MARKET WRAP

Another interesting Monday. The day began with a negative reaction to the tariff details but following news that the Mexico tariffs were to be paused, we saw reversals in equities, bonds, commodities and even bitcoin from their first hour extremes. At the close SPX was -0.75%, QQQ -0.8% . IWM -1.25%. The 10y yield is now 4.54 after dipping below 4.50, Oil finished +0.5%. The VIX closed 18.60 but was above 20. Bitcoin is now 101k after a rally. In other words, we got sight of what the reaction to tariffs looks like, but possibly a glimpse of how easily those tariffs can go away. On the earnings front, PLTR is 18% higher after hours.

More on today’s action at the bottom of this email. Also below, Dan and Guy are joined by Carter Worth on MRKT Call. And Liz Thomas of SoFi joins the new RiskReversal Pod! Look for the special segment on the real world impacts of tariffs.

MRKT MATRIX: February 3, 2025

Today’s Top Stories:

• Dow claws back sharp losses in stunning reversal after U.S. tariffs on Mexico are paused (CNBC)

• Trump pauses Mexico tariffs for one month after agreement on border troops (CNBC)

• Beijing Prepares Its Opening Bid to Talk Trade With Trump (WSJ)

• Putin says Europe will ‘stand at the feet of the master’ as Trump’s tariffs alarm allies (CNBC)

• Tom Lee says buy this tariff dip in stocks, but bitcoin is headed for much more short-term pain (CNBC)

• Paul Tudor Jones says markets are on shakier ground than in Trump’s first term, leaving no room for error (CNBC)

• Everyone’s Rattled by the Rise of DeepSeek – Except Nvidia, Which Enabled It (WSJ)

• Musk Says DOGE Halting Treasury Payments to US Contractors (Bloomberg)

Today’s MRKT Call is Presented by MoneyLion

Trade War Impacts: What The Charts Tell Us

Today's MRKT Call kicks off with a breakdown of the market’s reaction to the tariff news and the apparent easing of tensions throughout the day. Carter Worth joins with a compelling historical chart dating back to 1928, offering a broader perspective on the current landscape. The conversation then shifts to key earnings reports, with a deep dive into the GOOGL chart, plus a check-in on META and MSFT following their results. Guy and Dan highlight the Chart of the Day, featuring AAPL and NVDA, followed by the Call of the Day on CAT. The show wraps up with a discussion on the real-world impact of tariffs—beyond the stock market.

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

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Today’s RiskReversal Pod is Presented by CME Group, iConnections and SoFi

Macro Matters: Trade Wars, Labor Markets, and Economic Signals

In this episode of the RiskReversal Pod, Guy and Dan announce our official podcast rebrand with a streamlined focus, emphasizing daily market insights and expert conversations. Liz Thomas of SoFi joins to discuss key market events, including upcoming corporate earnings, tariff impacts, and the much-anticipated jobs report. The episode delves into the market's reaction to recent trade announcements, fluctuations in treasury yields, gold's surprising performance, and the implications for major tech companies like Google, Amazon, and Tesla. The conversation also explores the potential consequences of a prolonged trade war on the U.S. consumer and jobs market, highlighting insights from various experts.

What’s Next?

Today’s action provided a glimpse of how the market initially reacts to tariffs—but also how quickly sentiment can shift when those tariffs are in question.

• SPX was down nearly -2% in the first hour.

• QQQ was down -2.2%.

• IWM was down 2.5%

• 10-year yield settled at 4.54, recovering from an earlier dip to 4.48.

• Oil finished +0.5% but was up neatly 3% Sunday evening.

• VIX peaked above 20 this morning before retreating to close 18.60.

• Bitcoin is now trading at 101k but fell as low as 93k this morning.

The assumption traders are now working on is that the tariffs are a passing negotiating tactic and that not much has to be done by the other countries to pause or avoid them. If that does indeed turn out to be the case it does neuter most of the tariff story as overhang on the market. However, should that turn out to not be the case, and if the market remains in a cycle of threats/escalations or even simply headline/tweet risk, traders today gave a bit of preview of how assets would react.

On that note, should the tariff news cycle cool and we see positive earnings reactions followed by a good but not too good jobs number on Friday, this sort of volatility can often act like a trampoline to help send stocks to new highs, as traders get turned around. One thing worth noting in the options space is that the 6150 area contains a lot of option overhang out until March. We’ll revisit that factor should stocks make a run at new highs in the coming weeks or month.

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