By John Stewart, chief investment officer at Farmers Trust Co.

Week in Review: Trump vs. Powell

Markets have certainly calmed down a bit over the past couple of weeks as the Trump administration has made concessions around its tariff plans, putting a pause on reciprocal tariffs and creating exemptions for certain products and industry groups.

Trump continues to play hardball with China, however, ratcheting up a tit-for-tat battle with the CCP that has current tariff rates on most Chinese imports at an eye-popping 145%.

Enter Fed Chairman Jerome Powell – just when markets were starting to find their footing after the early April swoon, Mr. Powell decided to throw cold water on the markets by trashing the administration’s policies and indicating that investors shouldn’t be holding their breath while waiting for the Fed to provide further relief on interest rates.

That led to a decline of more than 2% for the S&P 500 index this past Wednesday.

The macro uncertainty remains, but two-way volatility is preferable to market in free fall; stay tuned . . .

Investors are prone to always look backward when making decisions – and this makes sense, they certainly don’t have clarity on what the future holds.

Nevertheless, sometimes investors will try to make decisions based on what prevailing market trends were in place yesterday, or last month, or last year.

This can work as long as a certain trend is in place, but it’s important to recognize when the game has changed, and look for clues as to what new emerging trends may be developing.

For example, everyone is looking for opportunities to buy the mega-cap growth stocks that have led the market during the past several years, but what if a new group of stocks will take the lead during the next market cycle?

The largest stocks from 30 years ago may not be forgotten, but they didn’t necessarily lead the market during the next cycle after the dot-com bubble burst in the year 2000.  And at least a few of them ended up going bankrupt.

Looking Ahead: Earnings Season Ramps Up

Yes, it’s time for another earnings season.  The early reporters, notably the large banks, have already begun releasing their results for the first quarter.

The numbers are mostly good, and it’s likely everything will look like it’s on the up-and-up as companies continue to present their business results to Wall Street.

Much more important, as always, will be the guidance, or lack thereof, that companies provide regarding their expectations for the rest of the year.

The macro picture has become quite cloudy, and it’s clear that the economy is slowing, at least somewhat.

It will be interesting to see what companies expect regarding the health of their business outlooks for the coming months.