America’s New National Sport

  This morning, the markets are bleeding. Not just a post-FOMC hangover red. No. A full-blown bloodbath.U.S. futures are pointing to a 3% drop at the open. Japan is down more than 3%. Hong Kong is down 2.3%. And European markets are about to be hit ice-cold at the opening bell. The only exception? China, strangely calm. Maybe because they already know what their next move will be. LIBERATION OR DETONATION? It’s official: Trump just pressed the button. What was supposed to be “Liberation Day” turned into a tariff tsunami—an economic shock of unprecedented magnitude since… let’s say 2008. And even that might be an understatement. It all started last night, in the White House gardens. Trump, microphone in hand, in full crusader mode, unveiled his plan: open, aggressive, and massive economic warfare. A “protectionist crusade,” as he called it, to bring back American industrial greatness—even if it blows up the entire global economy. The method? Simple, brutal, and very Trumpian: A universal 10% tariff on ALL imported goods into the U.S. “Reciprocal” surcharges ranging from 20% to 49% for countries with which the U.S. has a trade deficit. And just like that, here come the condemned nations: 🇨🇳 China: 34% (up to 54% with fentanyl-related surcharges)🇻🇳 Vietnam: 46%🇰🇭 Cambodia: 49% → World record!🇹🇼 Taiwan: 32% (except for semiconductors—lucky break!)🇮🇳 India: 26%🇧🇩 Bangladesh: 37%🇮🇩 Indonesia: 32%🇪🇺 European Union: 20%🇨🇭 Switzerland: 31% – Shouldn’t have let go of banking secrecy.“These are bargain tariffs,” Trump declared. “We’re making them pay half of what they charge us.” Sure, buddy. THE SEMICONDUCTOR SCARE: SAVED—FOR NOW The 32% tariff on Taiwan sent shockwaves through the tech industry. Nvidia, AMD, Qualcomm, Apple… all of them rely on TSMC, the mega-factory that produces 90% of the world’s most advanced chips. Panic? Absolutely. Then, a last-minute reversal: The White House clarified that semiconductors are excluded. Relief? Not really. Stocks still tanked: Nvidia: 4.3% TSMC: 6.6% AMD: 4.4% Because at the end of the day, the real poison isn’t the tariff—it’s instability. And in an industry where timing is measured in nanoseconds and margins in micro-dollars, instability is a nightmare. WHO PAYS THE BILL? Spoiler: Everyone. But some will feel the pain much sooner than others. Apple: 7%. Dell: 5%. They manufacture in China and Taiwan. Do the math. U.S. retailers: Lululemon 11%, Gap 8.4%, Walmart 5%, Target 5.5%. Why? Because clothing, shoes, and accessories come from heavily tariffed countries. Brewers: 25% tariff on aluminum cans. Even drinking a Corona is now a political act. Green energy: Sunrun 5.6%, GE Vernova 4.6%. Components are imported. And now, they cost a fortune. Private equity: Blackstone, KKR, Apollo—all down. Why? If the Fed can’t cut rates due to imported inflation, their entire business model collapses. Farmers: China retaliated immediately with tariffs on soybeans and corn. If Beijing ramps up the pressure, U.S. agriculture could be crushed. The irony? Trump’s own voter base will take the hardest hit. THE PERFECT RECIPE FOR A RECESSION The formula is frighteningly simple: Soaring prices A Fed trapped between inflation and slowdown Supply chains in ruins Consumer spending under pressure Now add a dash of geopolitical chaos, shake violently, and voilà: a Made-in-Trump recession.If you think I’m exaggerating, the Atlanta Fed already predicts a GDP contraction for Q1. And that doesn’t even factor in the full impact of the tariff wave. RESHORING? LOL So, will this bring factories back to America? Sure. But let’s be realistic: Manufacturing in the U.S. costs more. It takes longer. And it mostly hires… robots. So, no, we won’t see 10,000 blue-collar workers heading back to factories like it’s 1954. Maybe 12 engineers and a robot dog, if we’re lucky. For now, the world is splintering. There are no friends anymore, just rivals. Europe is screaming. China is plotting its counterattack. India is growling. The era of “every man for himself” is here.The 1990-2020 globalization model? Dead.What we’re witnessing is a paradigm shift—and it’s brutal. IN CONCLUSION: TRUMP DIDN’T PRESS A BUTTON, HE THREW A GRENADE. What he launched last night isn’t just a tariff plan. It’s a total redefinition of the global economic rules.He shoved international trade into a blender, hit the power button, and served it back to us with a pink umbrella and a lemon slice, saying:“Bon appétit, folks. It’s this or nothing.” AND NOW? Jerome Powell (Fed chair) is watching the storm arrive armed with a bucket and a spoon. The markets are in full panic mode. Algos are screaming. Investors are running for cover. And us? We’re getting shaken like it’s 2008 all over again. We’re officially in a correction zone. Just a few steps away from a bear market. The magic number? 4,950 on the S&P 500. Drop below that, and we’re in bear territory. AND ELON? Meanwhile, Elon Musk just announced he’s leaving the government to focus on Tesla—which is great timing because Tesla’s delivery numbers were catastrophic yesterday. The stock plunged 6% on the report. Rebounded 10% on Musk’s departure from DOGE. Dropped another 5% after-hours thanks to Trump’s tariffs. It’s a rollercoaster—and you better have a strong stomach. BOTTOM LINE? IT’S STILL RED. Futures are still down 2.8%—a drop we haven’t seen since COVID or Lehman’s collapse. Have a great day, and see you tomorrow—hopefully with more perspective as we brace for the Non-Farm Payrolls together! “Be Fearful When Others Are Greedy. Be Greedy When Others Are Fearful” Warren Buffet Thomas Veillet Financial Columnist

