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Hope Springs Eternal – April 23, 2025

Mike Tierney

Good morning,

While it is not a good investment strategy, we all get to tip our hats this morning to hope. The three leading financial headlines this morning:

              *Trump Says He Has No Intention of Firing Fed Chief Powell
              *Trump Floats “Substantial” China Tariff Cuts in Trade Deal
              *Musk to Refocus on Tesla After Its Worst Quarter in Years (and step back from DOGE beginning next month)

An all-asset rally is underway this morning. It is not just that Powell keeps his job, or that China won’t have a 145% tariff to avoid, but I believe it is more about some thread of normalcy coming from the leader of the free world. Futures are up another +2.5% (that means +6% from intra-day lows on Monday), bonds are up (Treasury 10yr yields down 10-bps to 4.29%), the dollar is up a smidge, and the VIX is down below 30 to 28.21.

Is it up, up, and away now? Unfortunately, that’s not likely. Most economists surveyed can’t see the avoidance of a recession if the initially announced tariffs stick (let alone the reciprocal ones). Uncertainty has caused some, yet undeterminable, damage to the U.S. economic growth engine. It is unlikely that this morning’s “never mind” (as the great Gilda Radner would say), will do more than repair the market damage caused by White House recklessness over the weekend and into Monday. Removing terror and replacing it with some calm is a good thing.

We can also hope to see more of this kind of White House behavior because … hope springs eternal.

See you Friday to close the week – and be well,
Mike

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