Economic Data and Market Highlights
The S&P 500 advanced 4.60% for the week, and 2.57% off from Liberation Day’s close. Despite the seemingly small drop, the VIX hit 52.3 earlier this month, which is only the 75th time it has closed above 50 since 1990. The Fed recently cited the degree of uncertainty in its Beige Book.
Now that the VIX has dropped back below 30, a move that marked recoveries in 2009 and 2020, some think we may have just hit a bottom, but a lot of ground needs to be covered, notably, talks with China. While there will likely be continued volatility, each time the VIX surpassed that level, the S&P 500 posted gains over the next 1, 3, and 5 years.
Recent headlines noting American Exceptionalism is over, resulting in a flight out of US equities. However, the selloff doesn’t appear to be foreign capital fleeing U.S. assets. JPMorgan says the pressure is coming from hedge funds, particularly momentum-driven and quant shops, that have been aggressively de-risking. Around $750 billion in equities have been dumped this year, with CTAs alone accounting for roughly $450 billion as they flipped from long to short in a matter of weeks, with short interest in SPY and smaller S&P 500 names spiking. Retail, on the other hand, isn’t flinching as about $50 billion a month has flowed into U.S. equity ETFs, while also nibbling on Europe (VGK) and gold. German names rose 5.01% for the week, with gold taking a breather, falling 90 basis points. Note gold’s year-to-date return of 24.89%.
The key target of the administration seems to be China, and some US companies are already repositioning manufacturing to other countries. Apple announced on Friday that it is planning to shift all iPhone production for the U.S. market from China to India by 2026. With only 10% of iPhones currently made in India, this marks a major overhaul of Apple’s supply chain. Repatriating production to the U.S. isn’t viable due to cost and infrastructure constraints, making India the more strategic choice. Apple shares are down 16% in 2025 amid tariff concerns, but the company is working to soften the blow by eliminating low-storage models to raise average selling prices and expanding 36-month financing options via Apple Card. These moves aim to protect margins and demand without hiking sticker prices, as the tech giant navigates a more politically charged global manufacturing landscape.
The Past Week’s Notable US data points (with revisions)
The Upcoming Week’s notable US data points
Data Source: Financial News London, Financial Times, Morningstar, MarketWatch, Standard & Poor’s, and the Wall Street Journal.
Authors:
Jon Chesshire, Managing Director
Michael McNamara, Analyst