The Show Must Go On

Let’s not lie to ourselves—we can tell ourselves whatever we want about yesterday’s session, but fundamentally, we were just filling the time with deep reflections on the state of the economy, just to keep our minds occupied until the announcement of the tariff rates, which will take place at 4:00 PM New York time this evening. In the meantime, we tried to get through Tuesday pretending to be interested in other things, knowing full well that we wouldn’t learn anything new about customs duties. The result was quite interesting: Europe was rising because the economy was slightly improving and the numbers were “less bad,” while the U.S. markets were rising simply because something had to happen. A Macro Day to Keep Up Appearances So, we spent a session trying to keep up appearances while waiting to learn more. To be honest, if you focus on everything that happened yesterday, there was a mountain of macroeconomic data that gave us a real opportunity to reflect on the current global economic situation. But we also had to ask ourselves whether it was really worth discussing, since we all know that, depending on what Trump says later today, anything could happen. Well, “anything could happen” is a bit of an overstatement, since, according to “options experts,” the bets placed for tonight expect a movement of about ±2% on U.S. indices. Honestly, after 10 days of excitement for a 2% move, I wonder if I should have just gone back on vacation. In any case, yesterday’s session was “pretty good” in Europe. A bit more hesitant in the U.S., but we still ended up in the green—except for the Dow Jones. But the Dow Jones had an excuse because Johnson & Johnson got hammered again by a judge over its talc cancer lawsuit. The judge rejected yet another financial settlement proposal from the American company. This was the third time Johnson & Johnson tried to use one of its subsidiaries to take all the liability and use bankruptcy proceedings to pay out around $9 billion to victims. Apparently, the court found procedural flaws in the case, and Johnson & Johnson lost 7.5% during the session. The company also announced that it was withdrawing its proposals and the $9 billion settlement fund, opting instead to fight in court. In other words, the victims are nowhere near seeing a dime. So, the Dow Jones was down. And initially, I wanted to talk about macroeconomics. So, the Macro… Yesterday in Europe, the DAX gained 1.7%, France rose by 1.10% but remained far from the 8,000-point mark. Meanwhile, Switzerland had a 0.7% increase, but the 13,000-point target still seemed out of reach. But the main topic of the session—used to mask the waiting game—was economic reports. The CPI was released in Europe, coming in at 2.2%, exactly in line with expectations and 0.1% LOWER than last month. This suggested that “life is getting cheaper and that the European Union is managing things brilliantly.” Of course, we prefer not to mention how much prices have risen over the past five years—because then the 0.1% variation would make you roll on the floor laughing! But in the meantime, it gave politicians an opportunity to show how great their work is and to imagine that, under these conditions, Madame Lagarde would have no choice but to continue easing monetary policy to please her dear investor subjects. Following these figures, which once again prove that inflation is perfectly under control in the eurozone, thanks to our oh-so-competent leaders… Let me pause here—does my sarcasm come across clearly? No, seriously, I AM BEING SARCASTIC. The number is better than last month, but given the overall state of the economy, there’s really nothing to brag about. But hey, we needed something to keep us busy while waiting for tonight. Alright, back to where I left off: “thanks to our oh-so-competent leaders”… So, following these figures that once again prove that inflation is perfectly under control in the eurozone, thanks to our oh-so-competent leaders, we also got the Manufacturing PMI numbers from Germany and France. In France, the number came in at 48.5—well below expectations since finance experts were hoping for 48.9. However, it was still considered GOOD because it was “less bad” than the previous month, which stood at 45.8. Same story in Germany: the figure came in at 48.3—0.1 below expectations but “less bad” than last month’s 46.5. Considering the amount of money that has been injected into the defense sector over the past three weeks, this “less bad” outcome was the least we could expect. That said, every time I hear economic figures being described as “good” because they are “less bad,” I can’t help but think that maybe we should just shut up and talk about something else. I don’t know… maybe tariffs? Anyway, Europeans gained yesterday because things were “less bad”—all while waiting to find out how much they’ll have to pay to export Dacias to the U.S. The Macro from Over There Across the Atlantic, the market wasn’t exactly in great shape, but in the end, the Nasdaq and S&P 500 still managed to close higher, putting an end to a losing streak of a few days. There was a lot of focus on tariffs, but since we don’t know much beyond the announcement time, the market had to shift its attention elsewhere. Yesterday, that meant looking at the JOLTS report and the ISM Manufacturing PMI. The JOLTS number came in weaker than expected at 7.568 million, and it was also lower than last month’s figure. However, the wonderful world of finance didn’t seem too bothered, still wanting to believe that the U.S. job market is doing just fine. So, in the end, JOLTS had no real impact on the market. Then came the ISM Manufacturing PMI, which printed at 49. Expectations were at 49.5, and last month’s figure was 50.3. This means the U.S. economy is, once again, contracting based on this data. So, if we focus

