Turbulence ahead! Let’s not overthink it this Monday morning—it’s clear that things are going to get rough. The Nikkei is already down 4% in “preparation” for Donald Trump’s so-called “Liberation Day” set for this Wednesday. If we’re already taking hits like this three days before the event, I don’t even want to imagine how we’ll end the week!
And let’s not forget the tariff drama—on top of that, it’s the first week of April, which means employment data is coming. In short, if you’ve never been inside a washing machine during the spin cycle, now’s your chance to experience it.
THIS IS THE WEEK!
Since Trump’s inauguration, we’ve been living in total uncertainty, and it’s becoming unbearable. CNN’s Greed and Fear indicator is still deep in the EXTREME FEAR zone, and volatility—the so-called fear index—seems ready to surge at full speed. And looking at everything ahead this week, there’s little hope that things will get any better. Markets hate uncertainty, and they’re about to get their fill! Trump has already started stirring things up over the weekend, and futures are down 0.8% as of 5 AM. Japan is collapsing, and even China’s strong industrial growth numbers—the highest in a year, proving that the government’s stimulus measures are working—aren’t enough to ease market tensions in this chaotic period. The reality is, if China’s growth is picking up and Trump slaps them with a 50% tariff on their exports, things won’t be heading in the right direction!
Over the weekend, the U.S. President made several statements. First, he’s picking a fight with Putin. Putin isn’t complying with Trump’s demands on Ukraine, so Trump declared he was “really angry” with the Russian President and might retaliate with massive tariffs on Russian oil. Oil barrels that, technically, aren’t supposed to be exported anyway—but let’s move on. The so-called bromance between these two “presidents for life” seems to be cracking. And yes, I say “presidents for life” because Trump also hinted this weekend that he’s already considering a third term. Given the chaos he’s stirred up in just two months, if he also plans to change the Constitution to stay another seven years and ten months, we’re in for a wild ride.
But that’s not all! He’s also clashing with Zelensky over rare earth minerals, meaning the much-promised peace in Ukraine is already fading into oblivion.
And that’s still not all!!!
Trump also lashed out at foreign automakers threatening to raise prices. The White House chief bluntly responded that he “doesn’t give a damn” and that if foreign cars became too expensive, Americans would simply buy American cars—after all, there are plenty of them available… Meanwhile, the U.S. is meddling in French labor laws, telling companies doing business with America not to “favor inclusion” in their hiring. And to top off the weekend’s news cycle, Trump announced that the U.S. will take control of Greenland, not entirely ruling out the use of force if necessary. But hey, we’re safe because France’s foreign affairs clown, Jean-Noël Barrot, declared that “France will not allow it!” I don’t know about you, but Barrot, with his angry wide eyes, is terrifying.
All of this to say: Trump is ramping up pressure everywhere, just three days before a historic moment for tariffs. If you haven’t been lost deep in the Andes mountains, you should know that this Wednesday, the Reciprocity Tariffs will be announced, which could severely impact inflation and consumer spending—already battered over the past five years. This fear is weighing heavily on the markets, as we saw again last Friday when U.S. indices got slaughtered after the PCE came in hotter than expected and personal consumption expenditures also slumped. You didn’t need a PhD in market analysis to see that indices are downright terrified about what might happen on Wednesday. And when you look at where the S&P 500 and Nasdaq closed, it’s already clear: this will be the week of make or break.
Because here’s the thing about the wonderful world of finance: we always try to “anticipate.” And looking at where we stand today, we’ve already priced in a ton of economic trouble. The Nasdaq is down 14% from its February highs, and if we break last Friday’s closing levels this week, talks of an inevitable Bear Market will start flooding in—officially triggered once we cross the 20% decline threshold. But if we survive this week—given that we’ve already priced in a mountain of bad news—we might be able to hold onto the fact that April is historically a strong month for global markets.
In April, Don’t Shed a Thread
As March wraps up with a “sell everything and figure it out later” vibe, many investors are wondering whether April—historically one of the best months for U.S. stocks—will live up to its reputation. More importantly, is this a real buying opportunity or just a dead cat bounce?
