From the Team @ HPLT 5/12

Markets Update

The US stock market pulled back marginally last week after trading back up & through the early April lows following Trump’s tariff announcements.  Headlines on the tariff front leaned positive throughout the week, with most of the focus remaining on any major takeaways between the US & China.  Trump & his team announced an agreement with the UK which included lower tariffs on UK-made cars to 10%, steel & aluminum was removed entirely from the tariff list, and a 10% universal tariff on everything else will remain… It was viewed as a generally positive outcome, with more announcements with other trade partners to follow in the coming days/weeks. 

Fed Chairman Jerome Powell spoke last Wednesday, after leaving rates unchanged @ 4.25-4.5%.  He noted there are cases in which rate cuts would be appropriate this year but still lacks visibility on tariff impacts.  Most strategists predict one rate cut later this year, somewhere in the Sep-Dec timeframe.

Even though bullish sentiment is still washed out (like on 5-yr lows washed out), there are a number of positive talking points on the move higher the last few weeks, including: A better-than-expected earnings season that we just wrapped up, favorable flow dynamics with resilient buyers of the market, both from retail + institutional communities, China policy support on a recent rate cut, and ongoing signs of tariff de-escalation.  

Some Charts to Paint the Picture

I mentioned washed-out / negative sentiment... this is longest streak for bears > 50%

Good visual on the drop-off for exports after the initial rush post Liberation Day

Good chart on the forward returns after huge declines in market volatility (like we just saw.. which was 2nd biggest 4-week decline in volatility in history).

Where the betting markets shake out on US recession (2 consec quarters of negative GDP growth) in ‘25

brian mazzaComment