn’t really changed—interest rates haven’t moved, there hasn’t been any major earnings release—except Nvidia (which we’re not even talking about anymore, thankfully, since the stock is down 34% since late January). So even though nothing concrete happened—apart from tariffs—markets literally collapsed. It’s the Apocalypse, and the mood is almost dramatic. People are comparing this to 2008, wondering what the hell the Fed is doing this time, and it feels like we’re on the edge of panic.
No Volatility?
Looking at year-to-date performance, the Dow Jones is down 4.7%, the S&P 500 is down 8.25%, and the Nasdaq: 14%. Over in Europe, Spain is still up 13%, the DAX is up 9%, and even Switzerland is up 5.8%. And yet, when you listen to the market chatter, the commentary from everyone and the nervousness of some investors, it feels like we’re inching closer to a panic zone. Contrarian indicators tell us that people have rarely been this bearish, the Fear & Greed Index is at 8, and the inventors of the index are probably wondering if they can invent negative values—like, can we go below zero? Everything points to an end-of-the-world vibe, panic knocking at the door. And yet, the VIX—the fear index—is only at 30%.
For those who like parallels: last August, when Japan almost collapsed in our hands, the VIX shot up to 65%. In 2008, it hit 96%.
And now, while Trump floods us with dumb tariffs and picks fights with the whole planet—making Ursula von der Leyen seem almost likable in her role as “fierce protector of Europe”—volatility is struggling to even reach 30%. It’s like there’s some missing piece of information. Something we just can’t seem to factor into our thinking. Maybe deep down we don’t want to believe that what Trump is doing is truly, completely stupid. We want to believe it’s not possible—that the guy must have some semi-rational strategy behind it and that he can’t really be that dumb. Even though that’s EXACTLY what the FABULOUS European politicians—all nearly flawless—have been repeating on loop for the last 24 hours.
And Yet
And yet, it’s a fact. Trump is trying something against the advice of the rest of the world, and for now, everyone thinks he’s going to crash and burn, and that he’s a complete idiot. But from the market’s perspective, it feels like we’re still clinging to something invisible—a separate force telling us we’ll pull through. Because honestly, since 2008, we’ve seen market miracles flip trends like pancakes. And this lack of volatility might be a sign that we’re expecting some kind of miracle to save the SOX and steer the Nasdaq back on course.
I must admit, I’m surprised this morning that we’re not REALLY in panic mode—as we’d have every right to be. The VIX isn’t that high, and yet there’s a strong bear market sentiment, even though we’re only in a correction zone. Then I had a realization. There is a part of the market that’s already in a bear market—and I’d even argue: worse than a bear market—it’s the Magnificent Seven! Yes, the darlings of recent years, the ones that sent the markets soaring during the Fed pivot, the ones that made us feel like a new world was opening up and the World Company might actually be real. Well, that gang of crazies is down 25% and officially in a bear market…
The Concentration
It was pretty subtle, actually. While we were all focused on tariffs and Trump’s convoluted policies, Apple dropped 22% from its all-time highs, Microsoft fell 21%, Alphabet 27%, Amazon plunged 26%, Meta barely held up with a “mere” 20% decline. Nvidia is down 34%, and Tesla has lost 45% since Christmas. In short, these Magnificent Seven are all in a bear market—and since they still represent 30% of the S&P 500, it’s not something we can ignore. That might be why this drop feels strange—like it’s not as “clean” as a proper crash should be…
Anyway. The point is: the market got hit hard because of tariffs and Trump, but there’s still something that hasn’t cracked—maybe something that won’t crack—because we just can’t bring ourselves to go full panic. Maybe because we don’t want to believe Trump would do this on purpose, and we hope he still wants to negotiate, that it can’t really end like this. Yesterday, the U.S. President said that EVERY COUNTRY IN THE WORLD had called him to negotiate, and that made him happy. As for the market drop, he said there’s no reason to panic and that things will soon take off again.
And Now? Where Are We?
So. This morning, the mood isn’t exactly cheerful. It feels like the markets are beginning to price in a looming recession, which would be a lesser evil compared to stagflation—but we’d rather avoid it altogether. It’s kind of funny to note that when Trump mentioned tariffs during last November’s election, basically the entire financial world told us, “It won’t impact inflation, and there won’t be a recession.” And now, four months later, the narrative has done a complete 180. I’m always amazed by my fellow humans.
Regardless, everyone’s dusting off their Excel spreadsheets, trying to calculate the real impact of all this—assuming Trump doesn’t change course before the weekend.
