Month: May 2025

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Trump’s tariffs challenged in court and deemed to be illegal

U.S. tariff court ruling

A U.S. federal court has ruled that former President Donald Trump’s sweeping tariffs were imposed illegally, dealing a significant blow to his economic policies.

The Court of International Trade determined that Trump exceeded his authority by invoking emergency powers to justify tariffs on nearly every country.

The ruling states that the U.S. Constitution grants Congress exclusive power to regulate commerce, meaning the president cannot unilaterally impose such broad trade restrictions.

The decision immediately halted the 10% tariffs Trump had imposed on most U.S. trading partners, as well as additional levies on China, Mexico, and Canada.

The court found that the International Emergency Economic Powers Act (IEEPA), which Trump cited as justification, does not grant him the authority to implement such sweeping trade measures.

The White House swiftly filed an appeal, arguing that the tariffs were necessary to address trade imbalances and safeguard American industries.

However, businesses and state governments that challenged the tariffs welcomed the ruling, citing concerns over inflation and economic harm.

Dow Jones Industrial Average Futures 28th & 29th May 2025 after the court ruling

Dow Jones Industrial Average Futures 28th & 29th May 2025 after the court ruling

Markets responded positively to the decision, with stock futures rising and the U.S. dollar strengthening. If the ruling stands, businesses that paid the tariffs may be eligible for refunds, marking a potential shift in U.S. trade policy.

The U.S. President is expected to find a workaround after suffering a major blow to a core part of his economic agenda.

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What’s going on in the U.S. bond market?

Treasury yields

The U.S. bond market is experiencing some turbulence due to rising Treasury yields and concerns over government debt.

Investors are demanding higher yields because they’re worried about the GOP’s tax-cut plans, which could lead to increased borrowing and a larger deficit.

Additionally, the recent Trump tax bill has caused Treasury bond yields to surge, as investors anticipate more government debt issuance. Moody’s has also downgraded the U.S. credit rating, adding to market jitters.

The bond market’s reaction is significant because higher yields can lead to increased borrowing costs across the economy, affecting everything from mortgages to corporate financing.

Japan

Japan’s bond market is facing significant turbulence, with yields on 40-year government bonds hitting an all-time high. This surge in yields is causing concerns about capital repatriation, as Japanese investors may start pulling funds from the U.S. and other foreign markets.

The Bank of Japan’s reduced bond purchases have contributed to this trend, leading to weaker demand for long-term government debt. Analysts warn that if Japanese investors begin moving their capital back home, it could trigger a global financial market shake-up.

Additionally, Japan’s Finance Ministry is considering reducing the issuance of super-long bonds to stabilise the market. However, recent auctions have shown weak demand, raising concerns about the effectiveness of this strategy.

Europe

The European bond market is experiencing some shifts due to falling government bond yields and easing U.S. – EU trade tensions.

German 10-year bund yields dropped by 4 basis points, reflecting increased investor confidence.

UK and French 10-year bond yields also declined by 4 basis points, while Italian bonds saw a 2 basis point dip.

Long-term UK gilts experienced the biggest movement, with 20 and 30-year yields falling by 7 basis points.

This decline in yields suggests higher demand for European government debt, possibly due to investors shifting away from U.S. assets amid concerns over U.S. fiscal health.

UK

The UK bond market is facing some challenges, with the IMF warning that it is vulnerable to sudden shocks due to a growing reliance on hedge funds and foreign investors.

30-year gilt yields have hit 5.5%, the highest in over three decades.

The Bank of England’s quantitative tightening and increased bond issuance are putting pressure on the market.

The Debt Management Office (DMO) is shifting towards short-dated debt to reduce long-term interest costs.

Additionally, the UK government has launched a new 30-year gilt offering 5.375% interest, which is attracting investor attention.

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Tesla’s European market meltdown – sales plunge 49% amid brand damage and fierce competition

Tesla's European sales fall!

Tesla’s vehicle sales in Europe plummeted by 49% in April 2025, marking the fourth consecutive month of decline.

Despite an overall 27.8% rise in battery-electric vehicle sales, Tesla struggled to maintain its foothold in the region.

The drop in sales has been attributed to increasing competition from Chinese automakers, a shift in consumer preferences towards hybrid vehicles, and growing backlash against CEO Elon Musk’s political affiliations.

Tesla’s market share in Europe nearly halved, falling from 1.3% to 0.7%. The company’s aging lineup, particularly the Model Y, has failed to attract new buyers, while rivals such as BYD have overtaken Tesla in European EV sales for the first time.

Additionally, European carmakers are cutting costs and adapting to U.S. tariffs on auto imports, further intensifying competition. Chinese EV manufacturers are also cutting EV prices.

While Tesla faces challenges in Europe, the broader EV market continues to expand, driven by government incentives and stricter emission targets.

