“The stock market is a device for transferring money from the impatient to the patient.”

“Last week's market showed us exactly why patience matters in this business.”

The S&P 500 recovered last week, rising 6% as the White House walked back some of its tariff plans. However, despite the rally, the market remains below pre-tariff levels. To return to those highs, the S&P 500 would need to surge another 5.7%.

The small caps took the brunt of the selloff, despite starting the year with better valuations than large caps. Of the main sectors, only consumer staples and utilities finished in positive territory, while tech and consumer discretionary lagged significantly.

Global Perspective

The weakening dollar had one bright side: international stocks outperformed. Both Latin America and Europe reported gains exceeding 5% for the year. Nevertheless, several troubling trends emerged in the global markets.

Commodities & Cryptocurrency

Oil prices plummeted, with Brent crude futures crashing 12.5% over just two trading days, a move usually linked to recessions. The EIA slashed its price forecasts to $67.87 per barrel for 2025 and $61.48 for 2026.

Gold soared 6.6%, hitting all-time highs of $3,200 per ounce. The iShares Global Gold Miners ETF (NYSE:JGMC) and the VanEck’s (NYSE:GDX) surged 19%. Silver futures advanced 8.3% but remained below their 2024 peak.

Bitcoin futures closed at $83,730, marking a 6.8% increase for the week despite high volatility. Ethereum showed strength against Bitcoin, and Kaspa Coin jumped 13% ahead of its May 5 hard fork. Ripple acquired prime brokerage firm Hidden Road for $1.25 billion.

Key Events & Economic Calendar

This week will bring important economic data and earnings reports.

My Take

The dollar is at the bottom of its three-year range, and a breakdown through 99 could trigger another 10% decline, leading me to believe we might be entering a weak dollar period.

The 10-year Treasury yield also surged last week and seems headed toward 5%, a level that could heavily impact the administration’s economic plans. With mortgage rates increasing, we can expect a decline in the housing market.

Let’s be clear: this trade war might just be beginning. Stay flexible, focus on quality stocks, and don’t try to catch every falling knife. I am selling puts on stocks that I would like to buy.

The Trump administration has a nearly impossible task, given the hand they were dealt. My take is that they are trying to get better trade deals to offset the deficit and out-of-control government spending. Unless you buy into the modern monetary theory, the numbers are truly frightening.

Treasury Secretary Bessent is the right man for the job. He understands economics and is promoting a strategic, long-term, strong America. He mentions that continuing the current level of government spending would have been the easiest course of action, but he does not believe it is a sustainable long-term solution.

Bessent, along with President Trump, recognizes that the transition away from heavy government spending may require a period of “pain” in the short term, but ultimately lead to long-term economic benefits.

And remember – in markets driven by policy whiplash, cash is king. It’s dry powder for the opportunities that always emerge from chaos.