Market Report.
⚖️ We are continuing our examination of the impact of the US Supreme Court’s decision on Trump’s tariffs and how the trade and economy is being adjusted. We are facing a chaotic and uncertain trade landscape.
❓ There is significant confusion around the actual implementation of the new 15% tariffs, as the White House fact sheet still lists them at 10%, creating uncertainty around the status of existing trade agreements.
🌍 Paradojicamente, U.S. allies like the UK, EU, Japan, and South Korea now face higher trade-weighted tariff rates, as the IEEPA-based tariffs are replaced by a new 15% global tariff under Section 122 of the 1974 Trade Act. In contrast, countries like Brazil, China, and India that were previously hit hard by IEEPA-based tariffs will see sharp reductions in their trade-weighted tariff rates.
🏯 Asian countries like Japan, South Korea, and Singapore are also monitoring the situation closely, as the new tariffs could undermine the trade deals they had negotiated with the U.S.
🇪🇺 The European Union has postponed a planned vote on its trade deal with the U.S. European officials reacted with “disbelief and concern” to Trump’s latest tariff move, with the chair of the European Parliament’s trade committee calling it “pure tariff chaos.”
🧀 The European Commission has found that under Trump’s new tariffs, some EU exports like cheese, agricultural products, plastics, and chemicals will face tariffs above the 15% ceiling agreed in the trade deal. This is because the new 15% global tariff will be added on top of existing tariffs, resulting in a cumulative rate exceeding the 15% cap.
⏳ EU trade chief Maros Sefcovic has indicated that a transition period of up to 4 months may be needed to work out the details and ensure the trade deal can still be honored.
🤝 The EU has stated that “a deal is a deal” and expects the U.S. to honor its commitments under the previous trade agreement, which capped EU exports to the U.S. at a 15% tariff. The UK, which had a 10% tariff rate under its own trade deal, is also questioning how the new 15% global tariff will affect its privileged trading position with the U.S.
🏦 ECB President Christine Lagarde warned that the trade uncertainty could disrupt business relationships between the U.S. and its European allies.
🏭 Meanwhile, the idea of “Made in Europe” might not be entirely realistic. According to a Bloomberg article, EU should focus on its genuine areas of competitive advantage rather than resorting to broad protectionism.
🌬️ The EU’s competitive position appears stronger in areas like wind turbines, grid technologies, and heat pumps compared to solar panels or EV batteries, where China has a large head start. This suggests the EU should prioritize these areas rather than trying to protect every industry.
🎯 The EU could be more pragmatic and selective in its industrial policy, focusing on “letting the losers go” instead of trying to save every industry through protectionist measures that could ultimately be economically costly.
🏢 In the corporate world, when it comes to tariffs, the troubling thing is that there is not just unease among US trading partners, but also among their own companies.
📦 FedEx has filed a lawsuit against the U.S. government, seeking a “full refund” of the tariffs it paid under President Trump’s unilateral tariff policies that were recently ruled illegal by the Supreme Court.
⚖️ This appears to be the first major lawsuit filed by a U.S. company seeking a refund of the tariffs after the Supreme Court decision. FedEx had previously said the U.S. trade policies, including the tariffs, would result in a $1 billion hit to its earnings for the fiscal year.
🤖 The fears and paranoia of certain sectors about AI advances continue. The cybersecurity industry is grappling with the potential disruption from advancing AI capabilities, leading to volatility in related stocks.
📉 Cybersecurity stocks dropped for a second day as investors worried that new AI tools, like Anthropic’s latest security tool, could displace traditional cybersecurity business models.
💻 Anthropic debuted an AI tool that can scan software code for vulnerabilities and suggest solutions, raising fears that it could automate some common cybersecurity tasks. Stocks like CrowdStrike, Zscaler, Netskope, and Tenable fell 10% or more as investors fretted over the threat of AI disruption.
🛡️ CrowdStrike’s CEO defended the company’s platform, saying an AI code scanning tool does not replace their Falcon security system.
📊 The broader software sector has already been rattled by the rise of generative AI tools that can automate certain tasks, leading to sell-offs in stocks like Salesforce and ServiceNow.
