Monday Takeaways: Why Good Earnings Aren’t Moving Stocks Higher

Shah Gilani|April 21, 2025

Futures are down this morning as another down week closes for major benchmarks…

The VIX remains elevated at 32 – well above its 19.5 mean…

Earnings have been a mixed bag for investors…

So are they setting investors up for a downside move or a spectacular rally?

Here’s the thing… the problem isn’t earnings. It’s what comes after earnings.

Meanwhile, a battle is brewing between President Trump and Fed Chairman Powell, adding another layer of uncertainty to already nervous markets.

With tariffs delayed until July and Q1 spending artificially boosted by companies buying ahead of potential restrictions, we could be facing a significant downturn in the second half of 2025.

Plus… the charts are telling us there’s more danger ahead unless markets can reclaim the 200-day moving average.

Tune in for your Monday Takeaways. Don’t miss what’s moving your money… NOW.

Click on the thumbnail below to check out today’s video.

Note: Here’s what few people understand… this volatility is all part of Trump’s “Master Plan.” And it’s setting smart investors up for an incredible opportunity…

Find out more here.

Transcript

Hey, everybody. Shah Gilani here with your weekly takeaways. It is Monday morning, premarket, 8:30, as I report to you. Futures are down this morning.

That’s not surprising. Last week was another down week for the S&P and for most of the benchmarks, and, unfortunately, things don’t look better this morning.

The takeaway from last week was though earnings were good and earnings so far this season are teeing up to be good… the problem is guidance.

Guidance, if it isn’t bad, is on a split basis, where companies are saying, “I’m going to give two forward guidance outlooks. One of them negative, if this happens and this and this happens, another one positive, if this and this and this doesn’t happen or these things do happen over here.”

So it’s very difficult for investors to get a handle on where guidance is because it’s a mixed bag.

So what I’m going to say is earnings numbers, net-net, are pretty good.

They’re not good historically, they’re not great historically, but they’re pretty good.

They’re positive, and that’s always a good thing.

They’re just not growing as fast as they did last year or last quarter or the previous quarter or even half year last year. But so far so good.

The takeaway there is, OK, earnings are good. And with the spending that’s been going on in the first quarter, maybe second quarter earnings will be pretty decent too.

You know why? In the first quarter, there was a lot of spending brought forward because of the tariffs. We may fall off a cliff in the back half of the year.

We had that to look forward to what’s going to happen really when we get into the third quarter. We look back at second quarter, what will we see? Because, really, first part of the second quarter, we’re almost done with that, is a positive because there’s been a lot of good spending. Again, that’s being buying forward because of tariffs down the road.

So speaking of tariffs, we have until July. So we’ve got a reprieve on tariffs. Markets didn’t rally on that. They did for about a New York minute, and then they fell back.

So that didn’t help last week. What else didn’t help last week? Well, the VIX remains elevated. The VIX is somewhere between two and three standard deviations from its 19.5 mean.

So it’s trading around the 32 handle right now, and that is very elevated for a VIX that should be maybe in the low 20s. It should have come down from a several standard deviation move, which showed maybe it was a buying opportunity, but the VIX has to calm down. And it’s not calming down because investors are buying puts.

They’re buying protection. They’re hedging, and they’re using options to do that, and that’s reflected in the higher risk.

So takeaway from there is there’s a lot of nervousness out there. There’s a lot of investors trying to play the market, maybe protect themselves to the downside. Maybe trying to play the downside by buying puts.

That’s not great. There is nervousness setting up for perhaps a downside move in the markets, which they’ve been getting and probably making some money.

On the positive side, if there’s a lot of negative positioning, we could get some good news, really good news. And we could see another spectacular rally. Will it be a pop rally? Will it be a dead cat bounce? That remains to be seen.

It’s all about the politics.

Another takeaway is the Fed. The fed fund futures are basically pointing to at least one rate cut by July and four rate cuts by the end of the year.

That remains to be seen, of course, because we’re not anywhere near there. The Fed meets in three weeks. Will there be a rate cut? I don’t think so.

The takeaway there is more indecision for the market. I don’t think we’ll see a rate cut because there’s now a battle between the president of the United States and the chairman of the Federal Reserve.

Over the weekend in some of the news shows, Trump’s chief economic adviser, Hassett, was basically saying the president is looking at whether or not he can fire or remove Fed Chairman Powell. Now he may not be able to remove him from the Fed, but he may be able to remove him from the chairmanship, which is, in my opinion, a nonstarter.

I don’t think he’s able to, and I actually think this is a lot of bluster. This is, I think, the president’s way of looking at who he can blame if things really go south, if the tariffs don’t work, if the economy starts to slip, if interest rates remain elevated… Trump can blame the Fed. So he want him out. He want rates lower.

And if he’s not going to give Trump interest rates that are lower, that are more beneficial to the economy, then he’s going to try and get him out.

That to me is just bluster. I don’t think he can. I don’t think Congress would allow.

The markets certainly don’t want it. They don’t want the executive branch determining the trajectory of interest rates. Every president has wanted that through history since the Federal Reserve Act of 1913.

We need an independent Federal Reserve.

Look, I’m not a fan of the Federal Reserve at all. I wouldn’t mind if the Federal Reserve was disbanded, and we had something like the “Taylor rule” and pro-cyclically adjusted interest rates according to the economic expansion and contraction that we experienced pretty much in live time… but that’s not going to happen.

So the president is unlikely to be able to unseat Chairman Powell and unlikely to persuade the Fed to raise rates.

So coming up in the May Fed meeting, it’s highly unlikely that the Fed’s going to cut rates. It’s going to look like they’re being political. It’s going to look like they’re kowtowing to the president. So that is not going to happen, in my opinion.

But the takeaway there is more, shall we say, uncertainty about the future of the Fed, of the future of the executive branch’s ability or willingness to push the Fed as hard as it can in the direction it wants to see interest rates go. These are all unknowns, but the uncertainty underlying that is dusting up markets. So here we are Monday morning. You got your takeaways there.

The dollar is sliding. Bonds are on the long end. Yields are backing up again. None of this is good.

Futures are down, the Nasdaq futures are down 1.36%, S&P futures down 1%. They were down 1.25% a little while ago. But it looks like it’s going to be a negative opening for the markets.

There’s not a lot of data out this week for us to hang our hats on, but we do have a bunch of earnings. And, if they guide positively, then maybe that’ll make a difference in the market. Last thing I want to do is just give you a quick showdown of what it looks like out there.

Here’s a look at the S&P.

All right. There’s a beautiful uptrend. You know, we’ve since broken that uptrend, and now here’s a pretty nasty downtrend. And then absolutely fell through that channel here.

So we could get up to 5,500, 5,500 and change and still be within this descending channel here, this really steep channel. So we’ve got to get well above that, get well above the 200-day for markets to turn around.

Do they have the energy to do that? I don’t think so.

I don’t think there’s anything positive out there. Are we getting oversold? Though, we got oversold, and we’re not oversold anymore on this RSI indicator.

So your takeaways there are… it looks like more danger ahead.

You know what I always say. Be careful out there. Catch you guys next week. Cheers.