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Investors on a knife-edge as one fake headline prompts huge index swings. (0:15) JPM’s Dimon says tariffs will slow growth. (2:42) Mesa Air, Republic to merge in major regional carrier deal. (4:41)
This is an abridged transcript of the podcast:
Our top story so far, the stock market has gone from edgy to jumpy to as nervous as a long-tailed cat in a room full of rocking chairs – if you’ll forgive the technical terms.
Volatility and swings are the order of the day, and investors look unsure which way to turn as the major averages bounce around.
Case in point, one erroneous tariff headline pushed the Nasdaq Composite (COMP.IND), which had been down more than 4% at its intraday lows to more than 4% in the green. Janney strategist Guy LeBas noted the S&P (SP500) tracing 780-point intraday path.
Those are just wild moves.
The headline that President Trump was considering a 90-day pause on tariffs on all countries except for China came from a known financial Twitter account, which said its source was Reuters. CNBC reported the headline but later said it was unconfirmed, and the White House finally denied the headline, calling it fake news.
The major averages are now down around 2%, but the swings haven’t stopped, and a higher finish wouldn’t be out of the question. The VIX volatility index (VIX), also known and the fear gauge, topped 60 overnight and is currently near 50, a level that can prompts short-term buying. The CNN Fear & Greed Index is at a lowly 4 (on a scale of 0 to 100) indicating fear in the extreme.
Also, potential supporting stocks is some unexpected action in the bond market, where Treasury yields have been moving higher. The 10-year yield (US10Y) is up more than 10 basis points, back above 4.1%. It touched below 3.9% on Friday.
Renaissance Macro said the move could be related to people dumping their bonds to raise cash, which is “not good.” Another possibility is sovereign selling, which would also be worrying.
What’s unlikely is that it’s sudden, renewed faith in growth.
Goldman Sachs lowered its 2025 fourth quarter over fourth quarter GDP growth forecast to 0.5%, down from 1%. It also lowered their annual average GDP growth forecast from 1.5% to 1.3% and raised their 12-month recession probability to 45% up from 35%.
Chief economist Jan Hatzius cites “a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty that is likely to depress capital spending by more than we had previously assumed.”
In his letter to shareholders, JPMorgan Chase (JPM) CEO Jamie Dimon warned that the latest round of tariffs is likely to drive up inflation and dampen economic growth.
“There also remains a growing need for increased expenditure on infrastructure, the restructuring of global supply chains and the military, which may lead to stickier inflation and ultimately higher rates than markets currently expect,” Dimon said.
“The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and ‘trade wars,’ ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility,” he added.
Among active stocks, Bernstein says tariffs could eliminate 20% in free cash flow and shave 50% in FY26 adjusted EPS for General Motors (GM). Analyst Daniel Roeska downgraded the stock to Underperform from Market Perform and lowered his price target to $35 from $50.
He said: “For the past six months, we’ve been cautious as U.S. policy uncertainties started to mount. Now, with greater clarity, the outlook for GM is clearly unfavorable. Our revised numbers reflect the impact of tariffs, softening consumer sentiment, and the realization that GM’s peak in this cycle may be behind it.”
Strategy (MSTR), formerly MicroStrategy, recognized a $5.91 billion unrealized loss on its digital assets for Q1 2025, which is expected to result in a net loss for the quarter. The company has amassed holdings of bitcoin on its balance sheet.
“We may not be able to regain profitability in future periods, particularly if we incur significant unrealized losses related to our digital assets,” the company said in a filing. “As a result, our results of operations and financial condition may be materially adversely affected.”
And US Steel (X) is rallying after Trump ordered a national security review of its planned sale to Nippon Steel (OTCPK:NPSCY).
The Committee on Foreign Investment review comes after former President Joe Biden originally blocked the deal. The new review may allow the White House administration to potentially approve the deal.
In other news of note, Mesa Air Group (MESA) struck an all-stock deal to merge with Republic Airways to create a leading publicly traded regional airline. Upon closing, the combined company will be renamed Republic Airways Holdings and is expected to remain Nasdaq-listed under the new ticker symbol RJET.
Terms of the deal were not disclosed. Republic shareholders would own 88% of the combined company, while Mesa shareholders would own a minimum of 6% and up to 12%.
Mesa CEO Jonathan Ornstein said: “Today’s announcement is an exciting next step in Mesa’s more than 40-year history, one that represents the best outcome for our shareholders, employees, and all of our stakeholders.”
The proposed combination creates a carrier with a larger, unified fleet. The combined company is expected to produce revenues of approximately $1.9 billion, pretax margins of 7% to 9%, excluding one-time merger and integration costs, and adjusted EBITDA exceeding $320 million.
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
