From the Team @ HPLT 4/21

Markets Update

US equities were mostly lower in a shortened trading week, after ending sharply higher the week before.  The S&P is +4.1% the last 2 weeks.  Breadth was a positive all week, meaning the equal-weighted S&P outperformed the tech-heavy / market-cap weighted S&P, finishing +0.40% last week.  Global trade continues to serve as an overhang with plenty of volatility and a barrage of back & forth daily headlines as tensions with China appear to be on the rise.  Stock darling Nvidia was -8.5% after announcing it will take up to a $5.5b charge in the wake of the US government decision to impose license requirements for exports to China.  The White House also said China now faces a tariff of up to 245% on imports of certain goods to the US, way higher than the 145% figure that markets have been pricing in the last few weeks.

Fed Chair Powell also a notable highlight from last week.  Comments from Powell, who spoke on Wednesday, had some hawkish/bearish takeaways after he reaffirmed that the tariffs are all ‘significantly higher than expected’ and will likely pressure growth and push inflation higher.  He also flagged tariff-driven inflation could have long-term persistent effects and reiterated that the Fed remains solely focused on combating inflation- not supporting equity markets.

We will jump into the busier stretch of Q1 earnings season these next couple weeks, and across all sectors the overwhelming focus will be on companies pulling some sort of guidance.  We’ve already seen this from Delta, Walmart, and Warner Bros Discovery.  Companies seem to want to be as transparent as possible about the lack of near-term visibility, which has been appreciated so far by the markets.  United Airlines went so far as to issue two different versions of financial guidance to account for the uncertain macro backdrop in a wildly sensitive industry.  Most companies will look to offer a range of outcomes in both ‘stable’ and ‘recession’ type ranges.

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