“Hello Tariffs My Old Friend” – Rally Interrupted as Trade Policy Returns to Center Stage

Markets Pull Back Modestly After 9-Day Rally

• $S&P 500(.SPX)$ lost 0.6%, snapping a 9-day winning streak after Trump floated 100% tariffs on foreign-made films over the weekend.

• $NASDAQ(.IXIC)$ 0.7%, Dow down 0.2%, as investors absorbed the re-emergence of policy -driven uncertainty.

• The retreat followed the strongest rebound from oversold conditions (+3σ) since 2020, suggesting the rally’s pause is more about headline risk than fundamental deterioration.

Even modest tariff threats can reignite volatility, particularly with tech and multinationals already priced for perfection.

Stocks

Oil Weakness, Recession Signal

• Oil prices have recently broken lower, but historical comparisons since 1987 show no reliable link between falling crude and US recessions.

• Investors should interpret crude declines more as macro disinflationary tailwinds than as warnings of demand destruction.

Sector Correlations High, Volatility Easing

• S&P sector correlations remain unusually elevated, reflecting persistent investor caution. Typically a contrarian bullish signal.

• The VIX Index has fallen to the low 20, indicating lower implied volatility and setting the stage for increased stock/sector dispersion.

• Stock selection is now critical, especially as correlations normalize and broad asset allocation plays lose edge.

Disruption & Long-Term Themes: AI, Venture, and Policy

• Global VC funding held steady YoY at $23B in April, with US firms capturing 62%, mostly in AI and healthcare.

• This flow of capital reinforces our long-term overweight in US large-cap tech, particularly firms with AI monetization paths.

• $Palantir Technologies Inc.(PLTR)$ shares +60% YTD, driven by strong demand for its enterprise AI platform, beating Q1 estimates and raising FY guidance.

$PLTR

• Sustained AI innovation and disruptive IPOs will be vital for the S&P 500 to deliver its historical +10% CAGR.

Tariffs, Trade, and Apple’s Legal Challenges

• Trump’s tariff proposals, including 100% levies on foreign films, rattled sentiment. Hollywood execs warn of widespread industry disruption.

Tariffs

• $Ford(F)$ suspended its 2025 guidance, citing inability to model the full tariff impact. Estimated cost: $1.5B in pretax earnings.

• $Apple(AAPL)$ filed an appeal in its App Store legal battle with Epic, adding another layer of uncertainty amid weaker China sales and increasing regulatory scrutiny.

Week Ahead: Fed, Earnings, and OPEC+ Policy Watch

• Fed Meeting wraps Wednesday : no rate change expected, but Chair Powell’s tone is critical. Will he lean dovish on data, or stay hawkish on tariff inflation risk?

• Earnings Lineup :

  Tues–Thurs: Uber, Walt Disney, $Advanced Micro Devices(AMD)$ , AB InBev, Monster, Match Group, ConocoPhillips

• Economic Releases :

  NY Fed Consumer Survey (Thursday)

• OPEC+ Meeting (Saturday) : Another ~400k bpd production hike is under discussion to rein in overproduction and stabilize markets.

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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.