And the outlook isn’t great. The market gets it: a recession is likely coming. These tariffs aren’t just a new customs form to fill out—they’re a fragmentation bomb hitting prices, margins, consumers, and corporate earnings.
Companies will see costs rise.
Consumers are thinking about cutting spending.
The economic cycle is coughing louder and louder.
And S&P 500 earnings? Kaboom. Citigroup already expects an 11% drop, and others are predicting up to -15% if things spiral. And I do mean if, because there’s still hope out there—you can feel that people want to believe.
Before Trump 2.0, Wall Street was expecting a modest growth slowdown, like -0.8%.
But now, we’re talking about -2% GDP in 2025. Analysts are starting to sketch out scenarios: If we panic a bit more today, the rational target would be around 5,000 on the S&P. And if it’s full-blown chaos and everyone jumps ship, we could hit the 200-week moving average! Yes, we’re already talking about 200 WEEKS! That would take us to 4,677—a level we barely touched during the COVID phase. That’s the “end of the world” level, the point where Roubini crawls out of his hole to say: “Told you so!”
Back to the Point
So here we are, in a delicate situation. As you’ve probably figured out. It’s wild to think that just two months ago, we were riding high on euphoria, and now everyone’s wondering if it wouldn’t be wiser to buy a cottage in Scotland, raise sheep, and sell hand-knitted sweaters on Amazon. But life doesn’t stop here—and neither do the markets. While world leaders prepare their counterattacks to Trump’s decisions—and they don’t seem too pleased (except for Switzerland, which has decided that doing absolutely nothing is the urgent priority)—we’re going to try and resume normal life, tariffs or not.
And that’s good, because there’s work to do this Friday. First Friday of April. And like every first Friday of the month, we’ll get the U.S. jobs report. On that note, the ADP employment figures came out stronger than expected on Wednesday night. But honestly, I think we were all too busy with something else that day—so important that even if the Vatican had announced that God, Jesus, Mary, Joseph, and the baby-blowing donkeys were all a giant scam, we wouldn’t have noticed because we were so focused on Trump. That said, later today we’ll get the Non-Farm Payrolls report. Forecast: 140,000 jobs created (vs. 151,000 the month before). But honestly… we kind of don’t care.
Why?
If it’s bad => it confirms the economy is slowing = Bad news.
If it’s good => people will say it’s irrelevant now because of the new tariffs = Bad news too.
So yeah, it might just be one of those reports where no matter what happens, we all lose.
The Return of Jerome
However, beyond the jobs report, tonight we’ll have the IMMENSE HONOR of hearing from Jerome Powell. The Fed Chairman will be speaking in Arlington, Virginia, at the annual meeting of the Society for Advancing Business Editing and Writing. And he MIGHT give us some clues on the Fed’s approach to inflation this Friday. Which means, yeah—the “editing and writing” part won’t be anyone’s main concern!
Everyone’s hoping he’ll say: “We’re cutting rates, supporting growth, and we love you all, hallelujah.”
But in reality, he can’t really cut rates now—because inflation is still sticking around like gum on your shoe. And he definitely won’t comment on Trump’s policies—it’s too “touchy,” and the backlash could be brutal. So he’ll likely dodge, talk about data, avoid hot topics… upset no one, but reassure no one either.
Conclusion
So, what do we do? We wait. We touch nothing. Keep your powder dry. It’s not 100% clear that now is the time to jump back into the market.
The storm isn’t over yet. Not all the damage is visible. And Powell won’t save the world this Friday. The market still needs to digest the consequences of this new trade war. And until then, on a fluke, we could very well see the S&P 500 head back toward 4,677—or lower, if Trump decides to slap an embargo on Korean socks or Scottish hand-knit sweaters.
We’re living through a historical moment. Not the most glorious—but definitely a memorable one.
Between a president playing tariff poker, a Fed walking on eggshells, and a market that looks like a domino setup, the only strategy that seems to hold up is: observe, stay liquid, and prep your shopping list for the day the smoke clears and Roubini shows up again to say we’re all doomed after a 45% drop.
And that day is not April 4, 2025.
So now we just wait for Powell and the NFPs. For now, futures are pointing toward another ~1% drop in the U.S. at open, and Japan took a 4% hit this morning, with Hong Kong down 1.5%.
Looks like we’re not out of the woods yet. And the woods are deep, and the inn we’re stuck in is at the very bottom of a pit.
Still—have a great day and an excellent weekend.
I’ll see you Monday morning, just to check if the storm has passed.
And forgive me for being so long-winded this morning—I just needed a little therapy session on the couch!
See you Monday!