However, unless Tesla refreshes its lineup and rebuilds consumer trust, its dominance in the European market may continue to erode.

The company’s future remains uncertain as it navigates political controversies and shifting market dynamics

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China’s industrial profit accelerates in April 2025 – despite Trump’s tariffs

China factory output

Despite the heavy tariffs imposed by former U.S. President Donald Trump, China’s industrial sector has demonstrated remarkable resilience.

In April 2025, industrial profits rose by 3%, marking the second consecutive month of growth.

This increase was largely driven by Beijing’s strategic policy measures, which cushioned the impact of the tariffs and supported private enterprises.

In the first four months of 2025 China’s industrial profits rose 1.4%, according to data released on 27th May 2025.

Trump’s administration had levied tariffs as high as 145% on Chinese imports, prompting Beijing to retaliate with its own trade restrictions.

However, rather than crippling China’s manufacturing sector, these tariffs led to a shift in trade dynamics. Chinese exporters successfully found alternative markets, particularly in Southeast Asia and Europe, mitigating the losses from reduced U.S. trade.

It isn’t unusual for businesses to weather and absorb such tariffs but more usually, the consumer bears the brunt and pays some, if not all, of the increased costs.

High-tech manufacturing and equipment production saw notable gains, with profits in these sectors rising by 9% in the first four months of the year.

Additionally, government subsidies for consumer electronics and appliances helped boost domestic demand, further stabilising industrial growth.

While state-owned enterprises reportedly faced challenges, private firms and foreign-invested businesses saw profits improve.

Analysts suggest that China’s ability to adapt to external shocks underscores the resilience of its industrial economy, even in the face of aggressive trade policies

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BYD Surpasses Tesla in European EV sales for the first time in upset for Tesla

BYD

April 2025 marked a watershed moment in the European electric vehicle (EV) market as BYD outsold Tesla for the first time ever.

According to JATO Dynamics, BYD registered 7,231 battery-electric vehicles, narrowly surpassing Tesla’s 7,165 registrations.

This shift comes despite EU-imposed tariffs on Chinese-made EVs, which were expected to hinder BYD’s growth. However, the company’s aggressive expansion strategy and diversified lineup – including plug-in hybrids – helped it navigate trade barriers and maintain momentum.

Tesla, on the other hand, has faced declining sales, with its European registrations dropping 49% year-over-year. Production delays, protests against CEO Elon Musk, and consumer hesitation over new Model Y trims have contributed to the slump.

BYD’s success signals a changing landscape in Europe’s EV market. With its Hungarian production plant set to open soon, the company is poised for further growth.

Presumably now, Tesla must reassess its strategy to regain dominance in a market it once ruled.

As competition intensifies, European consumers will benefit from greater EV choices, potentially driving further innovation in the industry

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Japan’s core inflation rises to 3.5% – higher than expected

Japan economic data

Japan’s inflation figures for April 2025 have revealed a continued rise in consumer prices, with the Consumer Price Index (CPI) climbing 3.6% year-on-year.

This marks a sustained period of inflation above the Bank of Japan’s (BoJ) target of 2%, prompting speculation about potential interest rate hikes later in the year.

Core inflation, which excludes fresh food, rose 3.5% YoY, exceeding market expectations. A major driver of this surge has been food prices, particularly rice, which has soared by an astonishing 98% compared to last year.

The sharp increase has led the government to release emergency stockpiles to stabilise the market.

The BoJ faces a delicate balancing act. While inflation remains strong, economic uncertainty – partly fueled by U.S. tariffs, could complicate monetary policy decisions. The central bank has already raised rates in recent months but has paused further hikes to assess the broader economic impact.

With inflationary pressures persisting, analysts predict that the BoJ may tighten policy again by October 2025.

Concerns over global trade and domestic economic stability could influence the timing of any further rate adjustments.

The core inflation increase of 3.5% was far higher than expected.

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Bitcoin surges to new all-time high above $111000

Bitcoin at new high!

Bitcoin has once again shattered records, reaching a new all-time high of $111,544 during early trading hours on 22nd May 2025

The world’s largest cryptocurrency has surged nearly 50% since April, fueled by growing substantial institutional interest and macroeconomic shifts.

The rally follows a period of volatility earlier in the year, when Bitcoin dipped below $75,000 amid concerns over U.S. trade policies and global economic uncertainty.

However, renewed investor confidence, coupled with ETF inflows and regulatory optimism, has propelled Bitcoin past its previous peak of $109,800 set just a day earlier.

Analysts attribute the surge to weak demand for government bonds, prompting investors to seek alternative assets.

Additionally, corporate treasury allocations into Bitcoin have increased, with public companies now holding 15% of all Bitcoin in circulation.

