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Recap | Bear Market and a Dress Rehersal Thumbnail

Recap | Bear Market and a Dress Rehersal

“Every past market decline looks like an opportunity, every future decline looks like a risk.” – Morgan Housel


Last week's market recap (Week of 3/31/25): 

  • The S&P 500 closed the week down -9.05%. Year-to-date the index is down -13.42%
  • NASDAQ closed the week down -10.00%. YTD the index is down -19.13%
  • U.S. Aggregate Bond index closed the week up 1.12%. YTD the index is up 3.69%
  • 10-Year Treasury Rate decreased, ending the week at 4.01% down from 4.27% the prior week
    • Fed Funds Target rate remains at 4.25-4.50%
  • The 1-Year Treasury is yielding 3.86%  
  • A 6 Month Treasury is yielding 4.13%  

Monday, 4/7/25:

We watched a +7% upside swing in the S&P 500 based on a fake news headline saying, “90-Day tariff pause.” It was frustrating watching this in real time, but this is a glimpse (Dress Rehearsal) of what could happen on a decent headline.  Ie: The headline wasn’t a “Deal!” It only stated a “Pause!” What is the upside if there are deals!?

Tuesday, 4/8/25:

The S&P 500 started strong, up roughly 2.5% only to bleed off during the day in finish in the red. Long term treasuries pushed over 5%. We’re seeing huge moves in the bond market as well. Tuesday was the worst in the muni market in over 31 years!


The week ahead:  

  • CPI (Inflation data)
  • PPI (Inflation data)
  • Consumer sentiment
  • Tariff Headlines
  • Corporate Earnings: JP Morgan, Chase, Wells Fargo, BlackRock, Delta Air Lines, and more  


Comments: 

Capital markets are a representation of the psychology of the entire world at a given moment. Data and information feed into the psychology without a political bias and you get to understand what that world is thinking and feeling. Based on the previous few trading sessions with stocks down aggressively, credit spreads wider, and extreme increased volatility, Capital Markets are reflecting extreme uncertainty. While volatility is never comfortable, most investors should stick with their long-term investment strategies. Do not make emotional decisions.


 

“Show me the incentive and I’ll show you the outcome” – Charlie Munger

Congress can stop the tariffs. The incentive for most politicians is to get re-elected. If tariffs send us into a recession, especially a self-inflicted recession, swing states would probably swing again at the mid-term elections. Would Congress go against Trump if they felt their jobs were in danger?


Fear Index:

The time to buy is when there’s blood in the streets, even if it is your own. – Barron Rothschild

The CBOE Volatility index hit 52.66.  This is 4 standard deviations away from the average! As the chart below shows, stocks have substantially outperformed when the VIX gets this high.



Avoid making mistakes. Most investors should stick with their long-term investment strategies. Do not make emotional decisions. Look for tax-loss harvesting opportunities, rebalance. 

If you’re thinking about “going to cash”… The data is against you! And..you need to be correct twice. 1: on the way out. 2: when to buy back again. 

As always, let us know if you have any questions.

 

Best, 

CRA Investment Committee


Matt Reynolds CPA, CFP®

Tom Reynolds, CPA 

Robert T. Martin, CFA, CFP®

Gordon Shearer Jr., CFP® 

Jeff Hilliard, CFP®, CRPC®

Joe McCaffrey, CFP® 

Phillip Tompkins, CFP®


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