Trump pushing markets around isn't only about Trump: Morning Brief

Economic

Forex

Summary:

Markets rallied after comments from Trump and the Treasury Secretary, amid growing investor pessimism over future earnings. Tariff-related remarks hit a market already primed for a sharp reaction.

Deadlines spur action.

In markets, sentiment does too.

A flurry of commentary from President Trump and Treasury Secretary Scott Bessent between Tuesday afternoon and Wednesday morning spurred a rally in the stock market.

As Yahoo Finance's Josh Schafer reported, this action signaled to some on Wall Street that the president was starting to "feel the market" as he did during his first term in office, using financial markets more like a scorecard reflecting the success of his economic policies.

For weeks now, the stock market has ebbed and flowed on one basic thing: trade-related headlines.

Wednesday's action, which saw stocks moderate gains after Bessent made further comments clarifying the administration's stance on US-China trade talks, shows this trend continues.

But the accumulation of negative information investors had digested since April 2 also helped prime the market to respond positively to this week's developments.

"Based on the daily news flow and our own client interactions, it seems that the pessimism among investors when it comes to the trajectory of US stocks has increased substantially in recent weeks," BMO's chief investment strategist Brian Belski wrote in a note to clients Wednesday.

"While we understand that it has been a challenging market environment the past few months and the scope of the recent selloff has been unsettling, it is important to note that not all market indicators are signaling further downside in the months ahead, despite what some pundits may be suggesting. In fact, some of our most tried-and-true contrarian indicators have recently plunged to excessively negative levels, which suggests to us that a solid price rebound may be on the horizon should history be any sort of guide."

In other words, tariff-related comments from Trump, among others in the administration, may be pushing the stock market around. But the stock market also needed to be in a certain place to be pushed around.

The first — and most notable, in our view — factor that Belski calls out is the massively negative trend in forward earnings revisions.

In just the last few weeks, the ratio of rising earnings forecasts compared to all forecasts being issued has plunged to around 30% for the second fiscal year out. Meaning the majority of earnings forecasts being published for the year after next are penciling in lower profits than had previously been modeled.

Given that stock prices are most influenced not by whether things are good or bad but whether they're getting better or worse, this round of negative revisions for results two years out shows a clear disintegration in optimism about the path forward.

Belski's team's work, however, shows that when this measure falls to levels seen of late, year-ahead returns for the S&P 500 have averaged over 12%. The most recent instances of this dynamic prevailing include late 2022, early 2020, and early 2016.

In Wednesday's Morning Brief, we highlighted that some of America's biggest companies are saying higher costs from tariffs will be passed on to consumers.

Reporting from Axios on Wednesday indicated executives from Walmart (WMT), Target (TGT), and Home Depot (HD) suggested as much in a visit to the White House earlier this week.

Higher costs for businesses. Higher costs for consumers. Lower profits for businesses. Lower stock prices for investors.

This is the recipe for a sentiment washout and the "substantial" increase in pessimism referenced by Belski's team. And the setup needed for the market to react to Trump's latest tariff comments with the force seen this week.

Source: yahoo

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Michelle Reid

Cryptocurrency

China has sent a stark reminder to the United States that no negotiations have commenced, characterizing the previous softening of tensions as a unilateral move. This declaration raises apprehensions among cryptocurrency holders. Concurrently, Japan is strategizing to boost imports from the U.S. as it seeks to negotiate tariff agreements with multiple nations. A pressing question on many minds remains: when will Bitcoin soar to $100,000?

Will Bitcoin Reach $100,000 Soon?

The stagnation of Bitcoin at current price points keeps alive worries about a potential dip to the $69,000-$66,000 zone. At the moment, Bitcoin hovers around $93,300, trying to recover from the recent declines triggered by tariff announcements.

What Does the Chart Indicate for Bitcoin?

Recent analyses reveal positive signs for Bitcoin. A chart shared by expert Jelle emphasizes the critical significance of the $100,000 benchmark. He stated, “Bitcoin is delivering precisely what bullish traders desire. A minor pullback solidifies the recovery at the lower price threshold, paving the way for another surge, potentially to $100,000.”

