Stocks closed lower yesterday after news of Nvidia's charge and Fed Chair comments.

Nvidia said they would be taking a $5.5 billion charge after new export controls to China would curb sales. That also weighed on other chip stocks.

Fed Chair Jerome Powell's comments in the afternoon dragged on stocks as well. He suggested that President Trump's tariffs, which were "significantly larger than anticipated," could result in "higher inflation and slower growth." He added that "we may find ourselves in a challenging scenario in which our dual-mandate goals are in tension." (The Fed's dual mandate is maximum employment and price stability, i.e., low inflation.)

Regarding tariffs, the President has put a 90-day pause on reciprocal tariffs for most countries (sans China), to allow negotiations to take place. While the 10% base tariffs are still in effect, the negotiations for many countries could significantly reduce the larger-than-expected reciprocal tariffs, and maybe ever lower the baseline tariffs for many. Moreover, it could result in more market access for U.S. goods.

Of course, we won't know that until the deals are announced. But it's likely that what was first announced back on April 2 will be significantly reduced. If so, that would take some pressure off the Fed, and potentially create a nice upside surprise for the economy.

The bigger wildcard is what happens with China? We have 145% tariffs on them, and they have 125% tariffs on us. Will the two countries meet and hash out an agreement? Or will the trade war continue to get ratcheted up? Time will tell. But given that trade between the U.S. and China has essentially stopped for some products, both countries are being harmed. So there's incentive on both sides to work this out. (Although, China's exports to the U.S. are 5 times what the U.S. exports to them. So there might even be more incentive on their part.)

In other news, yesterday's Retail Sales report showed a 1.4% m/m increase vs. last month's 0.2% and views for 1.4%. Ex-vehicles it was up 0.5% vs. last month's 0.7% and estimates for 0.3%. Ex-vehicles and gas it was up 0.8% vs. last month's 0.8% and the consensus for 0.4%. (Vehicle sales increased last month as customers raced to buy before the new tariffs kicked in.)

MBA Mortgage Applications showed the composite index falling -8.5% w/w with purchases down -4.9% and refi's down -12.4%.

The Housing Market Index, however, improved to 40 vs. last month's 39 and expectations for 38.

Industrial Production declined -0.3% m/m vs. last month's 0.8% and views for -0.2%.

And Business Inventories came in at 0.2% m/m vs. last month's 0.3% and expectations for 0.2%.

Today we'll get Weekly Jobless Claims, the Housing Starts and Permits report, and the Philadelphia Fed Manufacturing Index.

Today is also the last trading day of the week as the markets will be closed tomorrow for Good Friday.

With one more day to go, the major indexes have turned lower for the week (except for the small-cap Russell 2000, which is holding onto a small gain). But just like one day (yesterday) took the markets from green to red, it can just as easily take it from red to green.

Either way, the markets are well off last week's lows. And the worst of the tariff fears could very well be behind us.

Happy Easter. Enjoy the 3-day holiday weekend.

Best,