Resurfacing Tariff Fears
This Week in the Market
This week’s market tone is being shaped by persistent tariff fears and the growing anticipation of another Fed rate cut. The tariffs, while intended as leverage in trade negotiations, have begun to pressure input costs and sentiment. We don’t believe their current form is sustainable; they’re more of a bargaining chip than a lasting policy.
The crypto market faced a major wave of forced liquidations this week as a surge in macroeconomic uncertainty and tariff-related fears triggered sharp declines across major digital assets. Over nineteen billion dollars in leveraged positions were wiped out, with most of the damage coming from long traders in Bitcoin and Ethereum. The sell-off exposed how fragile liquidity and sentiment remain in highly leveraged markets, as cascading margin calls quickly accelerated price declines.
Current Trade Idea: AMZN
Amazon.com, Inc. (AMZN) has experienced a volatile start to 2025. Its share price has declined notably, driven in our view by tariff-related cost pressures and investor caution surrounding its cloud market share.
We believe the tariff-related cost pressures are temporary and will not be a long-term issue for Amazon. Investors are worried about how fast Google Cloud and Microsoft Azure are growing, in our view, they are growing faster just because they are much smaller than Amazon's AWS. AWS is still the dominant cloud and is growing at a very impressive rate.
We like buying shares here in a non-linear fashion with the possibility of converting to LEAPS if there is a significant downturn. We will cover this strategy in our next section.
Amazon (AMZN) – Non-Linear Accumulation Strategy + LEAPS
Our approach centers on a staged accumulation framework, increasing exposure strategically into a price decline. Initial positioning remains light at current levels, with size expanding disproportionately as prices pull back further. This non-linear scaling allows us to optimize entry, lower our average cost basis, and position for amplified gains when the stock re-rates higher.
At scale, the position is designed to capture asymmetric upside as Amazon’s fundamentals reassert themselves. Our strategy prioritizes patience and precision while preparing to convert a portion of the position into long-dated LEAPS if market dislocation deepens.
LEAPS, or Long Term Equity Anticipation Securities, are options contracts with expirations longer than one year. They allow investors to gain leveraged exposure to a stock’s long-term upside by controlling a large number of shares with a relatively small upfront premium. This means investors can amplify potential returns if the stock appreciates, while limiting downside risk to the cost of the option. For fundamentally strong companies like Amazon, LEAPS offer an efficient way to express long-term conviction and maximize upside participation with less capital deployed.
LEAPS should be used carefully and may not be suitable for all investors.
Disclaimer: We own shares of AMZN as of writing this. The content in this newsletter is for informational and educational purposes only and should not be considered financial, investment, or legal advice. A4K Capital and its affiliates are not responsible for any financial losses or decisions made based on the information provided.