In addition, insights from Ali Martinez regarding the Bitcoin MVRV ratio suggest a possible upcoming bull rally, especially following a golden cross between the MVRV ratio and a 365-day simple moving average.

The cryptocurrency market has predominantly experienced downturns over recent months, benefiting short sellers. However, the latest uptick in Bitcoin’s price has caught many off guard, as airdrops have not met expectations, leading investors to feel that short-term gains are elusive.

Altcoin Sherpa provided his perspective on effective investment strategies, indicating that while traditional investments can yield profits, opportunities are scarce. He advised that trading-based approaches might offer greater flexibility and potential for profits, particularly in today’s turbulent market.

● China’s recent statements have alarmed cryptocurrency investors.

● Bitcoin currently struggles to maintain its value while aiming for a significant recovery.

● Market fluctuations are creating challenges for both short and long-term investors.

The outlook for Bitcoin remains uncertain, but analysts suggest that positive indicators could lead to significant price movements if the market conditions align favorably. The next few weeks will be crucial in determining Bitcoin’s trajectory.

Source: CryptoSlate

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Adam

Stocks

US stocks rallied on Thursday, with Big Tech leading the way as investors digested mixed signals from President Trump and his top advisers on tariffs.

The Dow Jones Industrial Average (^DJI) rose 0.7%. The benchmark S&P 500 (^GSPC) gained 1.3%, while the tech-heavy Nasdaq Composite (^IXIC) rose 1.8%. The "Magnificent Seven" megacap stocks all gained.

The S&P 500 has rallied over 4% in the last two days, boosted in large part by tariff-talk optimism. On Wednesday, stocks rallied as the US floated slashing China tariffs, though the stock surge eased when Treasury Secretary Scott Bessent said there has been "no unilateral offer from the president to deescalate" the trade war with China.

Meanwhile on Thursday, China stood defiant as the US eased its rhetoric, demanding the US eliminate all tariffs and denying that any talks have taken place between the nations.

While Trump's apparent eagerness to negotiate takes the spotlight, his approach to other key tariffs grew more muddled.

The Financial Times reported that the Trump administration is considering exempting automakers from the most punishing auto tariffs, yet Trump said from the Oval Office that a 25% tariff on cars imported from Canada could increase.

The White House also ordered a probe into truck imports, paving the way for tariffs on the sector.

In corporates, IBM (IBM) shares dropped 5% on Thursday after the company revealed 15 government contracts were impacted by cost cuts from the Trump administration. Chipotle (CMG) shares rose slightly after its first quarter earnings missed expectations and it lowered its 2025 forecast.

On Thursday, Wall Street's attention will shift to Alphabet earnings. While investors don't expect the company's results to be impacted by Trump's trade war yet, they'll be watching for any warning signs of how tariffs could hit the business in the near future.

Intel is also reporting earnings after the bell on Thursday. The results will be the company's first under the leadership of its new CEO, Lip-Bu Tan.

Source: yahoo

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Adam

Economic

Central Bank

The uncertainty around trade tariffs is complex but a period of uncertainty also provides Europe with an opportunity to assert itself as an economic and geopolitical superpower, the governor of the Bank of Latvia told CNBC Thursday.

“With all this uncertainty and vulnerability, this is also the time of opportunities for Europe,” said Mārtiņš Kazāks, who is also a member of the governing council of the European Central Bank.

“It’s a time for Europe to grasp all the aspects of being an economic superpower and becoming a really fully-fledged political and geopolitical superpower, and this requires doing all the decisions that in the past, were not carried out fully,” after the global financial crisis, he said. The central bank chief cited a capital markets union, fiscal union and a single market in services as examples of further integration that were needed.

“This requires political will, political guts to make those decisions, and to strengthen the European economy and assert its place in a global world,” Kazāks told CNBC’s Carolin Roth on the sidelines of the IMF-World Bank spring meetings in Washington this week.

