April 7, 2025
Good morning,
U.S. investors went to bed last night bracing for another wave of selling on our shores this morning. The global futures market opened last night with Asian markets getting slammed and the S&P 500 Futures contract off another ~3.5%. The S&P 500 Index (SPX) closed on Friday afternoon down ~17.5% from its February all-time high. It looks like the down-20% threshold mentioned in Friday’s Morning Note is already upon us. That threshold of damage is sensible, and I think the market will gravitate to it in the coming days. However, there are early signs that panic fear has the crowd in its grips in the equities market; overshooting sensible is the very definition of panic fear. It is difficult to do given the job of the media industry, but there is every reason to remain calm or at least not get caught up in the panic.
The good news is that unlike in 2008, the U.S. private sector is not facing major structural imbalances that will require years to undo. This selloff has been policy-induced, and hence, can be rectified by changing policy.
I would normally mention events ahead for this week (employment data on Friday), but these aren’t normal times, and as if by design, nothing matters this week other than what comes out of the White House regarding tariffs. I’ll write each day this week if for no other reason than to add a small dose of calm to the fears we are all feeling.
Be well,
Mike