Tariffs? Bring It On

The past week has been spectacular. Spectacular because we have learned that we are no longer afraid of tariffs, no longer afraid of inflation, and with each passing day, we convince ourselves that artificial intelligence is the solution to all our problems. Not to mention that peace in Ukraine is just around the corner and that Trump is a fantastic accelerator of processes. As for the markets, performance has been decent—Europe keeps climbing, while the U.S. is stalling at record highs. And this Monday, the States are closed. So why did we even show up? Like a Monday Mondays are never easy—coming to work is never simple, and getting back in front of the screens after the weekend is even harder. But it’s even more complicated when you have to come back to the office, knowing that the Americans are busy celebrating their Presidents and that their markets are closed. You know volumes will be lousy, and it’s likely to be too quiet. Yet, since the start of the year, all we’ve been hearing is that Europe is cheap, so we should buy. So maybe, this Monday without the Americans will be more exciting than usual—because Europe is cheap. Honestly, I have no idea, but one thing is certain: with Trump returning to power, the divide between Europe and the U.S. has never been more pronounced. So, we’ll give European markets a chance in the absence of the Americans and hope that—who knows—since it’s a holiday over there, Trump might take the opportunity to rest, stay silent, and say nothing. Then again, the guy hasn’t stopped since January 26, and it feels like he never sleeps. The Americans used to have a President who seemed to be sleeping all the time, and now, with Trump 2.0, it feels like he never does. Tariffs and Inflation So, we’ll start the week gently, with low volumes, waiting to see what the market’s concerns will be. Given this sluggish start to the penultimate week of February, we’ll likely focus on the FOMC Meeting Minutes coming out Wednesday night—just to see if we missed anything from Powell’s closing speech. Though, to be fair, in his testimony before Congress last week, he already repeated the same thing. In short, the Minutes should be a non-event since we already know almost everything. But since there’s not much else to chew on, we’ll pretend it’s important. And since we have (too much) time this morning, we might as well ask ourselves how and why inflation went so unnoticed last week. There was actually reason to be concerned. We hadn’t seen it above 3% for more than eight months, the figure was well above expectations, and it’s clear that interest rates aren’t stopping prices from rising again. This immediately raises questions about the Fed’s next moves. Questions Because if inflation is rising while rates haven’t moved for weeks, we can ask ourselves: (a) Is inflation climbing because rates aren’t high enough to stop people from borrowing and spending recklessly—especially since the economy is doing well and some Americans clearly still have money to spend? Or (b), could this inflationary situation eventually push the Fed back to the “hawkish” side, forcing them to RAISE rates again? I know that’s not the narrative we’ve been sold since October 2023, but let’s face it—right now, inflation is no longer falling. Quite the opposite. Yet, last week, the market didn’t flinch. In fact, the market doesn’t seem to care about inflation figures at all. After all, tariffs are no longer a concern, and Trump—the “dove of peace”—is supposedly about to end the war right under the noses of European leaders, who have poured half their GDP into Ukraine over the past three years. When faced with such thrilling and disruptive news, it’s easy to forget the pesky issue of rising inflation. Plus, the media does a great job of reassuring us that, yes, inflation is climbing, but hey, it’s not that bad—so there’s no need to panic. In reality, just when we thought we had buried inflation six feet under, it’s coming back stronger—more resilient than a zombie in The Walking Dead. And last week, we learned five essential things about why it refuses to die and return to Powell’s sacred 2% target. Just Another Monday Mondays are never easy—it’s never simple to get back to work, to sit in front of the screens again after the weekend. But it’s even harder when you know that the Americans are busy celebrating their Presidents, meaning their markets are closed, volumes will be terrible, and everything is likely to be way too quiet. Still, I don’t know, but since the beginning of the year, everyone keeps saying that Europe is cheap, so we should buy. Maybe this time, this Monday without the Americans will be more exciting than usual—because Europe is cheap. Honestly, I have no idea. But one thing is certain: with Trump back in power, the gap between Europe and the USA has never been wider. So, let’s give European markets a chance in the absence of the Americans and tell ourselves that—who knows—since it’s a holiday over there, maybe Trump will take the opportunity to rest, stay silent, and say nothing. Then again, the guy hasn’t stopped since January 26, and it feels like he never sleeps. The Americans used to have a president who seemed to be sleeping all the time, and now, with Trump 2.0, it feels like he never sleeps at all. Tariffs and Inflation So, we’re starting the week slowly, with low trading volumes, waiting to see what the market’s concerns will be. Given this awkward start to the second-to-last week of February, we will likely focus on the FOMC Meeting Minutes coming out Wednesday night—to check if we missed anything after Powell’s closing speech. Although, since his congressional testimony last week was just a repetition of the same message, the Minutes are probably going to be a total non-event. We already know almost everything. But

