MARKET WRAP

Traders did not like the combination of a hot PCE and bad Consumer Sentiment this morning, sending equites lower sharply into the weekend. On the day, SPX -2%, QQQ -2.6% and IWM -2.1%. For the week, SPX was lower by -1.5%. Adding to the bad vibes today, the US10Y yield was sharply lower, now 4.25% while the VIX spiked to near 22, up from 17 earlier this week. Big tech had an especially bad day with META, AMZN and GOOGL down more than -4%.

Trade Update: Selling to close the SPY May +570p/-540p @ -$11.85 (Originally bought for +$6)

• On today’s RiskReversal Pod, Brian Belski, of BMO Capital Markets joins to discuss his S&P 500 price target of 6,700, tariffs, geopilitcs, potential opportunities in small/mid-cap banks, and more.

MRKT MATRIX: March 28, 2025

Today’s Top Stories:

• Wall Street sell-off deepens on inflation worries, Dow closes 700 points lower (CNBC)

• Nvidia-backed CoreWeave opens at $39 per share after biggest U.S. tech IPO since 2021 (CNBC)

• Industry Analysts Project 21% Increase in S&P 500 Price Over the Next 12 Months (FactSet)

• Macro Traders From New York to Hong Kong Primed for Tariff Day (Bloomberg)

• Value Stock Gains Need Fresh Catalyst With Earnings a Wild Card (Bloomberg)

• AT&T, Pepsi, and 10 Other Stocks That Look Immune to Trump’s Tariffs (Barron’s)

• Trump Warned U.S. Automakers Not to Raise Prices in Response to Tariffs (WSJ)

• Deutsche Bank slashes Tesla price target as first-quarter deliveries come under pressure (CNBC)

• EU Plans ‘Term Sheet’ of Concessions for Trump Tariff Talks (Bloomberg)

• Chinese Exporters Hunt for Alternatives to ‘Irreplaceable’ U.S. Buyers (WSJ)

• Trump Ushers In ‘New High Water Mark’ for Deregulation (WSJ)

Today’s RiskReversal Podcast is Presented by CME Group, iConnections, and Robinhood

Keep Buying Stocks, Says Wall Street Bull Brian Belski of BMO

Dan Nathan and Guy Adami are joined by Brian Belski, Chief Investment Strategist at BMO Capital Markets. The discussion covers a wide range of topics, including Belski's bullish outlook on the S&P 500, with a price target of 6,700. They delve into the dynamics of the secular bull market, cyclical trends, and the path to normalcy in market returns. Belski shares his views on the impact of geopolitical events, trade tariffs, and sector-specific performances, particularly in technology and financials.

The conversation also touches on consumer sentiment, the role of AI, and the implications of monetary policy on market behavior. Belski emphasizes the importance of a diversified investment strategy and the potential opportunities in small and mid-cap banks. The episode provides a comprehensive overview of current market conditions, offering valuable insights for investors navigating these uncertain times.

Timecodes 

• 0:00 - What's Changed?

• 13:05 - Consumer Sentiment

• 20:00 - Recession Fears

• 27:20 - Rates

• 32:30 - Regional Banks

• 35:30 - Private Markets

• 40:50 - Google, Meta & Apple

• 47:30 - What Media Misses

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What’s Next?

This week’s failed attempt to rally above the 200-day moving average is a setback for bulls and marks the fifth decline in the past six weeks for the SPX. From a technical perspective, 5600 SPX was a key level recently—it had served as support over the past two weeks and was briefly a resistance level during the bounce from -10% before that. With today’s close just below 5600, the 5505 low of March 13th is likely the last defense for bulls.

With VIX at 22, traders are essentially pricing in a 50/50 chance that SPX holds that 5505 level. A break below would likely send VIX back towards the high 20’s and ensuing wild day to day swings.

Next Week:

• Monday: End of quarter—expect potential window dressing, rebalancing, and large option rollovers.

• Wednesday: Tariff deadline—anticipate a wave of market-moving headlines into (and out of?)

• End of the Week: Latest jobs report.
  

As noted earlier, the calendar signaled a potential return to volatility toward the end of this week and into next, and that’s now playing out. One last note on that, there’s been somewhat of an assumption that the April 2nd tariff deadline is the end of the story. There’s no indication that that is true at this point. March’s deadlines didn’t end up being that way. We’ll see if things are different this time?

Trade Update: The bearish/hedge SPY trade (from earlier this week) can be closed for a double and Dan did that today (bought for $6, sold at $11.85). For those still needing a bit more protection below this level, the top strike or the entire trade can be rolled lower to book a smaller profit while leaving some protection.

Stay tuned this weekend for a full preview of next week—check your inbox Sunday evening for that.



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