It's not just a difficult story
After all, President Trump was not bluffing.
Global markets plummeted on Tuesday after US tariffs came into effect on imports worth around $1.5 trillion from Canada, Mexico and China.
China and Canada are already responding, with Beijing targeting the American centres to stop taxing imported food and shipping logs and soybeans from select American companies. Mexico is also planning to retaliate.
Escalation warns consumers and businesses that they will soon see higher prices, making global business leaders increasingly worried about what will come next. Warren Buffett reminded us of what the global economy is facing. “Trist” and billionaire investors said this week that it was “some degree of war.”
This is the latest:
Stocks in most Asia and Europe fell on Tuesday after the S&P 500 experienced the worst day drop this year yesterday. US stock futures fell slightly on Tuesday.
On Tuesday, stocks from European automakers, including Volkswagen, BMW and Daimler Truck, were particularly strong hits. Taxation could denounce sectors that rely heavily on complex cross-border supply chains.
According to Deutsche Bank, Wall Street's so-called fear gauge, CBOE Volatility Index, has jumped the so-called fear gauge commonly known as the VIX, posting the biggest one-day spike of the year.
The sale has also been extended to cryptocurrency (more on more), and in a new twist the dollar.
If global investors weren't scared before, they seem to be what they are now. “The market ultimately led the Trump administration to that word and the perception that tariff talks aren't just about negotiation tactics,” Northwright Asset Management investment strategist Chris said yesterday evening.
How long will the trade war last? Analysts see reasons for cautious optimism, at least in China. “We believe Beijing's response is still strategic and restrained,” Xiangrong Yu, chief China economist at Citigroup, said in a research note on Tuesday. He said the trade deal was still “plausible.”
Shanghai's combined index closed slightly on Tuesday.
Marketwatchers warn of deep consequences if the trade war is dragged over. Trump appears to be digging up, telling reporters yesterday that “there are no rooms left in Mexico or Canada.” Mark Haefele, chief investment officer at UBS Global Wealth Management, told Bloomberg Television on Tuesday that the long-term battle could hamper global growth and drive inflation, all of which could “hamstring the Fed.”
Analysts are looking at the US Central Bank suspending interest rate cuts until inflation approaches its 2% target. That would increase the chances of a clash with Trump, which pressured the Fed to reduce borrowing costs.
The dollar is worth seeing. Investors are now worried about inflation and US growth. This is a factor that could make the White House a rethink of tariffs.
That said, investors appear to be flocking to safe seafarers' bonds, and for now they've put pressure on the Ministry of Finance.
This is what's going on
The United States has suspended all military aid to Ukraine. President Trump said he would soon halt more than $1 billion in weapons and ammunition on his way to Ukraine, and would only resume after Volodymyr Zelensky determined he had committed to peace talks with Russia. This move, coming just days after the explosive oval office conflict, is the latest sharp break between Washington and Kiev. European Commission head Ursula von der Leyen said that the European Union could increase the number of euros ($840 billion) by up to 800 billion euros ($840 billion) to help Ukraine defend it. Separately, Bloomberg reports that Russia has agreed to support brokers discussing between the White House and Iran on a variety of issues, including the nuclear program.
The world's largest chipmaker has announced a $100 billion US investment plan. The Taiwanese semiconductor manufacturer that produces Nvidia and Apple processors said it plans to expand its plants in the US and hire more workers. The onshoring investment initiative is the latest from the corporate giant as the Trump administration focuses on strengthening American manufacturing. See also Apple and SoftBank. Washington and Wall Street fear that supply chains could be interrupted if tensions intensify between China and Taiwan.
Kroger's CEO suddenly resigns in an investigation into his personal behaviour. The grocery chain said it determined that Rodney McMullen's actions were “inconsistent” with business ethics policies but not financial performance of other employees or the company. This is Kroger's latest twist after his efforts to buy rival Albertsons, with nearly $25 billion blocked by regulators. Speaking of Albertsons, CEO Vivek Sankaran had resigned as part of a planned retirement.
Elon Musk's government efficiency removes more claims of savings. The organization erased about $4 billion from saying it saved taxpayers last week, including five of its seven biggest items, The Times reports. According to a new poll, this is a sign of the latest obstacles in the initiative, where cost-cutting efforts are not popular among Americans.
