Bluefin Investments
Weekly Market Commentary

March 2025


Hello all - we hope you had a nice April.

For investors, it’s nice to put this month behind us!  April was on track to be one of the most volatile months ever, but we closed quietly with little change.  

For the month, the Dow lost 3.2%, the S&P 500 fell 0.8%, and the Nasdaq, which has a higher concentration of tech stocks, was actually higher by 0.9%.  

We’ve also seen the S&P fall over 7% since President Trump took office, which would be the worst opening for a president since Nixon in 1973. 



Here’s a chart of the markets this month:



Here’s a look at how the various sectors performed.



April saw massive moves in the markets, both higher and lower.  That meant volatility was up sharply, reaching levels we last saw in the depths of Covid.



In fact, April had one of the most volatile weeks in history.



Frequent headlines like this didn’t help:
 


We had days where nearly every stock in the index was lower – by a lot.



Then any hint of an easing in tariffs, and stocks reversed sharply and all stocks were up.


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Gold had another banner month, reaching new record highs.  Investors have been pouring money into gold on worries of a global trade war, which is described as a “flight to safety.”  

We’re also seeing more foreign governments buying gold.  There’s many reasons for this.  

One reason is that foreign countries like China are no longer eager to buy U.S. government bonds like they have in the past.  They’ve also seen countries like Russia have their foreign assets frozen, so they are reluctant to buy anything other than hard assets.



With gold rising, the strength of the U.S. dollar has plunged.  That means the price of imports will cost more. 


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TARIFFS

The moves in the market were again driven by comments about trade from the Trump administration.   There was very tough talk early in the month as tariff rates kept ratcheting higher.  It feels like the worst is behind us now, but the problem is that it can turn in an instant based on the whims of the President.  

We’ve mentioned that we understand the Trump position on trade.  Trade was very unbalanced against the U.S. and perhaps trade will eventually become more aligned.  However, we think this extreme approach is unnecessarily tumultuous and counterproductive.   

You must prepare for war before declaring it.  But we declared war on the entire globe, and haven’t even made the bullets.

Companies who have played by the rules are completely upended - and possibly bankrupted.  Smaller businesses can’t exempt themselves from the tariffs, like the auto industry recently did.  

No ally will consider the U.S. reliable and will find other countries to align with.  Many countries are even considering boosting ties with China.

We’re also seeing foreign countries boycotting U.S. products.  For example, Tesla sales have plunged in Europe.

Foreign countries are also electing far-left politicians, like in Canada, as a response to aggressive Trump policies.  

These are not long-term positives for the U.S. and we aren’t sure how well this will work out.  

At any rate, here’s a look at the most recent estimate of our tariff levels:



And here is an interesting chart showing the tariff rates by industry:



The tariffs, especially on China, have had an immediate impact.  We’ve seen shipments from China plummet. 


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FED

Tumult between the Fed and the President also added to the volatility of the markets.

Comments from the Fed chief indicated that they were in no rush to lower interest rates, as President Trump has repeatedly called for.  This launched Trump into a fight with the Fed chief, posting that he would like to see the Fed chief removed from his post.  Such a move would be incredibly rare and set a dangerous precedent, so stocks fell sharply on the news.  

Days later, Trump announces that he has no intention of firing Fed chief Powell and markets rallied on the news.

We understand the Trump perspective here.  The Fed is holding rates steady in light of significant economic issues, which is as good a time to cut rates as any.  Meanwhile, other central banks around the globe are cutting rates.



Trump looks back at his first term in office and recalls that as he entered the office, the Fed under Janet Yellen immediately began raising rates.  They then cut rates numerous times under Biden - while understandable during the Covid period - but the Fed kept repeating the ‘transitory inflation’ line as justification for lowering rates further, even though the data did not support it.

Trump then sees Janet Yellen going on to be a key member in the Biden administration and we could see how far left her beliefs really were.

Trump also sees former NY Fed President (seen as the #2 position at the Fed) Bill Dudley outright advocating for the Fed to tank the economy in 2019 to prevent the re-election of President Trump. 



Then Trump takes office a second time and believes he has another Fed working against his interests.  And we believe it certainly may be.  

The Fed and its defenders consider it apolitical and above the fray, but as we’ve seen, the Fed and its members are very, very political and all have a far-left viewpoint.  

However, we think these rash announcements and threats of firings do more harm than good.  Like the approach with tariffs, this approach is counterproductive.  

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UNCERTAINTY

The unpredictability from day to day under President Trump has weighed on the markets and investors.  Economic uncertainty has reached new record highs.



This is weighing on consumer sentiment.  The risk is a self-fulfilling prophecy as more and more people sour on the economy.  We’ve seen confidence drop like a rock.



We’re seeing a record amount of people believing that business conditions are worsening (which they are).



People are also predicting more unemployment.



Further, more people believe their income will be lower in the future.



CEOs at large companies have had a major loss of confidence.  According to CNBC, more than 60% of CEO’s see a recession in the next six months.



Small businesses are less optimistic, too.



Recessions tend to start with negative sentiment.  That leads to decreased spending and investment, which adds to a contraction in the economy.  Trump needs to turn this around immediately if he wants to avoid a recession.  

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ECONOMY

Speaking of recessions, we got our first indication of a recession approaching.  

The GDP report, which measures the strength of the economy, posted its first decline since coming out of Covid.  Two negative GDP reports are largely seen as the definition of a recession.



This number is very misleading, though.  In preparation for the tariffs, many companies imported as much as they could before the tariffs hit.  Imports are counted as a negative for GDP, and this alone is the reason for the decline in GDP.



It’s too early to tell if the economy is truly in a contraction, or if this GDP report was an abnormality.  

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INFLATION

A bright spot this month was inflation, as we saw an actual decrease in prices.  However, this is before tariffs were implemented, so prices may rise again in the coming months.  At any rate, the annual inflation rate continued to move lower.



When we look at inflation on a month-to-month basis, prices actually declined, though only slightly.   



When excluding energy and food from the calculation (which economists call the “core” measurement), inflation rose very slightly. 



Another good sign was inflation at the business level, which showed a decent decline.  This inflation level tends to lead the CPI, so perhaps we’ll see a cooling in prices at the retail level soon. 


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OTHER ECONOMIC DATA

Other economic data released this month was mixed.  We’ve seen a slowdown in activity, but many areas saw booms as businesses stock up before the tariffs.  

Both the manufacturing and service sectors of our economy showed declines over the last month. 




Retail sales saw a solid increase. 



Durable goods (these are items with a longer life, like a phone or refrigerator) saw a significant increase as importers looked to beat the tariffs and purchase foreign items today.



However, when you exclude big items like airplanes, the durable goods order was flat.


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EARNINGS

We’re about halfway through the corporate earnings for the first quarter.

Overall, the results have been decent.  Earnings and revenue are both showing solid increases.  

This hasn’t been the story, though.  Investors have been looking for what the future looks like for these companies as the Trump policies kick in.  The consensus seems to be “We don’t know.”  Companies see higher prices coming, but aren’t sure how much they can raise prices.  

Rising costs and an inability to raise prices will hurt corporate earnings in the future, which is a warning that we could see lower stock prices for investors.  

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Where does the market go from here?

It’s anyone’s guess at this point as random policy announcements are moving the markets.

After this quick rebound, though, we do look poised for a breather where stocks could pause or decline slightly.  Like we mentioned above, though, anything can happen and we have little conviction either way.  




This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.