Bull Market Strength

I was away for a day. JUST ONE DAY. And yet, that was enough to (almost) push all-time highs everywhere and, most importantly, bring back exaggerated optimism from all sides. However, if we base ourselves on the macroeconomic data we’ve had to digest over the past 72 hours, there’s certainly reason to raise an eyebrow when comparing performance to economic reality! But actually: NO! No, because the great thing about finance and the fascinating world of investment is that it’s not economic reality that matters—it’s how we make it say what we want! The Facts Are Here But let’s start at the beginning. The beginning of economic reality. What we’ve known since Wednesday, and especially since yesterday, is that inflation is picking up again. Wednesday’s CPI came in at 3%—above expectations—and yesterday’s PPI also exceeded expectations. And if we look ahead to next month, we can already assume that CPI won’t be going down, because PPI comes before CPI. In simple terms: if PPI is strong, since it represents production prices, and production comes before consumption, it’s easy to see that if producers are paying more to produce and don’t want to cut into their margins, then ultimately, the consumer (you and me) will end up footing the bill—probably within the next month. So, no matter how we spin it—whether we say it gently while tossing rose petals in the air, or write it in pastel colors with soft background music—the reality is this: inflation is rising again. And if inflation is rising again, then the prospect of lower U.S. interest rates is becoming more science fiction than a realistic economic objective that could be integrated into a so-called “Global Macro” investment strategy (if we want to sound fancy). Beyond that, the economic data from recent days suggests that Powell won’t feel the need to change his tone much. His message essentially remains: “There’s no urgency to cut rates.” This is worrying, because the narrative of the past 18 months has been based on a simple equation:“Inflation is falling → Powell will cut rates → Consumers will have more money → People will rush to Walmart and Apple → BUY the market, especially Apple and Walmart.” Now, if inflation starts rising again, that theory becomes MUCH weaker. But hey, no need to panic! In the wonderful world of investing, we always find a rational explanation to justify our actions. And to maintain our permanent Bull Market, the solution is simple: we just need to INTERPRET things the right way. A New Era Until Tuesday morning, the main concern was ensuring that inflation was under control and slowly returning to 2%—as planned by the Fed—so that interest rates could decline accordingly. But after the latest data, it’s become clear that 2% inflation isn’t happening anytime soon, not this year, and probably not even in 2026. So, we’re left with three investment strategy alternatives: Panic—realize that inflation is no longer “transitory” and is completely out of control, leading us all to financial doom. Rationalization—convince the masses that a strong economy comes with strong inflation, that growth doesn’t happen without inflation, and that a little inflation never hurt anyone. (Some might even argue that the Fed should raise its inflation target by 1.5%.) If we accept this, then everything we’ve believed for the past 18 months is BS. Smoke and Mirrors—probably the easiest solution, and the one currently in play. Maybe with a bit of option #2 mixed in. Because let’s be honest—did you see what happened yesterday? Markets soared because Trump announced his new tariff reciprocity strategy—essentially, he plans to tax foreign countries the same way they’ve been taxing the U.S. for years. But here’s the catch: this will take time, analysis, and reflection. Meaning tariffs won’t be implemented anytime soon, so there’s nothing to worry about. Inflation won’t be “boosted” by tariffs (and anyway, who cares about inflation? We’re too busy finding reasons to ignore it). On top of that, markets decided yesterday that Trump’s tariff plan is about as threatening as a barking dog with a muzzle, locked in a cage made of adamantium bars. Admission Awareness of customs duties might not have been enough to boost the market—especially since we’d been saying the same thing for over a week. So, we had to load the boat with something more captivating, something more motivating. What better than to discreetly announce that Trump and Putin are expected to meet in Saudi Arabia to resolve the war issue? A brief statement, whose source is unknown, was enough to make us feel completely relieved that the war might soon come to an end. Of course, not everyone is pleased—starting with Zelensky, who isn’t even sure he’ll get a stool in the negotiation room. Nor are European politicians, who find themselves instantly ejected from the discussions. Just look at Gabriel Attal’s messages—he holds no government position but already acts like an elected president, displaying his outrage like a war leader meant to strike fear into Russia and the US. Anyway, that’s not the topic here, but I couldn’t resist mentioning how pathetic he and his peers are. From a market perspective, you give them a little breathing room by no longer talking about inflation (even though you’ve been drumming it into their ears—I say ears to stay polite—for four years), you tell them a beautiful fairy tale with colorful characters about the war in Ukraine, you neatly package the customs duty story by saying that AFTER ALL, IT’S NOT THAT BAD (especially since no one cares about inflation! Yes, yes, I just told you)… And in the end, you have the S&P 500 closing ALMOST at an all-time high. The DAX is at an all-time high. The CAC is ALMOST at an all-time high. The SMI is ALMOST at an all-time high, and the SOX is still stuck in its lateral range, refusing to break out. Everything is fine in the best of all possible worlds, and it’s all thanks to Trump! And

Inflation at the Center

The U.S. markets ending in the middle of nowhere, Europe still being considered “cheap” by market participants, the DAX surpassing 22,000 for the first time in its HISTORY, and Powell confirming that there’s no rush to cut rates. This Tuesday, February 11, was another day following the same patterns as the past few days: an intense obsession with ARTIFICIAL INTELLIGENCE, tariffs dominating most conversations—along with Trump, Musk, and Vance. And in the end, Powell telling us nothing new, except that nothing has changed. Now, we’ll have to see if inflation will be a wake-up call for all of us. From the Beginning Since Donald Trump became the 47th President of the United States, we have been living to the rhythm of his explosive announcements. Since January 27, the world has been rocked by the declarations of a President whom some consider completely insane, while others believe he is bringing order to the world. It’s hard to take a side—especially since no one is asking us to. Nevertheless, we have to live with it. From now on, steel and aluminum will be taxed at 25%, starting in mid-March. This is no longer a surprise, and we have already been dealing with it for two sessions. The market, for its part, seems to be handling it reasonably well. However, the real question remains: how long can we ignore the actual consequences of these tariff increases, and what will be the next announcement? Who will be the next to take a hit? For now, global indices seem immune. The performance of U.S. indices on Tuesday was unremarkable—we remain stuck in a sideways trading range, whether on the S&P 500, the Nasdaq, or the SOX. The only difference between these three indices is that the SOX has been stuck for much longer. It’s difficult to choose a direction when valuations are extremely high, yet shorting the market would be madness while the White House disruptor runs around telling everyone who will listen that he is going to restore America’s greatness, give every citizen a job, a home, and money—and, in a masterstroke, do it all without causing inflation to rise, or perhaps even lowering it. Looking Forward to Tomorrow (Well, Today) Yesterday’s session revolved around Trump’s statements, which no longer seem to scare anyone (for now). Beyond that, the market continued to hype artificial intelligence (thanks to the Paris summit), and as usual, investors kept buying into Germany and France because they’re cheap and breaking records daily. There was also time to analyze Coca-Cola’s earnings while waiting for Jerome Powell’s testimony before the nation’s top authorities. As for Coca-Cola, it outperformed market expectations, and Coca Zero sales pleasantly surprised investors. The stock had faced a tough previous quarter, but it looks like that’s behind them now. The share closed up nearly 5%, leaving behind a massive gap that may need to be filled someday—but let’s not spoil the celebration. As usual, Coca-Cola is a trend stock that should be bought when no one wants it anymore because, no matter what people say, it sells worldwide, and in the end, the bulls always win with Coca. One of the other central themes of Tuesday was, of course, Jerome Powell’s testimony before the Senate Banking Committee. According to its chairman, the Fed has no reason to rush into cutting rates. He argued that the economy is “generally strong,” with a low unemployment rate, which does not justify immediate action. Not to mention that inflation remains above the Fed’s 2% target, which has existed since the dawn of time. The world’s top central banker explained to politicians—who spent the day questioning him about the new Trump administration—that he does not engage in politics. His job is to manage a real economy without worrying about his interviewers’ electoral concerns. He stated that the economy is broadly strong, has made significant progress toward its objectives, and that the Fed has absolutely no reason to rush into monetary policy adjustments. Notably, he specified “ADJUST” and not cut or raise rates—an intelligent way to keep a backdoor open just in case. His words were more or less, if not exactly, the SAME as those from the Fed’s January meeting. In conclusion, Powell told the committee members and the rest of the world that “further rate cuts would depend on a MORE SIGNIFICANT decline in inflation AND the health of the labor market.” As for the labor market, there’s nothing to complain about (for now)—it remains strong. As for inflation, conveniently, it will be released this afternoon at 2:30 PM. Amusingly, Powell carefully avoided commenting on Trump’s new retaliatory measures and their potential impact on inflation—and, by extension, on a possible rate cut. Inflation as the Target So, as you’ve probably figured out, this Wednesday will be all about inflation—unless Trump or someone else decides to crash the party with a spectacular announcement. I don’t know, maybe a 25% tariff on Europe and 50% on France because Manu Macron didn’t greet Vice President Vance at the top of the Élysée Palace steps. Or maybe Musk announcing that he wants to buy Ford just to get their V8 engines and put them in Tesla S models to “Make American Automobiles Great Again.” Or Zuckerberg declaring that he wants to buy Hawaii and Nvidia because Meta has just logged its 17th consecutive day of gains. Lately, macroeconomic fundamentals have often been pushed aside because people were too busy with other things. Remember last Friday’s job numbers? They generated about as much interest in the financial community as I have in the reproduction of clams on the southern coasts of New Zealand. Regardless, this afternoon we’ll find out what inflation has done over the past 12 months and whether it has finally decided to come home, heading toward 2%. Looking at market expectations, CPI is expected to come in at 2.9%, and Core CPI (which only includes the stuff that’s doing well) is forecast at 3.2%. For our personal knowledge, it’s worth noting that

