The Week Ahead

Equities will look to build on last week’s progress (a small gain on the week following 4 straight weeks of losses). Barring an overnight change in sentiment it looks like we’ll start the week higher, with stock futures +0.5% Sunday evening. The markets will have to navigate more economic data, particularly towards the end of the week, and tariff news should pick up as we go as well with a deadline looming next week.

Before we get into that, some stories from this weekend you may have missed:

Over the Weekend:

• White House Narrows April 2 Tariffs (WSJ)

  • Tariffs on industrial sectors like cars and microchips are no longer expected to be announced on that date, though major trading partners will still be hit with so-called reciprocal tariffs.

• Tariff ‘Liberation Day’ With More Targeted Push (Bloomberg)

  • The coming wave of tariffs is poised to be more targeted than the barrage he has occasionally threatened, aides and allies say, a potential relief for markets gripped by anxiety about an all-out tariff war.

• Stumbling Stock Market Raises Specter of Dot-Com Era Reckoning (Bloomberg)

  • It happened exactly 25 years ago when the roughly five-year dot-com bubble popped, leaving trillions of dollars of investment losses in its wake.

• Nvidia’s Next-Gen Chips Will Guzzle Electricity. Will the U.S. Have Enough Power? (Barron’s)

  • Nvidia just unveiled new AI chips that will be several times as powerful as anything on the market today, and use considerably more electricity. By 2027, a server rack stacked with its top-of-the-line chips will use five times the power of today’s machines.

• Investors Who Were All In on U.S. Stocks Are Starting to Look Elsewhere (WSJ)

  • American exceptionalism was this year’s big trade. Now some are hedging their bets.

Now to the upcoming week. Futures opened higher Sunday on the back of “less bad” tariff headlines over the weekend. We enter the week with some of the lowest implied vols since late February. The VIX closed Friday at 19.20, and the expected move for tomorrow (0.7%) and for the week (1.8%) are much tighter than recent weeks:

Expected Moves:

• SPX/SPY: 1.8% (5565-5775)

• QQQ: 2.2%

• IWM: 2.3%

• TLT: 1.1%

• USO: 2.4%

The economic calendar is headlined by the PCE on Friday but there’s important data all week as well as well as a ton of Fed governor speeches:

Economic Calendar: 

• Monday

  • 9:45am - S&P Global PMI’s

  • 4pm - Fed Barr Speech

• Tuesday

  • 9am - Fed Williams Speech

  • 10am - Consumer Confidence

  • 10am - New Home Sales

• Wednesday: 

  • 8:30am - Durable Goods

  • 10am - Fed Kashkari Speech

• Thursday:

  • 8:30am - GDP

  • 8:30am - Initial Jobless Claims

  • 10am - Pending Home Sales

• Friday:

  • 8:30am - PCE

  • 10am - UM Consumer Confidence

The earnings calendar is light on big names, but we do hear from KBH, DLTR and LULU:

Earnings (with expected moves):

• Monday

  • After Hours: KBH 4.5%

• Tuesday 

  • After hours: GME 11%

• Wednesday

  • Premarket: DLTR 12.6%, CHWY 10.7%

  Thursday

  • After hours: LULU 9.5%

As we mentioned last week, the large expiration of options this past Friday will opens up equities to potentially break out from this recent consolidation. In which direction is largely dependent on tariff news as the April 2nd deadline approaches as well as economic data like GDP, PCE, and Consumer Sentiment.

There are more large option positions expiring end of month (next Monday) that will begin to be rolled this week. That rolling could assist with a move higher as it removes some large short deltas from Puts just below the recent range.

We’ve got some great coverage and trade ideas all week. Stay tuned!

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