- Equity Markets nosedived as worse than expected macro data spooked investors. Big Tech led the fall, giving back all the gains from the past few weeks, as an unexpected import tax on Autos only added to fears. The Tariff D-Day of April 2nd approaches with no signs of de-escalation from previously scheduled tariffs. Macro data supported the selloff, with a weakening consumer and higher than expected inflation numbers contributing to the dimming economic growth prospects.
- The Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred inflation metric, climbed to 2.5% YoY in February, in line with analysts’ expectations. Concerns rose over Core PCE, which excludes volatile food and energy costs, as it came in higher than expected for the third consecutive month.
- The data supports our view that the Fed is not prepared to act on rates before having a better grasp on the economy. We expect the FOMC to continue to adopt a “wait and see” approach, even if that means being late to adjust rates.
- Adding to the selloff, the University of Michigan’s monthly U.S. consumer sentiment came in at its lowest point since 2022, with tariff uncertainties and worsening inflation expectations as the main drivers.
- In corporate news, auto shares had a significant selloff following President Trump’s 25% tariff on imported cars. The new tariffs will apply to manufacturers with higher foreign component exposure, such as General Motors (GM). GM saw the largest losses of all auto companies for the week.
- In tech news, Microsoft (MSFT) was reported to walk away from several AI Data center projects in Europe and the US, as tech giants continue to adjust investment levels in the current AI Cycle. Nvidia (NVDA) acquired a startup Data Center chip reseller – Lepton AI – for several hundred million dollars. CoreWeave (CRWV), a much-anticipated IPO, disappointed investors as the AI Chip renter agreed to sell shares at $40, well below the announced $47-55 range, while also requiring Nvidia’s support in anchoring the offer at the $40 mark.
- JPMorgan (JPM) reached an agreement with Affirm (AFRM) to provide Buy Now pay Later services across its entire merchant network. Gamestop (GME) issued $1.3Bi in convertible notes to be invested in Bitcoin, following MicroStrategy (MSTR) in the popular crypto playbook. Lastly, AppLovin (APP) experienced a sell off as a short selling report from Muddy Waters came out, making it the third short selling report to target the company in the past month.
The Week Ahead
- Markets will be watching the Trump administration closely this week asthe much awaited “Liberation Day” on April 2nd is set to give investors a more definitive outlook on the tariff policies already implemented by the administration.
- Later in the week we also get an update on the labor markets. Nonfarm payrolls are expected to rise by 128,000 in March, compared to 151,000 in February. The unemployment rate is expected to increase to 4.2% while average hourly earnings are predicted to grow by 4.0% YoY, which would match the rate from February. Fed chair Jerome Powell scheduled to speak on Friday, April 4th as investors look for his views on tariffs and the economy.
- Next week no earnings are to be reported, as Q4 season concludes. Q1 season is set to begin in two weeks’ time (Week of Apr 7th) as banks kick off the earnings season.
Market Summary – Returns and Yields
- Yields slightly increased, with the long end falling 0.7%. Equities sold off and Gold continued to climb.
For additional insights, be sure to check out last week’s blog post.
Definitions, sources, and disclaimers
This content is being published by Amerant Investments, Inc (Amerant Investments), a dually registered broker-dealer and investment adviser registered with the Securities and Exchange Commission (SEC) and member of FINRA/SIPC. Registration does not imply a certain level of skill, endorsement, or approval. Amerant Investments is an affiliate of Amerant Bank.
Definitions:
- Gross Domestic Product (GDP): A comprehensive measure of U.S. economic activity. GDP is the value of the goods and services produced in the United States. The growth rate of GDP is the most popular indicator of the nation’s overall economic health. Source: Bureau of Economic Analysis (BEA).
- GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 and social mobility beyond their impact on GDP source data and relevant economic reports that have already been released. It does not anticipate their impact on forthcoming economic reports beyond the standard internal dynamics of the model.
- The Current Employment Statistics (CES) program produces detailed industry estimates of nonfarm employment, hours, and earnings of workers on payrolls. CES National Estimates produces data for the nation, and CES State and Metro Area produces estimates for all 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and about 450 metropolitan areas and divisions. Each month, CES surveys approximately 142,000 businesses and government agencies, representing approximately 689,000 individual worksites. Source: Bureau of Labor Statistics (BLS).