Negotiation Arsenal

Don’t give a damn. It’s official. The market no longer gives a damn about tariffs. For now, indices around the world are signaling that “everyone understands this is a weapon of mass negotiation” and that as long as there are no real implementations and we can’t measure the economic impact, we’ll keep buying the rest of the market. The “threats to tax everyone” from Friday night sent a chill over the weekend, but we made up for it on Monday as if the import tariffs on metals were just a bluff. A bluff that Trump still went ahead and signed into effect as executive orders last night. Not Selling The market finds itself in a very strange situation. We know that the President wants to assert his power over the rest of the world and “make America great again.” To do so, he first has to clash with allies, and these disputes could lead to trade wars—never good for economies. These wars could trigger inflation spikes and fears of declining consumer spending. Yet despite these concerns and the fact that we know Trump is completely unpredictable, capable of doing anything at any moment, the market keeps buying as long as there’s no CONCRETE action. That’s essentially the message the market is sending: “Dear President, you want to raise tariffs left and right and pick fights with everyone? We’re fine with that!” Even though deep down, we’d also like to say, “Go on, I dare you!” And so, as long as there are no REAL tariffs being enforced (apparently, the 10% against China doesn’t count in Wall Street’s mind), buyers refuse to give up on the rally. They see an opportunity to scoop up tech and AI stocks if the current bullish wave continues. Monday’s gains weren’t sky-high, but once again, investors turned their attention to AI and the Magnificent Seven—because when you don’t know what to buy, you might as well grab the biggest names that, at worst, will form the foundations of the future World Company. Yes, the gains weren’t spectacular, but everything was in the green—except Tesla. Meanwhile, Nvidia kept climbing, adding another 3% for the sixth consecutive session. And we have to mention Meta, which gained just 0.4%—not exactly mind-blowing—but it marked its 16th straight session of gains! I don’t have the stats on hand, but even ChatGPT couldn’t find another company that’s strung together 16 sessions of consecutive gains. Not even Nvidia. Trump’s Tactics No Longer Scare Anyone—Until They Do If we needed more proof of the market’s bipolar nature, just look at the commentary. Before the close, markets were rising, and analysts were calm, saying tariffs were just a negotiation tool. But right after the close, when news broke that Trump had actually signed off on those tariffs, futures immediately gave up half the day’s gains. Stuck in Concrete In short, we know what we’re doing, we’re confident in many things—but that confidence is fragile and could vanish in an instant. As I write this, futures are down 0.3%—for whatever that’s worth at 5 AM Geneva time. One thing is clear—just look at the charts of the S&P 500 and Nasdaq 100—markets are stuck in a period of uncertainty. We know valuations aren’t cheap. We know the Fed will be calling the shots in the coming weeks. We know Wednesday’s inflation data could be a key factor in guiding the Fed’s next moves. But until things become clearer, investors are hesitant to push the market higher. Because let’s be honest—if we break through all-time highs on the S&P 500, we’re launching into a new bullish wave that could blow the roof off. For Now, No Clear Direction At the moment, it’s clear that we’re struggling to tip definitively to one side or the other. The final decision date doesn’t seem too far off, but pinpointing it on the calendar isn’t easy. So for now, we’re living day by day—or rather, from one Trump statement to the next—waiting for news that might show us the way. Maybe it will come in the form of tomorrow’s CPI report or Nvidia’s earnings in 15 days. Who knows? Last Friday, we saw that economic figures have very little impact at the moment. The words and declarations of the White House resident carry too much weight, and we never know how things will end. If they ever do. Europe In Europe, we’re in the same mood, with two additional factors: Factor one: European stock valuations are lower, meaning we can play the “catch-up effect.” Factor two: The AI Summit in Paris, featuring the fabulous, exuberant, excellent—no, let’s say the EXTRAORDINARY Emmanuel Macron, President of all French people, acting as a top-tier salesman. And since artificial intelligence is undeniably cool, it’s even cooler when Europe hosts big events and looks stronger than others. So, we might as well ride the wave, push for 8,000 on the CAC, and close at record highs on the DAX. Simply put, for now, Europe is surfing the momentum. Since no one dares—or really wants—to sell, and since quarterly earnings aren’t bad, we’ll keep going with the flow for a little while longer. Rest of the World As for the rest of the world, Asian indices are practically doing nothing this morning, as if they’re waiting to gauge the perception of tariffs before taking any risks. Even if we think we “understand everything,” there’s always a chance of an uncontrolled slip-up due to a sudden reinterpretation of what we thought we knew. You follow? No? Because even I got lost there. Anyway, Asia is in wait-and-see mode. Gold is at $2,944, heading toward $3,000, and oil is at $72.55, because oil always rises when geopolitical tensions start looming on the horizon. As for risk appetite, Bitcoin is doing nothing, hovering around $97,700, much like the markets—stuck in relative stagnation, waiting for the fog to lift and the sun to shine again. Today’s Market Stories To be perfectly honest, if we focus solely on the indices,