📚 Nassim Nicholas Taleb, author of The Black Swan, warned investors to brace for rising volatility and possible bankruptcies in the software sector as the AI-driven rally enters what he sees as a more fragile phase.
📑 A new publication by Citrini Research is scaring markets. The report is about how transformative AI could trigger a systemic economic crisis if the implications are not carefully navigated by policymakers, businesses, and society.
⚠️ The rapid advancement of AI capabilities could lead to a severe economic crisis in the coming years, centered around the displacement of white-collar workers and the disruption of industries reliant on human intermediation.
🧠 The rise of “agentic coding tools” in 2025 allowed companies to quickly replicate the functionality of mid-market SaaS products, leading to a collapse in pricing power and revenue for incumbent SaaS providers.
🌐 The crisis spread beyond the tech sector, as AI agents were able to eliminate the need for human intermediaries in industries like travel booking, insurance, financial advice, and real estate, destroying the business models of these companies.
⏱️ The speed of AI advancement outpaces the ability of institutions to adapt, creating a race against time to develop effective policy responses before the negative feedback loops become entrenched.
Geopolitics.
🇺🇦 The conflict in Ukraine does not seem to be progressing, and US and Russian negotiations are stalled. Meanwhile, Ukraine is gaining enemies in EU neighbors.
💥 Reports say the Druzhba‑1 pumping station at Kaleikino, a key node in the Druzhba oil pipeline system, was blown up in Ukraine, disrupting flows along one of Europe’s main crude supply routes.
🛢️ The Druzhba pipeline is highly significant for Central Europe, accounting for roughly 86% of Hungary’s oil consumption and nearly 100% of Slovakia’s oil supply, making both countries especially vulnerable to any interruption.
⚡ In response to the reported disruption, Slovakia announced it will halt electricity supplies to Ukraine, signaling a sharp escalation in regional tensions tied to energy security.
🪖 Bloomberg has described the options that the Pentagon would consider for attacking Iran. There are three “buckets” of capabilities the US can leverage against Iran:
🛰️ Non-kinetic warfare: Cyberattacks to degrade Iranian military and civilian systems, Information warfare and propaganda to undermine the regime, Using “discombobulator” weapons to degrade Iranian microchips and electronics.
🚀 Limited strikes: One or two days of strategic attacks on Iranian military targets like missile batteries, command centers, and potentially leadership figures, Using assets like Tomahawk missiles, drones, electronic warfare aircraft, and stealth fighters.
🔥 Extensive campaign: Weeks of strikes to cripple the Iranian leadership, nuclear program, electric grid, oil production, and naval/military facilities, Deploying strategic bombers, more F-35s, and carrier-based fighters
📉 The US administration is dragged into a new war in the Middle East under pressure from Israel. Trump’s approval rating drops below 40% according to Fox News (pro-Trump media), and American First no longer seems to be the priority according to critics.
Market View.
📊 US markets remain range‑bound, with major indices continuing to trade sideways amid three key sources of uncertainty:
⚖️ the ongoing tariff turmoil following the US Supreme Court ruling,
⚔️ the risk of a potential conflict with Iran,
🤖 and the disruptive impact of artificial intelligence across multiple sectors.
📍 S&P 500 futures remain stuck around the 6,860‑point level, while Nasdaq 100 futures are similarly stalled near 24,800 points.
💵 The US Dollar Index (DXY) has strengthened once again, returning to the 98 level, which is weighing on EUR/USD. The pair has fallen back below 1.18, currently trading around 1.1775.
🇪🇺 European markets are also moving sideways. DAX futures have eased to approximately 25,025 points, while Euro Stoxx 50 futures are showing relatively stronger momentum, holding near 6,125 points.
🛢️ The oil market remains modestly bullish amid fears of a potential conflict in the Middle East, with spot Brent crude trading above $71.25 per barrel.
🥇 Gold futures climbed above $5,250 per ounce in recent hours before easing slightly to around $5,195.
₿ Finally, Bitcoin has resumed its decline, weakening towards the $63,225 level.
