Attack the Week (ATW)
April 6, 2025
Sunday Thoughts
Structural regime shifts don’t occur too often, but when they do, it never is just a short-term event. This might be good or bad news, depending on one’s views. I am taking a more positive stance as I seek opportunities. The consequences of what’s unfolding, however, has to be taken against a thorough understanding of what this great macro shift entails. I have opined before the “Liberation Day” announcement what I see as my macro roadmap ahead. All the points and investment implications are in play, and I see no need to change anything. You can find it here:
Waiting for April Fools + 1
With quarter end now firmly behind us, we and everyone else are awaiting April 2nd and with it the potential repercussions. A seismic event for financial markets or just another one of those unclear presidential communications where everything is still very much up to interpretation? I am not sure financial markets want to grapple with continued uncertainty and are pricing in enough event risk premia in case we are indeed presented with a historical event. I wrote about it in
Many friends have messaged me over the past days, asking me what I think will happen. Is this another GFC? Is this another SVB or Covid moment? I told them it’s neither one of those. We simply will not be able to compare any of those past stress tests to what’s going on currently. There is no past scenario that fits the bill. That’s why the current setup is potentially way more dangerous. That’s mostly because I’m not sure that our monetary leaders will be proactive in stimulating. I’m telling you, anything can happen. Bitcoin was up on Friday as stocks fell nearly 6%. That was not in my book as an example, although it has fallen over the weekend.
As usual, its sometimes useful to ask yourself what might not change. Many went into the weekend hoping for some sort of deal or announcement. None of it happened as Trump and his generals double down on “hanging tough”. So, I think its reasonable to assume that this administration has no appetite to change the fact that they are rupturing the whole global trading system. Everything else flows from this. There are car manufacturing companies already freezing their US production as they assess the situation. I could imagine this happening across industries. All this halts the economic engine, and you don’t need to be an economic genius to realise that this is not great news.
Where can US stocks find support? Subscribers are familiar with my longer-term charts. Below is the SPX on monthly candles. We are actually at one support line (blue) currently but as previous episodes have shows we usually go through and only find support on the pink line, which currently stands at 4600.
A friend of mine attended a conference where Druckenmiller shared his latest thoughts. As always, his thinking is very often spot-on. He thinks we are in a bear market for the next 12 to 18 months. He mentioned that he is relatively light on risk, as the current political mix makes it very hard to navigate. Bear markets are tricky beasts to navigate as we spend more time rallying. He is also overall bearish the US Dollar from here.
I want you to also read my piece on emotional risk management, which you will find below. I think it’s important to keep a level head in these trying times. Needless to say, that panic never ends in optimal results. Keep a clear mind and be open-minded is my recommendation.
Emotional Risk Management
As you have certainly experienced yourself, trading and investing can be emotionally challenging endeavours. Think back on the times when you had maximal stress your mind and body had to deal with. Do you remember certain patterns and how you tried dealing with them?
Let’s also read Macro D’s latest thinking before briefly scanning the week’s upcoming calendar. We then revisit some charts, which give us some interesting setups. As always, we close with a look at the output of our asset allocation model. It had another positive week last week, which is a blessing in these turbulent times. Let’s see what it decides to do for the upcoming trading days.
Have a successful week ahead. And remember, stay nimble.