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Relief Rally or Crash Déjà Vu?

Relief Rally or Crash Déjà Vu?

🤔 Some traders are sending a warning, saying that this relief rally is similar to what was seen during both the Dot Com Bubble and the 1987 Crash.

Ankit Sinha
April 10, 2025

Silver banana goes to…

In this issue of the peel:

⬆️ Welp, that didn’t take long. Markets soared on news that Trump would delay and reduce tariffs for everyone except China.
🤔 Some traders are sending a warning, saying that this relief rally is similar to what was seen during both the Dot Com Bubble and the 1987 Crash.
💴 Apple is breaking records as the stock had its best 1-day performance since 1998.

Market Snapshot

Banana Bits

Apple’s stock is trading like a meme coin, having its best intraday performance since 1998.
Investors are bracing for more volatility ahead amidst the relief rally.
Bill Ackman sends a warm “thank you” to President Trump on behalf of all Americans.
Hang on a second, we’re not out of the woods yet, according to Economists who believe the tariff pause was not enough to prevent a recession.
So, the tariffs that were “not negotiable” all of a sudden became…. negotiable?
Apple used its creative genius to send a plane full of iPhones from China to the US to avoid taxes.

The Daily Poll

What do you think of Trump’s 90-day tariff pause?

Previous Poll:

Is now a good time to invest? Will you be investing?

Hell yes, discount time!: 49.1% // Waiting it out: 38.6% // Already invested, send help: 8.7% // I only buy snacks, not stocks: 3.6%

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Macro Monkey Says

Pause Button

Can someone find that guy Walter Bloomberg who tweeted about a 90-day pause on tariffs, only to be called a liar by the White House? Someone go give him the MVP award and 0% capital gains rates for life because he was right.

Wall Street traders swung from ending it all to complete exuberance after Trump announced a 90-day pause on most of his recently imposed tariffs. On top of that, when they do get implemented (if they do), they’ll only be 10% versus the insane numbers we saw on that giant piece of cardboard last week.

So, basically, we can all admit that those numbers were complete and utter bullsh*t now, right? I wasn’t nervous, were you?

Trump’s quote yesterday that countries who negotiate would be “rewarded” brought calm to the storm. However, while every other country got a reprieve, Trump upped the score on his best friend, Xi, raising tariffs on Chinese imports to 125%.

The announcement, made via a midday social media post while Trump was taking a pee break from golf, caught many by surprise, including members of Trump's own administration.

The President cited widespread concerns and backlash as reasons for the pause, stating that people were becoming "yippy"—nervous or fearful. Yes, losing 20% of your net worth in a day would make one a bit yippy.

Source

Markets responded accordingly. The S&P ended the day +9.5% and the NASDAQ +12.1%. Apple is no longer a mature multi-billion-dollar company but is apparently now a meme coin. It had its best day since 1998, soaring 15%.

That’s some much-needed positive news after embarrassing reports that the company flew boatloads of iPhones on commercial flights from China to get around tariffs. In hindsight, that was a waste of money, but you can never be too sure!

Source

Despite the market rally, we’re not out of the woods yet. The fact that we have an administration that can throw 100% tariffs on a country only to say “nvm, just kidding” the next day adds a ton of uncertainty for markets, and markets hate uncertainty.

The 90-day pause offers only temporary relief, but the ongoing tension with China could exacerbate trade tensions. Some economists also think that the delay didn't necessarily stop the economic damage and are still forecasting a recession.

The Takeaway?

Trump's tariff pause has provided a much-needed boost to investor confidence, but the underlying issues in global trade relations persist. As the 90-day window unfolds, markets will be watching closely for signs of lasting resolution or further volatility.

Career Corner

Question

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Answer

Maybe the person who is directly managing you, but besides that, you will have plenty of time for coffee chats throughout your internship.

Head Mentor, WSO Academy

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What's Ripe

Restoration Hardware (RH) 28.6%

Restoration Hardware staged a massive turnaround after getting slammed last week. RH was one of the most overexposed companies to tariff policy because it makes a lot of its products in Vietnam. The bad earnings report didn’t help either.
But now, it looks like all is well in the world as tariffs are delayed and as the company revealed it actually moved a lot of its manufacturing back home.

Delta Air Lines (DAL) 23.4%

Not just Delta, but all the airlines were up today after the company reported earnings.
While they cancelled their future guidance (because anyone who tells you they can give you an accurate earnings forecast right now is full of crap), the company beat earnings in a tough consumer environment. This sent all the airline stocks soaring.

What's Rotten

Rocket Companies (RKT) 3.3%

Home lenders are sitting on the bench for this rally. The unwinding trade is happening. All of yesterday’s winners are today’s losers, and yesterday’s losers are today’s winners.
Rocket’s stock slumped as the economic armageddon scenario in which mortgage rates might go lower doesn’t seem to be coming to fruition anymore.

Dollar General (DG) 1.9%

Dollar General’s stock got a little ahead of itself. It was one of the biggest winners from tariffs, with investors assuming that consumers would trade down to lower-cost options after losing all their money.
Now that tariffs are off the table, the stock is giving back some of its gains. Investors are so fickle.

Thought Banana

Relief Rally

If yesterday’s market surge gave you flashbacks, you’re not alone. The S&P had a 10% intraday turnaround, and the NASDAQ swung 12% during the day. The last time that happened was during the depths of the 2008 Great Financial Crisis. So, before you start uncorking champagne, calm down and remember your history.

I hate to burst your bubble, but yesterday’s market performance doesn’t necessarily mean we are 100% back. Bounces like this happen often during bear markets.

According to CNBC, sharp market rebounds like this have happened before, right in the middle of serious bear markets. Think of the dot-com bust of 2000 or the infamous 1987 crash.

During those periods, relief rallies of 10% or more gave investors a flicker of hope, only to be followed by more turbulence. In fact, those rallies often happened because markets had dropped so fast, sparking short-term buying frenzies that didn’t last.

This time around, Trump’s surprise 90-day tariff pause on most nations (while ramping them up on China) gave Wall Street some optimism. Investors cheered the de-escalation in trade tensions, even as businesses braced for uncertainty.

But seasoned market watchers are warning: don’t confuse a big bounce with a full recovery. These sharp spikes can be emotional reactions, not sustainable turnarounds.

In October 2008, the NASDAQ had two of its best days on record. The other two best days came as the tech bubble was bursting. The index’s sixth-best day since its beginning in 1971 came on March 13, 2020, as the COVID-19 pandemic was hitting the US.

Of the 25 best days for the Nasdaq, including Wednesday, 22 took place during the dot-com collapse, the 2008-09 financial crisis, or the early days of Covid. One occurred on October 21, 1987, two days after Black Monday. The other was in November 2022.

Source

Simply put, when markets collapse this fast, there will always be optimists looking to buy in the short-term.

The question is whether this rally will last. Some say that this time is different because there is a clear driver of all the market volatility (tariffs) and a clear solution to the problem (removing tariffs). Pessimists argue that a President with such volatile decision-making will only lead to more market turbulence.

The Takeaway?

While Wednesday's market surge provides a momentary sigh of relief, it's essential to remain cautious. Historical patterns suggest that such rallies can be ephemeral, and the underlying economic challenges may persist.

Investors should stay vigilant and not interpret a single day's gains as a definitive sign of market recovery. Still, a green day is better than a red one, right?

The Big Question: Is this relief rally just a trap for overly optimistic investors, or could it signal the beginning of a real recovery?