February 3, 2025

Markets:

Stock futures dropped to kick off a new trading month after President Donald Trump hit several key U.S. trading partners with tariffs, raising fears that a full-blown trade war would disrupt global supply chains, reignite inflation and slow the economy.

President Donald Trump on Saturday slapped a 25% tariff on goods from Mexico and Canada. He also placed a 10% levy on imports from China. Energy imports from Canada received a lower 10% tariff. Canada responded with retaliatory tariffs of its own, while Mexico said it would explore levies on U.S. imports. The Chinese government, meanwhile, said it would file a lawsuit with the World Trade Organization.

Trump also signaled over the weekend that tariffs on the European Union would be imposed next.

The emerging trade war comes as investors are dealing with the biggest stretch for fourth-quarter earnings reports and a key economic reading on the labor market this week. More than 120 companies in the S&P 500 are set to report their results, including tech names Alphabet, Amazon and Palantir, as well consumer giants, including Walt Disney
and Mondelez. The January nonfarm payrolls report will be out Friday with economists polled by Dow Jones expecting that 175,000 jobs were added last month.

Portfolio:

Well, here we are, almost an exact replay of last Monday to start the week. Last week DeepSeek blindsided markets with its AI "breakthrough", sending NVDA down 12% before tech bulls bought the dip. This week Trump’s tariff announcements has everyone guessing — was it a real shift in trade policy or just a negotiating tactic? In other news that no longer seems to dominate a headline but is just as important are Bond yields fell last week, with the 10-year Treasury yield dropping 12 bps to 4.506%—a net positive for equities.

Goldman Sachs put out a note this weekend that the volatility spread between SPX (15%) and individual stocks (45%) is at levels last seen during the 2020 election and vaccine rollout. This favors active traders and hedge funds over passive index investors! It's important to understand the opportunity that is being created here even with short term events like today that cause swings / pain.

We treat today as we have done the last several events where markets open down like this and utilize it to add! It's been a proven winner. For the open we will adjust our stops on ASAN to 19.00 and S to 22.00.

Major earnings this week will also be a critical driver to this market and a few we are interested in this week: Monday (2/3): PLTR & NXPI, Tuesday (2/4): GOOGL, AMD, & SPOT, Wednesday (2/5): DIS, UBER, ARM, & MSTR, Thursday (2/6): AMZN & PINS.

Markets are heading into another high-volatility week, with Trump’s tariffs, AI news, and key earnings. Cannot stress this enough; Do not get caught in trying to time day to day moves. The overall trend remains and that is fact! Be ready today.