Ataraxia April Recap

I. Executive Summary: A Line in the Sand

April 2025 marked a historic inflection point for global markets. What began as a soft continuation of Q1’s upward drift was violently disrupted on April 2nd, when former President Donald Trump declared "Liberation Day" — a sweeping call for the reinstatement of aggressive trade tariffs aimed at China and other foreign importers. The result was a rapid deterioration in equity markets and a psychological pivot in investor sentiment.

The S&P 500 and Nasdaq Composite officially entered bear market territory, each down more than 20% from their previous peaks. The CBOE Volatility Index (VIX) surged above 50, a level not seen since the height of the COVID-19 crisis in 2020. Over $6.5 trillion in equity value was wiped from U.S. markets in just the first week of April.

Yet amid this chaos, Ataraxia’s flagship portfolio returned +2.1% for the month, bringing our year-to-date gain to +15.2%. We achieved this not through heroics or prediction, but through calculated discipline, guided by our in-house “Hugging Strategy” — a methodical positioning framework that shadows index beta during uncertainty while preserving upside flexibility.

II. Market Context: Volatility in 4 Acts

1. Liberation Day Ignites Trade War Fears

Trump’s April 2nd press conference marked a defining geopolitical flashpoint. His pledge to restore “fair trade” included proposed tariffs on over $300 billion worth of Chinese goods. In response, Chinese state media confirmed retaliatory tariffs on American agricultural exports and high-tech hardware.

Markets reacted violently:

• April 3: S&P 500 drops 6.65%, Nasdaq slides 5.97%
• April 4: VIX spikes to 51.2, largest single-day increase since March 2020
• Shanghai Composite: Declines 4.8%, while the MSCI EM Index drops 5.1%

This marked the end of the Q1 optimism narrative and the beginning of a defensive global positioning regime.

2. Inflation Proves Sticky

Despite moderating consumer confidence, inflation remains persistent:

• Core CPI (March print): +3.8% YoY, exceeding expectations
• Core PCE (Fed’s preferred gauge): +2.8% YoY
• Shelter inflation continues to rise due to supply constraints and resilient demand

This stickiness complicates monetary policy. The market has priced out June and July rate cuts, pushing expectations for the first move back to September at the earliest.

3. Growth Cracks Begin to Show

The advance Q1 GDP estimate showed 1.2% real GDP growth, missing consensus by 0.6 percentage points. Capital expenditures and exports showed contraction — directly tied to early tariff impacts.

Additional red flags:

• ISM Manufacturing Index: Contracted for the 18th month in a row, at 47.3
• Conference Board LEI: Fell 0.5% MoM in March — its 14th consecutive decline

4. The Yield Curve and Liquidity Stress

The 2s/10s spread remains inverted at -42bps, and financial conditions are tightening:

• Bank lending standards rising across consumer credit and commercial real estate
• Repo market stress returning, with overnight rates nearing 5.4%

This is a clear warning: while equities just entered a bear market, the credit cycle is already grinding.

III. The Ataraxia Strategy: Hugging the Storm

Facing a trifecta of inflation pressure, rate stagnation, and geopolitical risk, we activated our “Hugging Strategy” in late March — a signal to move into index-adjacent exposure with tight tracking error. The core premise: when volatility reigns, outperformance is achieved not through bold bets but through survival and alignment.

This playbook limited downside exposure while maintaining our relative edge, captured over less volatile periods like January and February.

IV. Performance Table

V. May and Beyond: Eyes on the Long Game

Key Dates on Our Radar:

• May 15: April CPI Report
• May 17: Retail Sales
• May 22: FOMC Minutes
• June 12: Next Fed decision
• Q2 Earnings Season: Beginning mid-July, likely to show margin compression

Our Market View (Rest of 2025):

• Inflation will remain above 2.5% through Q3, prolonging the Fed’s pause
• No more than one rate cut in 2025, barring a sharp recession
• Tariff expansion is likely, with China-U.S. tensions escalating into the election cycle
• Earnings estimates are still too high, especially in discretionary and growth tech
• Commodities (gold, oil) will act as relative safe havens, particularly if inflation and trade pressure escalate

VI. Why Ataraxia? Clarity Amid Confusion

The institutions are lost in lagging models. Retail is lost in hype. Ataraxia is your middle path.

💡 We’re not a trading room — we’re a strategy platform.
💬 Live macro research.
📊 Transparent model portfolios.
📈 Daily updates with actionable positioning signals.
🧠 A Discord community of real investors, not pumpers.

“Ataraxia means composure under pressure. It’s what we deliver, and what you’ll gain.”

VII. Join Us. Outperform with Precision.

April proved it again: the calm outperform the chaotic. If you're tired of reacting to headlines and missing inflection points, it's time to plug into a system that works.

👉 Join Ataraxia today. Build your edge before the next storm hits.