April thirteenth, twenty twenty-five (250407-250413)
The first week of sentiment recovery after Tariff Day; stock market volatility will remain very high under the impact of tariffs and macro narratives, The narrative for Asian markets is one of shock, making it suitable to buy on dips at event-driven moments. For U.S. markets, below Trump’s pain threshold, the narrative will be one of a rebound, making it suitable to sell into strength at event-driven moments. This is roughly the entire trading logic for the coming quarter; we will discuss the specifics on a few small planets.
We reduced our European market positions early, gradually selling this round’s gains starting in February. We exited U.S. stocks even earlier, beginning at the end of last year. The rationale for both sales is also mentioned in Notes. The only additions were China and India (India was a trial position within the core holding), so this shock did not leave us with any major risk exposure.
A lot is already in motion before events occur. What Notes and the cross-asset planets help us do is find the early clues and identify the key trades ahead of time. In any given macro period, there will only be 1-2 golden trades, with the greatest payoff odds and the highest probability. We enter early and leave before the crowds arrive.
The trading focus remains on the foreign exchange market The foreign exchange positions laid out in Notes over the past few months have now entered their golden period. Profits are substantial, and the market’s voting machine continues to roll in our favor. The key question of when to close the positions was also answered in this week’s 0409.
For further reading: Notes250409 This round’s CNY depreciation + why we continue to hold the two trades mentioned earlier
Interest rates are rising, the dollar is falling, The dollar is weakening because the new tariff policy has dealt a real blow to economic confidence. These tariffs not only impose higher costs on U.S. consumers and businesses, but also take away their bargaining power, turning them into “price-takers”—in other words, For now, the result of the tariffs is that Americans can only passively accept the reality of higher prices.
One core reason the dollar was strong in the previous cycle was that the earnings outlook for U.S. assets really was better than elsewhere. That outlook did not come from macro narratives; it came from actual earnings results, what is known as “American exceptionalism.”
To reiterate, we (and we hope Planet users do the same) are not analysts who bet on narratives. We do not adjust our positions in response to noise in natural-language narratives; our views change only when the underlying fundamentals actually change.
This is why we went long U.S. stocks in the previous round, why we began selling U.S. stocks at the end of last year and precisely shorted the market at the +6164.25ES high. This is why we began going long German and European stocks in the middle of last year, why we began selling European stocks in 2, why we went short soybeans on November seventh last year, and why we are not mechanically repeating the trade this year just because everyone else is doing it...
Notes250205 Revisiting political noise and the ultimate performance of assets
The behavior of the current U.S. stock market is largely caused by the mismatch between post-pandemic liquidity and the pricing system The liquidity series updated this week and the answers to a range of questions currently on the market’s mind examine this issue:
Notes250407 Powell and Yellen’s tricks: “Pump and Dump”
Notes250411 Global Liquidity (Four): The Anchor for Treasury Yields and the Mismatch in the Pricing System
If corporate profits are squeezed and consumers’ real purchasing power is weakened, exceptionalism is bound to lose credibility, the logic supporting the dollar will also be eroded the key is always actual earnings and actual consumption; this is a negative spiral.
Notes250401 Positioning the United States (Part Four): The K-Shaped Economy—Leverage, Illusion, and “Paper Prosperity”
Of course, this assessment is not without risks. For example, if the market suddenly panics and a large-scale asset sell-off occurs, people may rush into the dollar as they did during the pandemic in 2020, which could strengthen the dollar in the short term. However, This time, however, there is a “90-day tariff pause,” which has acted as a sedative for the market and instead gives it more room to short the dollar.
More importantly, market behavior no longer looks like that of a dollar-starved market. It looks more like investors are voting with their feet to express concern about uncertainty in U.S. policy.Falling equities + a steepening U.S. Treasury yield curve + a weaker dollar—taken together, these three features look very much like the U.K.’s fiscal confidence crisis in 2022.
This shows that the market is no longer simply reacting to interest rates; it is genuinely beginning to question the U.S. government’s ability to govern and the credibility of its institutions. If this distrust continues to build, new policy tools may be needed in the future to stabilize the situation again. Although the Trump administration has made some adjustments—for example, trying to focus on a more conciliatory negotiating stance and greater clarity in fiscal policy—these steps are not substantial enough to change the underlying logic behind the dollar’s weakness.
The two FX trades can stay on… Everyone must be making a killing… The golden period for these two trades has only just begun. This is when technical traders are placing orders en masse and getting ready to enter,
Everyone will gradually understand whose money we are making.
The liquidity series wasn’t finished this week; it will continue next week until it’s complete.
The weekend is over. Wishing everyone reading this a happy life and all the best in the new week!
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Note: All content in this article is for reference only, does not constitute investment advice, and is not a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on this information as a basis for making decisions.