Friends

I know I’m beginning to sound like a broken record, but it was another difficult day for stocks. We now enter a very complicated earnings season where companies are going to have a difficult time explaining their future earnings outlook given the uncertainty they are dealing with on a day-to-day basis. Have the markets already priced in all this uncertainty? We are about to find out. I think the markets at the moment are still concerned with the President’s threats to fire Fed Chair Jerome Powell. He is seen as a steadying force by market participants.

As I have mentioned, the thing that concerns me the most is the lack of rallies in the bond market when stocks fall. Again today, the long end of the yield curve did not dip during the stock selloff. U.S. Treasury bonds have always been seen as a safe haven when stocks struggled. But right now, that does not appear to be the case. The dollar is losing value (that’s actually ok for companies that sell abroad, but nevertheless), long term Treasury bonds are losing their safe haven status and gold continues to soar in value. U.S. assets have been always seen as the safest and best option. We do not want that to change. The President continues to insist that through the efforts of DOGE and Tariff Policy we will be able to get the country on a sounder financial footing. That would be a major positive. At the moment, the markets are having trouble seeing that coming to fruition. The President appears to have a tolerance for falling stocks, but we will continue to keep an eye on the bond market. Credit issues draw a lot of attention from the makers of both fiscal and monetary policy. As I said a week ago, the bond market is undefeated when it comes to getting everyone’s attention.

As for today, by the close the Dow Jones Industrial Average was down 971 points to finish the day at 38,170. The S&P 500 was down 124 points to close at 5,158. The Nasdaq Composite Index was down 415 points to close at 15,870. Gold was up $102 to trade at $3,431 per ounce, while oil was down $1.28 to trade at $63.40 per barrel WTI.

My goodness, it’s only Monday. Like we noticed before the last rally, stocks are getting oversold. A nice rally again at some point this week wouldn’t surprise me. Let’s hope the Fed Chair distraction dissipates. I hope everyone had a wonderful Easter.

Have a nice evening everyone.

Jim