Customs duties & Ai

Last week began with the topic of customs duties and ended with the same topic—since Trump had more or less hinted that he was going to announce new tariffs against just about everyone. And guess what? It’s not over yet, because last night—just before the Super Bowl—Trump doubled down by announcing a 25% tariff on all steel and aluminum imports. Since the announcement, futures have started rising again, as this is seen as good news for making America Great Again. The Central Focus To be honest with you, we still don’t know who’s next on the list to be hit with tariffs. We have a few ideas—somewhere between India and Europe—but one thing is certain: the central axis driving the markets right now is clearly Donald Trump. In fact, I even wonder if he ever gets a chance to sleep, because ever since he took office in the U.S., it feels like he’s always there, always present, and the moment you take your eyes off the screen for more than three minutes—BAM!—he’s back with something new. One day it’s $500 billion in AI, the next it’s fighting fentanyl by taxing Canada and Mexico, then it’s the return of plastic straws, the desire to dismantle wind turbines, or even buying Greenland. In short, he’s never out of ideas, and when it comes to tariffs, he still has a long list of countries to tax and industries to crush. As for the market and us, the participants, we’re going to have to get used to it—because he’s here to stay for quite a while. And the most telling thing about Trump’s omnipresence is that he overshadows everything. Absolutely everything. Whether we’re talking about macroeconomics or quarterly earnings, all it takes is for Trump to post something on X, and suddenly, the focus shifts. Take last Friday, for example—U.S. employment numbers were released. You’d probably agree with me that this has been an obsession of ours for at least 24 months now. If I recall what’s been happening since January 2023, we’ve been fixated on whether employment might slow due to high interest rates, which could, in turn, be seen as the first step toward a recession. I know we in this industry have the memory of a goldfish, but you’d still acknowledge that Non-Farm Payrolls have been a fixture on our calendars every first Friday of the month, right? Well, ever since Trump has been back, it seems like that’s taken a backseat. The employment numbers were also released last Friday—it was actually the most important economic figure of the week. That said, the numbers weren’t particularly revealing: in January, the U.S. added 143,000 jobs, down from 307,000 in December and below expectations of 169,000. But—EUREKA, GOOD NEWS—the unemployment rate fell to 4%! The takeaway from these employment figures is that the good cancels out the bad, leaving no clear indication about the future of interest rates. However, one thing is almost certain: rates will not be cut in March, and anyone still believing otherwise should probably seek professional help. But the real issue isn’t whether these numbers are good or bad—the real issue is that no one gives a damn! Everyone is completely hypnotized by the statements and grandstanding from the White House. This week, the U.S. CPI numbers will be released, and it feels like nobody cares because all attention is on Trump, Trump, and more Trump. Then again, it’s not exactly surprising that he’s taking up so much space (to avoid saying ALL the space). If we remember the period from January 20, 2017, to January 20, 2021, we were bombarded with aflurry of tweets, dramatic twists, and a stock market that danced to the rhythm of White House announcements. It was like a real-life Netflix series. And guess what? We’re in for four more seasons! Honestly, I think I need to take a Xanax and stop getting worked up about this because we’re just at the beginning of the story. And if he manages to secure another term, well, the fun has only just begun. For now, one thing is clear: if you’re an aluminum or steel exporter to the U.S., you’re probably having aterrible morning. There’s still a slim hope that Trump is only doing this to get something in return, and if you hand it over within 12 minutes, he might be magnanimous with you—but still, it’s not looking good. AI, Always AI… On another note, the other big topic at the start of this week is one we’ve beenhearing about for months. Yes, you guessed it—ARTIFICIAL INTELLIGENCE. I know, it’s not very original, but hey, I don’t make the news! And honestly, when I look at global headlines, I’m fascinated by howmuch we’re willing to invest in Artificial Intelligence while seemingly neglecting investment in human intelligence. Just look at the sheer number of idiots multiplying at an alarming rate. But that’s another debate that would take way too long! Let’s at least acknowledge that the brilliant President Macron—the French guide, the beacon of intelligence in the Hexagon—has just announced that France will invest €109 billion in artificial intelligence. I’m not entirely sure, and I don’t have the exact figures, but I highly doubt that national education spending is anywhere close to that. Not to mention the irony of France signing blank checks for AI while its deficit is skyrocketing, and the government has no idea how to make it to the end of the month. Nevertheless, AI investment is now the “other big market obsession.” Speaking of which, I want to quickly revisit an interesting and quickly forgotten event: just two weeks ago, we started a Monday much like today, except the markets took a nosedive after a new app topped the Apple Store charts. This app, called DeepSeek, was supposedly about to put us all in trouble for at least two days. The issue with DeepSeek wasn’t so much that this AI was more powerful than ChatGPT. The real problem was that it was

