Trump’s attacks on Powell ramp up … will he try to fire the Fed Chair? … Jeff Clark’s short-term market forecast … why Luke Lango sees “15% higher” by summer
Stocks are falling fast as I write Monday approach lunch. All three major stock indexes are down sharply, led by the Nasdaq, off 3%.
Meanwhile, gold futures have broken $3,400, setting a new all-time high.
Behind this “risk off” market action is President Donald Trump and his latest attack on Federal Reserve Chairman Jerome Powell.
As we noted in last Thursday’s Digest, Trump wants lower interest rates…yesterday.
Last week, Trump referred to Powell as “‘Too Late’ Jerome Powell of the Fed,” writing that “Powell’s termination cannot come fast enough!”
The attacks continued this morning with Trump calling the Fed Chair a “major loser” while again demanding lower interest rates.
But it isn’t the insults roiling the investment markets today. Rather, it is Trump’s recent saber rattling about firing Powell.
Wall Street wants stability. Trump firing the sitting Fed chair for not doing his bidding – despite the risk of reinflation – would rattle the market. As much as stocks have fallen in recent weeks, a “Powell firing” is not priced in.
Here’s Bloomberg:
The sell-America trade gathered momentum on Monday on concern President Donald Trump will act upon his threat of firing Federal Reserve Chairman Jerome Powell and implement policies that lead to a recession.
The dollar, US stock futures and Treasuries slid, pushing the yield on 30-year bonds higher by as much as 10 basis points in thinner-than-normal, post-holiday trading.
Investors are grappling with the risk of Powell’s dismissal, which the White House said last week it was assessing, and the implications of his policies on the world’s largest economy.
So, how will all this play out?
Today, let’s evaluate two different market forecasts. One bullish, one bearish.
After all, the more angles you have, the better prepared you’ll be.
On Wednesday, April 9, the stock market erupted after President Trump announced a 90-day tariff pause on certain levies
I reached out to master trader Jeff Clark, editor of Jeff Clark Trader, to ask if the surging market had changed his bearish forecast.
Prior to that historic rally, Jeff had told his subscribers:
Ultimately, I think where we’re headed, if this is truly a bear market as I think it is, is the same level as late-2023 when we were somewhere around the 4,150 level or 4,100 level (for the S&P).
The real opportunity to buy I think is probably going to wind up sometime in October, November.
We can trade between now and then, but…like oftentimes happens, you get that final washout in October or November, and that’ll give us a really good opportunity to jump in and put some capital to work at super depressed prices.
Jeff told me the tariff-pause rally has not changed his opinion.
He was sticking by his forecast for a relief rally that, ultimately, would fizzle and turn into a new leg lower.
Since then, the S&P jumped to roughly 5,453 but then ran out of steam. It fell back to 5,275, successfully holding that support level twice. But as you can see below, as I write Monday, we’ve fallen through that level to 5,138.
Medium-term, Jeff believes we’re headed lower. But in the short-term, the level to watch is 5,200.
As of last week, Jeff was in the camp that this recent pullback was not the beginning of his predicted next leg lower
Rather, he expected the relief rally that began two Wednesdays ago would have more room to run.
That still may be the case. But before we get to what’s changed, let’s map out that original scenario.
Let’s go to Jeff’s Morning Update from last Thursday:
Stocks are likely headed higher in the short term.
Conditions are oversold enough to justify a rally towards the upper end of our 5,400-5,500 target zone.
In fact, I can make a case for higher levels if the rally happens fast enough. But I don’t think we have any chance of getting above the 50- and 200-day moving averages near 5,750.
The closer the S&P gets to 5,750 the better the odds for adding short exposure.
Ultimately, the index will need to retest the 4,835 low, and more likely, break below that level.
For the next few days, I am leaning bullish. But, with one eye glued to the exit sign.
To better contextualize Jeff’s predictions, a rally to 5,750 would mean we’re in for another 12% climb based on where the S&P trades as I write Monday.
Assuming that happens, the subsequent fall to 4,835 (and potentially, beyond) would mean a 16% drop.
But Jeff’s update this morning puts the key level of 5,200 into the spotlight. Where we close today has the potential to change Jeff’s short-term outlook:
As long as 5,200 holds, on a closing basis, I favor an upside move over the next few days.
If the S&P closes below 5,200, then the odds favor a retest of at least the 5,000 level, and possibly an immediate retest of the recent low at 4,835.
I am leaning mildly bullish for the week. That will change if the S&P closes below 5,200.
For now, though, sentiment is so poor, and the daily technical indicators are starting to turn bullish. So, I tend to think we’re due for a quick pop higher before we get a retest of the recent lows.
So, all eyes on whether the S&P closes above or below 5,200 today.
Regardless of which way the S&P moves in the short term, let’s revisit Jeff’s overall forecast.
As noted earlier, 4,150 or 4,100 is Jeff’s predicted bear-market low. That would mean a 29% fall from where he thinks a relief rally could top out (5,750).
Here’s Jeff:
If you’re holding stocks long all the way through that, that could spell a little bit of trouble.
