Good Morning Investors,
Markets rallied overnight after President Trump eased pressure on the Federal Reserve and signaled a potential pullback on China tariffs. It was a decisive shift in tone that brought relief to investors following weeks of sharp volatility. Futures surged across the board, while safe-haven assets like gold pulled back, suggesting risk appetite is returning.
This may well be the first confirmation that the tariff cycle is beginning to reverse — just as I’ve suggested it would. I continue to believe that the second half of the year sets up bullishly, with sentiment near lows, positioning light, and AI fundamentals still strong underneath the surface. It’s early, but the market may have found its first foothold toward recovery.
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BEFORE THE BELL
US stock futures jumped Wednesday after President Trump said he has "no intention" of firing Fed Chair Jerome Powell, easing Wall Street fears over central bank independence. Trump also hinted that sky-high tariffs on Chinese imports would be reduced — a major shift in tone.
Futures attached to the Dow Jones Industrial Average rose 1.9%, gaining 761 points. S&P 500 futures jumped 2.5%, while Nasdaq-100 futures soared 2.9%.
Trump’s softer stance sent China-exposed tech names sharply higher. Nvidia gained 6% premarket, Apple rose 3%, and Tesla surged 7% after Musk announced he would scale back his role in Trump’s administration.
Stocks ended Tuesday with their best session in weeks, snapping a four-day losing streak. Optimism grew further after China signaled openness to trade talks, saying, “if we talk, the door is wide open.”
Meanwhile, Treasury yields pulled back as the 10-year fell 8 basis points to 4.311% and gold briefly paused its rally, despite still being up 8% in April.
TESLA EARNINGS RECAP
Tesla missed estimates across the board in Q1, with revenue and earnings both falling as vehicle sales dropped 20% year-over-year. But the stock moved higher as Musk reaffirmed production timelines for its affordable EV (H1 2025) and robotaxi (2026), while also confirming he’ll reduce time spent on DOGE — a move investors applauded.
EPS: $0.27 vs. $0.39 expected (down from $0.85 YoY)
Revenue: $19.34B vs. $21.11B expected (down 9% YoY)
Net income: $409M vs. $1.39B YoY (down 71%)
Gross margin held better than feared, and Musk’s renewed focus on Tesla gives the market some hope of stabilization. Tariff exposure remains a risk, but the signal from Trump about scaling duties back is meaningful.
BITCOIN CONTINUES TO OUTPERFORM
Bitcoin surged past $93,000, extending its strength over equities and acting more like gold than a traditional risk asset. On Tuesday, Bitcoin ETFs logged nearly $1 billion in inflows — their strongest day since mid-January.
It’s not just price — it’s perception. Bitcoin is increasingly being seen as a macro hedge, not just a speculative play. That shift could also be foreshadowing strength in risk assets more broadly. Historically, Bitcoin has front-run reversals in equity markets, especially the Nasdaq, and the divergence here is too significant to ignore.
With stock positioning still light and fear peaking last week, Bitcoin’s relative strength may be a leading indicator for broader risk appetite returning.
IN OTHER NEWS
Trump softens on tariffs: China duties currently at 145% “won’t stay that high,” said the President, hinting at a pullback.
Fed Chair Powell stays put: Trump said he “never did” intend to fire Powell — a welcome relief for jittery markets.
China open to talks: Foreign Ministry says it’s “not afraid to fight,” but “the door is wide open” for negotiations.
Gold pullback: After tagging all-time highs near $3,510, gold cooled as futures surged.
ANALYSTS' RECOMMENDATION
• Alphabet Inc: Bernstein cuts target price to $165 from $200, citing macro and trade risks through 2026.
• Amazon.com Inc: Telsey Advisory cuts to $235 from $275, citing tariff pressure on costs and margins.
• Devon Energy Corp: Piper Sandler raises to $56 from $54, citing $1B in projected free cash flow by 2026.
• Tesla Inc: TD Cowen cuts to $330 from $388, reflecting weaker sentiment and macro overhang.
• Verizon Communications Inc: Scotiabank nudges target up to $49 from $48.50, maintaining a stable outlook.
STRATEGIC OUTLOOK
This is exactly the kind of reset I’ve been anticipating. As I've written for weeks, tariffs were unlikely to stick at peak levels, and now we’re seeing the first signs of reversal. Combine that with improving sentiment and oversold tech, and the setup for the second half of 2025 looks increasingly bullish.
It’s not just about recovery — it’s about reacceleration. The AI story is alive and well, and as geopolitical tensions ease, capital could rotate back into high-growth sectors, especially software and semis. There’s plenty of dry powder waiting on the sidelines — and it may just start moving.
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Please feel free to reach out to me on LinkedIn or by email if you would like help navigating this market environment or have any planning-related questions.
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.