- Initial Claims: An initial claim is a claim filed by an unemployed individual after a separation from an employer. The claimant requests a determination of basic eligibility for the UI program. When an initial claim is filed with a state, certain programmatic activities take place and these result in activity counts including the count of initial claims. The count of U.S. initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country. However, these are weekly administrative data which are difficult to seasonally adjust, making the series subject to some volatility. Source: US Department of Labor (DOL).
- The Consumer Price Index (CPI): Is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. Source: Bureau of Labor Statistics (BLS).
- The national unemployment rate: Perhaps the most widely known labor market indicator, this statistic reflects the number of unemployed people as a percentage of the labor force. Source: Bureau of Labor Statistics (BLS).
- The number of people in the labor force. This measure is the sum of the employed and the unemployed. In other words, the labor force level is the number of people who are either working or actively seeking work.Source: Bureau of Labor Statistics (BLS).
- Advance Monthly Sales for Retail and Food Services: Estimated monthly sales for retail and food services, adjusted and unadjusted for seasonal variations. Source: United States Census Bureau.
- Federal Open Market Committee (FOMC): Responsible for implementing Open market Operations (OMOs)–the purchase and sale of securities in the open market by a central bank—which are a key tool used by the US Federal Reserve in the implementation of monetary policy. Source: Federal Reserve.
- The Federal Funds Rate: Is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight. When a depository institution has surplus balances in its reserve account, it lends to other banks in need of larger balances. In simpler terms, a bank with excess cash, which is often referred to as liquidity, will lend to another bank that needs to quickly raise liquidity. Source: Federal Reserve Bank of St. Louis.
- The “core” PCE price index: Is defined as personal consumption expenditures (PCE) prices excluding food and energy prices. The core PCE price index measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices to reveal underlying inflation trends. Source: Bureau of Economic Analysis (BEA).
Sources: U.S. Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS), U.S. Department of Labor (DOL), Federal Reserve, Federal Reserve Economic Database (FRED), Federal Reserve Bank of Atlanta, U.S. Census Bureau, Department of Housing and Human Development (HUD), U.S. Department of Agriculture, U.S. Energy Information Administration (EIA), U..S Department of the Treasury, Office of the United States Trade Representative (USTR), U.S. Department of Commerce, data.gov, investor.gov, usa.gov, congress.gov, whitehouse.gov, U.S. Securities and Exchange Commission (SEC), Morningstar, The International Monetary Funds (IMF), The World Bank (WB), European Central bank (ECB), Bank of Japan (BOJ), European Parliament, Eurostats, Organization for Economic Co-operation and Development (OECD), National Bureau of Statistics of the People’s Republic of China, Organization of the Petroleum Exporting Countries (OPEC), World health organization (WHO).
Financial Markets – Recent Prices and Yields, and Weekly, Monthly, and YTD (Table): Bloomberg, Weekly Market Data is in USD and refers to the following indices: Macro & Market Indicators: Volatility (VIX); Oil (WTI); Dollar Index (DXA); Inflation (CPI YoY); Fixed Income: All U.S. Bonds (Bloomberg Aggregate Index); Investment Grade Corporates (Bloomberg US Corporate Index); US High Yield (Bloomberg High Yield Index), Treasuries (ICE BofA Treasury Indices); Equities: U.S. Industrials (Dow Jones Industrial Average); U.S. Large Caps (S&P 500); U.S Tech Equities (Nasdaq Composite); European (MSCI Euope), Asia Pacific (MSCI AP), and Latin America Equities (MSCI LA); Sectors (S&P 500 GICS Sectors) Source: Bloomberg. Fed Funds Rate probabilities, Source: CME FedWatch Tool.
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The information provided here is for general informational purposes only and should not be considered a customized recommendation, personalized investment advice offer, or solicitation for the purchase or sale of any security or investment strategy. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own situation before making any investment decision.
This information is obtained by AMTI from third-party providers from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. All expressions of opinion are subject to change without notice in reaction to changes in market conditions. By using such information, you release and exonerate AMTI from any responsibility for damages, direct or indirect, that may result from such use. Consult the issuer of any investment for the most up-to-date and accurate information.
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- Past performance is no guarantee of future returns.
- There is no assurance the Fund will pay distributions in any particular amount, if at all. Any distributions the Fund makes will be at the discretion of the Fund’s Board of Trustees
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- The value of the investments varies and therefore the amount received at the time of sale might be higher or lower than was originally invested. Actual returns might be better or worse than the ones shown in this informative material.
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