Liberation Day or Judgment Day

The week started in the red, as expected. However, not everyone was in the red—Americans still managed to pull off one of their signature REVERSALS. The shift from panic mode to “time to buy the dip” was brutally violent (once again). While Europe was licking its wounds, waiting for “Liberation Day,” the U.S. markets made a full 180-degree turn, closing with the biggest “recovery day” seen in three years. And all of this just 48 hours before an announcement of biblical proportions regarding tariffs. In summary, this is either the biggest scam of the century or an act of genius. We’re Asking Questions but Finding No Answers The hardest part of all this is understanding WHY the market suddenly flipped after hitting rock bottom. The European plunge isn’t much of a mystery—everyone understands that Europeans are terrified of the potential announcements from Donald Trump, given that they’re on the front lines. But in the U.S., considering the sheer fear hanging over Wall Street on Sunday night and Monday morning, it’s hard to justify a rebound of this magnitude. Sure, one could argue that since the indices tested new short-term lows and technical breakdowns didn’t trigger massive sell-offs—AND it was also the last day of the quarter, with many taking the opportunity to clean up their portfolios and take profits on shorts—this could explain part of it. But the theory that “we’ve seen capitulation, so now I’m buying” seems a bit far-fetched. Yet, it’s out there—I read it this morning. The issue is that calling it capitulation when the VIX peaks at 24.80% seems premature. Still, the fact remains that after hitting a low of 5,486—just a few points below the psychological and technical support level of 5,500 on the S&P 500—we bounced back as if it were already the day after Liberation Day, and as if Trump had ALREADY walked back his decisions. End of the Quarter Even though the U.S. market’s positive close caught many off guard, it doesn’t change the fact that this quarter was rough. The S&P 500 has lost 4.6% since January 1st, making this the worst quarter since early 2022. And yet, we had such HIGH HOPES at the start of the year with Trump’s return. But those hopes were quickly crushed by his enthusiastic use of tariffs. Add to that a consumer base that’s starting to lose confidence—some even doubting everything. Throw in fears over Trump’s protectionist policies, and soon you’ll see strategists talking about stagflation or recession. I’m not making this up—read the Wall Street Journal, MarketWatch, or Barron’s, and you’ll find plenty of references to these scenarios. Just a short while ago, bringing up either of those terms would have gotten you sent straight to a psych ward. It’s clear that investors, analysts, strategists, and even the guy fetching their coffee all have moods that shift faster than tariff rumors. The only thing left to hold onto is historical market data. And historically, “in general,” when we have a terrible first quarter, the second quarter is “generally” better. That’s reassuring. We know finance isn’t an exact science, but still, it’s comforting. And in times of uncertainty, we all need a little reassurance—even if it only lasts three minutes. Yesterday Again So we witnessed a textbook REVERSAL, going from “we’re all going to die by Wednesday” to “but if we don’t, this is the buying opportunity of a lifetime.” Let’s be real—when the Nasdaq drops 15% in six weeks, that’s a lot of bad news priced in. We already know the economy is slowing down. We know the job market isn’t great (even if no one likes to admit it). We know the fight against inflation isn’t ending anytime soon. And we know that if the Fed cuts rates three times this year, that would be like paradise. Some are even betting on a recession or stagflation. So unless Trump slaps 100% tariffs on the entire planet, we can assume the market has already priced in most of the bad news. The proof? It even anticipated the post-tariff-announcement rebound before Wednesday’s announcement. Let’s hope it holds. However, it’s still worth mentioning three events that have nothing to do with Tariffs: Several analysts are getting anxious as the release of Tesla’s delivery figures approaches. With just two days to go before the Q1 delivery report, analysts are revising their estimates downward. Between tariffs weighing on imported parts, controversies surrounding Musk, and the booming sales of “I bought a Tesla before Musk lost his mind” stickers—not to mention plunging sales in Germany and France—there’s reason to worry. Yesterday, Stifel slashed its delivery forecasts by 23%, with Baird and Wedbush following suit. Even the most bullish of bulls, Dan Ives, is expecting a “very soft” quarter. Yet, all remain “positive in the medium term,” as if searching for a glimmer of hope in the headlights. The consensus is at 377,000 cars delivered, but the market would be happy with just “360,000.” Any lower, and Musk’s seat might start heating up. The stock is down 37% since January 1st, with an average price target of $358—offering a potential 40% upside, but it takes guts. Today, though, fear is taking over. Meanwhile, Musk continues to walk the tightrope between visionary genius and political liability. There’s also drama in the biotech sector, as Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research, is reportedly about to be shown the door. Marks had supported programs that accelerated the development of treatments for rare diseases and gene therapies during his tenure and played a key role in the development of COVID-19 vaccines. Without his backing, the entire biotech sector went into panic mode. Moderna took a 9% hit on the news and didn’t even benefit from the market rebound. This is yet another ripple effect of Trump’s policies, no doubt. And then, a little IPO excitement: Newsmax, the fourth-highest-rated cable news channel in the U.S. and somewhat conservative in the Trumpian vein, went public yesterday. Priced at

Emergency Landing Position

Turbulence ahead! Let’s not overthink it this Monday morning—it’s clear that things are going to get rough. The Nikkei is already down 4% in “preparation” for Donald Trump’s so-called “Liberation Day” set for this Wednesday. If we’re already taking hits like this three days before the event, I don’t even want to imagine how we’ll end the week! And let’s not forget the tariff drama—on top of that, it’s the first week of April, which means employment data is coming. In short, if you’ve never been inside a washing machine during the spin cycle, now’s your chance to experience it. THIS IS THE WEEK! Since Trump’s inauguration, we’ve been living in total uncertainty, and it’s becoming unbearable. CNN’s Greed and Fear indicator is still deep in the EXTREME FEAR zone, and volatility—the so-called fear index—seems ready to surge at full speed. And looking at everything ahead this week, there’s little hope that things will get any better. Markets hate uncertainty, and they’re about to get their fill! Trump has already started stirring things up over the weekend, and futures are down 0.8% as of 5 AM. Japan is collapsing, and even China’s strong industrial growth numbers—the highest in a year, proving that the government’s stimulus measures are working—aren’t enough to ease market tensions in this chaotic period. The reality is, if China’s growth is picking up and Trump slaps them with a 50% tariff on their exports, things won’t be heading in the right direction! Over the weekend, the U.S. President made several statements. First, he’s picking a fight with Putin. Putin isn’t complying with Trump’s demands on Ukraine, so Trump declared he was “really angry” with the Russian President and might retaliate with massive tariffs on Russian oil. Oil barrels that, technically, aren’t supposed to be exported anyway—but let’s move on. The so-called bromance between these two “presidents for life” seems to be cracking. And yes, I say “presidents for life” because Trump also hinted this weekend that he’s already considering a third term. Given the chaos he’s stirred up in just two months, if he also plans to change the Constitution to stay another seven years and ten months, we’re in for a wild ride. But that’s not all! He’s also clashing with Zelensky over rare earth minerals, meaning the much-promised peace in Ukraine is already fading into oblivion. And that’s still not all!!! Trump also lashed out at foreign automakers threatening to raise prices. The White House chief bluntly responded that he “doesn’t give a damn” and that if foreign cars became too expensive, Americans would simply buy American cars—after all, there are plenty of them available… Meanwhile, the U.S. is meddling in French labor laws, telling companies doing business with America not to “favor inclusion” in their hiring. And to top off the weekend’s news cycle, Trump announced that the U.S. will take control of Greenland, not entirely ruling out the use of force if necessary. But hey, we’re safe because France’s foreign affairs clown, Jean-Noël Barrot, declared that “France will not allow it!” I don’t know about you, but Barrot, with his angry wide eyes, is terrifying. All of this to say: Trump is ramping up pressure everywhere, just three days before a historic moment for tariffs. If you haven’t been lost deep in the Andes mountains, you should know that this Wednesday, the Reciprocity Tariffs will be announced, which could severely impact inflation and consumer spending—already battered over the past five years. This fear is weighing heavily on the markets, as we saw again last Friday when U.S. indices got slaughtered after the PCE came in hotter than expected and personal consumption expenditures also slumped. You didn’t need a PhD in market analysis to see that indices are downright terrified about what might happen on Wednesday. And when you look at where the S&P 500 and Nasdaq closed, it’s already clear: this will be the week of make or break. Because here’s the thing about the wonderful world of finance: we always try to “anticipate.” And looking at where we stand today, we’ve already priced in a ton of economic trouble. The Nasdaq is down 14% from its February highs, and if we break last Friday’s closing levels this week, talks of an inevitable Bear Market will start flooding in—officially triggered once we cross the 20% decline threshold. But if we survive this week—given that we’ve already priced in a mountain of bad news—we might be able to hold onto the fact that April is historically a strong month for global markets. In April, Don’t Shed a Thread As March wraps up with a “sell everything and figure it out later” vibe, many investors are wondering whether April—historically one of the best months for U.S. stocks—will live up to its reputation. More importantly, is this a real buying opportunity or just a dead cat bounce? According to the Stock Trader’s Almanac (yes, it still exists, but we usually only pull it out when we’re REALLY desperate), since 1971, April has been the second-best month for Wall Street, even in post-election years. So, on paper, April smells like a rebound. But the market, well, it has a peculiar sense of humor. Sentiment Check: Not Exactly a Party Let’s be honest, investor sentiment isn’t great: individual investors are ultra-bearish. But for contrarians (like myself), that’s actually good news! That said, the AAII sentiment index… Quick educational interlude: AAII stands for American Association of Individual Investors. It’s basically an American association representing retail investors—people investing their own money (not fund managers or professionals). Their most famous metric is the Sentiment Survey, a weekly poll asking members if they’re bullish (optimistic), bearish (pessimistic), or neutral on the markets over the next six months. …Well, according to the AAII, over 50% of respondents have been expecting the market to drop for five straight weeks. Historically, when everyone is this scared, it’s often the moment things turn around. Ahhh, contrarian mindset, gotta love it! I bet Lorraine Goumot on

