(910) 319-7834
Another Week, Another Tariff Change
Year-to-Date Returns (as of April 16th, 11:30 AM, 2025)
- S&P 500: (-9.12%) Bear Market
- Nasdaq Composite: (-14.49%) Bear Market
- Dow Jones Industrial Average: (-5.33%) Correction
- S&P 500 Equally Weighted: (-6.79%)
- Russell 2000 (Small Cap Index): (-16.05%) Bear Market
- Gold: +23.69% New High
Weekend Tariff Changes:
Last week, the U.S. government announced significant changes to its tariff policy affecting smartphones and electronics. The Trump administration had initially imposed steep tariffs of up to 145% on Chinese imports, including smartphones, computers, and other electronics. However, as of April 11, 2025, these specific items have been temporarily exempted from the new tariffs, providing some relief to major tech companies like Apple and Nvidia, both of which saw their stock prices rally on Monday following this news.
Despite this exemption, a 20% tariff remains on electronics from China as a part of earlier trade measures. Additionally, Commerce Secretary Howard Lutnick indicated that these exemptions might be re-evaluated in upcoming reviews, particularly concerning the semiconductor industry, which could lead to new tariffs in the near future. On Wednesday, chip makers AMD and NVIDIA experienced a sell-off amid these developments.
The changes in tariff policy have led to increased market volatility and prompted companies to adjust their supply chains. For instance, Apple expedited shipments of iPhones from India to the U.S. to mitigate potential tariff impacts. In contrast, video game consoles, classified differently, did not receive tariff exemptions and continue to face significant import duties.
Economic News this week:
Import Price Index MOM: -.1% (vs 0.0% Estimated)
Import Price Index YOY: 0.9% (vs 1.4% Estimated)
Retail Sales MOM: 1.4% (vs 1.4% Estimated)
The VIX:
The VIX, short for the Cboe Volatility Index, is often referred to as the market’s “fear gauge.” It measures the expected volatility in the S&P 500 over the next 30 days based on options trading activity. Although the Vix does not predict the market’s direction, it reflects the anticipated level of movement by investors, whether upward or downward. In simpler terms, it indicates how nervous investors are regarding the near future.
- Low VIX (under 15) = Investors are calm → markets are stable
- Moderate VIX (15–25) = Normal levels of concern
- High VIX (above 30) = Elevated fear → potential turbulence
- Very High VIX (above 40–50) = Panic or crisis-level anxiety
The VIX has shown extreme volatility this April, as highlighted below:
- April 2: VIX stood at 21.51, reflecting typical market volatility.
- April 3: Surged to 30.02 following the announcement of sweeping U.S. tariffs.
- April 4: Jumped to 45.31, indicating escalating market fears.
- April 7: Peaked at 60.13, marking one of the highest levels since 2008.
- April 8: Remained elevated at 52.33.
- April 9: Dropped to 33.62, suggesting a slight easing of volatility.
- April 10: Rose again to 40.72 amid ongoing market uncertainties.
- April 11: Closed at 37.56
- April 14: Further declined to 30.89, indicating reduced market anxiety.
- April 16: Settled at 31.15, approaching pre-crisis levels.
The abrupt escalation in the VIX was primarily driven by concerns over U.S. President Donald Trump’s aggressive tariff policies, which heightened fears of a potential recession. The spike was so pronounced that it drew comparisons to volatility levels seen during the 2008 financial crisis and the COVID-19 pandemic in 2020.
Historically, such rapid increases in the VIX are rare and often signal extreme market stress. For instance, during the 2008 financial crisis, the VIX reached an all-time closing high of 80.86 on November 20, 2008, reflecting intense uncertainty in the markets at that time.
In summary, the early April 2025 VIX spike stands out as one of the most significant in recent memory, highlighting the market’s sensitivity to geopolitical developments and policy decisions. This doesn’t mean it’s time to sell everything and hide away but rather serves as a reminder that strategic planning and diversification are crucial for long-term growth and stability.
Have a great weekend.
Your OmniStar Investment Team
