Morning Brew April 6 2025

Good morning,

What a time to be alive

The massive selloff continued Friday after China announced reciprocal Tariffs and Jerome Powell said on Friday that the tariffs are "larger than expected" and the economic fallout, including higher inflation and slower growth, likely will be as well. JP Morgan now sees a 60% probability of recession. Ted Cruz seems the mid-terms in peril if the economy turns sour.

Many Indexes lost around 10% for the week in one of the worst selloffs, Oil lost 10%. UBS lost a whopping 16% last week, precious and industrial metals sold off, Silver gave up most of the annual gains in 2 days.

Volumes on Friday, were 26 billion shares in the US, a number I do not immediately recall.

Over night, the panic continues. The Nikkei dropped more then 6% US 500, the US Tech 100 NAS and the GER40 are down more than three percent. Gold and Silver sold off in the open but recovered, crypto looked stable last week but lost massively since last night Bitcoin -9% and Ethereum -15%.

Traders are now expecting a rate cut by the Fed with 60% probability oat the next meeting and more than 4 cuts by December.

Regardless of one thinks about tariffs (A great speech on them was made by Ronald Reagan), the implementation of the current policy will likely go down as the most expensive unnecessary failure in history (I hope)

Going forward, I see two questions dominating the short-term market direction: i

• to which extent the tariffs will actually take effect. There are few commentators that see a lot of sense in the basis, scope, and height of the tariffs. Elon Musk suggested a free trade zone with the EU and the US, Trump stated he was negotiating with Vietnam, which was asking for zero tariffs.
• To which extent will traders deleverage – or be forced to do so?

The Longer term impact will take time to become clear – Goldman Sachs expects many companies to not issue any forward guidance in the coming earnings season due to the high degree of uncertainty.

Koen on Vols: Why markets just got so volatile - and what it means for investors

Markets experienced a sharp surge in volatility, with the VIX hitting its highest level since 2020 and the S&P 500 falling over 6% in two days, driven by renewed trade tensions and macro uncertainty. For investors, understanding the structural and emotional drivers behind these moves is key to staying grounded in turbulent markets.

Why markets just got so volatile - and what it means for investors | Saxo

Ole on Commodities:

• Last week's recession-driven deleveraging shock extended into Monday’s session with copper briefly slumping 7%, and WTI trading below USD 60 before staging a comeback as US stocks attempted a bounce back from an overnight loss of 5%.  
• The Bloomberg Commodity Index slumped 5.7% last week, its biggest weekly drop since June 2022, as major growth-dependent commodities suffered double-digit losses, with WTI crude, copper, and silver leading the decline.  
• While some of these losses are now overdone, deleveraging episodes tend to ignore valuations. In such environments, forced selling will continue until positions are either cut back to more manageable levels, or volatility stabilises. 
• Crude oil prices have slumped to supply destruction levels, which over time will stabilise prices, while copper’s bull run turned to a rout led by a slump in the New York tariff-led premium over London, down to 9% from 15% last week.  
• Gold’s correction remains a relatively shallow one with key support levels holding, most notably the trendline from the January low at USD 2,975 ahead of the February highs around USD 2,955.  
• Silver saw its year-to-date gains wiped out overnight after briefly slumping below USD 28.80, an 18% top-to-bottom reversal. The metal has been the hardest hit on a combination of a collapse in the COMEX-London arbitrage, exacerbating price pressure amid plunging demand expectations tied to recession fears. 

Charu on : Five common mistakes investors make when markets get wild

Key points:

• Emotions are the enemy in volatile markets – Panic selling, overtrading, and chasing excessive safety often lead to poor outcomes. Instead, stay focused on your long-term plan and avoid knee-jerk reactions.
• Use volatility to your advantage – Build a watchlist of high-quality ETFs, practice disciplined dollar-cost averaging, and rebalance when needed. These are simple, repeatable actions that can turn downturns into opportunity.
• Stay informed and use your tools – From screeners to market updates and trade signals, Saxo offers everything you need to navigate market stress with confidence.

https://social.saxo/voffcip?uuid=oa15JQL

Five common mistakes investors make when markets get wild

Monday, April 7, 2025

- U.S. Consumer Credit Change (February): Insights into consumer borrowing and spending capacity

- Federal Reserve Governor Kugler Speaks: Focus on economic and inflation outlook

- EU Trade Ministers Meet: Discuss U.S. tariffs and trade relations

 Tuesday, April 8, 2025

- U.S. NFIB Small Business Optimism Index (March): Indicator of small business confidence

- Federal Reserve Official Daly Speaks: Policy insights from the Fed

- King Charles and Queen Camilla Begin State Visit to Italy

 Wednesday, April 9, 2025

- U.S. FOMC Meeting Minutes (March): Detailed discussions on monetary policy

- U.S. Reciprocal Tariffs Come Into Effect: Impacting trade with the EU and other nations

- King Charles Addresses Italian Parliament

 Thursday, April 10, 2025

- U.S. Core CPI & CPI (March): Critical inflation data release

- Multiple Federal Reserve Officials Speak: Bowman, Schmid, Harker, Goolsbee provide commentary post-CPI data

- China Implements Tariffs on U.S. Goods (34%)

 Friday, April 11, 2025

- U.S. Core PPI & PPI (March): Key producer price inflation indicators

- UK Monthly GDP Estimate Released

- Istanbul Mayor Ekrem Imamoglu Appears in Court