AI is booming

“Full house” day on the financial markets. While we started the week on Monday morning under the reign of terror of customs duties, we are now ending it on a high note, even though—once again—Amazon’s cloud numbers weren’t enough to satisfy investors. Everything else is “almost” perfect, and nothing seems to be stopping the markets. The DAX is back at an all-time high, the CAC is above 8,000 points again, earnings are generally strong—and if some stocks are down, it’s more psychological than fundamental. And above all, tons of money are pouring into AI!!! Europe Has Understood As General De Gaulle once said, “I have understood you!” Well, the European stock markets are no different—except they have understood Trump. As a result, they have received a boost, and nothing seems able to stop them. Looking back to the start of the week: we were on the verge of a panic attack at the mere thought of Trump slapping unbearable tariffs on us. The anxiety was suffocating. By Tuesday, we felt somewhat relieved to see that if we complied with the American President’s demands, tariffs could actually be renegotiated. The decline in markets stopped, but there was still fear that after Mexico, Canada, and China, Europe might be next on his list. Then, as the days passed and Trump seemed preoccupied with other matters—such as banning transgender athletes from women’s competitions and, incidentally, from their locker rooms—we started to wonder, “Maybe he has forgotten about Europe.” Of course, it was difficult to fully believe that. But yesterday, we found a new “buying motivation.” We began to convince ourselves that Trump didn’t actually have bad intentions toward us—he was merely using tariffs as a “threat” to accelerate negotiations on certain issues. So we thought, “Even if he does start attacking Europe with tariffs, it will be resolved in no time because we’ll just negotiate quickly.” Now, the real challenge is getting the dozens of European MPs in Brussels—who do absolutely nothing all day when they’re actually in Brussels—to reach an agreement. But once that happens, the issue will be settled. In short, we started to believe that tariffs were just political posturing and that a solution would be found anyway. On top of that, strong earnings reports from SocGen, ArcelorMittal, and Siemens Healthineers fueled optimism, making for an absolutely fantastic day. SocGen surged so dramatically that, for a moment, it almost seemed like Jérôme Kerviel had returned to trade for them. And in France, there was a collective sigh of relief for having a budget. Magic Assembly Yes, it’s quite absurd from an outsider’s perspective. The center-right government, led by Bayrou, managed to push through a budget by sheer force. The entire political and economic world agrees that this budget is an absolute disaster and that next year will be even worse, as everything intended for long-term development has been shelved. Yet, everyone is somehow pleased because at least there is a budget. Still, it’s just a band-aid solution, and the backlash could be massive. When you repaint the facade of a crumbling house, the paint won’t hold the walls together. But never mind. France has a budget, SocGen is soaring, and nothing seems to be able to stop the CAC 40, which is just a hair away from its all-time highs. Meanwhile, Bayrou even managed to erase the dissolution of the CAC 40 tables. In the U.S., investors hesitated on which direction to take. Many stocks that had reported earnings the previous day were struggling, and the big question was whether Amazon could save the market by the end of the session. Yet, as the day progressed, the indices gravitated toward their usual favorite direction: upward. Once again, AI giants led the charge, and everyone reassured themselves that Google would still pour mountains of cash into AI—just like Microsoft and Meta—which was great news for Nvidia, which continued to rebound, and Palantir, which gained another 10%. Palantir, by the way, is at valuation levels that are downright scary (it’s currently trading at 65 times its revenue—I’ll just leave that here, but it’s huge). However, that didn’t seem to concern anyone. By the end of the day, Ford was still declining, the Dow Jones flirted with all-time highs, and Nikola—the former electric vehicle darling—filed for bankruptcy. Meanwhile, traders turned their focus to the upcoming Non-Farm Payrolls (NFP) report, due this afternoon. For the record, the Jobless Claims report came in stronger than expected, but again, that wasn’t the day’s concern. The market was simply looking for a reason to rise. NFPs: A No-Brainer? Speaking of Non-Farm Payrolls (NFP)—expected at 169,000—everyone seems fairly confident. The big question is: What will be considered a “good” number this afternoon? The only consensus so far is that the unemployment rate should stay at 4.1%. But when it comes to job creation, things get tricky. If the number comes in higher than expected, that means the economy is strong, which could be a reason not to cut interest rates. In other words, too much good news could be bad news for rate-cut expectations from the Federal Reserve. On the flip side, if job creation falls below expectations, it would signal economic weakness—but markets could spin it positively, hoping that the White House’s “savior” will fix everything in the coming months. In short, a bad jobs report might actually be better for markets. One thing is certain: the interpretation of today’s NFP data will be highly psychological. And that’s what traders will be focusing on. For now, the takeaway is simple: this market refuses to fall, and as long as there’s an excuse to stay optimistic, we’ll keep climbing—until we can’t anymore.” Asia Leads the Way This morning, China and Hong Kong are up by 1.4%. The reason has nothing to do with tariffs—Trump still hasn’t spoken with Xi Jinping (unless I’m mistaken)—and market players are instead jumping on the Artificial Intelligence theme in China. It’s also possible that Amazon has something to do with this (I’ll