Eager for Liberation

In the world of finance, we always struggle to view the global economic picture in a truly “holistic” way. We are much better at focusing on a few key points while neglecting most of the rest. Often, our attention is on employment, inflation, and economic growth. That has been our main concern for months. But right now, we have found a new obsession, a new battle horse that has managed to overshadow everything else. Yes, you guessed it—since the inauguration, Donald Trump’s new dance partner, TARIFFS, has taken center stage. And yesterday, it got even worse. Inflation Adjustment I’m going to ask you for something superhuman as an investor: try to remember the past five years. COVID, monetary injections, government support, then the onset of inflation. Inflation that was under control and temporary. Oh wait, no—not temporary and not under control at all. So, we need to raise interest rates—AND FAST—to slow it down. Eventually, it works, but employment and economic growth seem to start feeling the consequences. And then Trump gets elected. He arrives at the White House while our main concerns are the CPI—which refuses to drop—the PPI—which is doing the same—and the labor market, which has been struggling for months, with numbers constantly being revised downward, seemingly calculated with a children’s abacus at the Bureau of Labor Statistics. And let’s not forget the PCE, THE FED’S FAVORITE MEASURE FOR ASSESSING INFLATION. For nearly a year, we’ve been living week by week, moving forward step by step, from one economic figure that is supposed to change everything to another economic figure that is supposed to change things even more than the last one that was already supposed to change everything. And all this while waiting for the NEXT economic figure that will REALLY be the one to determine the fate of the U.S. economy. And, by extension, the rest of the world. Let’s be honest—you know I’m right. And then, during the U.S. elections, we asked ourselves about tariffs—tariffs that could increase overall prices and give inflation another boost. We wondered whether cutting taxes to stimulate the economy might also have an inflationary effect. And to each of these questions, the market and experts brushed them off, saying, “NO, NO, that shouldn’t have that much of an impact.” Yet, for the past two weeks, we’ve started to ADMIT that, yes, tariffs could end up having a real impact on inflation. Because, as crazy as it sounds, if a company faces higher raw material costs due to tariffs, it might pass those costs onto consumers. It could also reduce its margins and make less money to ease the burden on consumers. That’s a fact. But at the same time, that’s not exactly in their best interest—because, well, money. Disinterest All this to say that we’ve been living in an inflationary world for five years. And while rate hikes have helped slow inflation somewhat, real prices have increased by nearly 30% over that period. But not your salary. Not your income. Not your company’s performance—at least, not for most people. Inflation and our battle against it are truly important and should be our top concern. Just like today’s PCE report. See where I’m going with this? No? Well, then let me continue. This afternoon, the PCE report will be released, and under normal circumstances—I mean, REALLY NORMAL, with three extra “A’s” and four extra “L’s”—this number should be on everyone’s radar, especially in the wonderful world of finance. But apparently—if you read the media—no one gives a damn anymore, because EVERYONE, without exception, is obsessing only about the tariffs set to be announced on April 2, the so-called “Liberation Day.” You know, those RECIPROCITY TARIFFS meant to put every country on equal footing with America, which is about to become GREAT AGAIN. Curiously, that’s the only thing anyone cares about now. And yet, given Trump’s ability to change his mind, flip-flop, double down before flip-flopping again, and then change his mind once more, betting everything on April 2’s tariff announcements being final and non-negotiable seems completely utopian, wouldn’t you agree? In fact, more than just utopian—it would be stupid to believe this is where it ends. The Decision-Making Skills of a Rotten Mussel And yet, when you take the time to read and listen to what’s being said about the markets, no one talks about inflation anymore. No one talks about economic growth. No one even dares to mention the slowing job market. Of course not—because we’re too busy analyzing the potential impact of tariffs that might be announced on April 2, that might be final, but that might also be complete nonsense and change 212 times before they’re actually implemented. We all know this. You know it. The bankers know it. The politicians know it. Even Donald Trump knows it. And yet, despite all that, we’re obsessing over something that might happen—with consequences that are difficult to predict—while completely ignoring the numbers that have haunted our nights for the past five years. This morning, I read MarketWatch, Barron’s, Investing.com, Zonebourse. I spent time on Bloomberg, CNBC, even the Financial Times. I was all over X. And what is everyone talking about?   Recalibrating Inflation I’m going to ask you for a superhuman effort as an investor: try to remember the last five years. COVID, monetary injections, government support, then the onset of inflation. An inflation that was under control and transitory. Oh no, wait—not transitory and not under control at all. So, we had to raise interest rates—AND FAST—to slow down this inflation. Eventually, it worked, but employment and growth started to feel the consequences. And then Trump got elected. He arrives at the White House while our main concerns are the CPI—which refuses to drop—the PPI—which does the same—and the labor market, which has been struggling for months, with figures constantly revised downward and seemingly calculated with a child’s abacus at the Bureau of Labor Statistics. And then there’s the PCE, which is THE FED’S FAVORITE MEASURE

Wall Street’s Show

Last Friday, the market was rising because we expected the “Customs Tariffs” to not be so bad. Last Monday, the market was rising because we expected the “Customs Tariffs” to not be so bad. This Tuesday again, the market was rising because we expected the “Customs Tariffs” to not be so bad. And yesterday, we took a monumental hit because Trump made an announcement about “Customs Tariffs” on cars. And at that moment, we realized that, in fact, YES, it could be much worse than we thought. But to be honest, we have no idea—uncertainty is back, and so is the MUPPET SHOW! I’m going to be super blunt with you: right now, I think we’re bordering on “COMPLETE NONSENSE” but in “Champions League” mode. We’re at a very, very high level, and to top it off, all the players are on the same team. Market participants have completely lost the concept of “taking a step back.” Yesterday, I attended a conference where we tried to explain to “young investors” that they should take a step back and “zoom out” from the momentary market fluctuations to avoid making rash decisions. And yet, yesterday, the markets did—once again—exactly what we keep trying to teach new investors not to do. Sure, the uncertainty we’re experiencing in the markets isn’t pleasant, especially since we feel like Trump is experimenting on us just to see how we’ll react! But sometimes, you really have to wonder if we could take just a little bit of perspective and think for more than 12 seconds. You see, it’s like a guy sitting in a huge armchair on top of a mountain overlooking the financial markets. Next to him, JD Vance sits on a stool, and Trump says to him:  “You see, JD, let’s tell them we’re going to raise tariffs on Canadian imports just to see how those idiots react!” And then Trump raises tariffs on Canada, and the market plunges into panic mode. Within the next 24 hours, the kind President climbs back up the mountain, sits in his armchair with his obedient Vice President, and announces that, actually, he won’t REALLY enforce these tariffs, and the market rebounds. Ever since, the kind President has been having fun running experiments, testing how these fools in the financial markets will react. Given that it took them six weeks to admit that tariff implementations could impact inflation—of course, driving it UP—Trump figured there were still plenty of psychological tests he could use to toy with the wonderful world of finance. The Noise By now, you would think we might have learned something and started reacting differently. Maybe we would have stopped listening so closely to the ramblings of an American President whose main characteristic is his uncanny ability to change his mind faster and more effectively than the financial markets have for the past 25 years! But no, instead, like a herd of sheep, we eagerly listen to whatever nonsense Trump spouts so we can immediately run in the direction he points—only for him to change his mind three days later, saying, “Actually, the ‘Customs Tariffs’ won’t be so bad after all!” A statement based on ABSOLUTELY NOTHING, obviously. Over the past few days, the three consecutive days of market gains were driven primarily by the hope that Trump might, just maybe, be merciful—that he was our friend and that everything would turn out fine! BUT NO, NOT AT ALL! He is not our friend. Yesterday, he climbed back up his mountain and thought to himself: — “Hmm, let’s hit them with auto import tariffs. I’ll be super aggressive and spew absolute nonsense just to see how these idiots react!” And he wasn’t disappointed. The markets tanked because we realized that if he is capable of taxing imported cars at 25%, then he is capable of absolutely anything between now and the reciprocal tariff announcement on April 2. Since yesterday, the President has once again stoked the flames of uncertainty—uncertainty we had almost started to forget about. And let’s not even get into the content of his speech, because I sincerely believe an eight-year-old child could dismantle his argument. Unreal It’s early this morning, and this column isn’t meant to dive too deep into everything that was said on Wall Street last night. My job is to help you digest the monstrous mess that happened in the finance world—and, if possible, to make you laugh on your way to work. Otherwise, this column would last three hours, and you’d have to take detours just to get through it. That said, I do have to go back to Trump’s speech from last night. To put it simply, the guy announces that every car or car part imported into the U.S. will be taxed at 25%. Boom! Then, after making a gigantic middle finger gesture to foreign automakers, he turns to Americans and explains that this will be “great” because all the car factories that will open in the States to avoid tariffs will create jobs and ensure that everyone works in the automobile industry. Desire and Time OK. First of all, he didn’t ask people if they WANTED to work in the automobile industry. But more importantly, he seems to assume that Renault, Volkswagen, BMW, Mercedes, and all the rest will arrive in Detroit next week to build factories and hire millions of people. He hasn’t considered for ONE SECOND that moving part of their production to the U.S. takes time, and even if the decision was made yesterday, those factories wouldn’t be operational until AFTER Trump’s presidency ends. Not to mention that, knowing the intellectual volatility of the President, the first question an automaker will ask is: “How long is he actually going to stick to these tariffs, anyway?” Because Trump isn’t known for setting things in stone. He’s more about writing in sand with watercolors—one gust of wind or a bit of rain, and it’s back to square one. Yesterday, we realized that we had spent