When asked what tariffs mean for the ECB, which implemented a 25-basis-point interest rate cut at its April meeting, Kazāks said decisions would be taken “from meeting-to-meeting because of this very poor visibility.”

“The uncertainty is very hard,” he noted, adding that “it’s certainly a very vulnerable situation for the global economy.”

“The [political] statements, the policy decisions and the political environment and especially the tariff war are what’s creating this extremely elevated uncertainty.”

Kazāks said financial markets should be monitored very carefully for any dramatic shifts in sentiment.

“So far it seems to be relatively orderly ... but if one looks at the spillovers to Europe, the financial markets are working more or less fine, we haven’t seen spreads exploding or anything like that,” he said.

“But in terms, however, of the macro scenarios, this uncertainty is extremely elevated in the sense that, given the possible outcomes, the multiple scenarios and their probabilities are very similar with the baseline [tariff] scenario,” he said.

Although the initial duties announced in early April by U.S President Donald Trump, as well as the EU’s retaliatory countermeasures, were paused for 90 days until July, there are concerns over the wider impact on regional and global economic growth once that period ends.

The IMF earlier this week forecast that U.S. gross domestic product would expand 1.8% in 2025, down 0.9 percentage points from its January forecast. The fund also cut its global growth forecast to 2.8% this year, down 0.5 percentage points from its previous estimate.

The fund predicted a slight decline in the euro zone, forecasting that euro area GDP will hit 0.8% in 2025, before picking up modestly to 1.2% in 2026.

Kazāks said the IMF’s forecasts were on the optimistic side, and that the risk of global recession was “not trivial.”

Source: cnbc

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Grace Montgomery

Economic

U.S. President Donald Trump is expected to sign an executive order on Thursday to boost the deep-sea mining industry, the latest attempt to tap international deposits of nickel, copper and other critical minerals used widely across the economy.

The order will likely fast track permitting for deep-sea mining in international waters and let mining companies bypass a United Nations-backed review process, Reuters previously reported.

Shares of The Metals Company - among the most prominent of deep-sea mining companies - rose on Thursday by roughly 40% to hit a 52-week high of $3.39 per share after the Reuters report on the executive order.

Trump has taken several steps already to boost domestic production of critical minerals and combat China's dominance of the industry that supplies the raw materials needed for a wide range of modern technologies and industries, especially those related to clean energy and defense.

Among other things, he has fast-tracked permitting on 10 mining projects across the United States and implemented an abbreviated approval process for mining projects on federal lands.

The International Seabed Authority - created by the United Nations Convention on the Law of the Sea, which the U.S. has not ratified - has for years been considering standards for deep-sea mining in international waters, although it has yet to formalize them due to unresolved differences over acceptable levels of dust, noise and other factors from the practice.

Trump's deep-sea mining order is likely to stipulate that the U.S. aims to exercise its rights to extract critical minerals on the ocean's floor, and to let miners bypass the ISA and seek permitting through the U.S. Department of Commerce's National Oceanic and Atmospheric Administration's mining code, Reuters previously reported.

Source: Reuters

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Devin

Central Bank

Economic

Bank of England Warns of Global Growth Risks Amid Tariffs

Andrew Bailey, Governor of the Bank of England, highlighted global growth risks stemming from U.S. tariffs during an event in Washington, reaffirming concerns over their broad economic impact.

This situation underscores potential financial instability, though the UK recession remains unlikely. Market observers are watching for further developments and their effect on the global economy.

U.S. Tariffs Spark Global Growth Concerns

The Bank of England, under Andrew Bailey's leadership, is closely monitoring the impact of U.S. tariffs on global growth. At a Washington event, he emphasized the potential for economic disruptions.

Bailey stated the importance of trade in supporting economic growth, warning that fragmenting global economies could be detrimental. The Bank has maintained its interest rate as inflation concerns persist in the UK.

"We do have to take very seriously the risk to growth. Trade does support growth. Fragmenting the world economy will be bad for growth." – Andrew Bailey, Governor, Bank of England

Rising Market Correction Fears Noted by Experts

The Bank's Financial Policy Committee cites potential severe shocks to global markets. The likelihood of a market correction is rising, with heightened concerns around debt sustainability.