With Bitcoin’s momentum showing no signs of slowing, experts predict the next psychological milestone could be $120,000.

Bitcoin one-day chart 22nd May 2025

Bitcoin one-day chart 22nd May 2025

As institutional adoption continues to rise, Bitcoin’s role as a hedge against inflation and economic instability is becoming more pronounced.

Will Bitcoin maintain its upward trajectory, or is a correction on the horizon?

A 50% climb in around a month is a substantial increase – it has room to give… and it most likely will.

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UK inflation hits 3.5% in April 2025 as household bills surge

UK inflation up!

UK inflation rose to 3.5% in April 2025, exceeding expectations and placing further financial strain on households.

The increase, reported by the Office for National Statistics, was driven by higher energy costs, water bills, and taxation pressures on businesses.

One of the most striking factors behind the surge was the 26.1% increase in water and sewerage costs, the largest recorded jump since 1988.

This, combined with electricity and gas prices, contributed to the unexpected rise in inflation. Meanwhile, falling fuel prices and clothing discounts helped mitigate some of the upward pressure.

The Bank of England, which had forecasted inflation at 3.4%, may now reconsider its approach to interest rates. A sustained period of inflation over 3% could delay potential rate cuts, impacting mortgage rates and borrowing costs.

Despite concerns, economists believe inflation should gradually ease in the coming months. However, persistent cost pressures on household essentials mean many families will continue to feel the squeeze.

The Bank of England will be closely monitoring economic trends before making further financial decisions.

With inflation unexpectedly climbing, individuals may need to rethink their budgets, spending habits, and savings strategies for the months ahead.

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Palantir now among 10 most valuable U.S. tech companies

Palantir stock up!

Palantir Technologies has officially joined the ranks of the top 10 most valuable U.S. tech companies, marking a significant milestone in its growth trajectory.

The data analytics and artificial intelligence firm saw its stock surge 8%, pushing its market valuation to $281 billion, surpassing Salesforce.

Founded in 2003 by Peter Thiel and CEO Alex Karp, Palantir has long been known for its government contracts and defense-related software solutions.

Its recent success is largely attributed to a booming government business, which grew 45% last quarter, including a $178 million contract with the U.S. Army.

Despite its impressive market cap, Palantir remains a relatively small player in terms of revenue compared to its peers. Investors are paying a premium for its stock, which currently trades at 520 times trailing earnings, far exceeding industry averages.

Analysts have raised concerns about its valuation, questioning whether its rapid rise is sustainable in the long term.

Palantir’s ascent reflects the growing influence of AI-driven data analytics in both commercial and governmental sectors.

As it continues to expand, the company faces the challenge of proving its financial fundamentals can support its lofty valuation.

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Are we underestimating the impact of tariffs on S&P 500 earnings growth?

Asleep

As global trade tensions escalate, many investors and analysts are questioning whether markets are too complacent about the long-term effects of tariffs on corporate earnings.

While some argue that businesses have adapted to protectionist policies, others warn that the S&P 500’s earnings growth could face significant headwinds.

Tariffs: A hidden threat to profit margins

Tariffs increase costs for companies reliant on imported goods and materials. Businesses must either absorb these costs, pass them on to consumers, or find alternative suppliers – each option presenting challenges.

According to Goldman Sachs, an additional 5% tariff could reduce S&P 500 earnings by 1-2%.

A 100% tariff would equate to around 10-20% reduction in the S&P 500 – and that’s correction territory.

Retailers and manufacturers are particularly vulnerable

Companies like Best Buy, Walmart, and Target rely on imports, and higher tariffs could suppress profit margins or lead to higher consumer prices, potentially dampening demand.

Market sentiment vs. economic reality

Despite concerns, Wall Street has remained relatively optimistic. A recent 90-day tariff pause between the U.S. and China has boosted investor confidence, leading firms like Goldman Sachs and Yardeni Research to raise their S&P 500 targets.

This optimism may be short-lived if tariffs resume or escalate

Sector-specific risks

Certain industries are more exposed than others

Technology: Supply chain disruptions and higher costs for components could reduce profit margins.

Consumer Discretionary: Higher prices on imported goods could weaken consumer spending.

Industrials: Increased costs for raw materials could slow growth and investment.

The bigger picture: long-term economic impact

Beyond immediate earnings concerns, tariffs could stifle innovation, reduce global competitiveness, and slow economic growth.

Citi analysts estimate that aggressive tariffs could cut S&P 500 earnings growth by 2-3%.

A false sense of security?

While markets have bounced back from initial tariff shocks, the long-term effects remain uncertain.

Investors should closely monitor trade policies, sector-specific risks, and corporate earnings reports to assess whether the S&P 500’s growth trajectory is truly secure – or dangerously fragile.

Time will tell – but the S&P 500 is vulnerable to pressure right now!

