“Keep your face to the sunshine and you cannot see the shadows.” – Helen Keller

Chart of the Day

Good morning!

The Nasdaq Composite is still in bear market territory. There seems to be little respite from tariffs. And corporate executives are panicking about a recession. 

In short, it doesn’t look great. But underneath the surface, there are signs that the market is holding its own and actually doing well. 

#1 The VIX has calmed down.

If this year’s market moves have you reaching for Dramamine, you’re not alone. In recent days though, Wall Street’s fear gauge, or the VIX, has eased off its 2025 highs. So you can put the medicine away. 

It settled at 26.47 on Thursday. That was the lowest close since 21.5 on April 2, which felt like the last day when markets were calm ahead of Liberation Day later that evening. 

In the days after what ended up being Liquidation Day, the VIX went berserk. It rose to its highest level since the Covid-19 driven market meltdown. The VIX rises when investors are bracing for volatility, dabbling in options to limit downside risk. The higher demand leads to higher prices for options contracts, pushing the VIX up. 

On April 9, when a brief reprieve from tariffs was announced, it tanked, notching its largest daily percentage decline ever. It has continued on that downward trend since then. 

#2 The tech trade is roaring back to life. 

The S&P 500’s information technology and consumer discretionary sectors are up 4.9% and 3.1% since April 10, when markets were jolted again despite the pause being announced a day earlier. 

Netflix has jumped 19% since then, Apple has jumped 9.4%, and Alphabet’s stock has rallied 3.9%.

It’s hard for the market to rally in a meaningful way without the likes of tech titans because they’re such a big part of the indexes, so they’re crucial if we want to see the broader index bounceback. 

#3 Good earnings are being rewarded.

We’re still in the early innings of the earnings season—about 30% companies have reported—but it looks like good earnings aren’t being unjustly punished, aka investors aren’t acting too irrationally. 

For example, Hasbro shares soared 15% Thursday after the toymaker posted a massive beat above expectations and issued that it is not changing guidance. Single-stock moves of that magnitude have been rare as of late. Texas Instruments, too, rose 6.6% after the semiconductor manufacturer reported better than expected earnings and upbeat guidance. 

The best signal was given by American Airlines, which showed a smaller-than-expected loss and shares rose 3.1%. Given the sour outlook for leisure and business travel, it was impressive to see its shares rally. 

In comparison, the S&P 500 rose 2% on Thursday. 

Share your thoughts

What other positive signs are keeping you optimistic during these tough times? Click here to send us your response.

Here’s what a reader commented

Question: How has trade-related uncertainty affected your consumer- or business-related decisions?

Answer: Two anecdotes to support the Beige Book (which, to be fair, I don’t pay much attention to): A close friend of mine is a NYC tour guide. Two weeks ago, a company she knows had 20 NYC bus tours for Canadians canceled. Twenty drivers and twenty guides lost a day’s work. The tour company lost money and so did the bus charter company. Another friend is high up at a major US retailer (1000+ stores). She sources almost all their apparel in Asia. Travels there many times a year. Company at a standstill. Investment plans on hold. Inventory build in question. Hiring? No clue. 

Catch up with Fundstrat

While the chasm between macro (bearish) and equity internals (bullish) is wide, today we got the 4th confirming signal.

Technical

While this short-term breakout is certainly helpful towards helping equities extend higher technically, the weekly downtrend and bearish momentum will likely take time to reverse.

Crypto

Head of Crypto Strategy Sean Farrell is on vacation.  

News We’re Following

Breaking News

• Trump asserts trade talks with China are underway after Beijing denies any ongoing negotiations CNBC
• Trump signs order to boost deep-sea mining, seeking to break China’s critical minerals dominance CNBC

Markets and economy

• How the Treasury market got hooked on hedge fund leverage FT
• Expectations of Fed rate cut by early summer fade MW
• Supply Shortages Loom as U.S. Shipments from China Plummet BR

Business

• Alphabet shares rise on stronger-than-expected revenue growth CNBC
• Meta lays off employees working on virtual reality in Reality Labs division CNBC
• Apple aims to source all US iPhones from India in pivot away from China FT

Politics

• Trump’s Policies Boost Left-Leaning World Leaders WSJ
• Trump Organization sells ‘Trump 2028’ hat and shirt, fueling questions about third term bid CNBC

Overseas

• China quietly rolls back retaliatory tariffs on some US-made semiconductors, import agencies say CNN
• Madrid’s Biggest Landlord? U.S. Investment Firms NYT
• Putin Keeps Pummeling Ukraine, Convinced Trump Is on His Side NYT

Of Interest 

• How Chili’s Won When America Raged About Fast-Food Prices WSJ
• The Hottest AI Job of 2023 Is Already Obsolete WSJ
• Duolingo Will Teach You to Play Chess. What It Means for the Stock. BR