Commentary on tariffs and the consumer will be in the spotlight (0:17) March core CPI forecast to drop to annual rate of 3% (3:27) Bill Ackman calls for tariff delay. (4:46) Show Notes Earnings CalendarBill Gross warns against buying the dipEpisode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
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Welcome to Seeking Alpha's Wall Street Brunch, our Sunday look ahead to this week's market moving events, along with the weekend's top news and analysis. Hello, today is Sunday, April 6th, and I'm your host, Kim Kahn. Investors can be forgiven for looking at this week with trepidation.
Following President Donald Trump's announcements of new tariffs, a risk off Thursday and Friday saw the biggest two-day round in years. The S&P 500 slumped 10.53% over Thursday and Friday, leaving it at 5,074.08 points. That level marks a 17.42% retreat from the index's most recent record close. This was the biggest two-day decrease since the S&P slid 13.93% across March 11th and 12th, 2020.
That crash came during the height of the COVID-19 pandemic and lockdowns across the globe. Going further back to 2008, the S&P notched a 12.42% fall across November 19th and 20th, 2008 in the wake of the collapse of Lehman Brothers. The FT says hedge funds are experiencing their most significant margin calls since the onset of COVID-19.
Major Wall Street banks have demanded additional collateral from hedge fund clients whose portfolios suffered sharp declines in value. Several large institutions have issued their largest margin calls in over four years, reflecting the scale of the market dislocation.
Allianz advisor Mohamed El-Arian says the last few trading sessions were characterized by a significant reduction in levered exposures and index holdings, as well as the sale of winners to fund margin calls and actual anticipated outflows from funds. The lack of immediate policy circuit breakers have amplified the adverse technical dynamics, he said.
Unsurprisingly, the result has been a generalized and quite indiscriminate hit to asset prices from stocks to gold, with most correlations converging to one for now.
While this has created pockets of value for investors able and willing to stomach significant price volatility, the when is a much harder call given the extent of potential deleveraging still in the pipeline, especially if the direction of travel on tariffs worldwide remains retaliatory rather than de-escalating. The big question is whether traders can move past the macro and focus on the micro.
As earnings season kicks off, bulls will hope good numbers and guidance, especially on margins, can underscore the health of corporate America. But bears will be listening to earnings calls for color on how tariffs and uncertainty are expected to impact operations and whether price hikes will be passed on to consumers. Earnings kick into high gear on Friday with the banks.
JPMorgan Chase, Wells Fargo, Morgan Stanley, and BNY Mellon all issue numbers before the bell. But investors may get a better insight on spending from Delta Airlines, which reports Wednesday. Airlines have already started seeing the effects of souring consumer sentiment, and the Jets ETF is well into bear market territory, down 32% from its high in late January.
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