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China’s retail and industrial growth slows amid ongoing tariff driven economic uncertainty

China retail data

China’s economy showed signs of slowing in April 2025, with both retail sales and industrial output missing expectations.

Retail sales grew 5.1% year-on-year, falling short of analysts’ forecasts of 5.5% growth. The slowdown reflects weak consumer sentiment, driven by deflationary pressures and uncertainty in the housing market.

While categories like gold and jewellery (+25.3%) and furniture (+26.9%) saw strong growth, car sales stagnated at just 0.7%.

Industrial production expanded 6.1% year-on-year, down from 7.7% in March 2025. The decline was largely attributed to tariff trade war tensions, which have disrupted exports.

However, fixed-asset investment rose 4% in the first four months of 2025, signalling continued infrastructure spending.

Despite the slowdown, China remains confident in achieving its 5% GDP growth target for the year. The government has introduced stimulus measures, including interest rate cuts and liquidity injections, to stabilise the economy.

With global trade uncertainties and domestic economic challenges, China’s policymakers face a delicate balancing act to sustain growth while addressing structural weaknesses.

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Moody’s Downgrades U.S. Credit Rating Amid Rising Debt Concerns

U.S. credit rating downgrade

Moody’s Investors Service has downgraded the United States’ sovereign credit rating from Aaa to Aa1, citing concerns over the country’s growing debt burden and rising interest costs.

This marks the first time Moody’s has lowered the U.S. rating, aligning it with previous downgrades by Standard & Poor’s (2011) and Fitch Ratings (2023).

The downgrade reflects the increasing difficulty the U.S. government faces in managing its fiscal deficit, which has ballooned to $1.05 trillion – a 13% increase from the previous year.

Moody’s analysts noted that successive administrations have failed to implement effective measures to curb spending, leading to a projected U.S. debt burden of 134% of GDP by 2035.

Market reactions were swift, with U.S. Treasury yields rising and stock futures sliding as investors reassessed the risk associated with U.S. assets. The downgrade could lead to higher borrowing costs for the government and businesses, potentially slowing economic growth.

Despite the downgrade, Moody’s emphasised that the U.S. retains exceptional credit strengths, including its large, resilient economy and the continued dominance of the U.S. dollar as the global reserve currency.

However, without significant fiscal reforms, further credit rating adjustments may be inevitable.

Time to print some more money…

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Trump does deals!

U.S. does deals!

Trump Secures Over $1.4 Trillion in Landmark Middle East Trade Agreements

President Donald Trump’s recent visit to the Middle East has resulted in a wave of economic agreements totaling over $1.4 trillion, marking one of the largest trade expansions between the region and the United States.

With a focus on investment, defence, and technology, Trump’s approach has emphasised strengthening economic ties rather than engaging in broader geopolitical discussions.

Qatar: aviation and defence take centre stage

One of the most eye-catching deals came from Qatar, where Qatar Airways finalised a $96 billion agreement to purchase 210 Boeing jets – the largest Boeing order in history.

This commitment not only bolsters Qatar’s aviation industry but also solidifies Boeing’s future as a leader in global aerospace manufacturing.

Additionally, Qatar has pledged $243.5 billion toward investments in quantum technology and defence systems, reinforcing the country’s push toward technological advancement.

Defence agreements also played a role, with Qatar signing a $1 billion deal for cutting-edge drone defence technology and a $2 billion contract for advanced remotely piloted aircraft.

These acquisitions align with the country’s long-term strategic vision of modernising its military capabilities.

Saudi Arabia: the biggest beneficiary

Saudi Arabia emerged as the biggest beneficiary of Trump’s visit, securing $600 billion in investment commitments across multiple sectors.

The kingdom allocated $142 billion toward military equipment and services, ensuring continued collaboration between U.S. defence contractors and Saudi leadership.

This agreement spans air defence systems, next-generation fighter jets, and cybersecurity infrastructure, strengthening Saudi Arabia’s military.

Beyond defence, Saudi Arabia also inked deals in AI infrastructure, energy projects, and technology investments, positioning itself as a hub for digital transformation.

By incorporating AI-driven solutions into its economy, the kingdom aims to enhance productivity and accelerate its shift toward a diversified financial landscape.

United Arab Emirates: AI

United Arab Emirates secured $200 billion in deals, featuring a 10-square-mile AI campus in Abu Dhabi and a $14.5 billion aircraft investment by Etihad Airways

Strategic impact

Trump’s visit signifies a shift in U.S. foreign policy, focusing heavily on economic partnerships rather than traditional diplomatic negotiations.

By securing these agreements, the administration aims to strengthen American industries, bolster employment, and ensure a steady flow of investment into the U.S. economy.

While critics may argue that the deals lack a geopolitical dimension, the sheer scale of $1.4 trillion in transactions underscores Trump’s intent to foster long-term financial alliances.

