Forgotten Profits Trade Setup Archive
Below you'll find Ian's setups stacked up and ordered chronologically. As this service once resided at another home, the alerts only go back to mid July. For a full track record, see the portfolio.May 1, 2025
Understanding the 2025 GDP Contraction and Its Market Impact
Understanding the 2025 GDP Contraction and Its Market Impact
What Is GDP?
Gross Domestic Product (GDP) is a comprehensive measure of a country’s overall economic activity. It represents the total monetary value of all goods and services produced within a nation’s borders over a specific period, typically quarterly or annually. GDP serves as a critical indicator for policymakers, investors, and economists to assess an economy’s health and trajectory.
There are three primary approaches to calculating GDP:
- Production (or Output) Approach: Summing the value added at each production stage across all industries.
- Income Approach: Aggregating all incomes earned by individuals and businesses, including wages, profits, and taxes minus subsidies.
- Expenditure Approach: Adding up all expenditures made on final goods and services, including consumption, investment, government spending, and net exports (exports minus imports).
The expenditure approach is the most commonly used method and is calculated as:
GDP = C + I + G + (X – M)
Where:
C = Consumer spending
I = Investment by businesses
G = Government spending
X = Exports
M = Imports
A positive GDP growth rate indicates economic expansion, while a negative rate suggests contraction. Monitoring GDP trends helps stakeholders make informed decisions regarding fiscal policies, investments, and resource allocation.
Why Was GDP Low as Reported Today?
On April 30, 2025, the U.S. Department of Commerce reported that the nation’s GDP contracted by 0.3% in the first quarter, marking the first decline since early 2022. This downturn has raised concerns about the underlying factors contributing to the economic slowdown.
Surge in Imports Ahead of Tariffs
A significant driver of the GDP contraction was a 41.3% surge in imports, as businesses accelerated purchases to stockpile goods before implementing new tariffs under President Donald Trump’s administration. Since imports are subtracted in the GDP calculation, this surge negatively impacted the overall figure.
(Source)
Implementation of “Liberation Day” Tariffs
On April 2, 2025, President Trump announced sweeping tariffs on nearly all imported goods, a move he termed “Liberation Day.” These tariffs aimed to promote domestic manufacturing but led to increased costs for businesses and consumers, disrupting supply chains and economic stability.
(Source)
Decline in Government Spending and Consumer Confidence
Government expenditures decreased during the quarter, and consumer confidence reached its lowest level since 2020. Major corporations, including GM and Delta, withdrew financial guidance due to economic unpredictability, further dampening economic activity.
(Source)
Inflationary Pressures
The Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose by 3.6%, exceeding the central bank’s 2% target. This uptick in inflation complicates monetary policy decisions and may hinder efforts to stimulate growth.
(Source)
How This Affected the Price Action in the Markets Today
The unexpected GDP contraction had immediate repercussions in financial markets. Major indices experienced significant declines as investors reacted to the economic data.
Stock Market Declines
- Dow Jones Industrial Average (DIA): Fell by over 700 points during the trading session.
- S&P 500 (SPY) and Nasdaq Composite (QQQ): Both dropped, with the Nasdaq losing more than 2%.
(Source)
Investor Sentiment and Volatility
The combination of declining GDP, rising inflation, and trade uncertainties led to increased market volatility. Investors sought safer assets, causing fluctuations in bond yields and commodity prices. The heightened uncertainty may lead to reduced capital expenditures and hiring in the coming months.
Currency and Commodity Markets
The U.S. dollar weakened against major currencies as confidence in the U.S. economy waned. Commodity prices, including oil and metals, also declined due to fears of reduced global demand stemming from the U.S. economic slowdown.
Conclusion
The recent GDP contraction underscores the fragility of the U.S. economy amid policy shifts and global uncertainties. While some underlying economic indicators remain resilient, the interplay of trade policies, inflation, and consumer sentiment presents challenges for sustained growth. Market participants will closely monitor upcoming economic data and policy decisions to gauge the trajectory of the economy in the coming quarters.
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April 30, 2025
Amazon Tariff Price Display Sparks Political Clash
Amazon Tariff Price Display Sparks Political Clash
In a move that reignited political tensions, the idea of an Amazon tariff price display has set off a high-profile spat between the e-commerce giant and the White House. On April 29, 2025, CNBC reported that the Trump administration lashed out at Amazon after a leaked internal discussion suggested the company might show U.S. tariffs as line-item charges on certain product listings. Though Amazon later clarified that the plan was limited to internal discussions for its Haul storefront and was never implemented, the political firestorm had already ignited.
White House Reaction and Bezos Response
White House Press Secretary Karoline Leavitt condemned the Amazon tariff price display as a “hostile and political act,” suggesting it was designed to turn public opinion against current tariff policies. President Donald Trump reportedly called Amazon founder Jeff Bezos personally to express his anger, calling the idea inflammatory during a sensitive economic period. Following the call and Amazon’s public clarification, Trump issued a statement thanking Bezos for “putting the issue to rest.”
Other Retailers Quietly Watching
Behind the scenes, major retailers like Walmart, Target, and Best Buy are reportedly evaluating similar pricing transparency moves. While none have gone public, several analysts suggest that retailers are feeling squeezed by increasing import costs, especially in electronics and home goods. The consideration of an Amazon tariff price display has opened the door for other large-scale sellers to rethink how tariffs are communicated to consumers.
This reflects growing unease among U.S. businesses about the ripple effects of extended tariff enforcement, particularly if the cost burden is increasingly borne by consumers. According to Peterson Institute for International Economics, U.S. consumers have paid billions in additional costs since the start of the U.S.-China trade war.
Possible New Trade Deal on the Horizon
Interestingly, this controversy comes amid new reports that the White House may be close to finalizing a new trade agreement with China. While details remain vague, administration officials have hinted at a framework that could reduce tariffs on a range of consumer goods if China agrees to improved IP enforcement and stricter carbon commitments in manufacturing.
This potential deal could undercut the need for companies like Amazon to consider a tariff price display at all—though the policy uncertainty has already prompted some internal shifts in how product margins are evaluated.
What It Means for Traders and Investors
From a trading perspective, the Amazon tariff price display flap highlights how geopolitical and policy risks continue to drive volatility in the consumer discretionary sector. Stocks like AMZN, WMT, and TGT may be subject to sharp intraday swings as headlines break, creating both risk and opportunity for short-term traders. For more analysis of trading through economic news, visit past coverage:
- Trading the Tariff Tape: How Traders React to Trade Policy Headlines
- Inflation and the Opening Range: Navigating Choppy Starts
- Market Maker Moves Amid Political Noise
Conclusion
The Amazon tariff price display episode may have ended with a press release and a presidential thank-you, but it signals broader tension between corporate America and U.S. trade policy. As the White House negotiates new international agreements, and retailers face mounting pressure from rising costs, transparency in pricing may become a flashpoint again. For traders, this creates a vital area to watch—not just for the headlines, but for how they shape market momentum and sector rotation.
April 29, 2025