Everything goes Fast

Well, I don’t know about you, but when I started in this business, there were several categories of “clients”—or, in other words, investors. There were the short-term ones, who only thought about making money quickly and spending it even faster. Then there were the medium-term investors, who bought assets for a few months, just to ride the trend. And finally, the long-term ones—the Warren Buffett aficionados or the guys managing the AVS fund. Well, that era seems to be over because, for some time now, it feels like we’ve been living with our noses to the grindstone more than ever, and suddenly, everyone is a trader. Everything moves too fast I don’t know if it’s because technology is advancing so quickly that nobody wants to hold onto positions for too long anymore, since there’s always some breaking news that’s going to change everything tomorrow. No one wants to take risks by looking beyond the immediate. Today, we can’t even see past the next economic figure, and as soon as we get it, we immediately move on to the next. That pretty much sums up yesterday’s market session. We started with a figure that surprised everyone in Germany: the IFO index. For those who may have forgotten, the IFO is a meaningless survey that spits out a number supposedly measuring German business confidence. And this month—oh, surprise—the figure was excellent. You might hear some sarcasm in my voice, and you wouldn’t be wrong. I say this because when reading the press this morning, journalists seemed shocked by how “good” this figure was. But there was really no reason to be surprised since, just three days ago, Germany approved a stimulus package of over €500 billion. If you’re an entrepreneur, you’d have to be pretty demanding not to feel a boost in morale after getting what is essentially a blank check—especially if you’re in the arms industry. Confidence takes a hit The IFO index came in at 86.7, up from 85.3 last month, helping European markets close in the green. That, plus the ongoing self-convincing that Trump’s tariffs—set to be announced on April 2—might be more “targeted” than expected, and that everything might turn out fine after all. So, with a number suggesting that Germans are optimistic (now that they’re all thrilled about being allowed to rearm) and with the euphoric optimism over Trump’s tariffs, the DAX and CAC managed to close in the green. Well, mostly the DAX, because when you close with a 0.00% variation from the previous session, like the CAC did, you can’t exactly claim you finished up. And then we got the U.S. consumer confidence figure. I won’t lie—it was pretty terrible, nothing worth losing sleep over, even though the indices still closed higher. American consumers are starting to lose their smiles and find everything a lot less amusing. And no, it’s not just because McDonald’s raised the price of the Big Mac. No. Consumer confidence just tanked by 7.2 points, landing at 92.9—lower than the Swiss football team’s morale after a World Cup exit. We haven’t seen numbers this bad since January 2021. And expectations for the next six months? In free fall at 65.2. A 12-year low. Who do we have to thank for this? Uncertainty, inflation, and… of course, Donald Trump. Let’s also not forget that this is the fourth straight month of decline, with no signs of recovery on the horizon. Sure, it’s just a survey, not hard economic data, and we all know the value of surveys—especially considering that just yesterday, we learned that the French are supposedly growing more confident in Macron, which just goes to show that surveys are more science fiction than anything else. Morale is in the gutter Anyway, if we believe what we’re hearing, while Trump keeps throwing around 200% tariffs like others drop punchlines on X, American households are starting to really panic. Inflation is digging in, recession is lurking, and there’s a growing sense that this is all heading toward stagflation—that delightful 1970s cocktail of stagnating growth and soaring prices. Just the thing to pop a bottle of Dom Pérignon—if you can afford it after those 200% tariffs at U.S. customs. On the political front, it’s still the usual dance—more like a mess of chaotic footwork. One day, Mexico gets hit with tariffs; the next day, they’re scrapped. Then comes a threat against Europe over wine and vodka, just to make sure nobody understands anything anymore. The result? Companies are tearing their hair out, investors are biting their nails, and consumers are staring at their wallets, wondering if they’ll have enough left for Black Friday shopping. Meanwhile, Trump’s economic advisor, Stephen Miran, remains calm. He says—and I quote—”It’s more political than anything, no need to panic.” Okay, Stephen, but meanwhile, the Fed is starting to think it might need to step in. The job market is still holding up (thanks to that 4.1% unemployment rate), but for how long? Until next Friday??? Bottom line: Americans are doubting, prices are rising, and the economic compass is glitching. And this is all before the real effects of Trump’s policies even kick in. Hold onto your shopping carts—it’s going to get hot in more places than just the beaches this summer. The numbers don’t look good So, as you might have guessed, confidence is in bad shape. But as with every crisis, there’s always something positive to take away. Yesterday, some traders still managed to muster up the energy to buy at the close, hoping that if consumer confidence is bad, the Fed might loosen up and decide to help us out. Which makes sense. But before Powell considers lending a hand, inflation will first have to show it is cooling off too. See how easy it is to find our new market obsession for the rest of the week? Because right now, I can tell you that everyone will be rushing to the nearest church to light a candle, hoping that Friday’s PCE numbers come in

