MARKET WRAP

After hours we’re seeing a negative reaction to the tariff announcements, with SPY lower by about -2.2%. The US10Y yield is also lower, about 4.12% off a close of 4.19%. Oil is lower as well. More details and specifics on the tariffs at the bottom of the email.

For today’s regular session: SPX +0.7%, QQQ +0.8% and IWM +1.4%.

• MRKT Call: a NKE trade, a look at defense contractor stocks, Sofi’s latest note and more.

• RiskReversal Pod: Deidre Bosa joins to talk the transition from AI foundation models to 'wrappers' and now to AI native applications. The show covers the booming private market for AI app companies in contrast to the stalling public markets (and more).

MRKT MATRIX: April 2, 2025

Today’s Top Stories:

• Stocks rise on Wednesday ahead of Trump tariff announcement (CNBC)

• Wall Street Trading Desks Warn S&P 500 Selloff Will Get Worse (Bloomberg)

• Summers Says Trump Tariffs to Impose Oil-Shock Type Economic Hit (Bloomberg)

• Tesla reports 13% drop in first-quarter vehicle deliveries from a year ago (CNBC)

• Trump Tells Inner Circle That Musk Will Leave Soon (Politico)

• Walmart Keeps Price Pressure on Suppliers After Beijing Pushback (Bloomberg)

• Google in Advanced Talks to Rent Nvidia AI Servers From CoreWeave (The Information)

• Nvidia Faces Dilemma After Chinese Firms Rush to Order $16 Billion in New AI Chips (The Information)

• Amazon Submits Bid for TikTok With US Sale Deadline Nearing (Bloomberg)

• Andreessen Horowitz in talks to help buy out TikTok’s Chinese owners (FT)

Today’s MRKT Call is Presented by SoFi

Traders Await Tariff Announcement

Talking all things tariffs on the eve of the announcements after hours. Dan predicts Elon stepping away from the admin minutes before a headline drops saying that is the case. A look at potentially tariff immune stocks.

• Analysis: NDX, US10Y, TLT, TSLA, GM, NKE, RTX, LMT, 

• Charts of the Day: Sofi report on total tariff rates, total goods as % of GDP, 

• Live Trading: NKE 70 Call Calendar

• Your Questions Answered:

  • Is SMCI looking good for a bounce?

  • RTX, Can Europe really hold out nd not use US contractors for defense?

Click here to access all of the charts mentioned in today’s MRKT Call.

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Today’s RiskReversal Podcast is Presented by Betterment and iConnections

Vibe Coding & Vibe Shifts In Silicon Valley with Deirdre Bosa

Dan Nathan and Deirdre Bosa, the CNBC host of Tech Check, discuss the evolution of the AI sector on the Risk Reversal Podcast. They examine the transition from AI foundation models to 'wrappers' and now to AI native applications. Deirdre elaborates on the booming private market for AI app companies in contrast to the stalling public markets. The conversation highlights companies like Any Sphere’s Cursor and examines the differing cost structures and monetization strategies between AI infrastructure firms and app-based companies. They also touch on the dynamics of AI in the Chinese market, the potential for strategic mergers and acquisitions, and the missed opportunities by tech giants like Apple. The episode concludes with a focus on the emerging concept of 'vibe coding,' where AI handles the technical coding while developers focus on higher-level design and functionality.

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What’s Next?

First, a couple of the headlines coming from the tariff announcement after hours:

• Starting tomorrow, the US will implement reciprocal tariffs on other nations.

• US Set to Baseline Tariff Rate of 10% for All Countries

• The US will charge a 34% tariff rate on China.

• Japan will face a 24% tariff.

• The European Union gets 20%.

• UK 10% (the baseline universal tariff).

• Vietnam 46%. Cambodia 49%, Taiwan 32%, South Africa 30%, India 26%, South Korea 25%, Thailand 36%, Switzerland 31%, Indonesia 32%.

The expected move into tomorrow for SPX was about 1.3%. For the balance of the week it was about 1.8%. That means the tariff announcement was garnering most of the anticipated potential volatility. The market still needs to navigate the jobs number Friday morning, but should the reaction after hours (-2%) hold into tomorrow morning, the SPX will already be testing the max of what options had been pricing. If that is the case we may still see a decline in 0DTE vol (tomorrow’s IV was nearly 40 into the announcement) while farther duration out a few weeks (the VIX) ticks higher.

The levels from Monday morning could once again be tested should the decline follow through into the morning. A higher VIX won't help as it is likely to add to the immediate reaction rather than be a contrary indicator. We’ll see if the mood changes over night (or gets worse). We’ll be back tomorrow with continuing coverage and reactions.

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