Here's the Deal - April 28, 2025

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

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

_{Week 17 of 52 for 2025: 32.69% of the way through 2025}

Weekly Note:

It seems that Trump may have gotten the message. At least, that's how investors are interpreting it. Since he stepped back from announcing immediate new tariffs and softened his language on trade, the markets have reversed course and are now showing signs of confirming that reversal.

It was a strong week for the market, and it looks like the recent correction is either ending or has already ended. Now, the key will be how this coming week, and especially how the month, closes. That will likely give us a much clearer signal about what’s ahead in the weeks and months to come.

One thing to keep in mind: this has been a very powerful cycle. Even though we've recently seen some signs of weakness, it could simply be a pause/breather rather than the start of a bigger downturn. Remember, there’s been a massive amount of stimulus pumped into the system, and the explosive growth of artificial intelligence has added even more fuel to the fire. Either one of those forces alone can drive markets higher, but together they’re even more powerful.

Bessent continues to lead.

Scott Bessent stayed active in the media this week, offering important reminders about how the economy really works. He made a key point that’s easy to forget but crucial to understand: "America First does not mean America alone."

He also added a dose of realism to the conversation about U.S.-China trade negotiations. According to Bessent, there has been no unilateral offer from Trump to cut tariffs on China, and a full trade deal could take another 2 to 3 years. He described the negotiation process as something that "will be a slog."

In addition to his commentary, Bessent also announced that the Treasury will be launching a financial literacy campaign this week. This is great news and something the country has needed for a long time. As more details come out, I’ll break it down further, but for now, it’s safe to say this is a fantastic and overdue move by the federal government.

Financial literacy is one of the best investments a nation can make in its future, and it’s great to see real leadership on this front.

This week in tariffs.

Trump claimed he spoke with Chinese President Xi Jinping this week, but China publicly denied that the call happened. Meanwhile, The Wall Street Journal reported that the U.S. is likely to reduce tariffs on China down to a range of 50% to 65%, with the cuts happening in stages.

If true, this would actually be a very sensible structure for both sides. Here’s what the proposal reportedly looks like:

1. Phase in tariff reductions over 5 years to give companies time to move production where needed.

2. Low tariffs on everyday consumer goods like clothing and furniture.

3. Higher tariffs on more strategic sectors like drones, automobiles, and electricity generation equipment.

This is the kind of measured approach that allows for economic adjustment instead of forcing sudden shocks, which is best for the US economy.

However, Trump’s messaging around tariffs remains untethered to any sort of strategy. On April 23rd, he said that if trade deals aren't reached, he would move forward with setting tariffs on other countries, including China, within the next 2 to 3 weeks. (What happened to the promised 90-day pause? The story keeps shifting with each press appearance.)

Later in the week, he stated that another pause in tariffs is now "unlikely."

Meanwhile, according to a report from a Fox Business journalist, Charlie Gasparino (a proponent of the the Trump Administration and definitely not a left-leaning source), the White House is quietly searching for an "offramp" to ease tensions with China while still "saving face" politically after their aggressive escalation.

According Gasparino, executives on Wall Street with ties to the White House are saying that Trump’s recent softening on tariffs and trade wars is being driven by political concerns. Specifically, the harm tariffs would cause to U.S. farmers, a key part of President Trump’s political base.

The fact that negative impacts on farmers seem to be catching the administration off guard provides further proof that there was no serious long-term plan in place, as this outcome was not difficult to predict. It’s the exact same issue which surfaced during the 2018 tariff battles, and even as far back as the US instigated tariff wars of 1930 when Smoot-Hawley passed.

The overwhelming evidence continues to point to the fact that there was never a carefully crafted, long-term plan behind these tariffs. And that it is more of a "shoot from the hip and see what happens" strategy. Which is incredibly sad considering how important it is for the US in the coming century to get this right.

History had already written the playbook. It seems the administration simply chose not to read it.

But while negotiations remain incredibly messy, underneath the chaos there are signs of a more pragmatic approach beginning to take shape.

Hopefully the President continues to pay attention to learn from the reality of real-world economics, instead of following his seemingly odd affection for tariffs.

At this point, many Trump supporters are beginning to mirror the same willful blindness we saw from many Biden supporters when clear and undeniable signs of cognitive decline became impossible to ignore.

It's an important reminder that when people become emotionally invested in a political figure or movement, it often leads them to ignore obvious warning signs.

Japan balks at isolating China, while India may offer a new path for tariff negotiations.

It’s starting to look like India could be the first country to reach a new trade agreement with the U.S., and that deal might become a template for future agreements with other key partners like South Korea, Australia, and Japan.

However, when it comes to Japan, negotiations aren’t going as smoothly. Japanese trade officials are reportedly frustrated with the Trump Administration’s handling of the talks. Their main concerns? A lack of clear objectives from the US.

While at the same time, Japan says they will not partake in a trade bloc which seeks isolate China (article will be posted in the comment section), which was a hope stated from the Trump Administration last week.

This confusion is yet another example of why it is appropriate to describe the Trump Administration’s approach to trade and tariffs as “chaotic.” Instead of building trust to reach stable agreements, the uncertainty is creating frustration among America’s longest and closest allies and trade partners.

