Market Report.
📉 Jim Cramer, the outspoken financial analyst, has issued a dire warning of a potential “Black Monday”-style market crash, predicting a dramatic -22% drop. Interestingly, the Inverse Cramer Tracker ETF (SJIM), launched in March 2023 by Tuttle Capital Management, is designed to profit by doing the opposite of Cramer’s stock recommendations. Will this bold call spark chaos or unexpected opportunity?
💼 Billionaire fund manager Bill Ackman, a supporter of Donald Trump’s presidential run, has expressed concerns over the U.S. leader’s handling of trade policies, warning of severe economic fallout. Ackman urged Trump to pause the trade war for 90 days to focus on negotiations, stating that escalating tensions could lead to an “economic nuclear war,” halting business investment, stifling consumer spending, and damaging the U.S.’s global reputation for years to come.
📊 Federal Reserve Chair Jerome Powell addressed market chaos last Friday, acknowledging rising inflation alongside slowing economic growth, hinting at potential stagflation. However, he stated that monetary policy’s path remains unclear. Powell described the Fed’s stance as moderately restrictive, suggesting it is a prudent moment to wait for further clarity. He noted tariffs are higher than expected, potentially driving inflation in the coming quarters. Despite highlighting significant uncertainty and risks of rising unemployment and inflation, Powell maintained that the economy remains resilient. On recession risks, Powell admitted the Fed has no internal probability forecast, though external analyses suggest an increased likelihood.
📉 According to JPMorgan, there is now a 60% risk of a U.S. recession and rate reduction by the Fed between June and January of next year, which would leave the funds rate at about 3%.
📈 Recent Nonfarm Payrolls (NFP) data on Friday revealed a strengthening U.S. labor market, even as the unemployment rate ticks up slightly by 0.1%. Despite persistent recession rumors, the U.S. economy has yet to show definitive warning signs, maintaining resilience and defying broader economic skepticism. The labor market remains a cornerstone of stability amidst ongoing speculation.
⚔️ China appears prepared for the battle, partly because it sees an opportunity to replace the United States as a reliable trading partner.
🇨🇳 China has ignited a new level of trade tension by announcing retaliatory tariffs on U.S. imports. Starting April 10, the Chinese Ministry of Commerce will impose an additional 34% tariff on all goods imported from the United States, escalating the economic standoff between the two nations. This bold move signals a significant intensification in the trade war, with potential ripple effects on global markets.
🤔 Does Trump have a point when he talks about tariff reciprocity with Europe? The numbers tell a complex story. In 2019, European tariffs on U.S. goods varied widely: agricultural products like dairy faced steep average tariffs of 32.3%, while cotton imports were tariff-free. Industrial goods such as vehicles were hit with a 10% tariff, and clothing and textiles averaged 12%. However, it’s important to note that these tariffs are not U.S.-specific; they apply universally to all WTO member countries, showcasing a broader regulatory framework rather than targeted trade discrimination.
🇪🇺 The European Union is preparing to present a united front against President Trump’s tariffs, likely approving a first set of targeted countermeasures on up to $28 billion worth of U.S. imports. The EU’s proposed counter-tariffs would target a range of U.S. products, including meat, cereals, wine, wood, clothing, as well as items like dental floss, vacuum cleaners, and toilet paper.
🇫🇷 There is some discord within the EU, with France pushing for more aggressive measures like suspending European investments in the U.S., while Italy has questioned whether the EU should retaliate at all.
💡 One possible solution, according to France, is to regulate how large American internet companies exploit data.
⚖️ The EU is walking a “difficult balance” – trying to make the response strong enough to bring the U.S. to the negotiating table, but not so harsh that it leads to a full-blown trade war and further economic escalation.
🩸 From our point of view, the U.S. appears poised to “vampirize” the European economy, exploiting its precarious position as Europe faces a dead-end due to its financial and military dependency on American support. This dynamic underscores the growing imbalance in transatlantic relations, leaving Europe vulnerable to strategic and economic maneuvers that could further entrench its reliance on U.S. dominance.
