The Week Ahead

Macro Movers

The Pay-Per-View Nobody Asked For: Trump v Powell

April 9th showed us the “Trump put” exists, and lives in the Treasury market. 

If the person behind the chaotic, economically-illiterate tariff-policy rollout—which nearly caused a credit event—is going to undermine the independence of, arguably, the most important intuition of global finance, then I suspect the Treasury market will have something to say about it. 

According to WSJ, Scott Bessent and Kevin Warsh (former Fed governor, and rumored Trump Fed pick) are pushing back on Trump’s impulse to oust Powell. While Trump hasn’t shied away from challenging the norms surrounding checks and balances, Bessent—who Trump trusted to run the Treasury and listens to on these matters—is surely making this risk known. Between the two voices, let’s hope they keep Trump’s discontent confined to social media.

Another “Jittery” Market: The U.S. Dollar

The USD is typically seen as a safe-haven asset. But during this equity selloff, it hasn’t attracted the usual bid—down ~7% while the S&P 500 is off ~15% (Feb 19–Apr 17, 2025). Using ChatGPT, I looked at every S&P 500 drawdown over 10% since the U.S. left the gold standard in 1971.

In ~78% of cases, the USD rose as stocks fell. The exceptions: 1970s stagflation, Black Monday (late 80s), and the 1990 Gulf War oil shock.

Because the analysis tracks USD performance from the S&P 500’s peak to trough, the dot-com bust and GFC escaped this list. I think this is because those drawdowns played out in extended phases rather than sharp declines. A closer look shows the USD didn’t act like a safe haven as those crises unfolded. In 2002, the S&P fell 23% and the USD dropped 13%. In the first half of 2008, the S&P was down 10% and the USD down 5%. So while the full peak-to-trough periods did not align with negative USD performance, it wouldn’t be intellectually honest to say the USD attracted safe-haven flows as it did during other drawdowns in the sample.

Even excluding those cases, the precedent isn’t encouraging. Some point to global divestment from U.S. assets amid deglobalization under Trump as the culprit. I am not comfortable making structural calls, but it feels premature to call this a lasting shift—especially when so much can flip on a single Truth Social post. What I am comfortable saying is this: the data suggests the USD tends to get a safe-haven bid when panic is global. When the stress is U.S.-specific—like stagflation or domestic economic weakness—it usually doesn’t. 

In conclusion, while it would be unwise to dismiss the logic behind the U.S. asset divestment argument, historical data offers another explanation for the USD’s behavior—and doesn’t inherently point to a loss of its safe-haven role or reserve currency status.

A Sliver of a Silver Lining

Although the market often looks through currency impact on earnings as transitory (which is great because it often doesn’t work in our favor), weakness in the USD could offset some tariff headwinds. With the USD weaker, when multinational companies bring dollars made overseas back into the U.S., the exchange rate is more favorable.

---

Now that we’ve nerded out, let’s look ahead. Barring any surprise macro headlines from the ongoing trade war, this week should be another relatively quiet one. That said, with Trump’s economic approval ratings hitting their lowest levels of either term, I’d expect the next trade-related headlines out of the White House to lean market-friendly.

Beige Book

The Beige Book is a Federal Reserve report published eight times a year that compiles anecdotal insights from businesses and regional contacts across all 12 Fed districts to provide a real-time snapshot of U.S. economic conditions.

While the summaries across districts may include more specific segments, there are five core segments: Labor Market, Prices, Consumer Spending, Manufacturing, Banking/Finance. The upcoming release covers the month of March. While tariffs were not in effect, this release could provide more insight into how much (or little) frontrunning was done and how it impacted economic conditions.

S&P Flash PMIs (preliminary, April)

• Manufacturing: 49.3 expected vs. 50.2 prior
• Services: 53.0 expected vs. 54.4 prior

UMich Consumer Sentiment (final, April)

• Final is expected to match the preliminary at 50.8.

Micro Movers

It was almost a clean sweep for the bulls this week.

If not for Nvidia’s $5.5B H20 charge dragging the Nasdaq and UnitedHealth’s brutal guide weighing on the Dow, all the major averages could’ve done better than 2%.

Not all the stock-specific news was grim.

In fact, some developments were downright good.

• Netflix posted strong results, gaining 3% in after-hours as it validated its status as a defensive-growth name. 
• Bank of America finished up ~4.5%, propelled by their solid quarter and reassuring comments on the U.S. consumer. 
• Taiwan Semiconductor also delivered a nice quarter, which is a win for the broader semi space even if the stock couldn’t build on post-earnings gains thanks to the untimely Nvidia-specific headline.