Import Volume Warning: Early Signs of Trouble for the Economy

We’re starting to see the effects of the trade war show up in some of the earliest economic reports (article will be posted in the comment section). I say “earliest” because the transportation sector, especially shipping and freight, sits upstream from the rest of the economy. It’s often one of the first areas to show changes, long before you and I feel them in our daily lives. This makes transportation data a valuable tool for predicting where the broader economy is headed.

And the latest data is flashing a major warning signal.

In just the three weeks since the new tariffs took effect, ocean container bookings from China to the U.S. have dropped by over 60%, according to Ryan Petersen, CEO of Flexport.

If this trend continues, it could trigger supply shocks similar to what we experienced during COVID which caused shortages, delays, and rising costs.

And it’s not just ocean shipping that’s showing cracks. Trucking volumes, another critical early indicator, are also falling.

Month-over-month, trucking volumes are already down 8.3%, and are at levels we haven't seen since just before COVID. And they're expected to fall another 3% to 4% in the coming weeks.

This is an important warning sign. If these trends continue, and if the tariff and trade issues aren’t resolved quickly and dramatically, we could start seeing real job losses and noticeable shortages of in the not to distant future.

Together, the sharp drop in container shipments and the decline in trucking activity are early warning signs that supply chains, and the broader economy, are under serious pressure.

With that in mind, it would be wise to buy your summer and back-to-school essentials now. Acting early can help you avoid higher prices or empty shelves if supply chain disruptions continue to worsen in the months ahead.

European and Canadian tourists are taking their tourism dollars elsewhere.

In a not-so-surprising development, it turns out that angering your customers can seriously hurt your income.

In this case, by insulting the rest of the world, the U.S. has made itself a much less attractive destination for international tourists, which means fewer tourism dollars coming into the country.

This is yet another example of how the Trump Administration’s barbarous rhetoric is directly working against its own goal of boosting national revenue. Instead of attracting more business, the messaging is pushing it away.

A good example of how important it is for an administration to align the proper rhetoric with their stated strategic economic goals.

Consumers say one thing, but their actions continue to say another.

Even though many consumers continue to complain about the economy, they’re still spending money on much more than the essentials (article will be posted in the comment section). Which has been the case since the early days of COVID.

This is a great reminder that actions are more important than words or feelings when trying to understand the real state of the economy.

It also helps explain the confusion we saw back in early 2021 and then again later in 2023, when many people believed the US was in a recession. Even though the overwhelming aggregate of the actual economic data didn’t support that idea.

However, moving forward, there are reasons to expect a shift to lower consumer spending as the economy continues to slow. Especially as federal student loan collections are scheduled to resume on May 5th. That means many consumers will soon have new financial obligations, which means fewer available dollars and thus a cut in consumer spending each month.

Yet another warning sign of a coming or newly beginning recession. And certainly something to watch carefully in the months ahead.

Markets:

Right now, I'm keeping a close eye on the 200-day moving averages across the major indices. They will likely give us the clearest clue about the market’s next major move, and by extension, how the economy might behave over the next few months.

Before we get there though, expect some resistance at the 100-day moving averages early this week.

Above all, stay alert. We’re entering the part of the market cycle where volatility, unpredictability, and a fair amount of “market games” tend to reach their peak. This is the time when discipline and clear thinking are most important.

$SPY ( ▲ 0.5% ) S&P 500:

The question now: Is this just a bounce, or are stocks ready to resume their longer-term uptrend after a roughly 20% correction?

Here’s the roadmap I'm using for SPY coming into the week:

• Next key level is $555.

• If SPY holds above $555, then the next target is around $562.75.

  • Looking for a test of $530ish should $555 - $563 fail.

• If that holds, we look toward $571ish

  • Looking for a test of $555 - $550, should $571 fail.

• And then $586.25ish should those levels hold.

  • Looking for a test of $571 - $563, should $586.25 fail.

But for me, the real battleground is between $555 and $563.

• If SPY fails at $555, it’s a strong sign that this is just a short-term bounce.

• If SPY pushes above $563 and holds, then the door opens for a possible run back toward the All-Time High of $613.23 later this year.

Another possibility is that we get stuck in a range for a few months, somewhere between roughly $510 and $563.

While there are many possible outcomes from here, based on the persistent strength we've seen in the broader market along with the renewed strength in Bitcoin the last few weeks, if you made me choose today I'd lean toward a move higher. Possibly all the way back to the highs. While that may seem crazy now, it also seemed crazy to many for markets consistently hit higher highs since the end of the 2022 bear market.

That said, everything could change quickly. A few inflammatory Truth Social posts or sudden political headlines, like Peter Navarro jumping back in front of the cameras, could easily shake the markets in a heartbeat.

This is not a market for the faint of heart or the inexperienced. But if you’re a casual observer, or have ever thought about starting to pay closer attention, this is actually a fantastic time to watch and learn.

$DIA ( ▲ 0.94% ) Dow Jones Industrial Average (Same plan as last week):

Bullish above $400ish. Bearish below $390ish.

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

$QQQ ( ▲ 0.34% ) Nasdaq (Same plan as last week):

Bullish above $452ish. Bearish below $435.50ish.

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

$IWM ( ▲ 0.03% ) Russell 2000 (Small Caps) (Same plan as last week):

If above $187ish, then looking for $200ish. If it can hold $200ish, then looking for $210ish.

Resistance between $190 - $197. Expect some resistance there initially, which may turn into a new opportunity to once again increase risk.

Significant Economic Data from the previous week:

Economic Data to watch this week:

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