Tariff Flip Flop?

The 🔥H.E.A.T.🔥 Formula : AI Driven Insights to Spark Your Portfolio

Author

Matthew Tuttle
April 14, 2025

In Today’s Issue:

  • Looming regional bank crisis

  • Will the Fed come to the rescue?

  • Ray Dalio concerned about something worse than a recession

  • Is the US going to look like Japan in the 90s?

  • Tariff policy flip flop?

  • and more……..

Announcements

Our Next Webinar

Trump’s Plan For the Economy and How It Impacts Your Investments

Thursday April 24, 2-3pm EST

Read our latest report: Looming Regional Banking Crisis

SKRE Regional Bank Report.pdf40.13 MB • PDF File

News & Noise

🧠 News:

Wall Street’s ‘Smart Money’ Braced for Tariff Chaos. It Was Still Caught Off Guard.

www.wsj.com/finance/investing/wall-streets-smart-money-braced-for-tariff-chaos-it-was-still-caught-off-guard-48588858?mod=finance_lead_story

Maybe there weren’t so “smart”, Trump told you when to sell and he told you when to buy

Fed Under Pressure as Inflation Expectations Surge

A new survey from the University of Michigan shows consumers souring sharply on the economic outlook as the trade war heats up.

www.nytimes.com/2025/04/11/business/economy/fed-inflation-trade.html

❌ Noise:

How to avoid Treasury bond panic and still get 'peace of mind' income from the market

Amid Treasury panic and market stress, the 'bond ladder’ concept can help investors and savers seeking a fixed income from falling into a financial hole.

www.cnbc.com/2025/04/13/how-to-avoid-bond-panic-and-get-peace-of-mind-income-from-the-market.html

No such thing as “peace of mind” income. Also, anything that’s generating 10-11% yield is likely returning principal.

What Wall Street Is Saying

Jefferies….

In 1990s Japan, the national decline was associated with the “triple yasu” loss: a fall in stock markets, a rise in bond yields and a declining currency. This has been a feature which US experienced briefly last week and if this were to continue, a flight from US assets represents a greater risk as USD and Treasury bonds.

GREED & Fear, Jefferies…..

One explanation for the sell-off in Treasuries is retaliatory Chinese dumping of Treasury bonds. GREED & fear doubts this, despite the provocation of a 125% tariff levied against China. The more plausible explanation is forced selling triggered by highly leveraged players in the “basis” trade, where absolute-return investors seek to profit from arbitraging the difference between cash and future prices. If the current sell-off does not necessarily indicate that supply concerns are hitting the Treasury bond market, we believe that day is coming.

Goldman Sachs…..

Didn’t feel like it but US stocks finished up on the week (S&P 500 +5.7%). Market participants are left fatigued and stuck in an increasingly difficult trading environment, as fragility was exposed in the long end of the treasury market, and client feedback suggests the 90-day pause in tariff implementation did little to boost investor sentiment. AI Themes, Megacap Tech, and Defense logged among the largest gains on the week, while China ADRs, Oil, and Renewables were among the themes that underperformed.

Given most investors we speak to remain bearish U.S. stocks at the moment, the desk likes owning short-dated upside optionality to hedge another violent short squeeze / play for a positive China headline / Trump/Xi phone call, etc.

U.S. consumer stocks with China sales + supply chain exposure have a lot of ground to recover and while vol levels are optically high everywhere, we think these trades offer attractive convexity on the upside

JP Morgan…..

The Q1 earnings season should begin to shed light on the trade war’s impact on earnings. Our Equity Strategists reduced their 2025 S&P 500 EPS estimates to reflect flat real y/y growth, due to higher direct and indirect tariff costs. We expect significant downward revisions to Q2-Q4 analyst estimates, as corporates likely use Q1 reporting to reset growth expectations.

UBS…..

US equity volatility still at 2020 levels suggests uncertainty could persist, despite the VIX seeing its largest one-day drop on record last Wednesday. While we see scope for volatility to soften if trade policy uncertainty wanes, we remain cautious on the US earnings outlook broadly. The uncertain macro backdrop could pose challenges for US corporates providing guidance for FY 2025. However, this has not yet been reflected in consensus earnings revisions for this year or next, as we anticipate. We see scope for higher volatility at the single stock level through Q1 reporting season, though it remains to be seen whether this drives even higher correlation amongst constituents or dispersion across tariff-sensitive sectors and themes.

