The Formula That Wreaked Havoc Across Financial Markets: TBL Weekly #135
Good morning Readers!
What a time to be alive. This past week, we had many economic prints that would have moved markets a year ago, but today’s main market mover appeared to be the following equation:
On Wednesday, April 2nd, President Trump claimed to liberate Americans by imposing reciprocal tariffs across many of its trading partners using the formula above to encapsulate all of the monetary and non-monetary “tariffs charged to the U.S.A.” This rather simplistic approach to calculate tariffs sent the stock market crashing down:
Bringing back an old chart, we highlighted three correction support lines for the S&P 500: first one at 5530, second one at 5222, and third one at 4608—with the last one being a completion of a 2022-like correction. We also remind readers that one of our favorite retracement figures, the Fibonacci 38.2% pullback, is still quite far away from current levels slightly shy of 20% (and above for the Nasdaq and small caps). Despite the initial bounce from our first line of support, bears managed to bring down that buy-wall and cross well below the 5530 level—completely destroying the 5222 level. When comparing the current pattern to 2022’s correction, we saw a similar path until today’s 6% crash:
This time, the second leg of the bear run is much faster. One of the most fascinating aspects of this week’s price action was that bitcoin was flat. Flat—on a week with utter carnage across risk and spiking stock and bond volatility! The price action had us and many others salivating, to say it mildly.
In today’s Weekly, we will:
Analyze today’s main market winners and losers through a cross-asset and cross-border analysis.
Perform a volatility analysis—which we believe to be the main driver of markets today— via TBL Liquidity components.
Look at the Fed’s reaction function to all of this.
So, without further ado, grab a coffee, and let’s dive into TBL Weekly #135.
The first months of the new administration have sparked an unprecedented push for cost-cutting and efficiency within the federal government—but DOGE Can't Fix The Dollar. Join us on April 16th to hear PhD economist Peter St. Onge explain how bitcoin brings true efficiency to governments while protecting your generational wealth. With macro uncertainty driving a dip in bitcoin prices, now is the time to understand the fundamentals driving the global shift to sound money.
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Weekly Monitor
Weekly Analysis
Cross-Asset and Cross-Border Analysis
In somewhat of a continuation from last week’s Weekly, the separation between safe haven and risk assets continues to grow wider by the day. Just look at this chart—gold and Treasuries up, and risk down: