Quarterly Outlook
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John J. Hardy
Global Head of Macro Strategy
Senior Relationship Manager
Summary: EU Inflation and US Rate decision - will they matter?
Good morning,
It is tricky to make sense of markets with Gold, Silver and EU Equities strong, the US weak and the stars of recent history weak, Bitcoin rangebound. I have included a number of key articles by our strats team below
US Indexes lost again yesterday with the Dow 0.62%, S&P 500 1.07%, Nasdaq 1.71%, the magnificent 7 were under pressure again for various reasons, Alphabet due to the takeover of WIZ, Tesla was downgraded by RBC to $120 from $320, citing reduced expectations.
The Dax rose on the passing of the constitutional change, Rheinmetall remains the star of the current rotation. The GER40 is trading at 23315 and Rheinmetall is seen to open at 1444
Trump and Putin agreed on a 30 day halt on strikes against Infrastructure but it was not the big agreement hoped for.
Yields remain a little changed ahead of the US Rate decision and EU Inflation data today, Gold is trading at a record 3040 and Silver near 34, EURUSD is 1.0910, USDJPY 149.50 and GBPUSD 1.2970.
Continue to trade safely, we are still on the edge.
Key readings:
EURUSD ready for more upside? FOMC and BoJ on tap Wednesday.
The consolidation in EURUSD has been quite shallow, suggesting it may be ready to continue its rally sooner rather than later. Five central bank meetings this week for the G10 currencies, starting with the BoJ and FOMC on Wednesday.
Trading Desk Trading the European Market Rally | Saxo
What's happening in Europe?
Germany is poised to transition from fiscal conservatism, with plans to invest €500 billion in infrastructure alongside a substantial increase in defence spending. This will be facilitated by amending the constitution to exempt defence expenditures exceeding 1% of GDP from the debt brake. Such strategic investment is anticipated to bolster industrial sectors, including Siemens Energy, Heidelberg Materials, and Rheinmetall, which have already experienced significant rallies.
Conversely, the United States is scaling back fiscal expenditures through the DOGE initiative, with efforts underway to implement Federal government cuts and target a reduction of the fiscal deficit to 3% of GDP. These fundamental shifts in fiscal policy are contributing to divergent market performances between Europe and the US, with European equities increasingly attracting investor interest. For a comprehensive analysis, please review the articles “Make Europe Great Again?” and "Is U.S. Exceptionalism Fading?” authored by our Chief Investment Strategist Charu Chanana.
Why Berkshire Hathaway is crushing the S&P 500
Why the VIX isn't panicking (yet): what traders need to know
Despite a nearly 9% drop in the S&P 500, the VIX has remained relatively muted, signaling that traders are managing risk through position reductions rather than aggressive hedging. This measured response suggests that while volatility remains a concern, market participants are not yet in panic mode, with liquidity conditions and policy-driven uncertainties keeping fear contained.
Wednesday, March 19, 2025
Thursday, March 20, 2025
Friday, March 21, 2025