Asset Allocation

Have stocks bottomed? Will I buy DBS Bank, REITs, Stocks, Bitcoin now or wait?

April 19, 2025

“There are decades where nothing happens; and there are weeks where decades happen.” Vladimir Ilyich Lenin

This to me, was one such week.

I’ve been saying that the impact of the Trump tariffs are equivalent in impact to COVID itself, and I still stand by that view.

I don’t think we are ever going back to the pre-Trump tariffs world.

The actions from Trump the past 2 weeks, has permanently altered the way that the world looks at the US, and the way that global trade will happen going forward.

3 things that I wanted to discuss today:

Summary of the key events the past week
My high level take on what has happened so far
Has the market bottomed?

This is a modified FH Premium post written earlier this week.

I am making this available to all readers to keep you updated on my latest thinking given the current market volatility.

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Summary of the key events the past week (up to 16 April)

To sum up the big events:

April 2: President Trump announced a 10% global tariff on all imports, with higher rates for specific countries, notably increasing tariffs on Chinese imports to 54%.

April 9: In response to China’s retaliatory tariffs, the U.S. raised tariffs on Chinese goods to 125%.
April 9: The U.S. paused most new tariffs for 90 days, maintaining a 10% baseline tariff, while excluding China from this pause.

April 11: China countered by increasing tariffs on U.S. imports to 125% and suspended exports of critical rare-earth materials, impacting sectors like defense and electronics.
April 11: The U.S. exempted consumer electronics from tariffs for most countries (including China), though a 20% tariff remained on Chinese electronics.

My high level take on what has happened so far

The events of the past week suggest a very simple conclusion – Trump’s administration is pretty much making it up as it goes along.

Big picture wise.

What has happened, is that:

Trump started with an excessively aggressive starting position on tariffs
Was forced into making unilateral and sudden concessions on the exceptions – which looks to be largely driven by pressures from markets (long end blowing out) and pressure from CEO (iPhones is a big exception)
Worst is that some of these exceptions like iPhones (discretionary consumer good) makes little sense when other key essential goods (used in key industrial processes) are not exempt – suggesting that there really isn’t any underlying logic to the exemptions and is largely driven by who kicks up the biggest fuss to Trump.
On top of that, communication across the board has been extremely poor, with inconsistent messaging from key White House personnel, suggesting that many of them don’t even know the full picture. For example, what we’ve heard so far is that electronics are exempted but it’s not permanent, Semiconductors tariffs are coming later, Pharma in a few months etc etc.

From a negotiating perspective, this is a terrible look for US, as:

From a negotiating point of view, it makes US look weak as it suggests Trump can be pushed, and will cave if there is market / internal pressure
From a reliability stand point, the US just lost a great deal of credibility this week among its staunchest allies – after all can you really rely on the US as an ally after this

And funnily enough, the response from China actually makes them look like the good guy in this – as they are merely responding to US as the bully.

I suspect China’s handling of the situation thus far (this can change any time), would probably have won them a lot of fans in countries around the world, especially those not fully aligned with the US.

My simple take?

But that’s just a fancy, roundabout way of saying.

Long story short – the tariffs rollout is completely mess, nobody has any clue what tariffs will still be around a week from now, and America has lost a great deal of credibility amongst even its allies.

At the very least, you do need to accept that short term uncertainty (and volatility) remains very elevated, as nobody really has any clue what is going to happen next.

If the Trump administration is indeed making it up as they go along, it makes it very tough to predict how exactly things are going to play out.

What are the key events to look out for from a macro perspective?

I received this great question from a reader:

Question: Hi FH,

Thanks for the timely article.

While TA is certainly one important indicator, from a key events perspective, are there any potential indicators that you would be looking out for? For instance, the first trade deal being signed?

Thank you.

Answer:

The way I see it, the key events that I would look out for from a macro perspective are:

Trade deal with EU / China / Canada & Mexico / Japan

To me, the ones that really matter are EU and China, and to a lesser extent Canada, Mexico, Japan.

Everyone else to me is kinda a fringe player at this stage.

And if you really think about it, the entire tariffs is basically designed to correct US trade imbalance with one country in particular – China.

Viewed this way, tariffs on countries like China are there mainly to prevent China loopholes (China companies merely moving manufacturing out of China into Vietnam).

This is becoming increasingly obvious over time as the trade deals the US is cutting offer greater concessions if such countries promise to reduce trade with China (via tariffs).

Long story short – US trade deals with China / EU are the key to watch.

But big picture wise, it’s all about US – China.

Tax cuts (passed via Congress)
Fed rate cuts (Powell)
Government Fiscal Spending (Trump / Bessent)

These 3 are pretty self-explanatory in that they are different forms of fiscal / monetary stimulus.