Indestructible

As we approach the end of this second week under Trump 2.0, if there’s one thing to take away, it’s that the market is showing an absolutely impressive level of resilience. I’m not sure whether to use the word resistance or resilience—either way, the relative strength of global markets is striking. After facing the DeepSeek attack on AI, followed by the aggressive tariff measures earlier this week, one might have expected far worse. Just yesterday, the “relatively” poor results from Google and AMD had put the market in a tricky position. But not at all—once again, investors managed to sort things out. Tariffs Still Weigh on Europe As we approach the end of this second week under Trump 2.0, one thing is clear: the market is demonstrating an absolutely impressive level of resilience. I don’t know if we should use the word “resistance” or “resilience”—either way, the relative strength of global markets is striking. After enduring DeepSeek’s attack on AI, followed by the vicious tariff assault earlier this week, we could have expected much worse. Just yesterday, the “relatively” poor earnings reports from Google and AMD put the market in a tough spot. But no—investors managed to sift through the data once again. When looking at where indices closed yesterday, the picture is quite encouraging, considering the fears still looming over us—fears that will last for another 3 years, 11 months, and two weeks. We’ve understood that as long as Trump is in office, we will live under the constant threat of him getting angry about something. And right now, he is very, very angry. But despite these tensions, as well as the “bad numbers” from some major companies that make up a large portion of U.S. indices, things went relatively well yesterday. However, Europe closed slightly in the red, particularly in France and Germany, as both European heavyweights remain wary of what the U.S. president might unleash next regarding tariffs. Based on what he announced for Canada, Mexico, and China, it seems likely he’ll wait until markets close on Friday evening before making a move on the issue. Europe mostly traded in the red, reflecting concerns over a potential American reaction. Additionally, Pernod Ricard expressed pessimism about its future outlook, stating that the economic, political, and geopolitical situation was too complicated to make any solid predictions. The spirits company has therefore decided to “navigate by sight and hope for the best.” Their gloomy comments, which gave the impression that management was in full burnout mode, weighed heavily on the stock, making it the biggest loser in the CAC 40 yesterday. But once again, the central question for European markets remains: “What is the orange man going to do next?” And more importantly, “How will our so-called leaders respond, given that they currently seem about as trustworthy as a group of drug dealers awaiting a shipment at a highway rest stop in southern France?” But Wait, There’s More… In short, Europe saw a slight decline, questioning what the next “Made in the White House” event would bring. Meanwhile, Valneva soared after announcing that the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) had approved its iXchiq vaccine—the world’s first vaccine against chikungunya. This marks its fourth approval, following Europe, Canada, and the U.S. The stock jumped 17%. And once again, I find myself wondering: why do scientists insist on giving vaccines such ridiculous names? In this case, “IXCHIQ”—six letters, only two vowels (which are the same), and four consonants, including a “Q” and an “X”! Seriously? Just trying to pronounce the vaccine’s name makes you feel worse than being bitten by a mosquito carrying chikungunya. They could have simply called it “the world’s most effective chikungunya vaccine” and saved us all some trouble. Okay, sure, it wouldn’t score as many points in Scrabble, but at least it would be pronounceable. Elsewhere, TotalEnergies reported a 21% drop in profits for 2024. The company stated that market conditions were “less favorable” than in 2023. However, this bad news was already priced in, as the stock had fallen 30% from last year’s highs. The company forecasts oil at $70 per barrel in 2025, will continue investing in renewables, and wants to get listed in New York—without offending France. We’ll see how that works out. TotalEnergies’ CEO also joined Bernard Arnault in saying that investing and growing a business in France is nearly impossible under the current tax and economic policies. Of course, that’s not exactly how he phrased it, but the message was clear. What’s interesting is that whenever Total posts record profits, the left-wing crowd gathers outside their headquarters, screaming for the CEO’s head because he isn’t handing out free money to every French citizen. But when profits are down—poof! Silence. Strange, isn’t it? MAGA Mode Activated Meanwhile, in the U.S., the conversation was quite different. The tariff issue was already forgotten. Investors have realized that Trump is using tariffs as a weapon of mass destruction to force trade partners into quicker negotiations—far more effective than hosting luxurious summits in five-star hotels where rooms cost $1,500 a night for a 24-square-meter room with a pool view. So, instead of worrying about tariffs, the focus shifted to economic data and earnings reports. Yesterday, we got the first U.S. employment report under Trump 2.0—the ADP report. Now, we all know these numbers are basically meaningless because what really matters is the Non-Farm Payrolls report coming on Friday. But since yesterday’s ADP data showed strong job growth, it caught investors’ attention anyway. According to the report, the private sector added 183,000 jobs in January. December’s numbers were also revised up, from 122,000 to 176,000. In short, better than expected, plus an upward revision. Funny how that’s the exact opposite of what happened under Biden. Not saying there are two different calculation methods at play here, but… let’s just say I’m leaving that thought unfinished. This stronger-than-expected job data immediately raised doubts about whether the Federal Reserve will cut rates anytime soon. Right now, the

Anything to declare?

After Monday’s panic, we experienced the calm of Tuesday. Most global indices ended higher after the postponement of Trump-era tariffs. That was the main takeaway. It was also notable that China’s retaliatory tariffs did not faze U.S. markets. Given the ultra-quick resolutions found for Mexico and Canada, the financial world now expects equally swift solutions with China. A phone conference between Xi and Trump is even anticipated any day now. Beyond that, it’s all about earnings reports. The Waltz of Volatility I must say, I’m impressed by one thing: our ability to panic on Monday, send volatility soaring while making anxious calculations about the future of consumption and inflation—only to bounce back 24 hours later with such impressive serenity that you’d think the unemployment rate was at 2%, the Fed had just cut rates to 2.5%, and Powell himself had announced it dressed as a dove to make things more relaxing. And all because 10,000 soldiers and a hefty billion dollars are supposedly going to stop drug trafficking in the North and South of the United States—well, mostly fentanyl, because cocaine has long been part of the culture. In just 24 hours, we’ve gone from tears to laughter, and nobody seems surprised. And on top of that, it’s the second week in a row we’ve been given the same performance. Volatility is back around 17%, and now we’re just waiting to see how Trump is going to handle his issues with China. But one thing seems firmly embedded in traders’ minds: everything’s going to be fine. Well, we still have a couple of problems, especially since the AI stock market darling, Nvidia, is struggling to recover from the DeepSeek affair, and its chart looks pretty ugly. You can feel that AI is starting to lose a bit of its magic as a market argument. It still works, but a little less. Even though Palantir was one of yesterday’s big winners, largely emphasizing AI in their quarterly reports, investors are becoming more cautious and selective on the topic. Nvidia remains a major issue, even if everyone wants to buy it on weakness. The real question is: when will strength return? The Tariffs In any case, if we had to sum up yesterday’s session, we could simply say that we’re back to “business as usual,” calmly digesting the tariff issue—just as we had “calmly” digested DeepSeek last week. Yesterday, the S&P 500 closed above 6,000 points—6,037 to be precise—and we’re now just 91 points away from a new all-time high. The broad U.S. index has just taken a direct hit from: The questioning of its dominance in artificial intelligence The tariff issue, which could drive inflation up and hurt consumers The realization that, in this environment, the Fed is nowhere near cutting rates. We’re not yet talking about a hike to curb inflation, but let’s keep that option open for spring. And yet, despite these developments, which hardly qualify as “fantastic news that makes me want to sell my children to buy the market,” we are just a stone’s throw away from record highs. This applies to the Dow Jones, the Nasdaq, and the DAX. The only real laggard is the SOX, which seems stuck in its sideways channel, waiting for a breakout—up or down. Given AMD’s earnings report last night, we might start to think we’re heading lower. Quarterly Figures In the midst of these markets that now present a completely different face than they did on Monday morning, we have to acknowledge that there’s an avalanche of news to process all at once. And yet, we always refer to “THE MARKET.” A market—meaning it’s masculine, and if I’m not mistaken, men aren’t exactly known for their ability to multitask… except when it comes to the buttons on a PlayStation or Xbox controller, of course. So, let’s admit it: these are long and complicated days, juggling Trump’s omnipresent communications—he seems to have a gift for being everywhere at once on every topic—while weighing their economic, political, and inflationary consequences. And on top of that, we have to seamlessly navigate the flood of quarterly earnings reports that are saturating the media right now, making it feel like a small northern French village experiencing its eighth flood of the year. Since this morning’s market action is all about waiting for Xi Jinping’s call to Trump and interpreting quarterly results, let’s take a moment to review the latest earnings releases from the past 24 hours—just to see how the market is reacting. Because, let’s be honest, today we can classify the interpretation of quarterly figures into four main categories, each leading to its own predictable outcome. The first category includes companies that have exceeded expectations across the board, except for one single metric that falls short. Naturally, the market fixates on this one flaw and sells the stock massively, repeatedly asking, “How could they mess that up?!” This quarter, Microsoft falls into this category. The second category consists of companies that have crushed expectations so impressively that analysts don’t even understand their business model. In these cases, traders rely on the CEO or CFO’s earnings call to decide whether to buy or sell like mad. A little tip: if you don’t understand the business plan and management drops the term artificial intelligence in their speech, you should buy aggressively. This quarter, that’s exactly what happened with Palantir. The third category covers companies that, three months ago, confidently announced they were on fire, their future looked brighter than ever, and that things were only going to get better. Fast forward to today, and they report mediocre results while admitting they’re now flying blind in a fog so thick they don’t even know if they’re upside down or not. Naturally, this kind of result triggers selling. This quarter, AMD and Julius Baer fit the bill. The fourth category consists of companies that get everything right: they beat expectations across the board, dominate their industry, manage costs with surgical precision, see a rosy future, and even