🔮 The current Treasury Secretary, Scott Bessent, made a striking statement prior to the elections, forecasting a significant economic transformation. He described the coming years as a period of “a great economic reordering, something akin to a new Bretton Woods.” Bessent expressed confidence in the likelihood of this shift occurring within the next four years and highlighted his desire to play an active role in shaping this pivotal moment.
🚀 For his part, the hated Elon Musk called for the United States and Europe to eliminate their tariffs: ‘They should move towards a zero-tariff situation’.
💸 Federal Reserve Governor Waller has suggested a shift in approach toward the crypto industry, stating that the push for a Fed digital dollar has lost momentum. He supports the use of stablecoins, arguing they could improve payment systems, while emphasizing that the financial system does not require an excessive number of them. Waller prefers the private sector to manage payment systems but acknowledges the Fed’s potential role if necessary. His statements point to a possible change in the Fed’s stance, paving the way for greater innovation and growth in the crypto industry.
Geopolitics:
🌍 Thousands of Italians gathered in Rome’s Piazza Vittorio Emanuele II to protest the EU’s rearmament plan, which allocates 800 billion euros to defense. Chanting slogans like “We need hospitals, not missiles,” the demonstrators expressed strong opposition to increased military spending. Polls show that 62% of Italians reject the move, a figure significantly higher than the EU average. This widespread dissent highlights a growing divide between Brussels’ policies and public sentiment in Italy.
💰 Brussels has stepped in to cover the funding shortfall caused by the Trump administration’s cuts to USAID, and the EU’s CERV programme is channelling resources to liberal activist groups. These organisations, which often oppose conservative governments and promote certain policies, have received millions to lobby EU institutions and decision-makers. Critics argue that the CERV programme promotes the so-called globalist agenda, undermining national sovereignty and raising concerns about the undue influence of unelected individuals on EU policy-making.
🇩🇪 The Germans who felt that the new Chancellor Merz lied to them during the election campaign, contradicting his proposals on immigration and his budgetary restraint of the German economy within a few days, now seem to have a clearer picture. According to the latest polls, the AfD would be Germany’s leading political force, dethroning the government just one month after the elections.
🇫🇷 The National Front party, led by Marine Le Pen, held a protest in Paris on Sunday against the ‘tyranny of judges’, after a court banned Le Pen from standing in the presidential elections. Le Pen was found guilty of embezzlement and was immediately banned from standing for election for 5 years. The protest has received backing from former US president Donald Trump, who described Le Pen’s trial as a ‘witch hunt’. The prime minister and the former president have warned that demonstrations could undermine judicial independence. Polls suggest that Le Pen could win the presidential election if it were held today, highlighting the high stakes.
📉 Market View:
📉 A very sharp fall in the last sessions of the financial markets. Mini S&P 500 futures started the week below 5,000 points, currently trading at 4,920 points. Nasdaq futures also lost ground, dropping below 17,000 points and currently standing at 16,720 points.
💵 The dollar index has regained some strength after Thursday’s falls, when it reached around 101.25 points. Since then, it has rebounded and is now trading at around 102.65 points. This movement could be related to Powell’s statements during his speech on Friday, which we have analysed in detail in our news section.
💶 In a correlative fashion, the EUR/USD, which had exceeded the 1.1125 level on Thursday, has fallen back and is currently at 1.10.
📉 In Europe, DAX futures have also started the week with losses, breaking the 20,000 point support level and now trading at 19,860 points.
🛢️ The collapse of crude oil prices continues unabated. A barrel of Brent crude is now trading at $63.35, down from $64. Meanwhile, a barrel of WTI crude is following a similar trend, having lost the $60 mark and currently trading at $59.75.
🥇 Gold futures experienced extreme volatility following Powell’s statements, falling below $3,000 an ounce. However, the precious metal has now regained some ground and is trading at $3,040 an ounce.
₿ Bitcoin suffered a significant collapse over the weekend, losing the key support of $82,000 that it had maintained over the last two weeks. It is currently trading below $75,500.
