Erik Schafhauser Zürich

Morning Brew March 19 2025

Morning Brew 1 minute to read
Erik Schafhauser

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

  • Cash-generating powerhouses are driving returns – GEICO’s turnaround, strong dividend income from Coca-Cola and Bank of America, and a massive $286.5 billion allocation to U.S. T-bills have helped Berkshire thrive in a volatile market.
  • Diversification beyond U.S. tech – Berkshire’s portfolio offers exposure to financials, consumer staples, energy, and industrials, making it a strong diversifier for investors overly concentrated in tech stocks.
  • Risks remain, especially post-Buffett – While Berkshire is a stable investment, its limited tech exposure, sensitivity to interest rate cycles, and leadership succession concerns could weigh on long-term performance.

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

  • Japan: BoJ Interest Rate Decision.
  • EU Inflation
  • US Rate decision
  • Earnings: General Mills, Williams-Sonoma, Signet Jewelers, Five Below, Kingsoft Cloud, Tencent

Thursday, March 20, 2025

  • China, Sweden, Switzerland UK Rate decisions
  • U.S.: Initial Jobless Claims (Mar 15), Philadelphia Fed
  • Nike, Accenture, FedEx, Micron Technology, Pinduoduo
  • Sweden Riksbank Rate decision

Friday, March 21, 2025

  • Japan CPI

 

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

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