Market Rebounds

Yesterday morning, we were standing at the edge of the cliff. The markets were in full panic mode—talks of inflation, skyrocketing costs for certain industries (just ask car manufacturers), and fears that Europe might be next on the list for tariffs. Goldman Sachs sent its top economists to crunch the numbers and explain how tariffs would drag the S&P 500 down by 5%. Volatility was through the roof, traders were desperately trying to swap their Nvidia stocks for Nestlé, and then—Canada capitulated, and suddenly, everything was forgotten! Tariffs? What Tariffs? I’ve been thinking for a while now that the market could use some therapy, but after yesterday, I’m absolutely convinced. Especially since it’s living in an increasingly toxic environment—one that’s becoming more geopolitical than economic—and with Uncle Donald back in the picture, things aren’t about to get any easier. Quite the opposite. So, let’s rewind a bit. After announcing that the new tariffs against Canada and Mexico would take effect on Tuesday, February 4, at noon, the markets went full panic mode. Global car manufacturers got slaughtered because importing raw materials was about to get a whole lot more expensive. Meanwhile, some American journalists actually took the time to write articles asking, Why is Tesla dropping when they build most of their cars in the U.S.? That’s so unfair! Well, maybe Tesla doubled in six months, and some people took the opportunity to cash in. Makes sense, doesn’t it? More broadly, everyone started realizing that these tariff hikes would cost everyone a ton of money—both inside and outside the U.S. Since Canada and Mexico responded by raising their own tariffs, it became clear that higher costs would mean higher consumer prices, leading to… inflation. Well, return of inflation might be a stretch, considering it never really went away. And since it hasn’t been coming down for the past six months, it wasn’t hard to figure out that these tariffs would only push it even higher. Even the Fed had to send out a couple of its directors to go on TV and confirm the obvious: if consumer prices rise because of tariffs, inflation isn’t going to drop—on the contrary. So don’t expect any rate cuts from them anytime soon. Then they kindly reminded us that water is wet, fire burns, and any object submerged in water for more than five minutes is considered lost—unless it’s a world-class free diver or a dolphin, but that’s beside the point. The silver lining? None of the Fed officials who spoke yesterday mentioned hiking rates to combat inflation. No, they wouldn’t dare—because their wives and kids were being held hostage by the CIA to ensure Trump’s master plan went smoothly: slash interest rates while turbocharging inflation with tariffs. Yes, yes, I’m joking. But still, looking back at yesterday’s market session, it felt like something straight out of a thriller by Harlan Coben or Michael Connelly. The Plot Twist of the Day Yes, suspense and sudden twists—because just as global markets were teetering on the edge of a cliff and most car manufacturers were considering pivoting to AI, Mexican President Claudia Sheinbaum announced that she would deploy 10,000 National Guard troops to the U.S.-Mexico border to “prevent drug trafficking, particularly fentanyl, from Mexico to the United States.” Moments later, Trump announced that he was suspending the implementation of tariffs for 30 days to “see how things unfold.” Global markets breathed their first sigh of relief, immediately realizing that Trump was simply using tariffs as leverage to force his partners into action—bypassing the endless hours, days, weeks, or even months of negotiations that usually lead to nothing. The only question left was: what would Canada do? After all, Trudeau had been posturing defiantly, showing no intention of being intimidated by the man with the orange hair. Well… turns out, Trudeau was intimidated. Following Mexico’s lead, Canada announced that it would: Implement a $1.3 billion border surveillance plan Deploy 10,000 personnel to the frontlines of border protection Appoint a “fentanyl war chief” to combat drug trafficking Establish a joint U.S.-Canada intervention task force Cut a $200 million check for intelligence operations   In short, everything that had seemed impossible to negotiate for months, Trump managed to secure in the span of a single trading day. Canada, too, got a 30-day tariff suspension in return. I’m not sure if politicians feel invincible after “negotiating” with Trump, but ever since he returned to the White House, it seems like he does whatever he wants—and more importantly, gets whatever he wants. Speaking of which, Trump has now demanded that Ukraine hand over all its rare earth minerals and precious metals to the U.S. in exchange for American aid. He also confirmed to the press that he definitely intends to slap tariffs on Europe. Just 24 hours ago, several of Macron’s “clown ministers” were boasting about how they would “stand firm against Trump, or else no one would take them seriously.” Since last night, truckloads of Vaseline have been delivered to the French National Assembly and the Élysée to help them “stand firm” against Trump. If Macron or Scholz prove to be as “firm” as Trudeau, the EU tariffs should be settled within 12 minutes of their announcement. Rumor has it that Ursula von der Leyen is already applying for political asylum in Guantanamo. The 180-Degree Turn of Global Markets Needless to say, the announcement of a 30-day suspension of tariffs instantly reversed market sentiment at lightning speed. The Dow Jones was down 600 points but clawed back nearly 500 before the close. I’m convinced that if the NYSE had stayed open for just one more hour, the Dow would have ended in the green. The Nasdaq rebounded 300 points from its lows, the S&P 500 gained nearly 100 points, and this morning, futures are back above 6,000 points. Europe benefited less due to the time difference, but it should catch up this morning. Some stocks remain under pressure, however—Nvidia is still at rock bottom, with ongoing concerns about AI