The coming months will determine whether these agreements yield sustainable benefits or spark concerns over economic dependencies.

Donald Trump’s Middle East tour has reportedly resulted in over $1.4 trillion in investment pledges. His deals span multiple sectors, including defence, aviation, artificial intelligence, and energy.

Deal summary

Saudi Arabia committed $600 billion in investments, including a $142 billion defence partnership and AI infrastructure deals.

Qatar signed $243 billion in agreements, including a $96 billion Boeing aircraft purchase.

United Arab Emirates secured $200 billion in deals, featuring a 10-square-mile AI campus in Abu Dhabi and a $14.5 billion aircraft investment by Etihad Airways.

Trump’s tour has been framed as a push for foreign investment to boost U.S. manufacturing while Gulf states aim to accelerate AI development and diversify their economies

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UK first quarter GDP better than expected at 0.7%

UK GDP up!

The UK economy has defied expectations, recording a 0.7% increase in GDP in the first quarter of 2025 – better than the forecast of 0.6%.

This surge places Britain ahead of economic heavyweights, including the United States, Canada, France, Italy, and Germany.

A key driver of this growth has been the service sector, which demonstrated resilience amid global economic uncertainty. Production also experienced a boost, further solidifying the UK’s standing as an economic force.

Chancellor Rachel Reeves was quick to praise the achievement, citing the government’s commitment to fostering stability and investment.

However, economists are watching closely as Britain navigates potential challenges ahead, particularly in light of the latest global trade tariffs imposed by Donald Trump in April.

These new restrictions could slow growth in the coming months, but for now, the economy is holding firm. However, the UK – U.S. tariff deal is likely to lessen the overall impact and present a further improvement in the second quarter.

With businesses continuing to adapt to shifting market conditions, the UK’s better-than-expected performance is a welcome sign.

Data source: Home – Office for National Statistics

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Nintendo forecasts sales of 15 million Switch 2 consoles as it gears up for launch

Switch 2 gaming

In its first sales forecast, Nintendo said it expects to sell 15 million Switch 2 units in the fiscal year ending March 2026.

The new console is due to go on sale in the U.S. June 2025.

Revenue and profit plunged in the fourth quarter, the Japanese video game company said, although this was largely expected as Nintendo fans await the Switch 2 launch.

The Switch 2 will start at $449.99 in the U.S. and has improved features compared with its predecessor.

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Saudi Arabia to acquire 18000 Nvidia AI chips with more to follow

Nvidia AI

Saudi Arabia is making bold moves in artificial intelligence with a major acquisition from Nvidia.

The tech giant will be sending more than 18,000 of its latest GB300 Blackwell AI chips to Saudi-based company Humain, in a deal that marks a significant step toward the nation’s ambitions to become a global AI powerhouse.

The announcement was made by Nvidia CEO Jensen Huang during the Saudi-U.S. Investment Forum in Riyadh, as part of a White House-led trip that included President Donald Trump and other top CEOs.

Humain, backed by Saudi Arabia’s Public Investment Fund, aims to develop AI models and build data center infrastructure, with plans to eventually deploy several hundred thousand Nvidia GPUs

Humain, backed by Saudi Arabia’s Public Investment Fund, plans to use the chips to develop large-scale AI models and establish cutting-edge data centers.

The chips will be deployed in a 500-megawatt facility, making it one of the largest AI computing projects in the region. Nvidia’s Blackwell AI chips are among the most advanced in the industry, used in training sophisticated AI models and powering data-intensive applications.

Saudi Arabia’s investment in AI technology aligns with its long-term vision of transforming its economy beyond traditional industries. With plans to expand its data infrastructure and deploy several hundred thousand Nvidia GPUs in the future, the country is positioning itself as a major AI hub in the Middle East.

As AI continues to shape global industries, Saudi Arabia’s investment signals a broader shift in how nations are competing for dominance in the AI revolution.

Nvidia’s involvement underscores the strategic importance of AI chips, not just in business, but in international relations as well.

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U.S. inflation rate at 2.3% in April 2025 – less than expected

U.S. inflation

April 2025 saw the U.S. inflation rate ease to 2.3%, marking its lowest level since February 2021.

The consumer price index (CPI) rose 0.2% for the month, aligning with expectations but slightly below the forecasted 2.4% annual rate.

Core CPI, which excludes volatile food and energy prices, also increased 0.2%, maintaining a 2.8% year-on-year rate.

Shelter costs, which make up a significant portion of the index, rose 0.3%, contributing to more than half of the overall inflation movement.

U.S. egg prices dropped 12.7%, though they remained 49.3% higher than a year ago.

The impact of Trump’s tariffs remains uncertain, with negotiations potentially influencing inflation trends in the coming months.

