Daily Morning Brew – April 23, 2025 - The Elevator Ride

Up and Down (Without Advice)

“The Elevator Ride with the Oversharer: Markets Press All the Wrong Buttons”

Time for work.

You just wanted to go up one floor.

But now you’re stuck in the elevator with that guy—you know the one—who smells like stale coffee and wants to talk about “macroeconomic dislocation” like it’s a new diet. Before the doors close, he’s already launched into a monologue: Powell’s gone soft, the Fed’s credibility is toast, the dollar is going the way of the fax machine, and gold is “just getting started.”

You press “Close Door” 17 times. Doesn’t help.
He leans in and whispers, “I sold my Treasuries yesterday... all of them.”
The elevator dings, but you’re not moving.
He continues, “I’m reallocating to physical copper. For the vibes.”

Welcome to today’s market.
Everyone’s panicking. Nobody’s listening. And someone just hit “Emergency Stop.”

Let’s unpack the mess before the Oversharer tries to pitch you his startup.

🧯 Macro Meltdown: The Walls Are Closing In

1. Trump vs. Powell: Now Personal, Still Market-Wrecking
   The Fed’s independence is under siege—again. Trump turned up the pressure, calling Powell “Mr. Too Late” and a “major loser” on Truth Social, teasing his removal like it’s the season finale of Central Bank Survivor. He’s demanding “preemptive” rate cuts, claiming “virtually no inflation” despite the CPI at 2.4% and tariffs looming. National Economic Council Director Kevin Hassett said Trump’s team is studying whether Powell can be fired before his term ends in May 2026. Powell clapped back, saying the law doesn’t allow it, but the damage is done. Result:

   • S&P 500: -2.4% (closed at 5,158.20)

   • Dollar: ICE U.S. Dollar Index hit a 15-month low (97.92, lowest since March 2022)

   • Gold: $3,422/oz, with futures at $3,425.30, rising faster than your cortisol levels

   • Treasuries: 10Y yield spikes to 4.42% (from 4.41%)

   This isn’t a trade. It’s a trust crisis. And the market just hit “Exit All.”
   The threat to Fed independence has hedge fund elites like Paul Singer warning of a potential loss of the dollar’s reserve currency status. Evercore ISI’s Krishna Guha told CNBC a Powell firing would trigger a “severe reaction” with higher yields, a weaker dollar, and equities tanking.

2. The Dollar as a Global Punchline
   De-dollarization isn’t a theory anymore—it’s a market thesis. Foreign holdings of Treasuries are being quietly trimmed (e.g., Japan’s record $2.18T yen inflow to long bonds), Asian central banks are whispering about alternatives, and even Deutsche Bank said it out loud: “America now relies on the kindness of strangers.”
   Unfortunately, those strangers are ghosting. The Bloomberg Dollar Spot Index slid 0.7%, with every G10 currency gaining against the greenback. Barclays downgraded its dollar forecast, citing “dollar risks too large to ignore.”
   China’s warning to trading partners against deals hurting Beijing’s interests is escalating trade war fears, further pressuring the dollar as a safe haven.

3. Sell America: The Real Trump Trade
   Since April 2, the S&P 500 is down 10%, the Nasdaq 10%, and the Dow 9.6%. The dollar’s down 7%. That’s not a correction—it’s an exorcism.

   • Gold: Booming, with Citi eyeing $3,500 in three months.

   • Yen and Swiss Franc: On a heater, with the yen weighing on Japan’s Nikkei (-1.3%).

   • Bitcoin: Up 5% in April to $87,040.70, decoupling from equities as a hedge.
     But the U.S. is now priced like it borrowed your cousin’s credit score.
     Added: The sell-off spread to credit markets, with high-grade credit default protection costs at a one-week high. Only American Express moved forward with a $5B debt sale; two other issuers backed off.

4. Treasuries as Risk Assets
   Let’s talk about the 10Y yield. It’s doing the opposite of what it should.

   • Safe haven? Try risk magnet.

   • Liquidity? Try “now accepting Bitcoin as collateral.”
     The Fed is holding. Trump wants slashing. Investors want clarity. Nobody’s getting anything. Former Fed President Bill Dudley backed Powell, citing four reasons for patience: cloudy economic outlook, unprecedented tariffs, falling growth potential, and inflation risks above 2%.
     The Conference Board’s headline index plunged 0.7% in March, the biggest drop since October 2023, with 2025 GDP growth revised down to 1.6%, signaling tariff-driven slowdown.

5. Emerging Markets: EMB’s Bad Hair Month
   The biggest EM bond ETF ($12.5B EMB) is seeing its worst monthly outflow since October 2023. Tariffs, Trump, and Treasury turmoil don’t just hurt Wall Street—they wreck capital flows globally. EM FX like ZAR, IDR, and MXN remain under pressure.
   The rupiah faces further losses, with Barclays predicting a drop to 17,200 per dollar by early 2026, prompting Bank Indonesia intervention.

🔍 Sector Breakdown – Who’s Getting Talked Over in the Elevator

• Semiconductors: Nvidia’s $5.5B hit is yesterday’s news, but sentiment’s still bleeding. Taiwan and Korea are stuck between margin compression and trade war fallout. Tesla sank 6.8% after Barclays cut its price target, citing “confusing” Q1 earnings visibility.

• Retail: Walmart, Target, and Home Depot CEOs met Trump to discuss tariffs. The result? A shared look of retail PTSD. Tariff costs are rising faster than receipts. Walmart’s better positioned (two-thirds U.S.-made goods), but Target’s discretionary focus is a liability.

