📰 Market Report.
🚗 Elon Musk called White House trade adviser Peter Navarro a “moron” and “dangerously dumb” on social media, in response to Navarro’s comments about Tesla’s position as a “car assembler” rather than a manufacturer. Navarro suggested Tesla’s reliance on imported parts like batteries and electronics could conflict with Trump’s tariff policies aimed at boosting U.S. manufacturing. Musk strongly disagreed, claiming Tesla has the “most American-made cars” and that Navarro’s statements are “demonstrably false.”
📈 Treasury Secretary Scott Bessent said the U.S. holds a substantial advantage over China in the ongoing trade war, stating that China is “playing with a pair of twos” by raising tariffs on the U.S. Bessent explained that the U.S. exports only one-fifth to China of what China exports to the U.S., giving the U.S. the upper hand. The purpose of the U.S. raising tariffs on China and other nations is to bring trading partners to the negotiating table and bring jobs back to the U.S. While China has vowed to “fight to the end” and imposed 34% tariffs on U.S. products. China’s reaction, according to Treasury Secretary Scott Bessent, “was a big mistake” and a “losing hand” on Tuesday.
🔢 The 104% tariff on Chinese imports is the result of a rapid sequence of escalating tariff actions taken by the Trump administration between February and April 2025. This figure represents the cumulative effect of four separate tariff increases (10% + 10% + 34% + 50%), with the final increase coming in response to China’s retaliatory measures.
📉 When combined with pre-existing tariffs from Trump’s first term and the Biden administration, the effective tariff rate on Chinese goods is expected to approach 125%.
🌏 Major stock indexes in Asia sank after the U.S. imposed 104% tariffs on China, with the move sparking fears of a recession and a savage selloff in Treasuries. The U.S. dollar fell against safe-haven currencies like the yen and Swiss franc, while the Chinese yuan hovered just above its lowest level since late 2007 as Beijing allowed further depreciation.
⛏️ Commodities were also hit, with oil prices diving almost 4% on concerns about demand from China, while gold gained 0.7% as a safe-haven asset.
🍎 Apple decline 5% on Tuesday, the company’s total losses over the last four days came to 23%, bringing its market valuation to $2.59 trillion. Due to its reliance on China, Apple is suffering the most among tech’s megacap firms; one expert claims that producing iPhones in the United States is “a thing.”
🚗 Finally good news for Volkswagen. The Volkswagen Group more than doubled its deliveries of battery-electric cars in Europe in the first quarter, reaching over 150,000 units compared to 74,400 in the same period last year. Volkswagen also reported a 29% rise in orders for its vehicles, both electric and combustion engine, in Western Europe compared to last year. Factors driving the increased EV demand include new EU emissions targets and the launch of new electric vehicle models, after years of relatively slow growth in this segment.
📊 France’s economy grew 0.2% in the first quarter of the year, slightly better than the previous estimate of 0.1-0.2% growth. However, the central bank’s survey of 8,500 firms found that business visibility for the coming months was poor due to trade tensions and the new U.S. tariffs. Industrial companies in particular reported concerns about the impact of the tariffs on their order books, which are already below long-term averages in most sectors except aerospace.
🛡️ Italy plans to reveal details by the end of June on raising defense spending to meet NATO’s 2% GDP target. Currently, Italy spends only 1.5% of its GDP on military outlays, lagging behind its NATO peers. To reach the 2% target, Italy will include other national security-related expenditures, such as spending on its coast guard. Prime Minister Giorgia Meloni is working to ingratiate herself with President Trump and position the U.S. as Italy’s primary ally. Military officials believe NATO members will eventually agree to a defense spending requirement of 3.5% of GDP.
🤝 Meanwhile, Italian Prime Minister Giorgia Meloni is set to visit the U.S. next week to negotiate tariff relief with President Donald Trump, in a move coordinated with the European Union. Meloni and her team will propose eliminating tariffs on bilateral trade between the EU and the U.S., aligning with billionaire Elon Musk’s recent statement expressing hope for a “zero-tariff” free-trade zone between the U.S. and Europe. Meloni’s visit to the White House and a planned visit by U.S. Vice President JD Vance to Rome would be a diplomatic win for the Italian leader. Key sectors like pharmaceuticals, automakers, and food and wine are heavily affected by Trump’s tariffs. While the European Commission has said it will not delay the implementation of the EU’s countermeasures against the U.S. metals tariffs, Italian officials have signaled they are ready to support pushing back the implementation if it helps in the negotiations.
🌐 And little by little, Europe is beginning to give in to Trump’s demands. Lithuania’s energy minister Zygimantas Vaiciunas suggests the European Union should look at tweaking its methane rules to make it easier to import more U.S. liquefied natural gas (LNG). This could be part of a package to placate U.S. President Donald Trump on trade issues, as Trump has criticized the EU’s trade surplus with the U.S. This should be combined with a roadmap to phase out Russian gas, with U.S. supplies filling the shortfall. Trump has demanded the EU commit to buying a “$350 billion like amount” of energy from the U.S., though it’s unclear if this would be feasible given the EU’s plans to reduce fossil fuel demand. Vaiciunas says there should not be “too many technical burdens” or emission thresholds that would limit U.S. LNG from entering the European market.
⚖️ The European Union plans to strip Hungary of its voting rights within the EU Council, accusing the government of undermining the rule of law, media freedom, and judiciary independence. Hungary has rejected the EU’s accusations, calling the process a “political witch-hunt” and an attack on its sovereignty. The decision requires unanimous support from other EU member states, which may be difficult due to Hungary’s allies like Poland.
🕊️ Hungary has exposed the warmingering policy of European bureaucrats, organizing peace tours and denouncing the political class pushing Europe into a self-destructive war. The veto on Hungary would be joined by the cancellation of elections in Romania, the sentence against Le Pen for preventing her victory in France, and threats to cancel German elections if they voted for AfD.
📉 Market View:
📊 Markets suffered a severe blow yesterday in the middle of a recovery. The view we have shared in the media is that there will be moments of zigzagging in the market while new trade relations are negotiated, but we did not expect these to arise so soon. We have explained all the details in the news section.
📉 The Mini S&P 500 futures are back below 5,000 points, currently standing at 4,950 points. Meanwhile, the Nasdaq 100 futures are down to 17,000 points, from where they are trying to rebound.
📉 In Europe, DAX 40 futures lost 20,000 points and fell towards the 19,600 area, currently bouncing back towards 19,830 points. Eurostoxx 50 futures fell back towards 4,500 points, from which they have bounced back to the current 4,550 points.
💵 The dollar index, which had managed to regain strength on Monday, exceeding 103.50 points, fell definitively yesterday, giving way to other currencies and safe haven assets such as the yen or the Swiss franc. It currently stands at 102.25 points. The EUR/USD, therefore, responds with an upward rebound that takes it above 1.1050.
🛢️ As trade tensions between China and the United States increase, crude oil continues to lose ground. A barrel of Brent is approaching $60, currently bouncing slightly to $61.30, while West Texas briefly fell below $57, currently bouncing to $57.95.
🏅 Gold, which had remained stable, has risen again to around $3,050 per ounce, possibly driven by the weakness of the dollar. However, and incredible as it may seem, it could be beginning to show bearish patterns.
📉 Finally, Bitcoin has plummeted again, approaching $74,500, from where it has rebounded to the current $76,900.