Court to judge on legality of ‘reciprocal’ tariffs

U.S. Court of International Trade is set to hear arguments in a case challenging President Donald Trump’s tariffs.

The lawsuit filed by five domestic businesses argues that the law Trump invoked to impose his ‘reciprocal’ tariffs does not actually give him the power he claims.

The Department of Justice maintains that that law ‘clearly’ authorises the president to impose tariffs.

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Trump’s Boeing 747 Gift from Qatar – a diplomatic gesture or controversial play?

It's just a gift!

It’s just a gift?

Former U.S. President Donald Trump is set to receive a luxury Boeing 747-8 from the Qatari royal family, a move that has sparked debate over its implications.

The aircraft, valued at $400 million, is expected to serve as a temporary Air Force One until the U.S. government receives its long-delayed replacements.

Trump has been vocal about his frustration with Boeing’s delays in delivering the new presidential aircraft, originally scheduled for 2022 but now pushed to 2027.

The Qatari government’s offer provides an interim solution, allowing Trump to use the jet for official travel.

However, critics argue that accepting such a gift raises ethical and legal concerns, particularly regarding the U.S. Constitution’s emoluments clause, which restricts officials from receiving gifts from foreign states without congressional approval3.

The White House insists the arrangement is legal, stating that the aircraft will be transferred to the U.S. Air Force rather than Trump personally.

Upon completion of his term, the plane will reportedly be donated to his presidential library.

As Trump prepares for a Middle East visit, the controversy surrounding the aircraft continues to unfold.

Will this be seen as a practical solution or a diplomatic misstep?

And anyway, why can’t the U.S. provide its own presidential plane?

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Trump tariff roll-back – a win for China? U.S. markets rejoice the ‘deal’

U.S. markets gain on U.S China tariff roll-back announcement

The U.S. stock market surged as investors cheered a breakthrough in trade negotiations between Washington and Beijing.

The rollback of tariffs, announced as part of a new trade agreement, sent the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite soaring.

The deal, which slashes ‘reciprocal’ tariffs on both sides, is seen as a major de-escalation in the ongoing trade war that has rattled global markets for years.

Wall Street’s Reaction

Markets responded with enthusiasm as the Dow Jones Industrial Average jumped over 1,000 points, while the S&P 500 climbed more than 2.5%, and the Nasdaq surged by nearly 3%.

Investors had been wary of prolonged trade tensions, which had weighed heavily on corporate earnings and economic growth.

The tariff rollback signals a potential thaw in relations, boosting confidence across sectors, particularly in technology, retail, and manufacturing.

Tariff rollback

Under the agreement, U.S. tariffs on Chinese imports will be reduced from 145% to 30%, while China’s tariffs on American goods will drop from 125% to 10%. The reductions will be in effect for 90 days, allowing both nations to continue negotiations on a broader trade framework.

Treasury Secretary Scott Bessent emphasised that neither side wants a complete decoupling, and the rollback is intended to restore trade flows disrupted by years of economic brinkmanship.

China’s perspective: A strategic victory?

While the U.S. markets celebrated, China views the deal as a significant win. Beijing has sought relief from the steep tariffs imposed by Washington, which had strained its export-driven economy.

The agreement not only reduces financial pressure on Chinese manufacturers but also positions China as a key player in shaping future trade policies.

Some analysts argue that Beijing successfully leveraged its economic resilience to push Washington toward concessions, reinforcing its global influence.

Looking ahead

Despite the optimism, uncertainties remain. The 90-day window for negotiations suggests that further trade disputes could arise if talks stall. But will the U.S. allow that after the stock market turmoil Trump’s tariffs originally created?

Additionally, Federal Reserve Chair Jerome Powell cautioned that while sentiment has improved, the economic impact of previous tariffs has yet to fully materialise. Investors will be watching closely for signs of sustained progress, as any setbacks could trigger renewed volatility.

For now, Wall Street is basking in the relief of a tariff truce, with hopes that this momentum will lead to a more stable and predictable trade environment.

Whether this marks the beginning of a lasting resolution or just a temporary reprieve remains to be seen.

It is most likely now a platform for the U.S. to benefit from generally lower tariffs in the future.

There will again be cheap goods on U.S. shelves in time for Christmas.

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U.S. and China agree 90-day ‘reciprocal’ tariff pause and reduction deal

Tariff trade war 90-day pause

In a surprising breakthrough, the United States and China have agreed to suspend most tariffs on each other’s goods for 90 days, marking a significant step toward easing trade tensions between the world’s two largest economies.

Following high-stakes negotiations in Geneva, representatives from both nations announced that reciprocal tariffs would be slashed from 125% to 10%, significantly lowering trade barriers.

However, the U.S. will continue imposing 20% tariffs on Chinese imports related to fentanyl, meaning total tariffs on Chinese goods will settle at 30%.

