Market Report.
🇺🇸 We were told that Trump’s tariff policies would only result in chaos and would ruin the US economy. We were informed that winning a trade war was impossible. Fortunately, in this newsletter we gave the macroeconomic reasons for which Trump bet so strongly, US has the largest volume of consumption in the world, its best card.
💰 The U.S. has collected over $200 billion in tariffs this year due to new duties imposed by President Trump since 2025. But the tariffs face legal challenges, with the Supreme Court considering arguments that they are illegal.
⚖️ A federal appeals court previously ruled that Trump did not have the power to impose the tariffs without Congress’ consent. Costco and other companies are suing to obtain refunds of the tariffs they have paid and to block the duties from continuing.
📉 Menwhile, the U.S. trade deficit unexpectedly narrowed in September, touching the lowest level in more than five years. The trade gap contracted 10.9% to $52.8 billion, the lowest level since June 2020.
📊 The narrowing of the trade deficit suggests that trade likely provided a boost to economic growth in the third quarter. Prior to the trade data, the Atlanta Federal Reserve estimated GDP increased at a 3.5% annualized rate in the third quarter.
📑 The U.S. Bureau of Labor Statistics will release the combined employment reports for October and November, but with significant data gaps due to the government shutdown. The shutdown prevented the collection of data needed to calculate the October unemployment rate, resulting in the first-ever gap in that critical data series.
📉 The October Consumer Price Index report was also canceled, and it is unclear what components of the October CPI will be available when the November report is published. The employment and CPI reports are crucial for the Federal Reserve, investors, businesses, and the public to gauge the economy’s health, but the shutdown has disrupted the data collection. The November CPI report will be published, but it will not include 1-month percent changes for November where the October data is missing.
🏦 The Bank of England (BoE) is expected to have a close 5-4 vote to lower its benchmark interest rate to 3.75% from 4.0% this week. This would be the first rate cut since August and would take borrowing costs to a three-year low. BoE policymakers remain split on whether job losses or inflation pressures pose the bigger risk to the economy.
🇬🇧 Britain’s headline inflation rate eased to 3.6% in October and is expected to edge down further to 3.5% in November, still well above the BoE’s 2% target. Slowing pay growth and the impact of the government’s recent budget are also factors the BoE will consider. Governor Andrew Bailey is expected to change his view and vote for a rate cut, tipping the balance.
🇯🇵 The Bank of Japan (BOJ) is set to raise its key interest rate to 0.75% from 0.5% on Friday, marking a three-decade high. The BOJ is raising rates due to stubbornly high food costs keeping inflation above its 2% target for nearly four years. The government has signaled its tolerance for the rate hike, indicating alignment between the BOJ and the administration.
📈 Both a weak yen and higher interest rates may push up consumer prices, production costs, and funding costs, potentially weighing on business sentiment. This rate hike, the second this year, comes despite headwinds from U.S. tariffs and the inauguration of a dovish prime minister.
🚗 Tesla is testing driverless vehicles in Austin, Texas without any human safety drivers in the car, according to CEO Elon Musk. Tesla’s Robotaxi service in Austin, launched in June, has so far operated with safety drivers in the vehicles. The company now says it is testing driverless vehicles in the city. However, Tesla has reported 7 collisions in its Austin Robotaxi fleet as of mid-October, raising some concerns about the safety and readiness of the technology.
📈 Tesla’s stock price rose 3.6% on Monday, as investors reacted positively to the news of the driverless testing in Austin.
🤖 Tesla lags behind competitors like Waymo, Baidu’s Apollo Go, and WeRide in operating commercial robotaxi services, which are already active in major markets. The company still has work to do to fully deliver on its long-standing promises of self-driving capabilities and a robotaxi service.
🔋 Another important step back from green policies: Ford Motor Company is taking a $19.5 billion writedown and killing several of its planned electric vehicle (EV) models, in a dramatic shift away from battery-powered vehicles.
🚙 Ford is stopping production of the F-150 Lightning EV, and instead will focus on an extended-range electric model that uses a gas-powered generator. It is also scrapping plans for a next-generation electric truck and electric commercial vans. The company is pivoting towards gas and hybrid models, with a goal of having 50% of its global mix be hybrids, extended-range EVs, and pure EVs by 2030 (up from 17% today).
