Here's the Deal - April 13, 2025

Economy: In early Recessionary Phase (Not necessarily a recession, yet.)

Market Cycle: In Correction. Confirmed Bear Market, but showing signs of life.

_{Week 15 of 52 for 2025: 28.85% of the way through 2025}

Table of Contents

• “Your bond markets have a dog-face, Donald.”

• The Missed Opportunity Most are Overlooking

• Electronics Exempt from US Tariffs on Chinese Prod …

• Significant Economic Data from the previous week:

• Economic Data to watch this week:

• Quote of the Week:

Weekly Note:

What a difference a week makes.

Last week delivered a powerful reminder of just how fast things can shift in the world of markets and politics.

The good news? President Trump finally seemed to grasp just how damaging his tariff plans and rollout could be for the U.S. economy. No matter how his most loyal supporters spin it, he said it himself at Wednesday afternoon’s announcement of the 90-day reprieve stating, “I saw last night where people were getting a little queasy.” While also reportedly acknowledging in public that the tariff policy could cause a recession, but that he wanted to make sure that it didn’t cause a depression.

That queasiness wasn’t just about stocks, it was coming from the bond market, the most powerful forces in global finance.

Former President Bill Clinton once captured this dynamic perfectly stating, “You mean to tell me that the success of the program and my reelection hinges on the Federal Reserve and a bunch of fucking bond traders?”

Clinton’s strategist, James Carville, also opined on the topic saying, “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or a .400 hitter. But now I would like to come back as the bond market. You can intimidate everybody.”

And this week, the bond market reminded everyone of the reasoning behind both Clinton and Carville’s statements.

The US bond market is a $51 trillion behemoth. That’s 60% larger than the $32 trillion US stock market. So when it speaks and becomes irrational, it doesn’t just send a signal, it sends massive shockwaves.

Stock market jitters are one thing. But when the bond market starts to buckle, you instantly know it’s serious.

That’s exactly what happened with the market reaction to Trump’s tariff threats. According to The Wall Street Journal, President Trump also decided to adjust his stance after watching Jamie Dimon speak to Maria Bartiromo on Fox Business. That kind of reaction, governing by gut and TV segments, further signals a lack of a well-thought-out strategy.

And while “throw it at the wall and see what sticks” might work in some situations, it’s a risky approach when the future of global trade and America’s economic strength on the world stage is on the line.

Would you wing it if your entire future were at stake?

This week was another vivid reminder that the bond market doesn’t bluff and holds the cards. It forces leaders to listen.

At the very least, President Trump seems to be listening now. Let’s hope he starts learning too.

“Your bond markets have a dog-face, Donald.”

After pivoting on tariffs and granting a 90day extension for negotiations, President Trump falsely stated “The bond market is very tricky, I was watching it. But if you look at it now it’s beautiful.”

That’s… not exactly true.

In fact, it’s the opposite of true.

The 10-year Treasury yield just posted its largest one-week gain since November 2001. For this stage in the economic cycle, a spike in yields like this is not a sign of beauty. It’s a flashing warning signal.

Or rather, a “dog-face” as Trump once described the wife of a political rival.

Couple that with a falling dollar and we are getting into the nightmare scenario of bond yields ripping higher while the dollar crashes which Howard Lutnick was questioned about last week on CNBC and erroneously stated that “It’s just not possible.”

President Trump has been loudly demanding that the Federal Reserve cut interest rates. But what he apparently still doesn’t understand is that the Fed doesn’t set rates in a vacuum, they follow many data points and history shows that the bond market is a major one.

Ironically, Trump’s own actions have now made the rate cuts he wanted much less likely in the near future.

The Missed Opportunity Most are Overlooking

The irony to this week is that we got stellar CPI and PPI reports. Exactly the kind of data the Fed needed to start seriously consider more rate cuts.

In other words, we began to show real progress in the fight against this bounce in inflation. This could’ve marked the beginning of the shift we’ve all been waiting for. A path toward looser monetary policy, lower borrowing costs, and some relief across the economy.

But instead of opening that door, Trump’s “shock and awe” tariff strategy keeps it slammed it shut for now.

His chaotic approach and aggressive rhetoric around tariffs spooked the bond market. Instead of yields falling in response to cooling inflation, as they normally would on reports like this, they surged higher on the uncertainty surrounding trade policy.

That spike in yields didn’t just mute the market’s response to lower inflation, it undermined the Fed’s flexibility. Higher bond yields make make it almost impossible for the Fed to justify further rate cuts here.

A moment that could’ve signaled progress instead became a case study in how bad policy can drown out positive data.

If Trump had simply waited even just a few more days, the Fed would’ve had the perfect setup.

But instead, he charged ahead with chaotic messaging and a poorly timed tariff announcement. But only after blindsiding both U.S. allies and rivals in the run-up, rattling global confidence and lowering demand for the US’s debt. When demand for US debt goes lower, bond yields go higher as investors start to sell Treasuries.

And when yields rise sharply? The Fed’s hands are tied. They can’t cut into that environment without risking even more instability.

So now, the very rate cut Trump was craving has likely been pushed further out. Not because of inflation. Not because of strong growth. But because of a completely unforced error of his own making.

No one else can be blamed for this one. Trump had a moment lined up, and he blew it. “BIGGLY!!!”