Jonathan Krinsky, BTIG

As we discussed last week, we are not expecting a ‘v-shaped’ recovery. Like we saw in ’98, ’11, and ’15-’16 we can expect a wide choppy trading range, with a potential re-test of the lows before making a durable bottom. We are also keenly aware that the S&P’s 200 DMA is now threatening to inflect lower. The slope of the 200 DMA is always the most important part of trends, and the longer that trends lower the more likely this correction is going to turn into something more long lasting. At the same time, medium-term metrics like weekly RSI are oversold, and we think bonds are poised for a bounce. These cross-currents are likely what leads to ongoing chop in a wide trading range.

Policy Flip Flop?

After the close we got a list of exemptions from tariffs:

Smartphones • Laptops • Printer and copier parts • Semiconductor (chips) manufacturing equipment • Parts for semiconductors (e.g., diode/transistor parts) • CPUs and memory chips • Networking devices (e.g., routers, modems) • Flash drives and solid-state drives (SSDs) • Data storage media (obsolete classification) • Diodes (non-LED) • Low-power transistors • Other transistors • Thyristors, diacs, and triacs other than photosensitive semiconductor devices • Flat panel TV displays • General-purpose LEDs • Miscellaneous LEDs • Specialized LEDs • Solar cells (unassembled) • Solar panels (assembled solar cells)

So basically everything technology. Someone knew this was coming and bought a ton of AAPL calls right before the close. Then on Sunday we got this….

Mike O’Rourke….

This news is clearly not the market panacea that was expected upon the initial release of the Customs guidance. Some will certainly interpret a 1–2-month reprieve as a positive, and there will be strong expectations that the Administration won't follow through. Nonetheless, the President sent the trade hawks out to control the messaging today, and that is a market negative. If there is a strong, retail-driven gap-up higher open tomorrow on "exemption euphoria," it may be the last great selling opportunity of the year.

Regardless of what you think of the policy, I think Trump and Bessent did a great job of warning investors. Now, this confused messaging coming out is the exact opposite. At least now that the market isn’t going down in a straight line we have tradeable patterns. If you do wade back in on the long side I would continue to be very cautious.

Also, keep an eye on rates. This will tell you if something is broken or about to break, higher rates also make it more likely the Fed steps in….

Dimon Predicts Treasury Market ‘Kerfuffle’ Where Fed Steps In

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he expects “a kerfuffle” in the US Treasury market that prompts a Federal Reserve intervention.

www.bloomberg.com/news/articles/2025-04-11/dimon-predicts-treasury-market-kerfuffle-where-fed-steps-in

Before you go: Here are ways I can help

‍

  1. ETFs: We offer innovative ETFs that cover all aspects of The H.E.A.T. Formula, Hedges, Edges, and Themes.

  2. Consulting: I'm happy to jump on the phone with financial advisors at no charge. I've built a wealth management firm and helped other advisors grow their practices through the use of substantially differentiated investment strategies. If you want to talk just send me an email at [email protected]

  3. Monthly investing webinars

  4. Rebel Finance Podcast https://www.youtube.com/@TuttleCap

  5. Wealth Management-Coming Soon

  6. Paid Newsletter Service-Coming Soon

    The views and opinions expressed herein are those of the Chief Executive Officer and Portfolio Manager for Tuttle Capital Management (TCM) and are subject to change without notice. The data and information provided is derived from sources deemed to be reliable but we cannot guarantee its accuracy. Investing in securities is subject to risk including the possible loss of principal. Trade notifications are for informational purposes only. TCM offers fully transparent ETFs and provides trade information for all actively managed ETFs. TCM's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. Trade notification files are not provided until full trade execution at the end of a trading day. The time stamp of the email is the time of file upload and not necessarily the exact time of the trades.TCM is not a commodity trading advisor and content provided regarding commodity interests is for informational purposes only and should not be construed as a recommendation. Investment recommendations for any securities or product may be made only after a comprehensive suitability review of the investor’s financial situation.© 2025 Tuttle Capital Management, LLC (TCM). TCM is a SEC-Registered Investment Adviser. All rights reserved.