But if you take advantage of opportunities where you get deeply oversold conditions, where you can get into a good bounce – play that bounce.
But be quick to take your profits off the table and then allow the market to come back down again and give you another opportunity…
Bottom line is, I think there’s going to be an awful lot of opportunity to trade.
To dive into exactly how Jeff plans on trading a bear market, you can revisit our April 11, 2025, Digest here.
Our hypergrowth expert Luke Lango has a different take on where the S&P is headed
Ready for the S&P to be 15% higher and looking bullish by late summer?
According to Luke, that’s possible, but it all hinges on two big developments:
- Rate cuts from the Federal Reserve
- Trade war de-escalation
Luke believes each is coming.
Beginning with the Fed and rate cuts, Luke’s analysis from late last week starts with Federal Reserve Chairman Jerome Powell and his ostensible nonchalance about today’s deteriorating economic conditions.
Speaking last Wednesday, Powell appeared to be in no hurry whatsoever to cut rates
As we profiled in the Digest, this drew the wrath of President Trump (which is continuing this morning). The day after Powell’s speech, Trump took to Truth Social, writing “Powell’s termination cannot come fast enough!”
Here’s Luke’s take on Powell and this slow play:
Don’t panic just yet. More importantly, don’t listen to the words; watch the feet.
Powell may have said “no cuts for now,” but the evolving reality on the ground says something very different…
In fact, we believe the Fed is on the brink of launching a full-blown rescue mission for the U.S. economy – and it could send stocks soaring.
To make the case for this rescue, Luke points toward Bloomberg’s U.S. Financial Conditions Index – a catch-all measure of credit spreads, equity levels, and money supply.
Today, it’s showing that outside of 2020’s COVID crash, financial conditions are tighter than they’ve been at any time in the past decade.
At the same time…
- Consumer confidence is near a 50-year low
- Retail sales are slowing
- Business investment has stalled
- The housing market is frozen solid
- And yet bond yields have been spiking
Here’s Luke:
This is not a good cocktail.
It practically screams for Fed action. And we believe Powell is quietly preparing for that – regardless of what he’s saying in public…
So, when does the cavalry arrive?
We think it’s coming in June.
That’s when the data will likely have piled up just enough to give Powell and his colleagues the political and academic cover to start cutting.
That doesn’t mean we need to wait until June for optimism to begin. Luke expects strong forward guidance to come out of the Fed’s May meeting (about two weeks away). If so, that’s going to begin to move stocks higher.
But a pivot from the Fed is just half of what’s needed to push stocks 15% higher by late summer
The other half is improvement on the global trade war.
And here, Luke is optimistic, reporting that the conflict is dissipating:
Since the U.S. launched its “Liberation Day” tariffs in early April, we’ve actually seen tariff rates fall, not rise.
The average U.S. tariff rate spiked from 2.5% to 27% on April 2. But with the 90-day pause and electronics exemptions, that number has already fallen to about 23%.
If rumored auto parts exemptions come to fruition, we’ll drop to ~20%. And if steel/aluminum or China deals are locked in, we’ll slide closer to 10%.
That’s a pretty sharp reversal.
Luke is clear that the rhetoric from Washington remains aggressive. But as with the Fed, actions speak louder than words. And today, the actions suggest de-escalation.
Putting it altogether, we’re still in for volatility over the coming days. But the Federal Reserve’s next FOMC meeting concludes in just two weeks on Wednesday, May 7. If Luke is right above dovish signaling from Powell, Wall Street will begin repositioning immediately.
Then, if we get positive headlines on trade deals and the lowering of tariffs, that’ll continue to fuel a rally.
Next up, throw in a potential rate cut in June, and Luke believes…
The stock market could rip higher.
We wouldn’t be surprised to see the S&P 500 up 10% to 15% from current levels by late summer.
So, while others panic, we’re getting ready to pounce.
How do you resolve Luke’s and Jeff’s different forecasts?
First, you don’t try.
InvestorPlace and our corporate partner TradeSmith are independent publishers, and we believe it’s a strength to bring you the unfiltered market perspectives of our veteran analysts.
As American entrepreneur and author Jim Rohn once said:
Always be willing to look at both sides of the argument.
Understanding the other side is the best way to strengthen your own.
But I’ll note that during volatile markets, your odds of making profitable market decisions increase if you limit how far ahead that you’re looking.
And that brings us to TradeSmith’s breakthrough AI algorithm – calledAn-E.
As we detailed in the Digest last week, “An-E” (short for Analytical Engine), forecasts the share price of thousands of stocks, funds, and ETFs one month into the future along with the conviction level of that prediction. It’s equally applicable in both bull and bear markets.
Built in-house using machine learning models trained on over 1.3 quadrillion data points and 50,000+ backtests, this quantitative trading platform can help you better time and target your trade entries/exits within a 30-day price projection.
If you missed last week’s presentation from Keith Kaplan, TradeSmith’s CEO, you can catch a free replay here.
Whether you lean more bearish like Jeff, or more bullish like Luke, An-E can help you focus on what the data suggests is on the way – which can make all the difference in your shorter-term market positioning.
Have a good evening,
Jeff Remsburg
