February 3, 2025
Good morning,
It does feel a little déjà vu-ish this morning, starting another week in a hole for markets. If it was DeepSeek Monday last week, it is He-Wasn’t-Bluffing Monday, this week. Futures are off -1.65%, 2 hrs before the open, but off the opening lows of -2.2% overnight. As we were warned, Mexico (25%), Canada (25%), and China (10%) tariffs were announced over the weekend. They will have a profound influence on the economies of Canada and Mexico, and even our own if maintained for a lengthy period. The economic numbers will ultimately matter in determining the impact on the financial markets, but for today at least, emotion and sentiment are likely to be the most powerful drivers. In general, the likelihood of overreaction to a news event is higher on Sunday nights without normal price discovery mechanisms operating. I suspect we’re seeing a little of that again this week.
Unsurprisingly, automakers are leading the losses in the S&P 500 ahead of the open. GM shares are down more than 7%, Aptiv (auto parts mfg) is losing almost 5%, and Ford is also down more than 4%. Chip stocks are second among the declines. Mexico exports a lot of computers and electronic equipment to the US, so in some cases, this reflects the stick that has been thrust into the wheels of US manufacturers, but there are broader underlying issues. At a sector level, the worst performers are consumer discretionary, which includes the autos and info tech, where Nvidia is off -4%. The decline of Nvidia is telling as it indicates a change of mood from last week rather than the pricing of the new US trade policy.
As the hours pass today, markets may work their way higher off the overnight lows based on overreaction last night and a willingness to believe that the tariffs won’t last too long as reactions they are designed to elicit see the light of day.
Ahead this week are the first employment numbers for the new administration, which will be on Friday. Recall that last month’s report came in well above estimates (256K vs. 165K estimate), yields spiked, and stocks sold off. Not predicting a repeat, just that it is a market-moving number of late. We also get plenty of key Q4 earnings reports from the likes of Amazon, Alphabet, Palantir, AMD, Arm Holdings, and Uber, and earnings have been supportive of the overall market so far this earnings season.
I have not forgotten Whistling-Past-The-Graveyard, but it will have to wait due to the weekend announcements. See you Friday with what may be a slightly positive update for the week.
Be well,
Mike
Disclosures
Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security, has not been tailored to the needs of any specific investor, and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any Investment decisions. The information contained herein was compiled from sources believed to be reliable, but Robertson Stephens does not guarantee its accuracy or completeness. Information, views and opinions are current as of the date of this presentation, are based on the information available at the time, and are subject to change based on market and other conditions. Robertson Stephens assumes no duty to update this information. Unless otherwise noted, any individual opinions presented are those of the author and not necessarily those of Robertson Stephens. Performance may be compared to several indices. Indices are unmanaged and reflect the reinvestment of all income or dividends but do not reflect the deduction of any fees or expenses which would reduce returns. A complete list of Robertson Stephens Investment Office recommendations over the previous 12 months is available upon request. Past performance does not guarantee future results. Forward-looking performance targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are only available to qualified investors and are not suitable for all investors. Alternative investments include risks such as illiquidity, long time horizons, reduced transparency, and significant loss of principal. This material is an investment advisory publication intended for investment advisory clients and prospective clients only. Robertson Stephens only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Robertson Stephens’ current written disclosure brochure filed with the SEC which discusses, among other things, Robertson Stephens’ business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. © 2025 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere.