To The Moon

Friday Market Wrap: Markets ended flat as investors paused ahead of high-stakes U.S.-China trade talks in Switzerland this weekend. Treasury Secretary Scott Bessent’s trip is viewed as a potential inflection point, though one likely heavy on optics, light on substance. $S&P 500(.SPX)$ $NASDAQ(.IXIC)$

Markets

Reality Check: Even if tariffs are halved from 170% to 80%, the resulting regime would still be deeply restrictive. Markets rallied early Friday but faded as traders weighed the real-world impact of modest tariff rollbacks.

Tariffs

Policy Mood: Mixed Signals From the Top

• Trump’s social media post Friday ("80% tariff on China seems right!") was both a softening from earlier hardline rhetoric and a reminder of ongoing volatility.

• The market is left guessing: will Scott Bessent have real latitude to make concessions, or is this just performative diplomacy?

• Analysts say tariffs must drop below 60% to meaningfully restart trade flows.

Earnings: A Solid Season Ends Just As Tariffs Bite

• With over 90% of S&P 500 companies reporting, 78% beat earnings expectations, and 60% beat on revenue, above average, per FactSet. At this late stage of the earnings season, the S&P 500 is reporting strong results for the first quarter. Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year...

FactSet

• Forward guidance has also surprised to the upside: 45% of outlooks were positive, ahead of the 43% 5-year average.

Tariffs on Chinese goods imposed in early April are just now beginning to affect import costs and inflation prints.

• Next week’s CPI report (Tuesday) will be the first to reflect potential tariff impacts, followed by PPI and retail sales data on Thursday and Friday.

Market Stress Indicator: Bloomberg Turns Red

• Bloomberg’s Equity Market Regime Model shifted to its “red zone” in March/April, coinciding with heightened tariff volatility.

• Historically, red-zone periods lead to a 5.6% average S&P 500 decline over the next year.

• While the model suggests we’re early in this risk phase, market pricing remains fragile.

• Markets are inca.reasingly pricing in a policy misstep, with investors wary that delayed Fed or White House action could coincide with slowing earnings and softening labor dat.

Sector Lens: Tariff Shock Meets Regulatory Uncertainty

• Early tariff effects are hitting industrials, semis, and retailers.

• In healthcare, Trump’s pharma tariff threats and the appointment of Dr. Vinay Prasad to the FDA’s top vaccine post roiled sentiment:

  SPDR Biotech ETF fell 6.6%, the steepest drop since May 2022.

Positioning Outlook: Defensive, But Opportunistic

Theme Stance U.S.-China Tariff Exposure Neutral to underweight.

Await policy clarity Large-Cap Tech $NVIDIA(NVDA)$ $Apple(AAPL)$ $Tesla Motors(TSLA)$ & AI Maintain core holdings $Palantir Technologies Inc.(PLTR)$.

Hedge around earnings Healthcare/Biotech Underweight short-term; reassess post-FDA shift Inflation-Protected Assets Accumulate gradually.

CPI/PPI risks rising Consumer Staples Favor near-term as margin protection strategy

Bottom Line: Markets are in a holding pattern as policymakers send mixed signals. The key driver ahead is not just the headline outcome of U.S.-China talks, but how inflation and earnings evolve now that tariff policies are being felt onshore.

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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.