Crisis of Confidence: Fed Tensions, Tariff Turmoil, and Tech Under Pressure

Markets Sink as Political Risk, Powell Feud Shake Confidence

Markets kicked off the week deep in the red:

• Dow Jones: –2.5%

• $S&P 500(.SPX)$ : –2.4%

• $NASDAQ(.IXIC)$ : –2.6%

Lack of economic data left investors to focus on Washington turmoil, from tariff confusion to an increasingly personal feud between President Trump and Federal Reserve Chair Jerome Powell. Trump called Powell a “major loser” and pushed again for immediate interest rate cuts, raising concerns about central bank independence.

Crisis of confidence

Morning Briefing Highlights: Markets, Data, Disruption

Markets: Retest of Lows Feels Likely

• History suggests a market bottom often requires a retest — and we may be headed there.

• For April 8th’s lows to hold, investors need a tangible trade policy shift or credible signal of easing tensions.

Junk Bonds Flash Recession Warning

• CCC-rated bonds are now trading at 2022 levels — reflecting growing fears of a looming US recession.

• While not perfectly correlated to equities, credit spreads are often a leading signal of economic stress.

Data Recap: Weak Earnings, Strong Currency Signals, and Dovish Futures

1. Earnings season is off to a slow start. Revenue and profit trends are underwhelming so far — the tone must improve to support equities amid macro uncertainty.

2. Currency flows favor safety. The euro and Swiss franc are outperforming — a clear sign of investor risk aversion and a flight to perceived stability.

3. Rate cut bets increase. Fed Funds Futures now assign the highest odds to 50 bps in cuts over the next 100 days, implying that markets see a sharp economic deceleration ahead.

Disruption Watch: Big Tech Faces Growth Cliff

• Big Tech’s earnings growth is projected to slow sharply from +30% in 2023/2024 to ~16% by 2026. $Roundhill Magnificent Seven ETF(MAGS)$ $KraneShares CSI China Internet ETF(KWEB)$

• Meanwhile, the rest of the “S&P 493” is expected to improve — but not enough to re-rate the entire index if Tech undergoes a correction.

The market may not find leadership from Tech in the coming quarters, just as macro headwinds intensify.

Trump vs. Powell: Independence on the Line

The president’s escalating rhetoric toward Chair Powell raises serious market concerns:

• Trump has questioned Powell’s job security — despite legal barriers to his removal.

• The move is seen by many as a threat to the Fed’s credibility and long-term institutional independence.

“Replacing Powell would be disastrous… it would destroy the idea of a politically independent central bank.” — Capital Economics

Even if this standoff fades, the broader message to investors is clear: Policy predictability is at risk.

Tesla’s Slide, Fed’s Dilemma, and the Path Ahead

• $Tesla Motors(TSLA)$ shares fell 6%, ahead of earnings and amid investor concern about CEO Elon Musk’s political entanglements and weakening fundamentals.

• The Fed is caught in a policy trap: inflation remains sticky due to tariffs, but cutting rates too quickly could add fuel to price pressures.

$TSLA

What’s Next: Watch These Catalysts

• Tesla, $Bank of America(BAC)$ , Johnson & Johnson, and United Airlines report this week.

• Keep an eye on Fed commentary, tariff announcements, and credit market trends, especially in the high-yield space.

• S&P 500 remains vulnerable, even as it narrowly avoids a technical bear market — sentiment repair requires real policy clarity.

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.