🛍️ Market Report.
📉 Consumer confidence and new home sales data fell below expectations yesterday in the US. Fueling talk of a possible recession in the US. Remember, the US is growing much faster than Europe and has an enviable unemployment rate. For some reason, the public doesn’t want to talk about the recession on the European side.
🇺🇸 Trump hinted that not all proposed tariffs might take effect on April 2, suggesting potential exemptions for several countries without elaboration. Meanwhile, markets were jolted by the announcement of 25% tariffs on Venezuelan oil and gas buyers, highlighting the unpredictability of trade policies. With Trump labeling next Wednesday as “Liberation Day,” it promises to be pivotal for markets, potentially signaling either a softer stance on tariffs or reinforcing his hardline approach, leaving investors grappling to decode his intentions.
🛢️ President Donald Trump is urging oil producers to keep drilling, but U.S. oil and gas investors may not be on board with this plan. The U.S. is already producing more crude oil than any other nation in history, reaching a record high production rate of over 13.49 million barrels per day in December 2024. High rates of production tend to lower prices, which benefits consumers, but if prices drop too far, it may cause producers to stop drilling due to reduced profits. Producers surveyed by the Federal Reserve Bank of Dallas reported they would need to sell oil at around $64 a barrel to make a profit from drilling new wells, creating a challenge to find a price level that is comfortable for both producers and consumers.
💡 What if the tariff money was used to subsidize the oil industry to keep production high? This could help lower energy prices, reduce overall inflation, and possibly push the Fed to cut interest rates, boosting spending and growth. Just an idea!
💷 British Finance Minister Rachel Reeves is likely to announce spending cuts today in an attempt to show investors she can fix the country’s public finances as economic growth falters. Reeves will say the government needs “to go further and faster” to kickstart growth and protect national security. A big tax hike announced by Reeves in October, coming into force next month, is expected to cost jobs and push up prices, complicating the government’s growth promises. Reeves is likely to slow previously planned increases in public spending and may cut 10,000 public sector jobs to help restore her budget room for maneuver. Reeves faces the challenge of meeting her target of balancing day-to-day spending with tax revenues by 2030 amid a weak growth outlook, and may eventually have to raise taxes again.
💲 World Liberty Financial (WLFI), a token project closely affiliated with the Trump family, has officially announced the launch of its US dollar-backed stablecoin, called USD1. WLFI claims that USD1 will be 100% backed by short-term government bonds, dollar deposits and other cash equivalents, with plans for regular external audits. Although Binance’s participation in the project remains uncertain, Binance CEO CZ has shown interest with a suggestive emoji on social media. The launch of USD1 could be part of Trump’s efforts to promote the dominance of the dollar worldwide. However, WLFI’s portfolio contains more than $111 million in unrealised losses from other cryptocurrency investments, raising questions about how they will build up USD1 reserves.
🚗 Sales for the Chinese automaker BYD are expected to reach 777 billion yuan ($107 billion) in 2024. Fuelled by sales of hybrid vehicles, the sum represents a 29% increase in revenue over the previous year and exceeds the $97.7 billion in annual revenue reported by Elon Musk’s Tesla company. The application was made shortly after BYD unveiled a new battery technology that it claims can charge EVs in five minutes.
🎮 GameStop, a retailer of video games, said on Tuesday that it will purchase bitcoin and stablecoins denominated in US dollars with cash or through upcoming debt and equity offerings. Strategy, formerly known as MicroStrategy, saw a sharp increase in stock value after amassing billions of dollars’ worth of bitcoins. GameStop will be following in its footsteps. Following the revelation, the meme stock surged over 7% during Tuesday’s extended trading.
🌍 Geopolitics:
🤝 The U.S. has reached separate deals with Ukraine and Russia to pause attacks at sea and against energy targets, with Washington agreeing to push for the lifting of some sanctions against Moscow. The U.S. agreement with Russia goes further, with Washington committing to help seek the lifting of international sanctions on Russian agriculture and fertilizer exports. The deals include a 30-day pause on attacks on energy targets in both Russia and Ukraine, which could be extended. Restoring links between Russia’s agricultural export bank and the SWIFT international payments system could require agreement from European countries. Remember, Russia established a naval blockade on Ukrainian agricultural exports when the EU blocked the bank that received payments for Russian agricultural products. It was also offered then to lift the blockade if the sanctions against its bank were lifted.
🇩🇰 The Danish Prime Minister Mette Frederiksen has accused the United States of exerting “unacceptable pressure” on Greenland, ahead of an unsolicited visit by a high-profile U.S. delegation to the semi-autonomous Danish territory. Greenland’s acting head of government, Mute Egede, has labeled the U.S. visit a “provocation” as it coincides with government coalition talks and municipal elections. While the U.S. administration claims the visit is to “learn about Greenland, its culture, history, and people,” Frederiksen disputes this, saying the visit is clearly about President Trump’s desire to acquire Greenland.
📈 Market View:
📊 The stock markets continue to rise, although less intensely, as the optimism generated by Trump’s statements on Monday about possible more moderate than expected tariffs fades. Mini S&P 500 futures remain above 5,800 points, currently trading at 5,825 points. Nasdaq 100 futures, meanwhile, are approaching 20,500 points, a level that was temporarily surpassed overnight, now trading at 20,488 points.
💵 The dollar is showing significant movements, with the DXY index returning to the 104.50 area and currently trading at 104.30. The EUR/USD remains below 1.08, and if it fails to recover during the day, the odds of a bearish move towards 1.07 or even 1.05 in more aggressive scenarios increase. A possible catalyst for these movements could be the US PCE inflation data.
🇪🇺 In Europe, DAX 40 futures are on the verge of reaching new all-time highs, less than 100 points away from a new record high, currently trading at 23,430 points.
🛢️ The price of crude oil continues to rise, despite Trump’s promise at the start of his term in office to keep it low. The keys to this advance are detailed in the news section. A barrel of Brent is currently worth over $73, having reached levels above $73.50 yesterday.
💰 Gold remains stable above $3,015 per ounce. Although it is showing some weakness compared to the levels reached last week, it continues to reflect market strength.
₿ Bitcoin continues its upward momentum towards the $88,500 zone, showing clear positive signs and now trading at $88,235.
