What's Happening to Stocks, Bonds, and Bitcoin?
April 2025 Market Update
Hello everyone.
Thank you for your continued support of The Anti Advisor and welcome to our April market update.
The S&P 500 has fallen further after March's turbulence, falling 9% since the beginning of April and down 14% year-to-date. The “Not-So” Magnificent 7's influence hasn’t waned and has added fuel to the fire.
The other 493 are starting to catch up, finally!
Volatility spiking to levels not seen since 2022 and 2020 reaching over 50%.
Nothing that can’t be countered and I am glad to be underweight equities going into this drawdown.
Tariffs Impacts Starting to Show
Trump’s "Liberation Day" tariffs, which started on April 2, 2025, are already shaking things up for businesses and shoppers.
These new taxes on goods coming into the U.S. from 185 countries—like a huge 54% tariff on China and 30% on Europe—might hit supply chains and markets hard unless a deal is met.
Deals have been annouced but nothing confirmed.
Here are tariff rates pre 2025 just for some historical reference.
For everyday stuff like clothes or electronics, companies could feel the pinch. Some say their profits might shrink by 2-3% because importing things costs more now. Stores are handling it differently. Some might raise prices by 5-10%, so you might see higher tags on shelves soon. Others may keep prices the same to avoid losing customers, even if it hurts their earnings.
The car industry would get hit especially hard. With a 25% tariff on auto parts kicking in, making cars costs more, and some factories might slow down by as much as 30% in the first week. In the long run, both new and used cars could get pricier.
For U.S. factories, it’s a mixed bag. Some think these tariffs—called "Liberation Day" because Trump says they’ll free up American jobs—will help them grow. But others point out the chaos, like stock markets dipping almost 1% before the news even hit, and more drops after. While Trump says this is a fresh start for the economy, the early effects—higher costs, trade fights, and nervous markets—make it look like a bumpy ride ahead.
CAPE10 Valuations Flash Warning Signs
The Cyclically Adjusted Price-to-Earnings (CAPE10) ratio currently sits at 31.25, significantly above its historical average of 17.
This elevated level continues to raise concerns about long-term return prospects. Historical data suggests that when CAPE10 exceeds 30, subsequent 10-year returns average just 4.1% annually—well below the long-term market average. While high valuations can persist for extended periods, this metric suggests we should temper expectations.
Morgan Stanley's recent analysis indicates that current valuations may require a 15-20% correction or several years of flat returns for the market to realign with historical norms.
Long Term Bonds Falling
The bond market has been volatile this year with some crazy ups and downs…