Monday's Markets Update (March 3, 2025)

03 Mar 2025 by rate3

On Monday, stocks went down as manufacturing activity slowed, faced with price growth due to tariffs, new orders shrank sharply, and personnel lay-offs increased.

World's Markets:

European corporate purchasing continued to contract at a slower pace but with accelerating job shedding for the third year, led by Spain, while Germany, France, and Italy saw lesser rates of decline. EU yearly inflation declined to 2.4% due to energy and services, while food inflation is on the rise. Defense stocks surged after the EU confirmed support for Ukraine over the weekend. EU bonds jumped as traders faced increased debts and inflationary pressure bolstered by sharply rising military budgets.
India's business purchasing activity expanded at a slower pace for the second year as economic growth decelerated.
Brazil's business activity picked up strongly for the first time in three months, driven by new business creation.
South African factory activity dropped for the fourth month in a row, impacted by diminishing foreign trade as the country's political tensions with America intensified.
Chinese companies expanded their purchases for the third month in a row, struggling to meet their growing production demand.
Indonesia's inflation fell below zero, marking the country's first monthly deflation in 25 years. This came after the government slashed electricity prices by 50%. Core yearly inflation remained above 2.4%.
Turkey's price growth continued to decelerate for the ninth month in a row, led by food. Still, at 40%, the country's yearly inflation remains one of the highest in the world.
Commodities and Currencies:

Gas prices jumped by 5% after the Trump-Zelenskiy debacle on Friday dampened hopes for a rapid peace deal and the resumption of gas flows to Europe.
Crypto:

BTC, ETH, SOL, ADA, and XRP went up by more than 10% on Sunday after being included in the crypto strategic reserves. However, this sharp rise was reversed the next day, wiping out all profits in what is starting to look like a classic 'Trump's Pattern.' - up-on-hopes-down-on-tariffs.
The State Of Markets: Mixed, with the surging EU defense sector and American equities dropping due to tariffs and slowing manufacturing.

Comment: Patriots Tax.

Economically, Trump's policies might also be viewed as imposing a 'patriots' tax' on the country's consumers and entrepreneurs in the services sector, which was burgeoning during the period of external trade liberalization, while manufacturing activity migrated to countries with the lowest production costs, according to David Ricardo's law of comparative advantage.

Now, with 'America First' taking over Washington, economic considerations have given way to political and military ones. These considerations require asserting American political influence over both foes and allies by weaponizing trade and forcing American corporations to re-shore for the sake of 'national security' and to further bolster voter support in the country’s few remaining industrial regions.

As this policy is grossly 'anti-economic,' it imposes a huge tax burden on consumers and decreases the international competitiveness of the remaining 75% of the American economy, effectively imposing on it a 'military tax.'

Basically, megalomaniacal autocrats on both sides of the world now tell both consumers and entrepreneurs that they have to shut up and pay the bill for their countries' 'self-sufficiency' and military readiness at the expense of their own households and businesses.