“Plans are nothing; planning is everything.”
–Dwight D. Eisenhower, 34th President of the United States and Supreme Allied
Commander
Volume 28
Tariffs to Thrusts: Navigating a Market in Crosswind
What Happened in the Markets?
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Have you ever tried flying a kite on a breezy day only to have the wind suddenly swirl, stall, or shift direction? At first, it feels effortless, smooth sailing as your kite soars high. But then the gusts come from unexpected angles, tugging and jerking your line, forcing you to reposition constantly to avoid a nose-dive. That’s what today’s market feels like— still airborne, still resilient, but battling unpredictable winds.
Let’s talk about what’s fueling those gusts.
We’ll start with the good news because, believe it or not, there’s quite a bit of it. Despite rising anxiety around inflation, interest rates, and global trade, market breadth has shown signs of strength. In fact, we’ve officially triggered a Zweig Breadth Thrust, a rare technical indicator that occurs when the number of advancing stocks on the NYSE surges sharply over a short period—typically viewed as a powerful signal of a new bull market phase. It reflects a sudden and broad-based shift in investor optimism and risk appetite. In fact, it has only happened 17 times since 1945. Historically, that’s been a remarkably bullish signal, with 12-month forward S&P 500 returns averaging nearly 24% following such events, with positive returns in 94% of cases.
Breadth is improving across sectors, not just concentrated in mega-cap tech. Small-caps, midcaps, and cyclicals have all shown some relative strength. That broad participation tends to signal healthier market foundations than rallies carried by a few headline names.
We’re also seeing some normalization in investor sentiment. After months of extreme positioning and hedging, sentiment appears to be resetting, giving equities a potential base to build from. And corporate earnings? So far, better than feared, with many firms guiding conservatively but delivering above expectations.
Combine that with the historical precedent of 10%+ market years often being followed by continued strength, especially when breadth backs it, and it’s fair to say there are real reasons to stay constructive. While this breadth thrust shares many similarities with post-recession and Fed-pivot environments (like 1982 and 2019), it’s unique in that it is occurring amid rising trade barriers and without a clear Fed easing path, making this a more nuanced but still encouraging signal.
The strongest gust shaking our kite string comes from Washington, D.C. The administration’s proposal to raise tariffs on Chinese imports, including electric vehicles and semiconductors, has investors questioning its impact on inflation, growth, and global trade stability.
The context matters: unlike the 2018-2019 tariff cycle, this one benefits from a stronger labor market and healthier consumer balance sheets. While this may cushion the blow, tariffs are inflationary by nature, acting as a tax on imports and raising costs throughout supply chains. Whether these new measures are symbolic (posturing ahead of elections) or structural (a shift to long-term economic decoupling) remains to be seen.
It’s also worth noting that the market’s initial reaction has been mixed. That suggests investors may believe enforcement will be lighter than the rhetoric, or that the economy can absorb these
shocks better than in the past.
Still, it’s a variable worth watching. If tariffs stick and expand, expect higher volatility and possibly a second wind for reshoring-themed investments—domestic manufacturing, infrastructure, and supply chain tech could all benefit.
Then there’s the Federal Reserve, which finds itself in a familiar but unenviable spot: caught between not-too-hot growth and not-too-cold inflation. The economy is running cooler than 2021-2022, but is still humming along with low unemployment and steady consumer demand. The challenge? Inflation remains sticky, particularly in core services, and rate cuts are proving harder to justify.
Markets once anticipated multiple cuts for 2025, but forecasts now suggest only one or two, if any. The Fed is wary of reigniting inflation with premature cuts yet recognizes that being too tight for too long could stifle an economy facing global headwinds. In this monetary purgatory, every data point—job reports, CPI, retail sales, and Fed speeches—can significantly influence expectations and market movements.
In that kind of environment, having a long-term plan and diversified strategy is more important than ever. First, don’t mistake uncertainty for danger. Volatility doesn’t equal vulnerability. The US economy continues to display remarkable resilience. Yes, the Fed’s job is tricky. Yes, tariffs could create major speed bumps. However, earnings growth, market breadth, and investor positioning all suggest that this is still an environment where staying invested will pay off.
Second, be selective. Not all sectors and strategies are equal. Active management, tactical tilts, and thematic allocations—especially toward AI infrastructure—could add value in the months ahead.
Finally, remember that investing isn’t about predicting every wind shift—it’s about keeping your kite in the air, adjusting as needed, and staying focused on the horizon.
Just like kite flying, navigating today’s market requires patience, adaptability, and a good read of the skies. The winds may swirl, but with a well-tuned strategy and a clear investment philosophy, we believe clients can continue to climb. As always, we’re here to help guide that flight. Let us know if you’d like to review your portfolio, talk through recent developments, or explore new opportunities. Stay steady. Stay invested. And maybe, just maybe, enjoy the ride.
April was marked by elevated volatility as investors absorbed the administration’s aggressive trade actions alongside stronger-than-expected economic data. The S&P 500 declined -0.7%, while small caps underperformed with a -2.3% return. The VIX surged to over three standard deviations above its average, hovering in the 80th percentile throughout the month.
International equities provided a welcome offset. Developed markets gained 3.5%, aided by a weaker dollar and more stable policy environments, while emerging markets edged up 0.5%. In fixed income, core bonds offered stability—US Treasuries returned 0.6% and the Aggregate Bond Index 0.4%. Riskier credit posted mixed results: bank loans rose 0.6%, while high yield barely broke even at 0.1%.
April reinforced the importance of diversification amid policy driven
volatility. With global equities and quality fixed income providing ballast, investors now shift focus to inflation trends, earnings results, and central bank guidance as key drivers for May.
As the Chief Investment Officer, Stephen Swensen oversees investment management, research, portfolio design, and all investment-related operations at Atlas. He also chairs the Atlas Investment Committee, guiding strategic investment decisions.
Stephen’s career began as a Financial Analyst for Deseret Mutual Benefits Administration (DMBA), a role in which he managed investments for a private pension fund and insurance company. Subsequently, he served as an investment analyst and portfolio manager for local Registered Investment Advisors (RIAs). Before joining Atlas, Stephen contributed his expertise as an Outsourced Chief Investment Officer (OCIO) for the Carson Group, supporting advisors on the West Coast. Educationally, Stephen holds an MBA and an MS in Investment Management and Financial Analysis from Creighton University. He has earned the Series 65 Uniform Investment Advisor License and is actively pursuing the prestigious
Chartered Financial Analyst (CFA) designation.
Beyond his professional achievements, Stephen is an enthusiastic hockey fan, both on and off the ice. He finds joy in playing the piano, golfing, reading, and outdoor cooking. However, his greatest source of happiness comes from spending quality time with his wife and four children
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