🚀 Market Report.
📉 Yesterday’s data from the United States is interesting. On one hand, the PCE inflation rate turned out to be slightly lower than expected at 2.6%, compared to the anticipated 2.7%, though still above the previous period’s 2.2%. The GDP growth revision for Q4 2024 was adjusted upward, rising to 2.4% from the previous 2.3%. Lastly, the Initial Jobless Claims came in slightly lower than expected, at 224k compared to the forecasted 225k.
🚗 It is not only German, Japanese and South Korean car manufacturers that have been affected by Trump’s new 25% tariffs on vehicles. US manufacturers, who have outsourced part of their production, have also suffered losses. Yesterday General Motors dropped more than 7%, while Ford fell over 4%.
🇩🇪 In Europe, Porsche could take the largest hit because it only manufactures cars in Germany. As a result, the two automakers, along with Mercedes, stand to lose €3.4 billion. Meanwhile, Ferrari plans to increase its prices in the United States by up to 10%, based on Bloomberg report.
🐕🦺 A few days ago a video went viral in which Trump praised the hard work that Musk was doing for America, with his DOGE audits to cut superfluous administration spending, and then said ‘and he has never asked me for anything in return’. Well, for Elon Musk, the tide seems to be turning now.
⚡ President Trump’s new auto tariff policy is seen as a clear win for Tesla, as the company has domestic production and is “better insulated” from trade risks. While Tesla shares gained over 5% on the news, the company’s CEO Elon Musk acknowledged the tariffs will still have a “significant” impact on Tesla. The true is Tesla’s Model Y competes in the midsize crossover sector, where nearly half of all vehicles will now face levies.
🇺🇸 The US is demanding the “right of first offer” on investments in all infrastructure and natural resource projects under a revised partnership deal with Ukraine. The agreement would grant the US first claim on profits transferred into a special reconstruction investment fund controlled by Washington. Aid provided by the US would be seen as its contribution to the fund, effectively forcing Ukraine to pay for American support since the start of the war. This US demands risk complicating Ukraine’s path to EU accession and raising concerns about its economic and political independence. The unprecedented expansion of US economic influence in Ukraine is likely to be seen by Brussels as hampering Ukraine’s EU membership bid.
💡 Europe finally seems to be reacting to its lethargy. Weeks ago we reported on how a consortium of European industries had asked the European Commission to reconsider its policies, which were making the industrial development of the bloc increasingly difficult.
📜 Well, finally the European Commission is considering changes to EU energy laws as part of its next package of proposals to cut the regulatory burden for struggling industries. This is part of a broader drive by the Commission to remove layers of bureaucracy that European businesses say put them at a disadvantage against China and the US. The EU’s energy efficiency directive, which sets binding targets to curb energy consumption, is among the policies being assessed for potential simplification. The drive to cut red tape has strong backing from industries, who complain regulations drain competitiveness and resources, diverting funds from innovation.
🤔 The problem with the European economy, according to Isabel Schnabel, is not the failed policies applied over recent years, which have strangled sectors such as energy, agriculture and industry, but rather the ‘stupidity’ of European consumers. Let me explain: The economic recovery of the euro zone may have been slowed down by the ‘misperception’ of inflation and income by households, which makes them reluctant to spend. Isabel Schnabel, a member of the ECB Council, suggests that this may be because many households do not recognise the recent increase in their real income. An ECB survey showed that only 11% of households perceived an increase in their real income last year, despite the fact that it grew in more than half of households.
😵💫 In short, if European consumers are not increasing their consumption, it is not because they consider that the economy is deteriorating, or because Germany, the engine of Europe, has been in contraction for two years, closing its factories, or because of the uncertainty generated by the fact that the European Union has asked households to prepare a 72-hour survival kit in case of possible attacks or imminent extreme disturbances. No, it’s because they mistakenly fail to realise that they are actually earning more money. Excuse the sarcasm, but some days the news seems like a dark comedy show.
📊 Market View:
📈 Markets stagnate at the close of the week. The Mini S&P 500 futures remain stuck at the 5800-point level but are currently trading at 5727 points. Meanwhile, NASDAQ futures have dropped below the 20,000-point mark and are now trading at 19,925 points.
💵 The DXY dollar index remains relatively strong, holding above 104, currently at 104.25, after surpassing 104.50 on Wednesday. EUR/USD appears to be making a pullback, returning toward the 1.08 zone, though bearish risks persist with potential targets pointing to 1.07 or lower.
📉 In Europe, the DAX 40 continues to retreat from its historical highs reached on Wednesday, now trading at 22,800 points. The evident impact of the trade war on the German automotive industry, within an economy in recession, seems increasingly difficult to ignore.
🛢️ Crude oil appears to be in decline, with Brent crude falling to $73 per barrel from the $74 achieved on Wednesday.
🥇 Gold is breaking historical records, with gold futures surging above $3,100 per ounce, currently trading at $3,120. This exceeds our projected targets shared in video reports, which anticipated prices of $3,080 to $3,100 for gold.
💻 Bitcoin, which had been forming a bullish wedge, has not completed the pattern and broken downward, currently falling to $85,150.
