April stats. Tariffs have been the talk of the town for the past month since Liberation Day on April 2.
Markets have not enjoyed the uncertainty that the seemingly constant policy shifting has brought and we briefly entered bear market territory on an intraday basis on April 8 for the S&P 500.
One of our core tenets is “Time in the market, not timing the market.” If you miss the best 4-5 days of returns in a given year, your annual return gets severely reduced.
Yes, the same goes for missing the worst 4-5 days, but do you really want to try to time those 10 days out of ~250 trading days?
As you can see below, big down days and big up days often occur close to one another.
The moral is don’t get scared out of the market by biggish down days as you could very well miss a big up day that follows in short order…
On the heels of Liberation Day, we had a -12% decline from April 3-8 (4 trading days) followed by an absolute face ripper of a rebound +9.5% on April 9….
As you can see, that’s one of the highest single day returns for the S&P 500 ever!
For the Dow, the +7.9% single day return on April 9 was also one of the biggest ever…
The +2,962 point gain was the biggest day on record (though to be fair, the index level itself makes a gain like that easier to achieve).
Sector ETF performance paths for April:
And from the April 8 bottom:
And sector ETF YTD paths:
Broad index / commodity performance update:
Factor performance update – Pure Growth and Momentum led the way for April while Low Volatility and High Dividend lagged…
And here’s the factor performance since the April 8 close (recent market low).
Yields moved higher on the whole during April, with a bigger move to the upside earlier on before giving some of that back through the end of the month.
However, the 5yr and 2yr Treasury yields ended April lower than where they began…
What might we expect in May? It’s up 58 out of 97 times (59.8% batting avg).
When it’s up, it’s up +3.05% (3rd weakest up), and when it’s down, it’s down -4.68% (2nd worst) – so should we sell in May and go away?
May’s batting average of is right in line with the median BA of 60.3%.
Policy Uncertainty Index rose again in April, hitting 548, up from March’s 447 reading…
Volatility rocketed up with the VIX closing at nearly 171 on the market lows on April 8.
The VVIX and 1-Day VIX also surged before moving back lower to close out the month but are still above the levels we’d been living at recently.
Earnings projections are being cut both in the US and Europe as analysts/markets are trying to determine the effects of the policy uncertainty.
Source: JPMorgan
Goldman estimates tariffs could take 2% off US GDP…
And speaking of GDP, the 1st estimate for Q1 2025 U.S. GDP came in at -0.28% q/q annualized, the 1st decline since Q1 2022.
Imports / Exports were the reason for the drop, as Imports surged +41.3% on tariff front running…
Consumer Spending decelerated to +1.79%, the slowest in a few quarters.
Core PCE also came in below forecasts, up just +0.03% m/m, smallest since April 2020, bringing the Y/Y figure down to +2.65%.
No signs of accelerating inflation here…
Following its peak 110 back on Jan 13 2025, the DXY fell all the way to 98.3 on April 21, the lowest level since March 2022.
The decline has renewed concerns/discussions around the US Dollar as the global reserve currency. Gotta ask, though, who’d replace us?
In the midst of the uncertainty, Gold has shined (shone?), rising to all-time highs well above $3,000…
Silver has also been trending higher, but not quite at the same relative historical levels as Gold.
The labor market continues to chug along – March nonfarm payrolls came in at 228k, roughly 2x forecasts.
The Headline U3 unemployment rate ticked up to 4.2%, above forecasts for 4.1%. Broader U6 rate down to 7.9%.
The March JOLTS data showed that Openings declined, Hires ticked up, Quits increased, and Layoffs declined.
Good to see Quits increasing and Layoffs decreasing. Quits up implies workers are more confident in their ability to find a job elsewhere…
Despite the encouraging inflation numbers and continued stability in the labor market, the negative equity market action has depressed consumer sentiment…
Conference Board, RealClearMarkets, and Michigan all recorded declines in sentiment in April…
NAAIM exposure is light, indicating risk-off views.
AAII Investor sentiment has been decidedly bearish of late…