Secret Agreement

  There are two ways to look at things when focusing on yesterday’s session. Either we delve into the details of everything we know and everything we speculate about the future of tariffs set to take effect on April 2—this column would then be about 14 pages long and we’d still be discussing it at 11 a.m.—or we simply summarize it using the words of a French comedian who left us too soon: “It is authorized to believe, in authorized circles, that a secret agreement MIGHT be reached on tariffs”—which would bring joy and relief while clearly acknowledging that we know NOTHING! The Unrestrained Use of the Conditional Yesterday’s trading day was split into two very distinct camps. Europe decided to do nothing—or at least, not much—while the U.S. markets took the path of gains, assuming that it MIGHT POSSIBLY MAYBE, but not for sure, be the case that the upcoming tariff decisions from Donald Trump’s administration won’t be as severe as expected. And that even if—at worst—they are as severe as predicted, the affected sectors could be carefully selected, with some parts of the economy EVEN receiving preferential tariffs. This was particularly true for the semiconductor sector, which rebounded yesterday based on speculation, rumors, and theories suggesting that things might not be as harsh for them. But let’s be clear. If you go back through all the “justifications” for the U.S. rally and all the rational explanations for yesterday’s gains, the main takeaway is that the entire market surge on Monday, March 24, was based solely on speculation and the hope that the tariffs might be SLIGHTLY LESS brutal than expected. BUT NO ONE has seen an official press release. No media outlet has quoted an anonymous source “close to the matter.” No politician has made a cryptic remark hinting that they know something we don’t. No. Yesterday’s U.S. rally—the 1.42% rise in the Dow Jones, the 1.76% gain in the S&P 500, the 2.27% surge in the Nasdaq, and the 3% increase in the Semiconductor Index—was entirely driven by the idea that, in the wonderful world of finance, tariffs set to be announced next week might not be as “monstrous” as feared, and that Trump could show some “flexibility” toward certain trade partners. But we know absolutely nothing, and everything—and I do mean ABSOLUTELY EVERYTHING—remains possible. Yesterday, the stars aligned, and we had a great day on Wall Street. However, it would take just the flap of a butterfly’s wings to send the market in the opposite direction in the coming days. Volumes were also dismal yesterday—hardly lending credibility to the strength of the rebound. The only certainty we have right now is that uncertainty remains high. Perhaps it’s best to simply take yesterday’s session as a temporary good news event and enjoy the moment, all while knowing that everything could evaporate in the blink of an eye—especially given the unpredictability of the Trump administration.   The U.S. session was all about champagne, confetti, and caviar by the spoonful, while European markets preferred to sit on their hands and wait for clearer skies. For weeks now, it has felt like we are living in two completely different worlds. Never before have European and U.S. markets been so disconnected. Today, Europe is preparing for war on the continent, pouring money into military investments, unlocking credits left and right to fund the war effort, and completely ignoring structural issues like social welfare, economic slowdown, uncontrolled immigration, and questionable policies in certain EU countries. The war narrative has overshadowed everything else. Now, more time is spent discussing “patriotic bonds” to finance military spending than assessing the real state of the European economy. Yesterday, European indices did nothing—except in the defense sector—as traders focused on European PMI data, which suggested that the economy “seems to be recovering” but isn’t quite back to the party mood yet. In summary, the manufacturing sector is doing better than the services sector across Europe. Still, overall, things were better than last month and roughly in line with expectations. Sure, these numbers don’t make you want to roll around in caviar, but at the same time, they’re not catastrophic either. If Trump doesn’t hit us too hard with tariffs, things should turn out okay. As you can see, we’re still stuck in the same cycle: Tariff uncertainty fuels stress, and we just want to get past it to focus on fundamentals. Those fundamentals will soon return, as next week brings employment data, and by mid-April, earnings season will hit us once again. So, to sum up: Europe did nothing yesterday. The U.S. market soared on almost nothing. Uncertainty remains high. Meanwhile, yesterday also marked the 25th anniversary of the dot-com bubble burst, leading the media to speculate whether we’re living through a similar scenario without realizing it. The answer is: NO! But scaring ourselves is so much fun that it would be a shame to pass up the opportunity. On the Other Side of the World In Asia, markets were mostly up this morning because the argument that “TARIFFS MIGHT BE LESS SEVERE THAN EXPECTED” is still driving enthusiasm. Japan is up 0.73%, China is up 0.12%, but Hong Kong is moving on, as traders there start questioning whether the recent rally driven by government stimulus in AI is losing steam. As a result, the Hang Seng is down 1.85%. Oil, Cryptos, and the Latest from Trump On the oil front, we actually had something official, as Donald Trump (yes, him again) announced a 25% tariff on imports from any country that dares to buy Venezuelan oil. Clearly, the White House is set on undermining the Venezuelan government by hitting where it hurts: the wallet. The news pushed crude oil up to $69 and some change. Again, with tariffs and uncertainty, it’s hard to know where things are headed. But for now, oil is reintegrating its medium-term bullish trend, and the risk of a major correction is (slightly) fading—but only slightly, because conditionality is in vogue.

Tariffs, Yeah Yeah…

I just went through the latest news from last night and Sunday evening, and it seems that Trump has refrained from making any sharp statements for over 48 hours. At least, no statements that could impact the markets or drag us underwater as we start the week—something we’ve gotten used to since the American President took office. So, we should begin the week on the same footing as the end of last week, hoping that the worst is behind us and, most importantly, that after the storm comes the calm! Nothing Changes Technically, the markets are still highly oversold, and we remain in critical zones. For now, it looks like we’ve limited the damage, and in the grand scheme of things, we’re not that far from all-time highs. It wouldn’t take much for the market outlook to shift from storm warnings to clear blue skies. However, the same issues that got us here are still present and remain a serious thorn in our side. TARIFFS are our main concern—and will likely remain so for quite some time. In early April, Trump is expected to implement reciprocal tariffs with several countries, but there’s still a lot of uncertainty. So far, trade issues haven’t been resolved, whether with Europe, Canada, China, or Mexico. In short, we keep talking about it, but given the lack of clarity—not just regarding their implementation but also the possibility of them being lifted, reduced, increased, or modified—we’re left in the dark. This is what we call UNCERTAINTY, and apart from discussing it every morning, there’s not much hope for clarity anytime soon. The good news is that, “for now,” we seem to have “digested” the situation. As long as the White House doesn’t announce exceptional tariffs on French camembert exports, things might not get worse. Looking at analysts and strategists, expectations for the year have already been lowered, but at the same time, we’re not plunging into an economic abyss. Last week, we did hear some positive news regarding artificial intelligence—take Micron’s quarterly numbers, confirming the sector’s boom. That said, this optimism hasn’t been reflected in the behavior of the Magnificent Seven, particularly Nvidia, as investors remain cautious about the tech sector. We know that at these levels, it’s a great opportunity to reinvest, but for now, risk appetite remains moderate. Confidence—or Lack Thereof While the bleeding has stopped, the rebound has been about as dynamic as an overcooked spaghetti noodle left in boiling water for a week. We need a clear confirmation of this rebound, not this sluggish movement we’ve been witnessing over the past three or four days. The first real test for any meaningful recovery may come from the U.S. consumer confidence data set to be released Tuesday evening. After all, American growth is nothing but a myth if the average American isn’t spending their evenings shopping on Amazon—mostly buying useless things. Lately, however, enthusiasm seems to be fading, with consumers opting to browse Vinted rather than the Apple Store to splurge on two new MacBooks and three iPhones. We saw and heard it last week: FedEx isn’t optimistic about the future, and Nike hinted that “this year won’t be easy.” These statements suggest that consumer spending is slowing down, and when that happens, American growth suffers—and the worst-case scenario looms. However, tomorrow’s consumer confidence data will either reassure us or sink us further. If the number disappoints, panic will set in, reminding us of recent reports suggesting that a potential recession could be on the horizon by summer. And I don’t need to explain what happens when people start seriously considering the arrival of a recession—scythe, black hood, and all. Ironically, the only silver lining in this scenario would be if consumer spending slows down enough to help inflation retreat toward 2%—which, in that case, would be a blessing in disguise.   It’s for the end of the week And inflation? We’ll talk about it at the end of the week since we’re in “PCE week,” and that’s when we’ll see if everything is falling into place in the right direction and whether we should conclude that this economic slowdown—driven by consumers and falling inflation—is the price to pay to allow Powell to cut rates AND restart the economy while Trump pockets cash with his tariffs. It’s still a bit early to make judgments or place bets on what’s next, but the numbers that will be our daily bread this week might give us a bit more clarity and add some extra pieces to the global financial puzzle. I wouldn’t go so far as to say that the coming week is a “turning point,” but let’s just say that a few seemingly trivial figures could help us navigate our way out of this labyrinth of tariffs, interest rate wars, and the ongoing fight against inflation. The upcoming week will also be interesting from a geopolitical perspective, since last week’s discussions were limited, and the ceasefire between Russia and Ukraine is becoming more and more overdue. As for Gaza, we’ve apparently already forgotten how to spell the word “ceasefire.” In short, investors are filled with doubt, waiting for concrete proof before confirming a rebound—or completely deflating. Yes, because we must be very careful: in case of disappointment and a potential drop back to the March 15 lows, with a possible break below the 5,500 level on the S&P 500, we could find ourselves in what might well be called a “financial bloodbath.” But let’s not sell the bear’s skin before we’ve killed it. For now, futures indicate a grand opening on Wall Street, but if Trump set his alarm early on this penultimate Monday of March, let’s not forget that he has the ability to flip optimism on its head 22 times in a single day. Asia and the Rest This morning in Asia, absolutely nothing is happening. The three main regional indices are in total stagnation. If they were playing “Red Light, Green Light,” they’d be unbeatable. The Nikkei is unchanged, despite