War is on!

Let’s be honest, it’s no surprise. If I’m not mistaken, since the start of the election campaign, now-President Trump had warned that he would impose tariffs with a sledgehammer, just to show the world who’s boss. We knew it, but at the same time, we thought he might start by boosting the economy, cutting taxes, and creating jobs before shaking up global trade. Instead, he did everything out of order, and the realization we’re experiencing promises yet another “DeepSeek” Monday. Miserable Sunday Night The weekend ended on a rough note—especially for investors who bought the dip before heading out. This morning’s market open looks grim. Not that the announcement was a shock—we knew for days that Trump was about to make his move. The officially confirmed tariffs were exactly as expected: 25% against Mexico, 25% against Canada (except for oil, so Americans don’t freak out over gas prices), and 10% against China. Trump’s unpredictability is no secret, so no one can call this a surprise. But judging by the futures market reaction, it seems like investors were in full denial: “He won’t do it, he won’t do it… Oh, damn. He did it.” This is the most significant act of American protectionism in nearly a century, and it’s tearing apart the regional trade pact that has been the foundation of U.S. economic dominance. Friends or Frenemies? For decades, American companies thrived on the U.S.-Canada-Mexico economic alliance, leveraging U.S. innovation, Canada’s vast resources, and Mexico’s cheap labor. Sure, it wasn’t perfect—factories closed, industrial towns turned to dust. But Trump saw a winning political strategy: Bring the jobs back! Fire up the factories like it’s the ‘50s! America First! And so, MAKE AMERICA GREAT AGAIN… Except his master plan is just slapping tariffs on everything, as if that alone could fix unemployment, the national debt, and even the opioid crisis. (Yes, he actually linked tariffs to drug abuse—next-level economic genius.) The problem? Tariffs alone won’t magically bring back American factories, but they will: Raise prices on imports (Make Inflation Great Again!) Strain geopolitical ties (Punching Canada in the face? Not exactly “best friends” material.) Potentially weaken U.S. global competitiveness long-term. Trump’s tariffs feel like a Hollywood blockbuster—flashy effects, a weak plot, and a hero who thinks he can fix everything with three car chases and a couple of fistfights (probably learned from a Chinese Kung-Fu master before tariffs kicked in). But will the audience—voters—stick around to see how it ends? Or will they leave early, realizing that bringing jobs back home might be as mythical as the Loch Ness monster or Area 51? Reality Check That’s all great Monday morning theory. But for investors? We never thought he’d actually pull the trigger. We assumed he’d wave tariffs around like a scarecrow—never actually use them. Yet, here we are. And after last week’s DeepSeek beating—where Nvidia closed below its 200-day moving average for the first time in two years—this was the last thing we needed. And yet… here we go again When officially announcing the tariffs, Trump posted a message on X that said: “Will there be pain? Yes, maybe (or maybe not!), but we will make America great again, and the price to pay will be worth it.” Now, I’m not sure if, this morning, comments like that will reassure market participants, but one thing is certain: today is going to be rough. Futures are set to open sharply lower—down 2% on the S&P 500 and 2.7% on the Nasdaq—while volatility, measured by the VIX index, is expected to skyrocket by 20% at the open. We’re not talking about terror or panic just yet, but suddenly, there’s doubt creeping in about Trump’s strategy—assuming he even has one. Last night, The Wall Street Journal reported that the White House has implemented the most STUPID strategy in history, and plenty of experts—including those who actually voted for Trump—are now wondering how this will end. And to be honest, we have no clue how it ends, but we do have an idea of how it starts. Canada has already announced its response—Trudeau is raising tariffs on American goods by 25%. Mexico is “working” on a similar retaliation, and China has yet to respond. And that’s what’s truly frightening. One thing is clear: the trade war is back. And like all wars, we know where and how it begins, but we never know how it will end. A Tough Week Off to a Rough Start We’re kicking off this week under the weight of tariffs, and there’s no choice but to deal with it. And as if that weren’t enough, the days ahead won’t be any easier—an avalanche of quarterly earnings reports could add more fuel to the fire. Plus, at the end of the week, we have January’s employment numbers, which will pile onto the ongoing debate over interest rates and inflation. Some economists are already raising concerns about the potential fallout. Morgan Stanley’s chief economist even crunched the numbers and concluded that the new tariffs could mechanically push inflation up another 0.5%. Now, I’m no economic expert, but that’s not exactly the kind of move that will help lower interest rates in the U.S. by 2025. And now that Trump has made his move, it’s safe to assume Europe will be the next target. EU leaders are already preparing their counterattack, knowing full well that the hit is coming—they just don’t know when. Futures are deep in the red, we’re teetering on the edge of panic, and cryptocurrencies—the so-called risk appetite indicator in today’s wonderful world of finance—are getting absolutely wrecked. Asian markets have already set the tone: Japan is down 2.8%, Hong Kong is sliding 1%, and China remains closed for Lunar New Year. Meanwhile, China’s latest manufacturing PMI came in at 50.1—below expectations. Oil, sensing the chaos, is making another run at $74, gold is sitting at $2,813 an ounce, and as for Bitcoin—let’s just say I’ll spare you the details of its current lovely shade of red. Yet another sure