📉 Ford cites weakening EV demand and the Trump administration’s policies, such as the expiration of the $7,500 federal EV tax credit and the freeze on fuel-economy fines, as factors behind this strategic shift.
🇬🇧 United Kingdom political interference in the US during the 2020 elections? This is what could be the background with the following news.
📰 President Donald Trump has sued the BBC for defamation over edited clips of a speech that made it appear he directed supporters to storm the U.S. Capitol. Trump accused the BBC of defaming him by splicing together parts of his January 6, 2021 speech, omitting a section where he called for peaceful protest.
🎥 The BBC has apologized and acknowledged the edit gave a mistaken impression, but says there is no legal basis for Trump to sue. The dispute over the clip sparked a public relations crisis for the BBC, leading to the resignations of its two most senior officials. Trump’s lawyers claim the BBC caused him overwhelming reputational and financial harm.
⚖️ To overcome free speech protections, Trump will need to prove the BBC knowingly misled viewers or acted recklessly.
Geopolitics.
🤝 President Trump’s special envoy Steve Witkoff and son-in-law Jared Kushner have joined negotiations with Ukrainian President Volodymyr Zelenskyy in Berlin to end the war between Ukraine and Russia. U.S. officials say the two sides have resolved about 90% of the issues, but territorial disputes and security guarantees remain sticking points.
🛡️ Zelenskyy has agreed to drop his goal of joining NATO, but insists on “Article Five-like” security protections as part of a peace deal, which would require congressional approval. The Russians are open to Ukraine joining the European Union as part of a final deal.
⚔️ President Trump has renewed pressure on Zelenskyy to accept the U.S.-backed agreement, saying Zelenskyy is “losing” the war. The key remaining issues are around territorial disputes, with Putin demanding Ukraine surrender territory, while Zelenskyy has refused to cede any land.
🇨🇿 The new Czech Prime Minister, Andrej Babis, has stated that the Czech Republic will not participate in any financial support for Ukraine. Babis criticized the extensive aid to Ukraine under the previous government and said the Czech Republic needs to prioritize domestic issues.
💸 Babis said the Czech Republic has no money to give to other countries and will not participate in the Commission’s financing scheme for Ukraine.
⚖️ Meanwhile, Russia’s central bank has filed a major damages lawsuit in a Moscow commercial court against Euroclear, the Brussels-based clearing house that holds most of Russia’s frozen sovereign reserves under EU sanctions. The lawsuit seeks around 185-230 billion dollars, which corresponds to the value of the Russian central bank assets immobilized at Euroclear.
💼 The lawsuit comes as EU governments have agreed to indefinitely immobilize around 210 billion euros of Russian central bank assets and are negotiating a scheme to use the income and/or principal to back a loan package for Ukraine. Russia argues this breaches sovereign immunity and international law, and points to an old Belgium-Luxembourg-USSR investment treaty that could make Belgium liable in international arbitration.
🏛️ Euroclear itself has no sovereign authority to “expropriate” state assets; acts as depositary/custodian and executes decisions based on Belgian and EU law.
Market View.
📉 S&P 500 futures are pulling back again after yesterday’s modest gains, leaving the market effectively moving sideways. They currently trade around 6,840 points. Nasdaq 100 futures have fallen below the 25,350‑point support zone of recent days and now trade near 25,100 points.
💲 The US Dollar Index (DXY) also appears to be losing support, slipping below 98.50 and currently trading around 98.25. This has allowed EUR/USD to break above 1.1750 in recent hours, where it has since stabilised.
📉 In Europe, DAX 40 futures are retreating to around 24,080 points, while Euro Stoxx 50 futures are trading near 5,725 points.
🛢️ Crude oil continues to decline as a potential agreement in the Ukraine conflict approaches. Brent has fallen below $60.20 in spot trading.
🥇 Gold futures are easing slightly, now trading around $4,300 per ounce.
🪙 Bitcoin has suffered another sharp decline, moving further away from $90,000 and dropping below $86,000 in recent hours.