Where To Hide?

Geopolitically, in the Gaza Strip, Israel continues its ground operations, while Hamas has decided to retaliate. In Turkey, new protests were planned Thursday after the arrest of Istanbul’s mayor, Ekrem Imamoglu. As for the Russia-Ukraine conflict, despite the principle of a ceasefire accepted by both sides, Kyiv bombed a strategic air base in Russia on Thursday, while Moscow continues its drone attacks. Under these conditions, perhaps it is best to stay in cash? The Swiss National Bank (SNB) continues its monetary easing policy and thus lowered its key interest rate by 25 basis points, bringing it to 0.25% on Thursday. The decision is motivated by weak inflationary pressure and “increased risks of downward revision of inflation,” according to SNB statements. This marks the fifth consecutive cut since Q1 2024. The SNB began gradually lowering its key rate in March last year, from 1.75% to 1.50%. At the last monetary policy decision in December, the central bank surprised markets with a 50-basis-point cut. The Swiss exception in the markets In Switzerland, the SMI closed up 0.43%, thanks to stocks like Nestlé and Novartis (+1.6% each). Roche (+0.03%) joined the British lab Oxford BioTherapeutics’ therapeutic antibody discovery platform with an initial payment of $36 million (around 32 million francs). In Paris, the CAC 40 ended with a -0.95% loss at 8,094.2 points. The British FTSE fell -0.09%, and Germany’s DAX declined -1.18%. The EuroStoxx 50 lost -1.0%, and the FTSEurofirst 300 -0.41%. The Stoxx 600, affected by profit-taking in the banking sector (-1.72%) and industry (-1.03%), ended down -0.43%. The German Bund yield fell 1.8 basis points, to 2.780%. The French 10-year OAT remained stable at 3.472%, as Bercy seeks to raise €5 billion in equity for defense companies. The spread between the Bund and OAT remained unchanged at approximately 70 basis points. The Bank of England unsurprisingly kept its key rate at 4.50% on Thursday. The Monetary Policy Committee voted 8 to 1, with one member preferring a -25 basis point cut. “A gradual and cautious approach is needed regarding further monetary policy easing,” the institution stated. In the United States, the Dow Jones closed near equilibrium (-0.03%), while the Nasdaq fell -0.33% and the S&P 500 -0.22%. Tesla rose slightly (+0.17%) after recalling over 46,000 Cybertruck pickups, as body panels may fall off due to adhesive failure, the U.S. National Highway Traffic Safety Administration (NHTSA) announced Thursday. In the bond market, the 10-year U.S. Treasury yield remained stable at 4.24% compared to the previous day. The price of Bitcoin reached a high of $87,453 in early New York trading but quickly fell to $83,655 after U.S. President Donald Trump made a video appearance at the New York Digital Assets Summit. Before the video statement, rumors circulated on X suggesting Trump would announce zero capital gains tax for certain cryptocurrencies or make a favorable statement about the U.S. strategic Bitcoin reserve. Ultimately, his most positive statement was his reaffirmed goal to make the United States a leader in all areas of cryptography. This morning in Asia Chinese stocks fell slightly in early trading. Hong Kong’s Hang Seng index dropped -0.68% after a -1% decline on Thursday, as investors became cautious following a tech stock rally and the index hit its highest level in three years on Tuesday. Japan’s Nikkei, however, was up +0.38%, driven by banking stocks. The U.S. Dollar Index, which measures the dollar against a basket of six currencies, remained stable at 103.84, after rising +0.36% on Thursday. The yen traded at 149.11 per dollar, near last week’s five-month high of 146.545. The yen is up +5% this year on expectations that the Bank of Japan will raise rates again in 2025. Spot gold fell -0.3% to $3,034.09 per ounce. Silver dropped -0.8%, platinum lost -0.2%, and palladium fell -0.5%. Copper prices in London edged up today, nearing the psychological $10,000 mark after a report suggested China plans to increase its strategic reserves of key industrial metals, including cobalt, copper, nickel, and lithium, this year. Aluminum rose +0.3%, lead increased +0.1%, zinc gained +0.5%, and tin fell -0.1%, while nickel prices dropped -2.0%. Chicago wheat fell for the fourth consecutive session, nearing a one-week low, as the market struggles with weakening demand for U.S. cargoes and a stronger dollar. Soybeans gained ground, while corn prices declined. Brent crude oil futures rose +0.5%, while West Texas Intermediate crude futures increased +0.6%. Both are set to post +2% weekly gains. Have a nice day! Thomas Veillet Financial Columnist