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1. We witnessed the biggest bull trap of 2025 with the S&P 500 erasing a ~4.5% rally in ~3 hours.

2. You can’t put the toothpaste back in the tube.

Some corners of the market are beginning to question their investments in the U.S.

That’s true in Denmark, which is squaring off with Trump over Greenland: A pension fund there has begun to shed its holdings in U.S. tech giants.

Wei Li, BlackRock’s global chief investment strategist, told Bloomberg Television this morning that the coming days could test investors’ mettle. Bullish investors usually return to buy beaten-down shares after huge market plunges, she said. So far, she added, “we aren’t seeing that.”

This morning, the S&P 500 futures extend its decline as "reciprocal tariffs" officially go live. That's a -380 point drop over the last 12 hours in one of the largest bull traps in history.

3. Warnings from Wall Street are piling up.

Goldman Sachs strategists said the current event-driven bear market could easily morph into a much longer-lasting cyclical one.

UBS’s chief strategist said tariffs could hammer consumer demand, resulting in zero earnings growth for US companies this year. And Citadel founder and Republican mega-donor Ken Griffin said Trump’s tariffs amount to a hefty tax on families and are a “huge policy mistake.”

BlackRock released a downgrade on all US equities, and JPMorgan put the likelihood of a recession at 79%.

Morgan Stanley said the Fed won’t cut rates this year if tariffs cause inflation.

Higher volatility means risk-parity funds will have to reduce risk and sell more equity in the coming weeks.

4. S&P 500 valuations imply the bottom has not yet been reached.

During prior episodes of sharp market routs like the current one, the market trough was not seen until the 12-month forward P/E ratio hit a level between 13 and 15 times, compared with 18 currently.

5. Valuations are unlikely to offer support at this stage.

Both the S&P 500 and the Stoxx 600 have seen a decent de-rating in the past week, yet based on previous selloffs, there is more to go, even excluding recession periods.

Should tariffs trigger a global recession, then valuations have 10%-15% further to drop, according to strategists at Societe Generale and Goldman Sachs.

6. Something doesn't add up here.

The 10-year note yield just broke above 4.50%.

Higher yields could be a signal of increased risk premium—investors demanding greater compensation for holding long-term debt amid uncertainty.

Global trust in the US is failing, and some countries are dumping US debt. China?

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