That was a wild ride for last week’s equity trading.
We approached bear market territory with the S&P 500 on April 8.
It bounced back, ending the week with the first weekly gain in almost a month.
We are still in a correction and keeping up with the latest announcement from the White House is almost more than one can process.
We had good inflation news last week from both the consumer and producer side of the equation.
That, of course, can’t last long should tariffs go into place.
We did get a 90-day window for negotiations.
It seems unreal that over 100 countries could come to terms with the U.S.
More importantly, it appears that China will stand and fight to see who is the strongest.
It is hard to understand the staying power of a totalitarian country that cares little about its people suffering.
Having moved into the second quarter, we are getting the quarterly earnings reports and the banks so far have provided solid, if not better than expected earnings.
The problem is that it is almost impossible to project what the future will bring should the proposed tariffs become implemented.
We will get more banks this week, along with Netflix, Taiwan Semi, ASML and Johnson & Johnson.
It appears we will get good news, but little to project about what is coming.
You can hardly blame the CEOs of these companies in projecting what the next six to nine months will bring.
You saw last week how wildly the market moved just on rumors, much less actions.
Notably, the word recession is used far more than in the past.
It seems realistic to assume that should tariffs be implemented, it will raise the cost on almost everything.
There is one bit of hopeful light shining on the inflation watch, as energy prices are lower.
Crude is trading at levels not seen in almost five years around $60 per barrel and natural gas is coming out of the winter finding less demand.
The impact of energy on our economy is significant.
On the other side of the ledger, home sales have yet to take off and we are entering the buying season.
A drop in mortgage rates would help, but that market has yet to move significantly lower.
The consumer though appears to be undaunted, spending at will.
We are, in fact, a consumer nation and will need that to continue for this economy to avoid the R word.
As volatile as last week was, and it was off the chart, we came out on the positive side.
The S&P 500 moved below 500, but came roaring back.
It seems just another repeat performance of any setback we have experienced over the last three years.
I was concerned that the amount of leverage in the market might push us over the edge, but traders seemed to take it all in stride.
It did get their attention.
I have been doing this for over 40 years and never saw anything like last week.
The fact we made it through it doesn’t yet give me any security that we can move further up.
There is so much uncertainty in this market and that is the one thing that markets hate the most.
They will take whatever news as long as they know what to expect.
Good luck with that in this brave new world.
