Morning Brew March 5 2025

Good morning,

It was a crazy day yesterday with the tariffs against Mexico Canada and China spooking traders, then rumors appeared that Donlad Trump may consider an exit from Nato during his state of the union address and sparked more nervousness.

It the close, the Dow gave up 1.55%; the S&P 500 -1.2% and the Nasdaq -0.35%. A disappointing outlook by Target and lets their shares fall 3% and 13% , banks took the tariffs particularly bad, the S&P Banking sector loses 5%. Automakers traded lower in the US and internationally as they will be hard hit by tariffs in their whole supply chain. Tesla closed below 200 day moving average and the Nasdaq is looking at correction territory that would be reached if we fall 0.7% more. The Ger40 has traded a range of more than 1000 points this month.  Volumes were massive at 18.4 billion shares traded and the Vix remains high.

The Euro Stoxx 50 had just reached the level it traded at during the high in 2000 before it corrected yesterday… 

US Yields remained near the 4.20 while those of the EU and UK rose to 2.5% and 4.55%. The US Dollar fell significantly against most currencies: The USD Index fell to 105.55, EURUSD is above 1.06, GBPUSD near 1.28 and USDJPY 149.70. Gold and Silver are higher at 2915 and 32.10.

Bitcoin is trading at 87000, the boost of the US National Crypto reserve is fading.

What do we focus on from here?

• While not as exciting as trade wars and various executive orders, the US is on the brink of a recession: U.S. consumer confidence fell the most in 3-1/2 years, retail sales dropped by the most in nearly two years, and manufacturing activity fell for new orders and employment.
• In China, National People's Congress is taking place and maintaining a growth target of 5% - this will require significant stimulus measuers.
• DJT announced progress in Ukraine with Ukraine willing to negotiate with Russia
• EU`s Ursula von der Leyen announced plans to boost Europe's defense industry, potentially mobilizing nearly €800 billion.
• The EU is also looking to support Auto manufacturers by delaying ESG requirements
• Germany is willing to adapt the debt brake in favor of investments into defense and infrastructure.
• Donald Trump is looking to scrap a bill supporting semiconductor production, while only worth USD 57 Billlion, the signal could weigh more. Trade carefully and consider your positions.

   

  It is worth to take a look at options to increase your yield using options for taking profit or entering the market with covered calls or cash protected puts, the high implied volatility raises the premiums.

  Trade safely!

  Ole took a look at the Gold recovery: Stagflation and geopolitical tensions fuel renewed demand for gold

• Global financial markets are on both a technical and an emotional edge as Trump's tariffs have gone forward, the result being stock market and dollar weakness, lower bond yields and higher gold prices
• The yellow metal, following another relatively shallow correction, has resumed its ascent, currently trading back above USD 2900 with traders once again setting their sights on the psychologically significant USD 3,000 level
• Traders and investors are also reacting to a sharp and sudden deterioration in US economic data, raising the risk of a gold-supportive stagflation period

Key events:

Wednesday, March 5, 2025

• Japan & China PMI

• U.S.: ADP Employment Report (Feb), Factory Orders (Jan), ISM Non-Manufacturing Composite (Feb)
  • Earnings: Abercrombie & Fitch, Footlocker, Marvell, Victoria`s Secret,

Thursday, March 6, 2025

• Eurozone: Retail Sales (Jan), ECB Meeting.
• U.S.: International Trade & Initial Jobless claims

          •       Canada: Productivity (Q4).

• JD.Com, Kroger, Macy`s, Broadcom, Costco,

        •      

Friday, March 7, 2025

        •       U.S.: Employment Report (Feb), Consumer Credit (Jan).

        •       Canada: Employment Report (Feb), Capacity Utilization (Q4).

        •       Eurozone: GDP Final (Q4).