By Mike Dolan
London (Reuters) – What is more important in the US and global markets today
By Mike Dolan, editor-at-great, financial industry and financial markets
The greater the structure of an event, the greater the risk of disappointment. On Wednesday, which the US tariff announcements on Wednesday, may not do justice to hype, but even if this is the case, this will not be the end of the matter, and the market reaction will not be cut and dried.
I will discuss how the markets react before the great disclosure and then examine the risk examination on which investors should now concentrate. Note that it is not a collective bargaining today.
Today’s minute of market
* The US President Donald Trump is ready to impose new mutual tariffs today, increase decades of rules based on trade, to threaten the cost increases and probably pull retaliation from all sides.
* The drug manufacturers are committed to imported pharmaceutical products for the Trump phase in tariffs in order to reduce the stab from the fees and change the production of time, according to Reuters.
* Reuters takes a look at earlier examples of epochs that are dominated by tariffs and how they have influenced prices and trade.
* The US administration plans an executive regulation that loosens the rules for the exports of military devices, as Europe has been imposed at the fastest pace for at least 80 years.
* One of the world’s largest car suppliers is preparing for Trump’s tariffs by “the uncontrollable”, since the industry is exposed to a Seismic Skill.
Problem with a capital ‘t’
The timing of the rose garden set piece, which Donald Trump defines long-awaited trade strategy, is set today for 4 p.m. Eastern Time.
Various reports have shown that Trump will in general announce 20% of import duties, but other reports have spoken of an animal system. Nobody, including finance dealers and investors, seems to be quite sure what is coming.
Perhaps the Wall Street shares rose slightly to all results on Tuesday when the second quarter started, even though they were still below average below average. But S&P 500 -Futures gave back these profits overnight, and most world markets were slightly in red on Wednesday.
The VIX “Fear Index” was around 22, above the historical average values, but still well before the 7-month maximum of 30 a month ago.
Whatever the result was later, there is probably a wave of retaliation tariffs that were less discussed in analyzes of the potential worldwide effects of the US tariffs.
The reading of the ISM production of ISM on Tuesday showed us that the factory activity fell back to the contraction last month, with the price expectations. And in February the vacancies fell, a nervous start to the large labor market updates of the week.
March’s salary statements will take place on Friday, and the ADP private Sector Job Tally will be due later.
While the futures markets are still praising this year in three interest reductions of the Federal Reserve interest rate, it is interesting that five by July next year, despite the tariff inflation, jitter will be rated. This would bring the political interest rate back to the spot where FED officers see the long-term neutral interest rate.
However, the yields of the Ministry of Finance were a touch on Wednesday, and the dollar index was a little weaker.
In other political news, Wisconsin chose voters Susan Crawford as the Supreme Court of the state and retained the 4: 3 majority of the court in a setback for Trump and his billionaire Ally Musk, who supported their conservative rivals.
In better news for the administration, however, Republican candidates are expected to win two special elections in Florida, which would strengthen the slim majority of the party in the House of Representatives by filling the areas created by Trump’s picks for cabinet posts.
And now I’m going to convert to tariffs again to explain why a surprise of “Crash, Bang, Wallop” is not the risk that investors should be worried about.
Tariff shock less worrying than slowly burning
The still mysterious US tariff-swing on Wednesday makes it difficult for investors to see far beyond this week far beyond this week, but the real risk is more of a slow decline in the US market with an open planned plane more uncertainty than a cathartic use.
Most market forecasts with medium range were simply given up last week, as strategists have no tariff basic line for work. Most of the guesses have occurred, while a lousy quarter radio fell on Wall Street and implicit volatility measuring devices were higher.
The size, shape and duration of the tariffs are all unknown, and the width of the affected countries remains in the air.
If the big announcement on Wednesday comes as a “crash, bang, Wallop”, at least this could extinguish the air in Wall Street, which was over the problem all year round.
In fact, analysts that consider the increased but relatively relatively contained pricing of the stock index volatility suggest that on Wednesday there can only be a little out of what these measuring devices really surprised and developed further.
Maxwell Grinacoff, head of research of shares derivatives at UBS, caused the case on Tuesday that the tariffs were now suitable in the S&P 500 index and that investors had “left” considerably instead of securing stocks in March.
This trend led to a strong equity price, but a more modest reaction in “VOL”, especially compared to some of the periodic spikes in the “Fear Index” during the bull market in recent years.
“Volatility now has its” dirty shirt “effect-sie has already been colored, so a little more” sludge “won’t do much,” Grinacoff wrote and added that the Vix mirror would probably remain around 20.
Market linen
The prospect of the announcement of the tariffs on Wednesday, which the decks removed, could then be considered positive, but only if they are generally optimistic about the economic prospects of the United States.
“We believe that the potential for an even higher volatility from here is limited,” added Grinacoff. “If the United States does not fall into an area of recession in the coming months/quarters – if not our basic case.”
The lack of recession is a major restriction.
Goldman Sachs changed with JPmorgan this week and argued that the chance of recession in the United States has increased significantly over the next 12 months. Goldman gives him a little more than a three chance, a check mark among the 40% JPmorgan.
In addition, GDP models already show a contraction in the first quarter. The heading “Gdpnow” from Atlanta Fed refers to a whopping 3.7% annual shrinkage of national production in the first three months of this year. Some of them are clearly distorted by gold imports, but the gold -adjusted estimate of the Atlanta Fed is now a contraction of 1.4%.
High frequency data on Tuesday have contributed little to illuminate the mood. The ISM manufacturing survey for March showed that the factory sector has slipped back into contractional field, and falling job offers indicate that cracks occur on the once -wasted labor market.
And no matter what happens this week, the markets are still likely to have doubtful doubts about the end of the trade war and the not recognizable, delayed effects of import duties on prices, demand, attitude and activities. So it is difficult to see how the Koch tariff is required this week.
The administration of Trump keeps the right to extend, hike, move or even cancel the tariffs as part of their high-pressure deal for a number of difficult problems with allies and rivals.
And it is also impossible to know how the rest of the world will react to the US acts and retire, a factor in the impending trade war, which is often interrupted.
So economists should have more to work after Wednesday, but Crystal Clarity can stretch it.
And it is this long -term uncertainty and gradual economic weakening – a slow combustion – that can be really cumbersome for already injured and still expensive stock markets.
Diagram of the day
We see the perfect storm that gold buyers have dreamed of for years – well, almost 40 years. Trade wars, military tensions, broken western alliances, inflation concerns, fear of recession and doubts about the dominant role of the dollar in world financing: The combination of all of this this year has almost 20% of an all-time high of $ 3,148 per ounce. It is the best quarter since 1986.
And this time around us are also protectionism and isolationism in the mixture. With tariff walls and military expenses that rise in the background and lurking the ghost of the “stagflation”, the central banks around the world have increased the gold stocks on the edge as part of their pension fund.
To observe today’s events
* The White House announces an announcement on the “mutual” trading tariff plan, which is expected at 4 p.m. Eastern Time
* US ADP March private sector salary statements, February -Factory goods orders in February
* Governor of the Federal Reserve Board, Adriana Kugler, speaks; The President of the European Central Bank, Christine Lagarde, and the ECB chef economist Philip Lane both speak
* Defense Minister of the European Union meet in Warsaw
Expressions of the author are pronounced. They do not reflect the views of Reuters News, which are committed to the trust principles of integrity, independence and freedom of bias.
(By Mike Dolan; Editor of Anna Szymanski)