The effect of the tariffs is deflationary in nature, and will likely play out as a sharp drop to economic growth.

Left unchecked, this increases the risk of a recession.

To offset this, US needs to stimulate via either fiscal (tax cuts, higher government spending), or monetary stimulus (interest rate cuts).

This is a very big wildcard at the moment, because we don’t know how these 3 will progress.

Powell came out last night to suggest that the Feds won’t be stepping in so quickly due to inflationary fears.

Tax cuts will probably get passed at some point, but the size of the cuts is crucial.

And fiscal spending – Trump / Bessent need to get the long end under control before they starting spending in a big way, otherwise you’re going to see the long end blow out (and they have repeatedly said how they care about the long end).

Stimulus from China

The last big point in my view – is how China responds.

If China stimulates their economy in a big way, vs if China doesn’t do anything to stimulate.

Boy that’s just 2 completely different outcomes for the global economy right there.

This one is arguably even harder to predict than what Trump will do.

Has the market bottomed? Is the worst behind us?

I know a lot are asking whether the market has bottomed, and whether the worst is behind us.

The simple conclusion from the analysis above is that – nobody has any clue, as it all depends on what Trump does next.

So in a scenario like that, I find 2 factors come in handy:

Technical Analysis
Valuations

Technical analysis (US Markets)

I find Technical Analysis helpful in times like that.

You can see how even after the recovery, the S&P500 remains below all key moving averages, and below the 5700 support.

It has also failed to make a higher high so far, and remains in a downtrend for now.

Bitcoin is sitting right smack on the 50 day moving average.

However its still trending down for now, and has yet to make a higher high:

Brent Crude has failed to erase the post-tariffs driven fall:

While both regional banks and the Russell 2000 look very ugly and trending down, suggesting the market is not optimistic on small cap stocks (which are the backbone of the US economy).

Funnily the only asset outperforming at the moment is gold – absolutely soaring:

Technical analysis (China/HK Markets)

Hang Seng index actually is still trending up since the Jan 2024 bottom, and is above the 200 and 150 day moving average.

Similar story for Hang Seng Tech:

Similar story for Big 4 banks like ICBC:

This is really interesting, because despite all the doom and gloom, China stocks are actually holding up decently well (although this is partly due to valuations, as China stocks were starting from a much lower starting valuation – in sharp contrast to US stocks).

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Technical analysis (Singapore Markets)

Can’t say the same for the STI.

Despite a recovery, the STI still sits below all key moving averages, with a very ugly gap down:

This is the story for all 3 local banks (ugly gap down, and sitting below all key moving averages):

The REIT index as a whole has rallied from lows, but again from the charts it’s hard to really be bullish / definitively call a bottom.

Although that said, if you look through to underlying stocks.

Some names like Singtel and ST Engineering actually broke out to higher highs this week, showing remarkable strength.

So its not all doom and gloom for the SGX:

Valuations

Let’s now look at valuations, then I’ll share my views generally.

After the sell-off, S&P500 Megacap (MAG7) now sits at valuations last seen during the 2022 market bottom.

Large/Mid cap stocks are not exactly at 2022 bottoms, but have definitely come down quite a bit since the 2025 high.

I’ve always said that DBS Bank at 2.0x book value looks expensive to me.

After the sell-off, DBS Bank sits at 1.7x book value.

Again – similar story to the S&P500 above.

It’s definitely cheaper than just 1 month ago, but objectively I would hardly say it is dirt cheap, and if the macro plays out poorly I could see further downside.

My views – Has the market bottomed? Is the worst behind us?

So looking at the charts as a whole, combined with the macro outlook from Trump.

It’s really tough to call definitively a bottom just yet.

To be clear – I’m not saying that we haven’t bottomed.

I’m saying that it’s incredibly difficult to call, based on what we know today.

The crux is that unlike COVID where the key bottoming events was when (a) Feds started pumping unlimited QE, and (b) when the vaccine came into play.

This crisis is much more man-made in nature, in that much will depend on what Trump, Powell and Bessent do in the months ahead (Congress as well on tax cuts).

And the past week has suggested that really, the Trump administration is literally making it up as we go along.

So while the worst may be behind us, it’s also possible that the worst is yet to come.

So… what will I do in times like that?

In times like that, I would be heavily guided by valuations and especially technical analysis.

If valuations hit a point where they are too good to pass I will add.

If technical analysis starts to show a higher high, or stocks breaking above key moving averages, I will add.

I think there are some pockets of value across the market today, but by and large things generally don’t look pretty.

Whatever the case, I’ll update the stock watch this week on FH Premium and will go into a stock by stock, REIT by REIT analysis in there.