The Hot List
1. Capitol Hill
Trump announced a 90-day pause on his reciprocal tariffs on all countries except China. Over the weekend, he also announced that phones, computers and chips would be exempted from the new reciprocal tariffs.
2. Earnings
Netflix, Goldman Sachs and United Healthcare will headline a busy week of earnings.
3. Economy
The March Retail Sales report will be released on Wednesday.
4. Interest Rates
Interest rates spiked last week with the 10-year Treasury yield going from 4.00% to 4.50%.
5. Inflation
The March CPI and PPI reports both showed prices declining by -0.1% and -0.4% respectively.
Last Week
Monday: S&P 500 -11.83 (-0.23%) to 5062.25. No major economic releases.
Tuesday: S&P 500 -79.48 (-1.57%) to 4982.77. No major economic releases.
Wednesday: S&P 500 +474.13 (+9.52%) to 5456.90. FOMC minutes from last meeting.
Thursday: S&P 500 -188.85 (-3.46%) to 5268.05. March CPI -0.1% (vs. +0.1% expected). March Core CPI +0.1% (vs. +0.3% expected). Initial jobless claims 223K (vs. 225K expected).
Friday: S&P 500 +95.31 (+1.81%) to 5363.36. March PPI -0.4% (vs. +0.1% expected). March Core PPI -0.1% (vs. +0.3% expected).
S&P 500 [S&P] Technical Look
Potential Support: To the downside, look for support around Thursday’s lows at 5100. If it drops below that, look for additional support around 4900.
Potential Resistance: To the upside, look for resistance at the 20-day moving average around 5500. If it breaks above that, look for resistance at 5700 where the 50-day and 200-day currently sit.
Bright Ideas
Technology
Growth
Materials
Cybersecurity
Blue Chips
Gold
My Take
Stocks bounced after Trump paused tariffs for 90-days on all countries except China. Coincidentally he posted “This is a great time to buy” just a couple hours before the announcement. Now he has just announced that phones, computers and chips would now be exempted from the reciprocal tariffs – which could possibly undo some of the previous self-inflicted damage.
Overshadowed by the trade war was more optimistic inflation data. Both consumer and producer prices declined last month showing deflation. If it weren’t for these tariffs, it appears that the Fed would likely be looking to cut rates here.
Interest rates surprisingly spiked last week with the 10-year Treasury yield jumping to 4.5% from 4%. One explanation that is gaining traction is that foreign central banks like Japan, China and the EU could be dumping bonds as part of a capital war in protest of the trade war. If that’s the case things could get uglier and could result in the Fed having to step in to provide liquidity.
We are expected to get commentary from many different Fed members this week. Listen for any insight or clues about them stepping in.
Earnings season kicked off and there will be a wide variety of impactful earnings reports. Netflix, Goldman Sachs and UnitedHealthcare will headline the week of calls. In addition to earnings, we will also get the March retail sales report to give us further insight on the U.S. consumer.
From a technical standpoint, watch the 5100 level to the downside. That was the support level on Thursday as we gave back some of Wednesday’s massive gains. At the moment, we’re in kind of a “no man’s land” with no real support or resistance close by. The 200-day moving average is what I’m watching as a logical near-term target to the upside.
In the meantime, it still seems prudent to not do anything outside your comfort zone when it comes to risk management. It can certainly be tempting when you have such swings and even a President who is writing it’s a “good time to buy.” But in these times of maximum uncertainty it’s usually best to stick to your gameplan and do nothing – as hard as it seems.
As we gain more clarity, it will be time to make some more specific moves. However, at the moment if you need to do anything it would be to dollar cost average into your favorite beaten up names or simply upgrade the quality of your portfolio.
As always, if you have any questions or would like me to manage your money, please contact me today.
Until next time,
Clint Kirby
Chief Financial Strategist
Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.