There are plenty of warning signs across assets—bonds, currencies, commodities. But so far, Q1 earnings aren’t giving recession. I know a lot is changing. The next 90 days probably doesn’t look like the last 90 days. Nevertheless, if we are heading into one, companies will do so from a position of strength.

The docket this week includes a few more of the Mag 7 along with the big three of telecom, another pocket of perceived safety. Let’s jump in. 

Tesla (TSLA)

As of Thursday’s close, Tesla is ~50% off its high. Fair to say expectations are low. Reasonably so. 

• China-U.S. tariffs are a real headwind. 
• The EU and China are negotiating a deal on EVs. 
• Musk’s personal involvement in politics have triggered international boycotts. 
• Meanwhile, Waymo and Uber are steadily advancing their autonomous driving partnership, leaving Tesla behind—they should just partner with Uber as well.

But Tesla’s edge in automation shouldn’t be overlooked. 

Their vertical integration across batteries, energy, and manufacturing gives them a real shot at scaling humanoid robots—something no one else is seriously positioned to do. Yes, Musk’s timelines are usually overambitious. But if Tesla can shift focus away from cars and reframe as a robotics play, the stock could start working again. 

One last point: TSLA is the first of Nvidia’s major customers to report. There’s talk amongst bears that capex will get cut due to economic uncertainty. This will be the first real test of that theory.

The Telecoms: Verizon (VZ), AT&T (T), T-Mobile (TMUS)

UnitedHealth’s (UNH) brutal guide may have put the safe-haven bid for managed care stocks on life support, but the big three U.S. telecom names remain a beacon in the storm. If we hit a recession and unemployment rises, cell phone bills are one of the last things people will drop. That’s why these stocks have been so hot.

Now, if UNH taught us anything, it’s this: stocks that have rallied on multiple-expansion from the safe-haven narrative need to deliver… or at least not completely whiff. If there were any doubt, it is officially too late to chase defense. The easy money has been made.

TMUS is a bit of a different animal. It’s still playing offense—reinvesting in growth—while VZ and T have shifted to defense, protecting market share and kicking off steady dividends. If we get a real recession, TMUS probably gets hit the hardest. VZ and T hold up better. Of the two, I’d ride with T.

Alphabet (GOOG)

As of Thursday’s close, GOOG is down just over 25% from its highs, trading at 17.1x forward earnings, which is a discount to the S&P 500’s 19.8x. Some negativity is priced-in. Maybe, for good reason. 

The news flow has been terrible. The existential threat of AI-search continues to gain traction. Last week a judge ruled that GOOG illegally monopolized the online ad tech market. Perhaps the discount reflects the market anticipating a decline in ad revenue versus the same quarter last year (comparable quarters). While their cloud segment remains the future growth engine, I doubt any strength there will offset a decline materializing in the core search business this quarter.

That said, due to the existential threat AI poses for GOOG, one thing seems certain: GOOG won’t be cutting AI capex anytime soon. GOOG has the most to lose if it can’t make AI profitable. Whether investors are willing to stomach the spend is another question. Either way, GOOG is a tough stock to own right now.

Gorilla Tactics: Lows To Buy

The second half of this brief leaned positive, but the first half could have left some feeling hysterical. That’s not the point. I want people to stay invested. In fact, at this point, I’m looking for lows to buy.

Let me explain: The plethora of negatives are well-known. Could it get worse? Sure, but not as easily as the situation could improve. Even if you disagree with me there, here’s four things working for stocks: two tactical, two structural.

1. Fingers crossed, the VIX has peaked. I don’t expect a 50+ VIX again, even if the S&P retests its lows. And if we get that retest without a volatility spike? That would actually be encouraging.
2. Trade deals are coming. Trump’s approval on the economy just hit a fresh all-time low. That reflects near universal frustration on how he’s handled things. If this drags on, Republicans will flip. Trump cannot afford that if he hopes to act on other parts of his agenda. 
3. I’m taking stagflation off the table. If tariffs drive the economy into recession, we’ll see job losses. As a result, demand will evaporate. Companies will be forced to lower prices—inflation will fall— in response. Neither outcome is good, but there is a weird fascination with stagflation among some that I feel is misplaced.  
4. Fed Funds have room to fall. The “Fed Put” may not be in play right now due to the current economic factset, but the lever is still there. Rates are at 4.5 percent, not zero. If we get broad price declines, the Fed can cut rates to help the economy.

This isn’t fun. And the public, political nature of what’s driving this makes it even harder. But we’ll get through it.