April fourteenth, two thousand twenty-five
I. Foundation
resistance to change and hence greater dependability for the results shown in the past.
II. Insights
Our Viewpoints and ideas on market.
India: A relatively safe haven
During a week when global equity markets were volatile amid heightened tariff uncertainty, the NIFTY index was broadly unchanged week over week. Our starter position in India is still showing an unrealized gain, so there is no need to panic; our core position would not have a stop loss anyway. The “don’t panic” message is for everyone in the community. Whatever the view, having an unrealized gain helps many people stay in a position.
From our current perspective, India is essentially a relatively safe haven.According to Bloomberg, iPhone production in India will increase by 60% by the end of 3, and 20% of phones are now made in India, including high-end Pro models. Indian banks are also a sector worth watching.
Figure: India’s total exports to the United States are among the lowest of emerging markets
Read alongside Notes250313: the India trade could look
The Reserve Bank of India cut the policy repo rate by 25 basis points to 6%, while shifting its policy stance from neutral to accommodative, marking a clear dovish turn in monetary policy, There is likely to be room for at least another 50 basis points of easing over the rest of this year, meaning the easing cycle could be deeper and faster than the market expects.
The 4QFY25 earnings season is about to begin. This is a very important earnings season, and we will closely watch several major sectors, including autos, banks, fast-moving consumer goods, and information technology.
If the index cannot move higher from here, we will prioritize shifting the portfolio toward domestic exposure in India and defensive sectors, as a core defensive position in Asian markets.
2025.04.14
Extremes that never arrive, consensus, and the U.S. March inflation report
Risk indicators have deteriorated significantly, as everyone knows; what matters in the actual market is the question of extremes. The results from the various indicators are broadly similar, so here we use GS as a proxy. Goldman’s proprietary risk-appetite indicator has fallen sharply, but has not reached an extreme level. The hoped-for scenario of a so-called a one-shot decline all the way to the bottom may not materialize; that is actually worse, as it means a longer period of range-bound consolidation and decline.
Figure: Risk indicators have not reached extreme levels
Figure: Market stress in the microstructure is also not at an extreme level
Figure: The consumer confidence index is now one basis for some investors to buy the dip
The latest confidence index made the FT front page and is now a basis for many people buying the dip. According to xx statistics, the current odds of buying the dip look reasonable over a 6-12-month time horizon (more or less the same across the board) in terms of risk and reward. There is little risk in expressing this view, because it will take a year to validate it anyway, For us, at least for now, an extreme reading without confirmation from a consensus is not actionable.
Figure: Views on inflation by political party
The consensus view is not in the U.S. equity market, but elsewhere.
Views on inflation across political parties are now moving in the same direction, and the Republican position is also shifting. This means certainty in the U.S. session lies not in equities, but in bonds.
Figure: Last week, the 30-year bond yield rose 46 basis points, closing at 4.87%.
In line with sentiment indicators, the bond market posted its largest one-week gain in terms of market performance since 1987 (38 years ago).
Figure: More detail
Breaking down the intraday chart, the better-than-expected CPI and PPI reports (green) had no effect on the U.S. ten-year yield. Meanwhile, although the University of Michigan survey (red) was worse than expected and sentiment collapsed (severe economic slowdown or recession), it did nothing to stop yields from rising to the day’s high.
The reason the data do not matter is:The March inflation report was the last set of data from before the tariffs.
Now, we have entered a new tariff world.
Tariffs will not be the dominant market theme over the next few weeks; Trump and the administration in power will downplay the impact of tariffs on markets, U.S. equities will certainly be volatile, volatile, volatile, and we will sell intraday event-driven rallies.
The shift toward bonds means the tension will focus on the increasingly inevitable conflict between Trump and Powell, the Fed will continue to resist calls to buy bonds, and Powell, for his part, actually wants to leave his mark on the history of monetary policy, and what he wants to be is Volcker, not Burns:
While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent. Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices. Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.
—— Powell April 4th speech
Figure: The probability of a rate cut in May closed at 24% last Friday
Rising yields = tariff-driven inflation is coming + possible resulting recession + rate cuts are not on the Fed’s agenda
2025.04.14
III. Market Pulse
Our latest Comments on the economic and market environment
Note: All content in this article is for reference only, does not constitute investment advice, and does not serve as a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on this information as a basis for decisions.