• Energy: WTI crude fell 2% to $63.38, Brent to $66.57. Gas is dropping. Demand fears outweigh supply worries, signaling the market sees a recession before Powell does.

• Financials: Treasuries are no longer “risk-free.” Banks know it. Credit default swap spreads are up. Even Amex hesitated before its debt issuance.

• Gold: No longer just a hedge. It’s the captain now.

• Tech: The “Magnificent Seven” ETF (MAGS) fell 3.3%, with Tesla and Nvidia leading losses. Meta dropped 3%, on pace for its worst losing streak since April 2023. Amazon slipped 25% YTD after pausing data center lease commitments, per Wells Fargo.

• Health Care: The iShares U.S. Healthcare Providers ETF (IHF) fell 5%, down 12% over five days, led by Acadia Healthcare (-13%) and Universal Health Services (-11%).

• Crypto: Bitcoin hit $88,557.01 intraday, decoupling from stocks as a safe haven. Fairlead Strategies sees $95,900 if it clears $88,000 and holds.

• Consumer Discretionary: Norwegian Cruise Line Holdings jumped 2% premarket after Loop Capital’s buy upgrade, citing a 30% discount to land-based travel. Disney rose after Wolfe Research’s outperform rating, seeing 32% upside.

🎯 Core + Tactical Positioning – Elevator Recalibration Mode (Updated)

You can’t stop the ride, but you can brace better.

Core Holdings (Adjusted for Momentum)

• Gold ($3,422)
  Still the strongest hand. Momentum is overbought, but flow support is relentless. Overcrowded but justified.
  Hold: 12–15% | Hold here | Rebuy on dips near $3,300

• Short-Term Treasuries (1–3Y ETFs / CDs)
  Long-duration bonds (e.g., TLT) now look fragile. Sentiment deteriorating, yields rising, and positioning bearish. Shift to short-duration (3M–1Y) where demand is building.
  Add to short-duration CDs (4.5% yield) | Exit long-duration TLT exposure temporarily

• Staples & Utilities (XLP, XLU)
  Remain recession- and tariff-resistant. Still valid core anchor.
  Maintain: 15% allocation

• Cash / 1–3M CDs
  Optionality remains king. Use cash to pounce on opportunities.
  Hold: 25% | Ladder weekly | Consider 1M rollovers during volatility spikes

Tactical Trades (Refreshed & Realigned)

• Short S&P 500 (>5,150)
  The Fed drama and Powell threats have broken risk confidence. Momentum still bearish.
  Target: 5,000 | Tighten stop: 5,250

• Short Industrials (XLI)
  Still vulnerable to trade war mechanics and global supply chain downgrades.
  Maintain with caution | Exit on breakdown below $100

• Short High Yield (HYG, JNK)
  Risk spreads widening, and credit quality deteriorating.
  Hold with trailing stops | Re-add if spreads blow out further

• Short EM FX (ZAR, IDR, MXN)
  EM FX still under pressure. No reversal signals yet.
  Stay short | Review only on risk rally above +2%

• Long EUR Utilities (5%)
  Holding up well in risk-off. No tariff exposure. Euro strength adds cushion.
  Maintain: 5% | EUR-hedged preferred

Added:

• Long Bitcoin (3–5%)
  Decoupling from equities, acting as a hedge amid dollar weakness. Momentum supports near-term upside.
  Enter on dips near $85,000 | Target: $95,900 | Stop: $82,000

• Long Consumer Staples (XLP)
  Big-box retailers like Costco and Walmart hold up as “haves” in tariff uncertainty, per Telsey Advisory.
  Add: 5–7% | Trim on overbought signals above 15% gains

📌 Strategic Takeaways – When the Elevator’s Going Down, Don’t Talk. Move.

• Fed independence is now a variable. That’s terrifying.

• Global trust in the U.S. = foundational. That’s cracking.

• Tariffs + currency pressure + weak labor data = stagflation setup.

• Markets want policy clarity. They’re getting campaign chaos.

• Risk assets are re-pricing. Safe havens are redefined.

If Powell gets removed—or even pushed—markets may permanently price the U.S. like a banana republic with a Bloomberg terminal.

• The IMF’s spring meetings this week in Washington highlight global unease, with Trump’s tariffs estimated to cut global GDP by $2T by 2027, per Bloomberg Economics.

• The U.S. economy faces a stagflationary recession risk, with consumer incomes flat, inflation expectations surging (per University of Michigan), and the labor market weakening (Conference Board’s LI six-month growth rate ticking down).

📅 This Week: Press All the Buttons

• Wednesday: Alphabet earnings, Fed Beige Book, Taiwan export data

• Thursday: US GDP (Advance), Jobless Claims, Durable Goods, Tesla earnings

• Friday: Core PCE, Tokyo CPI, UK Retail Sales

• Tuesday: IMF releases World Economic Outlook (9:00 p.m.), Tesla Q1 earnings (post-market)

• Ongoing: Trump’s trade talks with India (Modi-Vance meeting), Japan, and China; retailers’ tariff discussions

🎤 Mic Drop: Get Off at the Next Floor

The elevator’s crammed with fear, bad policy takes, and portfolio losses.
Someone just farted. And it might’ve been Powell.
You want out—but there’s no button for “Escape Volatility.”

So here’s your move:
Hold gold. Hold cash. Trim risk. And stop making eye contact with the guy yelling about fiat collapse.

Oh, and maybe spare a thought for Pope Francis, whose passing at 88 prompted a moment of silence at the NYSE. The world’s mourning a “great shepherd,” but markets? They’re too busy dodging Trump’s tariff tantrums and Powell’s job security saga.

See you tomorrow—if the elevator doesn’t break down.

The Talker