By Michael O’Neill
Financial markets are in the blender, and someone hit “purée.” Equity indices are flailing under the weight of rising policy risk, tariff wars, and jawboning from the White House. In the first week of April, the S&P 500 plunged 11.21%, the NASDAQ lost 11.74%, and the Dow Jones Industrial Average fell10.37%. They have recovered from the lows but are still in negative territory, month-to-date.
At the epicenter of the chaos is President Donald Trump, who has been waging a verbal and tariff-heavy campaign against the Federal Reserve, trading partners, and anyone questioning his economic prowess. On April 21, Trump blasted Fed Chair Jerome Powell: “Too Late Jerome Powell… should have lowered Interest Rates, like the ECB.” That tweet came on the heels of his April 16 missive when he said, “Powell’s termination cannot come fast enough!”
Traders were not impressed. Wall Street stocks, the US dollar, and bonds all tanked, which made the mid-month rally evaporate. Escalating recession risks and Powell’s job security became the latest market landmine. Trump did eventually walk back the rhetoric on April 23, claiming he had “no intention” of firing Powell, but the damage was done.
Trading Through the Noise
So how should traders’ position in this mess? Here are five tactical insights:
- Fade the Panic, But Not the Fundamentals
April’s volatility spike is textbook policy shock. But while the headlines are ugly, underlying data still supports moderate U.S. growth. Risk assets may recover—briefly—on any signs of tariff de-escalation. Watch sentiment, but don’t bet on a smooth ride. - Revert to Relative Value Plays
Equity traders should weigh the prospect of Fed rate cuts and consider buying utilities and staples, like Loblaws or Dollarama. Stick to high-quality names with defensive cash flows. - Tariff-Proof Your Portfolio
Companies with domestic supply chains and pricing power are less vulnerable. Think railroads, domestic banks, and consider buying puts to mitigate losses. (They won’t be cheap). - Watch USDCAD Like a Hawk
The Loonie’s resilience masks underlying weakness: Canada is getting some protection from increased oil sales to China via the Port of Vancouver. Although there is no hard data available, exporters are likely getting a higher price than they would from the US. In March, China imported 7.3 million barrels after it slashed US crude purchases by 90%. Trump won’t care. He said Canada doesn’t have anything that the US needs, forgetting that US refineries are set up for “heavy crude.” - Trump Tweets = Trade Triggers
In the 70s and 80s, investors knew that “When E.F. Hutton speaks, people listen.” The 2025 version is when “DJ Trump tweets, Markets react.” Nimble traders may be able to take advantage of extreme reactions to find a favourable trade entry or exit level.
Patience is a Virtue
The ability to wait for something without becoming frustrated or upset is a time-worn proverb, and it is just as relevant today as it was eighteen centuries ago. The 24-hour news cycle, social media, business television, and easy access to a myriad of all-hours trading platforms make it increasingly challenging to cultivate patience in the financial markets, and this erosion of patience is a significant contributor to the dramatic increase in market volatility.
It is not Armageddon. Market meltdown drama has been spooking investors since there were markets. Take a moment to smell the tulips.
In the 1630s, Dutch tulip bulbs sold for more than houses—until the bubble burst. Fortunes vanished overnight, but the Dutch economy survived, and so did the markets. The lesson? Chaos comes and goes, but markets have a habit of bouncing back.
Loonie Looking Lost
The medium-term USDCAD technicals are suggesting prices may have found a bottom at 1.3770, although momentum indicators show a lack of conviction. A failure to rally above the resistance area of 1.4000–1.4010 suggests a range-bound consolidation between 1.3770 and 1.4010. However, the fundamental picture is a tad clearer. The weakness of the domestic economy combined with rising US recession risks and a tariff-triggered rise in inflation point to additional USDCAD gains.
It Ain’t Over Until the Yellow-Haired Man Leaves
The “only constant is change” is an apt proverb to sum up the state of markets today. Even Trump’s key advisors get blindsided by the President’s tweets or off-the-cuff remarks. Case in point, yesterday, Treasury Secretary Scott Bessent said he expects “there will be a de-escalation in Trump’s tariff war with China. He changed his tune today saying that there was no unilateral offer by Trump to de-escalate. Furthermore, Trump is certainly going to take umbrage with Powell again.
Chaos may rule the day, but fundamentals are not going away.