According to the Stock Trader’s Almanac (yes, it still exists, but we usually only pull it out when we’re REALLY desperate), since 1971, April has been the second-best month for Wall Street, even in post-election years. So, on paper, April smells like a rebound. But the market, well, it has a peculiar sense of humor.
Sentiment Check: Not Exactly a Party
Let’s be honest, investor sentiment isn’t great: individual investors are ultra-bearish. But for contrarians (like myself), that’s actually good news! That said, the AAII sentiment index…
Quick educational interlude:
AAII stands for American Association of Individual Investors. It’s basically an American association representing retail investors—people investing their own money (not fund managers or professionals). Their most famous metric is the Sentiment Survey, a weekly poll asking members if they’re bullish (optimistic), bearish (pessimistic), or neutral on the markets over the next six months.
…Well, according to the AAII, over 50% of respondents have been expecting the market to drop for five straight weeks. Historically, when everyone is this scared, it’s often the moment things turn around. Ahhh, contrarian mindset, gotta love it! I bet Lorraine Goumot on BFM Business is going to call me that again this morning!!!
But hold on: despite these technical and seasonal signals that might make the most depressed investors slightly less depressed, there’s still a major disconnect between economic data (which shows solid consumer spending but signs of weakening) and consumer confidence (at its lowest in two years). In short, people are spending, but they’re not exactly enjoying it—you can feel the struggle.
The Summary in a Few Lines
Investors are terrified of what Trump might announce on Wednesday, but historically, when fear peaks, it’s often a great time to buy. Buffett says so, and the stats say April tends to perform well. However, a flood of economic data is also coming in, particularly on employment, and Trump’s tariffs will inevitably stoke inflation fears!!!
Even Goldman
Even Goldman Sachs has already warned that these tariffs will fuel inflation, slow growth, and raise recession risks—not exactly the kind of news that makes you want to pop open a bottle of champagne. But, as always in finance, there’s a glimmer of hope in even the darkest tunnels. The investment bank added that they now expect three Fed rate cuts in 2025 instead of two. According to them, the Fed SHOULD cut rates in July, September, and November. See? Not all bad news this morning!
Okay, sure, this week is going to be a rollercoaster. But as we always say: after the storm comes the sunshine, and after a massive market wipeout, stocks always bounce back. And let’s not forget AI isn’t done yet—just think of Nvidia and the other tech giants that have kept us on edge for months!
Conclusion
Asia has already set the tone for this week: it’s going to be tough. The Nikkei is down 3.8%, Hong Kong dropped 1.6%, and China only lost 0.3%, thanks to solid economic data. Oil is at $69, with OPEC boosting production in April, which will help stabilize crude prices. Gold is at $3,139, and Bitcoin stands at $81,500 after a rough weekend.
In today’s news:
Novartis secured FDA approval for Pluvicto, its prostate cancer treatment.
BOC Aviation in Singapore just ordered 120 Boeing aircraft.
Novo Nordisk’s anti-diabetes and weight-loss drugs also reduce heart disease risks by 14%. These might just be the miracle drugs of the decade—now, if only they could bring back lost love and fix oil leaks in cars too…
As for economic data, we’ll see Germany’s retail sales and CPI today, as well as the Chicago PMI. But the real action kicks off later this week with ISM and JOLTS tomorrow, ADP employment figures Wednesday, RE-ISM Thursday, and the Non-Farm Payrolls report on Friday (expected at 139,000).
So yeah, buckle up—it’s going to be a wild week!
One Last Thing: Conference Alert
If you’re interested, tomorrow at 5:00 PM, I’ll be at UNIL Lausanne for a conference titled: 2024: We Didn’t Get It – And 2025 Won’t Be Any Better. Here’s the link to sign up:
Alright, I think that’s enough warm-up for this morning! Wishing you all an excellent Monday and a fantastic start to the week. See you tomorrow for another round in what’s shaping up to be a spectacular few days!
Have a great day!