The IMF forecasts indicate reduced UK economic growth, partly due to tariff impacts. Analysts suggest potential policy rate reductions in response to these prevailing economic pressures, as detailed by Oxford Economics.

Trade Tensions Recall Post-2008 Crisis Threats

Trade tensions reminiscent of past crises could threaten recovery, as seen post-2008. Experts highlight the prolonged effects of disrupted trade and an open economy's vulnerability.

Kanalcoin analysts suggest central banks might adjust policies, considering historical trends and current market data, to mitigate prolonged economic downturns and support global financial stability.

Source: CryptoSlate

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Adam

Stocks

LONDON/SINGAPORE, April 24 (Reuters) - Stocks drifted on Thursday and a rebound in the dollar lost traction as investors grappled with the Trump administration's shifts on tariffs and the Federal Reserve's leadership.

Over the last week, U.S. President Donald Trump has rained attacks on Fed Chair Jerome Powell then retracted calls for his resignation, and left investors none the wiser on his ultimate position on tariffs for China despite many headlines.

The Trump administration would look at lowering tariffs on imported Chinese goods pending talks with Beijing, a source told Reuters on Wednesday.

Treasury Secretary Scott Bessent said high tariffs between the U.S. and China were not sustainable, but also said a reduction would not come unilaterally, echoing comments from White House spokesperson Karoline Leavitt.

China's commerce ministry said on Thursday the United States should lift all unilateral tariff measures against China if it "truly" wanted to solve the trade issue.

Hopes of easing tensions helped U.S. shares and the dollar to rally on Wednesday - both have been hit hard by the tariff plans - but the moves faded on Thursday. S&P 500 futures and the broad European stocks index (.STOXX), opens new tab were both down around 0.2%.

The dollar was also weaker, down 0.7% against the Japanese yen and Swiss franc at 142.4 yen and 0.8253 francs, while the euro gained 0.6% to $1.1379.

But investors generally were still struggling to process all that has happened, and what might still be to come.

"This always happens in messy markets, it becomes harder to price the tails versus the big central scenario of 'muddle through'," said Will Hobbs, head of UK multi asset wealth at Barclays Private Bank, referring to extreme events that are unlikely but can have dramatic effects.

"Right now, everyone is focused on the tariff story but we're not sure what the hit is, because obviously we don't know what the tariffs are."

"So we've got this large, still-to-be described hit coming down the pike, but not really showing up in hard data, which people are saying is because of front loading to get ahead of tariffs."

Longer-dated U.S. Treasuries, which have been particularly volatile in recent weeks, were calmer with Trump's reversal on Powell seen as easing the risk to U.S. monetary and fiscal credibility.

The 10-year yield was last 4 basis points lower at 4.35%, a third session in a row of comparatively muted moves. The 30-year yield was down a similar amount at 4.79%.

Markets are pricing in slightly more than 80 bps of U.S. rate cuts by December, though with the tariff uncertainty high traders are bracing for further swings there.

Japan's Nikkei (.N225) , opens new tab was a rare outperformer, up 0.5%. Reuters reported that Japanese tariff negotiator Ryosei Akazawa was making final arrangements to visit the United States from April 30 to hold a second round of talks with his counterpart.

In a surprise bit of positive economic news, German business morale rose in April, a survey showed on Thursday.

Earnings in the U.S. and Europe offered a mixed picture.

Gucci-parent Kering's shares dropped 4% (PRTP.PA) , opens new tab after reporting a bigger than expected fall in first quarter revenue.

Alphabet (GOOGL.O), opens new tab earnings are due after the U.S. close.

Elsewhere, oil prices steadied after a fall in the previous session when sources said OPEC+ would consider accelerating its oil output increases in June.

Brent crude futures rose 1% to $66.80 a barrel, while U.S. crude was up 1.25% to $63.06 per barrel. O/R/

Gold was heading back towards Tuesday's record high, last up 1.6% at $3,340.2 an ounce.