The agreement signals a temporary thaw in what has been a long-standing economic standoff between Washington and Beijing. U.S. Treasury Secretary Scott Bessent, who played a leading role in the discussions, described the talks as ‘very productive’, crediting the location for fostering an atmosphere of cooperation.

While this move could provide immediate relief for businesses and consumers impacted by trade restrictions, analysts caution that the 90-day suspension may not translate into a long-term solution.

Some experts speculate that ongoing trade negotiations could lead to further reductions, while others warn that unresolved tensions could lead to reinstated tariffs if agreements stall.

For now, the deal presents an opportunity for renewed dialogue, leaving global markets optimistic about future relations between the two economic powerhouses.

How the next three months unfold will determine whether this development is a stepping stone to broader reforms or simply a temporary reprieve in a complex trade dispute.

I expect Trump, having instigated the ‘tariff’ upheaval, will happily hang on to this ‘deal’ with China to avoid any further stock market turmoil.

What really just happened? The markets seem to be rewarding a situation that was artificially created and then ‘fixed’.

Aren’t we simply back where we were before the Trump tariff onslaught or is this really a ‘promise’ for better ‘deals’ to come?

Has it opened a door for better relations?

Create a problem… fix a problem!

It’s all about the U.S.

We’ll see…

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China’s Exports Defy Tariff Pressures, Surge 8.1% in April

China World Trade

Despite the weight of U.S. tariffs imposed by President Donald Trump, China’s export sector has shown remarkable resilience, posting an 8.1% increase in April 2025 compared to the previous year.

This surge comes as a surprise, surpassing economists’ expectations of a modest 1.9% rise.

While China’s outbound shipments to the U.S. plunged by over 21%, exports to Southeast Asian nations soared by 20.8%, with Indonesia and Thailand seeing particularly strong growth.

This shift suggests that Chinese exporters are successfully redirecting their goods to alternative markets, mitigating the impact of U.S. trade restrictions.

The tariffs, which now stand at 145% on Chinese imports, were designed to pressure Beijing into trade concessions. In response, China retaliated with 125% duties on American goods, further escalating tensions.

However, analysts suggest that some of China’s export growth may be attributed to transshipment through third countries and contracts signed before the tariffs took effect.

Despite the export boom, China’s factory activity has taken a hit, falling to a 16-month low in April 2025, with new export orders dropping to their lowest level since December 2022.

Concerns are mounting that the tariffs could spill over into the job market, with estimates suggesting China could lose 16 million jobs tied to U.S. – bound production.

As both nations prepare for high-level trade talks in Switzerland, there is cautious optimism that a phased rollback of tariffs could be on the horizon.

While a comprehensive deal remains elusive, even minor tariff reductions could provide relief to businesses on both sides.

The coming months will be crucial in determining whether China can sustain its export momentum or if the tariff war will take a deeper toll on its economy.

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Bank of England cuts interest rates by 0.25% to 4.25%

BoE

The Bank of England has cut interest rates by 25 basis points to 4.25% on 8th May 2025 marking its fourth reduction since August 2023.

The decision, backed by a majority of the Monetary Policy Committee, reflects easing inflation pressures and a need to support economic growth.

Inflation, currently at 2.6%, is expected to rise temporarily to 3.5% due to household bill increases.

The cut will provide relief to homeowners and businesses facing high borrowing costs.

However, policymakers remain cautious, balancing growth stimulation with inflation control. Markets anticipate further cuts, potentially bringing rates down to 3.25% by year-end.

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U.S. Federal Reserve holds interest rates at 4.25% – 4.50% and upsets Trump in the process

Tariffs and the U.S. economy?

The Federal Reserve held its key interest rate steady at 4.25% – 4.50% on 7th May 2025, citing economic uncertainty and the potential impact of tariffs.

Fed Chair Jerome Powell emphasised that the central bank is in wait-and-see mode, monitoring inflation and employment risks.

The decision follows concerns that Trump’s trade policies could lead to stagflation, with rising prices and slowing growth.

While markets reacted positively, analysts remain divided on whether the Fed will cut rates later this year.

Powell stated that future adjustments will depend on evolving economic conditions and the balance of risks.

Trump’s take on this decision was reportedly to call Powell… a fool.

What is stagflation?

Stagflation is an economic condition where high inflation, stagnant economic growth, and high unemployment occur simultaneously.

It presents a challenge for policymakers because measures to reduce inflation can worsen unemployment, while efforts to boost growth may fuel inflation further.

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Signs of weakness in the U.S. economy – is a recession coming and is the United States causing harm to global economies?

Cracking world economies

The U.S. economy is showing cracks as multiple indicators suggest that growth may be slowing.

With GDP shrinking by 0.3% in the first quarter of 2025, concerns about an impending recession have intensified among analysts and investors.

