Market Report.
📉 The administration broadens its vision of ‘unfair trade’ beyond tariff levels (It is no longer just tariffs, it is everything, taxes, bilateral relations between countries…) Navarro criticized Vietnam’s proposal to impose zero tariffs on U.S. imports, stating that the US is more concerned about “nontariff cheating” by Vietnam, including Chinese product routes, intellectual property theft, and Vietnam’s value-added tax system. He initially dismissed the offer but later revised it to a “small first start” in negotiations. The Trump administration recently announced a 46% tariff on Vietnam’s imports, causing a drop in the VanEck Vietnam ETF. Navarro also highlighted the value-added tax system as a potential issue in tariff negotiations.
💸 Ken Langone, a veteran Republican donor, is strongly criticizing the Trump administration’s tariff policies, calling the 46% import duties on Vietnam “bullshit” and describing the 34% tariff rate on China as “too aggressive, too soon.” Langone says he does not understand the “goddamn formula” the administration is using to determine the tariff rates, and believes Trump has been “poorly advised” by his trade advisors on the trade situation.
📊 Blackrock’s CEO joins the recession rumours launched by Goldman Sachs last week and JP Morgan this week. Larry Fink stated that most CEOs he has spoken to believe the U.S. economy is already in a recession, with one CEO specifically citing the struggling airline industry as an early indicator. Fink expressed concern that the tariff policies of President Trump could put upward pressure on inflation, making it difficult for the Federal Reserve to cut interest rates as it typically does during recessions. Fink said he sees “zero chance” of the Fed being able to ease interest rates four times this year, as currently priced in by the futures market. Instead, he is “much more worried” that elevated inflation could lead to higher rates.
🚀 However, the plan seems to be working and US growth could skyrocket over the next few months. It doesn’t matter what a confused and contradictory political class in Europe says. The money is already on the move.
🏭 Major global corporations are making monumental investments in the United States, signaling a shift in manufacturing strategies likely driven by tariff-related policies. TSMC leads the charge with a staggering $100 billion commitment to U.S. chip plants, while Hyundai follows suit with a $20 billion pledge, including a new steel facility in Louisiana. Stellantis has allocated $5 billion toward its American manufacturing network, aligning with similar tariff mitigation strategies. Nvidia, not to be outdone, plans to pour hundreds of billions into U.S. manufacturing over the next four years, and Apple has unveiled a colossal $500 billion investment that includes a Texas-based facility. These moves underscore a growing trend of multinational giants reshaping their operations to navigate evolving trade landscapes and capitalize on domestic opportunities.
⏳ Treasury Secretary Scott Bessent has also commented on the tariff negotiations, suggesting they could last into June as around 70 countries have reached out to the White House about negotiating the new import duties. Bessent expects Japan to be prioritized in the negotiations, as they were quick to come to the table.
🇪🇺 Now let’s talk about where there really is a recession, Europe. The current situation could further worsen the condition of Germany, the industry of Europe, solidifying the case for the ECB to implement another rate cut at its next meeting next week, with markets now pricing in almost two rate cuts in the ECB’s next two meetings. Desperation of the European Central Bank due to the deterioration of its economy? Why aren’t the big financial firms talking about this? At least at ATFX we are not ignoring the problem.
🗣️ Robert Habeck, the outgoing Vice-Chancellor of Germany, in response to Musk’s words about a possible understanding between Europe and the USA that would provide Europe with an honourable solution to the crisis that is bearing down on it, replied that ‘the billionaire’s call for a zero-tariff system between the EU and the USA was a sign of weakness and fear’.
🤝 Meanwhile, the EU, led by Ursula von der Leyen, has offered the US a ‘zero tariffs’ agreement for industrial goods, including automobiles, but regrets Washington’s lack of response.
📈 Fixed income is the only winner in the last two sessions. As investors look for any safe havens amid the stock market sell-off, global bond rates plummeted following U.S. President Donald Trump’s tariff decision last Wednesday, demonstrating a significant increase in the demand for these assets. The yield on Germany’s 10-year bund, which serves as the benchmark for the euro area, fell from 2.72% on Wednesday to less than 2.6% on Monday afternoon. However, it ended the day slightly higher at 2.65%. According to Deutsche Bank experts, Japan’s 10-year bond yield fell to a three-month low on Monday, following its largest weekly drop since 1998.
🛠️ Musk is also going after the IRS. The Department of Government Efficiency (DOGE) arrived at IRS headquarters about two months ago to investigate waste and fraud, with the goal of streamlining the federal bureaucracy. As a result, the IRS will begin laying off around 20,000 staffers – up to 25% of the workforce – starting this Friday and continuing through next week. The White House stated this is in contrast to the previous administration’s plan to hire more IRS agents, and is focused on saving tax dollars, eliminating bloat, and increasing agency efficiency. The Treasury Department said the rollback of “wasteful Biden-era hiring surges” and consolidation of support functions are vital to improving efficiency and service quality for taxpayers.
📉 Market View:
🔮 Markets in Europe seem to be opening with a very heavy hangover after yesterday’s beating. The divergence we had been observing between European equities, artificially up, and US equities, which had been falling for weeks, is disappearing. Now, US futures seem to be recovering, while European ones are weaker.
📊 The Mini S&P 500 futures, which lost 5,000 points during last Friday’s session, are recovering and approaching the 5,200 point zone, now trading at 5,155 points. The Nasdaq 100 futures, which fell as low as 16,500 points, have rebounded to the current 17,735 points.
📉 However, the rebound in Europe seems to be slower and more limited. DAX 40 futures are trying to approach 20,500 points, currently trading at 20,330 points. EuroStoxx 50 futures, which fell below 4,500 points, are trying to approach 4,700, currently trading at 4,680 points.
💵 The dollar continues to strengthen following the words of Jerome Powell, of the Federal Reserve, on Friday, where, despite admitting that the official discourse of a possible recession could be true, he repeated once again that the US economy is showing resilience, ruling out immediate rate cut actions. The dollar index (DXY) has since rebounded to 103.50 points, retreating slightly at the moment to 102.90.
💱 As a result, the EUR/USD pair has lost 1.10 and fallen to 1.09, rebounding upwards to 1.0975 at the moment.
📉 Bond yields plummeted, indicating strong inflows of money into the fixed income market during yesterday’s session. The yield on the US 2-year bond fell to 3.50%, rising again at the moment to around 3.75%.
🛢️ The crude oil markets have stopped bleeding after the very sharp falls of the last two sessions. We have the barrel of Brent above $64.50 and the barrel of West Texas Index above $61.
💰 Gold, possibly discouraged by the rise of the dollar and the increase in demand for bonds, has fallen to $3,025 an ounce.
💻 Finally, Bitcoin, which fell to below 74,500, rebounded upwards towards 80,000 and is currently trading close to 79,500.