We’ll know for sure in a few months, but from where we’re sitting today, this looks like a classic case of short-term impulse wrecking long-term strategy.

Electronics Exempt from US Tariffs on Chinese Products

On Saturday morning, the Trump Administration announced a significant change to its China tariff policy, stating electronics (including phones, computers, and chips) will now be exempt from the newly imposed 145% tariffs.

This is no small adjustment. These products account for nearly 40% of all U.S. imports from China.

In other words, almost half of what the U.S. typically buys from China just got a pass from the steepest part of Trump’s tariff escalation.

Markets:

This past week may have been terrible for the economy, but it was glorious for traders with a plan, well tested strategy, proper risk management, and a keen eye to statements from policy makers on the main market narrative.

It was a week of huge gains for seasoned traders both while the markets were in free-fall and as they ripped higher.

Literally the type of week you dream about when learning how to trade.

After nearly sending both the stock and bond markets off a cliff with aggressive rhetoric against trade partners & allies with tariff threats, President Trump’s sudden midweek pivot sent stocks soaring on Wednesday.

All criticism aside, he did tell everyone that it was a great opportunity to buy a couple of hours before announcing the 90day negotiation window.

And Trump wasn’t the only one sending signals on Wednesday morning…

Moves like this might feel bullish long-term, and for traders, they can be. However, these type of daily gains for the indices often show up when markets are heading into major trouble. We see it happen time and again at the end of credit cycles before and/or during market crashes. As was the case in the lead-up to the Dot-Com crash in 2000–2001 and again during the Global Financial Crisis in 2008.

Death crosses are also forming on major indexes like SPY, QQQ, and DIA. Meaning the 50day averages are crossing below 200day averages. While the 200day are also now sloping down. Another troubling signal.

That doesn’t guarantee an imminent crash. These crosses can sometimes act as head fakes before another new uptrend. But historically, they’ve often been early warnings of serious trouble in the months ahead. So, best to keep an eye on them moving forward.

And while yesterday morning’s announcement exempting Chinese electronics from tariffs will likely lead to a big gap-up when markets open Monday, don’t get distracted. This only confirms one thing:

The dominant market narrative now is clearly tariffs, as this week provided further evidence.

That said, don’t be surprised if stocks continue ripping higher in the short to medium term.

Here’s what I’m looking at now…

$SPY ( ▲ 0.97% ) S&P 500:

Getting back above $550 - $565 is going to be the key. Expect some resistance there initially, which may turn into a new opportunity to once again increase risk.

$DIA ( ▲ 0.87% ) Dow Jones Industrial Average:

Resistance at $420ish. Expect some resistance there initially, which may turn into a new opportunity to once again increase risk.

$QQQ ( ▲ 0.68% ) Nasdaq:

Resistance between $470 - $485. Expect some resistance there initially, which may turn into a new opportunity to once again increase risk.

$IWM ( ▲ 1.18% ) Russell 2000 (Small Caps):

Resistance between $190 - $197. Expect some resistance there initially, which may turn into a new opportunity to once again increase risk. But I am much less focused on small caps while yields continue to spike and at this point in the cycle. There may be a few opportunities in nuclear, quantum computing, and space exploration companies should the market find firmer footing. But I certainly would not dare over staying my welcome in any small caps for now.

$TLT ( ▲ 0.71% ) 20+ Year Treasury ETF:

Meanwhile, bond prices continue to be a wreck here with the volatility in bond markets caused by tariff uncertainty and investors around the globe shedding their exposure to US debt.

Even with all of the negativity, I’m cautiously optimistic for markets in the coming weeks. Possibly into the end of Summer. But I certainly wouldn’t overstay my welcome this time around as it continues to appear that we are getting closer to the end of the cycle, which brings a reset of prices across the board while investors flee for safety and wait for signs of stabilization to accumulate.

I am watching for incrementally good news of tariff deals between the US and individual countries to propel markets higher. My bet is that should this all get resolved in the coming months, then the “sell the news” event which triggers the market crash which will lead to the end of the current credit cycle begins to occur when the last big trade announcement is made. Making it seem as though the coast is clear after the tariff “kerfuffle.”

At least that’s the thought on April 13th, but it’s a news driven market at this point. So if the news changes, then best to keep an open mind and stay nimble.

Make me choose right now, I say markets probably end up back at the highs and maybe even higher. Unless SPY fails to get back above $560 - $565.

While I think we go higher, I’m not buying hand over fist just yet. Instead I plan to see how price handles the the levels listed above.

And just like that... The story once again changes.

Right as this was about to go out, Howard Lutnick shifted the narrative… again.

Yesterday, we were told that electronics and semiconductors would be exempt from the newly imposed Chinese tariffs.

But this morning Lutnick has walked that claim back. Saying those products aren’t truly exempt after all, they’re just being pushed into a different category of “sectoral tariffs” set to arrive in a month or so.

Expect much less of a gap-up in markets tomorrow morning than previously stated. Which is much less of an issue than the continued plan-less reactionary statements by the administration.

Seriously guys, get it together.

Less Navarro and Lutnick. More Bessent, please.

Significant Economic Data from the previous week:

Economic Data to watch this week:

Quote of the Week:

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