A key driver of this economic downturn is the ongoing trade uncertainty, which has prompted businesses to stock up on imports before new tariffs take effect.

While some experts argue this is a temporary setback, others caution that prolonged trade conflicts could stifle growth for months to come.

Resilient labour market

Despite these concerns, the labour market has remained resilient, with unemployment hovering at 4.2%. However, signs of strain are emerging – job openings have declined, and layoffs have picked up in certain industries.

If hiring slows further, consumer spending could weaken, adding pressure to the economy.

Inflation remains another point of concern. Rising costs of goods and services have strained household budgets, leading to reduced discretionary spending.

The Federal Reserve, which has maintained high interest rates, is carefully assessing whether policy adjustments are needed to prevent a sharper downturn.

On Wall Street, sentiment is divided. Goldman Sachs estimates a 45% probability of a recession, while J P Morgan suggests the likelihood could be as high as 60%.

Some economists believe strategic trade deals and government intervention could avert a full-blown recession, but the margin for error is slim.

Does it really matter if there is to be a recession – it will likely be short lived. It will not please the U.S. President Donald Trump.

While uncertainty clouds the future, one thing is clear – the U.S. economy is at a pivotal moment. Whether policymakers can stabilise growth or if the nation is headed towards a deeper slowdown will depend on the next few quarters and the outcome of Trump’s tariffs.

Tudor Investment Corporation

Paul Tudor Jones, the founder of Tudor Investment Corporation, recently shared his outlook on the U.S. economy, and his perspective isn’t exactly optimistic.

He believes that U.S. stocks are likely to hit new lows before the end of the year, even if President Trump dials back tariffs on Chinese imports.

Jones pointed out that the combination of high tariffs and the Federal Reserve’s reluctance to cut interest rates is putting significant pressure on the stock market.

He reportedly noted that even if Trump reduced tariffs to 50% or 40%, it would still amount to one of the largest tax increases since the 1960s, potentially slowing economic growth.

The billionaire investor also warned that unless the Fed adopts a more dovish stance and aggressively cuts rates, the market is likely to continue its downward trajectory.

He reportedly emphasised that the current economic conditions – marked by trade uncertainty and tight monetary policy – are not favourable for a stock market recovery.

Interestingly, Jones also expressed concerns about artificial intelligence, stating that AI poses an imminent threat to humanity within our lifetime.

Maybe AI will start running hedge funds too…?

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S&P 500 achieves longest winning streak in two decades – then slides

S&P 500 hits new record!

The S&P 500 has surged to a new record, marking nine consecutive days of gains – its longest winning streak since November 2004.

This run came after significant market falls after President Trump announced his tariffs on Liberation Day in April 2025.

The index closed 1.47% higher on the final day of the streak on Friday 2nd May 2025, reflecting investor optimism amid shifting global economic conditions.

This historic run comes as China and the U.S. signal the potential of renewed trade discussions, easing concerns over tariffs and supply chain disruptions.

Additionally, a strong U.S. jobs report has bolstered confidence, with employment figures exceeding expectations. The rally has been broad-based, with technology, financial, and industrial stocks leading the charge.

Despite the impressive streak, analysts warn of potential volatility ahead. While the S&P 500 has demonstrated resilience, market corrections often follow extended periods of gains.

S&P 500 all-time chart as of 5th May 2025 – 9-day consecutive run record

S&P 500 all-time chart as of 5th May 2025 – 9-day consecutive run record

Investors are now watching for signs of consolidation or further momentum and that is down to Trump’s tariffs and the Fed’s interest rate decision.

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FTSE 100 achieves longest unbroken run since inception in 1984 – how significant is this record?

Longest FTSE 100 consecutive daily gains since 1984

The FTSE 100 has made history, recording 15 consecutive days of gains—its longest winning streak since its inception in 1984.

The index closed at 8,596.35 points, marking a 1.17% rise on the final day of the streak.

This remarkable run comes amid the potential of easing trade tensions between the U.S. and China, with signs that tariff negotiations may commence.

Investors have responded positively, driving up stock prices across multiple sectors. Financial stocks, including Barclays and HSBC, have surged following strong earnings reports, while industrial and mining stocks – such as Rolls-Royce and Rio Tinto – have rebounded.

Despite the impressive streak, analysts caution that uncertainty remains. The FTSE 100 has yet to reclaim its record high from March 2025, and concerns over global trade policies could limit further gains.

However, the index has still outperformed expectations, rising 4.9% over six months and 5.1% over the past year.

FTSE 100 one-month chart

FTSE 100 one-month chart

As investors celebrate this milestone, the question remains: can the FTSE 100 sustain its momentum, or is a market correction on the horizon?

Either way, this winning streak has cemented its place in financial history.