What Trump's Crypto Spare Plan lacks
Crypto Market states: After President Trump's National Cryptocurrency plan drew backlash from both Republicans and investors, the price of digital tokens involved rose high and then fell. (Bitcoin was trading at around $83,800 early on Tuesday, but it fell by about $10,000 from a day ago.)
The plan drove many questions about how it works and the risks it involves. Here are some of the questions we are asking:
How do national reserves work? Trump campaigned last summer to create a stockpile of federal Bitcoin, and appointed David Sachs to his Crypto Czar. The advisors suggest that the government already holds Bitcoin seized from criminals, and is estimated to be around $17 billion recently.
The bill proposed by Sen. Cynthia Ramis, a Republican of Wyoming, directs the government to purchase approximately 200,000 Bitcoin per year over five years. (To help with that payment, the bill proposes taking $4.4 billion from the Fed's surplus, cutting the Treasury funds.) Of course, the prices of digital tokens will likely rise in anticipation of those federal purchases.
One unknown is whether Trump will unilaterally attempt to test the legal restrictions of his authority in the face of division among Republican lawmakers over the idea of reserve.
Does taxpayer money involve? The prospects were the most criticised. “It's wrong to tax me on the crypto brothers scheme,” Trump supporter investor Joe Lonsdale said. Another investor called “unforced errors” “to enrich insiders and creators of these coins at the expense of US taxpayers.”
Some crypto executives have come to the idea of creating specific taxes to fund reserves, including collecting in transactions that include the $27.6 trillion stubcoin market.
How does the government hedge against crypto volatility? Given the wild shaking in digital currencies, the prospect of taxpayer money being effectively used for speculative investments has sparked real concern. “There's nothing strategic or wise about this idea,” Cornell University economist Eswar Prasad previously told The Times' David Yaffe-Bellany. “This is certainly great for current Bitcoin holders and certainly bad for taxpayers.”
That also means that the US government is acting as a capital allocator. The concept plunders the concept criticized in a 2021 post that resurfaced after Trump's proposal.
What are the advantages? In theory, the government could use the benefits from crypto investments to pay back the country's $36 trillion in debt.
But skeptics say the most obvious winner is Trump himself. He has developed his own crypto venture, carrying millions of dollars tokens with tokens to be included in the sanctuary. Others are crypto executives, many of whom have contributed extensively to Trump's reelection efforts. One example is Ripple, whose XRP token is one of five that Trump has included, donating $45 million to industry-wide PACs that sought to help Trump and other Republicans elect.
What else do you know? a lot. The fund's strange lineup of tokens suggests that Trump is being advised by a rather narrow group.
A new test of investor appetite for AI
Stocks in seven tech giants that shook last year amid Wall Street's desire for artificial intelligence have fallen more than 10% in the past two weeks. However, this does not mean that investors are making AI bets completely sour.
The new funding round, and potential IPOs, suggest that startups and their backers believe there is still a lot of desire for players who are promising in this space.
Example 1: Humanity. The company, whose AI model competes with Openai, said it had shut down its $3.5 billion funding efforts yesterday, closing its $3.5 billion funding efforts, which rose sharply from $16 billion a year ago.
The round was led by Lightspeed Venture Partners and also included Bessemer Venture Partners, Fidelity and General Catalyst. (Existing artificial supporters include Amazon and Google.)
Example 2: CoreWeave. The company, which provides cloud-based NVIDIA processing power to its customers, including Meta and Microsoft, submitted it to be made public yesterday.
CoreWeave said its revenue last year was up to $1.92 billion, up more than 700% from 2023. Almost two-thirds of the sale were Microsoft, the chief backer of Openai. (Note: the three founders of CoreWeave collectively sell holdings worth almost $500 million in the company.)
Many other AI companies are looking for money, including Elon Musk's Xai. This is under discussion for new funding that could almost double the valuation set just two months ago. Investors are still in trading mode. SoftBank, which has a heavily bet on AI, believes it plans to borrow $16 billion to fund those bets, according to the information.
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The Walgreens Boots Alliance is said to be close to a deal to sell to private equity firm Sycamore Partners for around $10 billion. (WSJ)
Mark Walter, CEO of Guggenheim Partners, and Thomas Tull, founder of film studio Legendary Entertainment at FINVINER, have founded a $40 billion vehicle to invest in the artificial intelligence business. (ft)
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