Daily Newsletter 4/22/25
Markets declined sharply yesterday due to heightened uncertainty stemming from President Donald Trump’s escalating criticism of Federal Reserve Chair Jerome Powell and concerns over the Fed’s independence. Trump’s public remarks, including threats about Powell’s possible dismissal and repeated demands for immediate interest rate cuts, unsettled investors and eroded confidence in U.S. assets.
The sell-off was broad-based, with nearly every company in the Dow and S&P 500 closing lower, and the U.S. dollar falling to a three-year low as investors sought safe-haven assets like gold, which reached new highs.
Overall, the combination of political interference in monetary policy and trade tensions drove a significant loss of investor confidence and triggered the market’s decline.
A market reversal could occur at any moment. Stocks may rise while gold declines, even if this goes against the prevailing trendlines. The market is extremely oversold according to various indicators.
Gold, on the other hand, is highly extended and overbought.
The U.S. fiscal system is highly stretched and faces significant vulnerabilities.
A market rally could occur if the U.S. and China implement a pullback strategy to ease trade tensions. However, the timing and likelihood of such a move remain uncertain, as current negotiations are stalled and both sides have yet to make significant outreach toward a resolution.
The lowest point of the recession has yet to be reached.
We believe the Federal Reserve will begin cutting rates, possibly starting in June, as economic conditions continue to weaken.
The International Monetary Fund (IMF) is launching its April 2025 World Economic Outlook today, providing updated global economic forecasts and policy analysis. The IMF World Economic Outlook (WEO) is a comprehensive report published twice a year that provides in-depth analysis and projections of the global economy over the near and medium term. This report often influences markets and policy discussions worldwide.
GE Aerospace (GE) and Tesla (TSLA) are reporting earnings today, which could influence both sector and broader market movements. We are also closely monitoring other earnings releases today, with particular attention on SAP, NVS, VRZN and LMT.
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