Friday's Markets Update (March 7, 2025)

08 Mar 2025 by rate3

On Friday, stocks rebounded on Powell's remarks about the strength of the economy despite unemployment rising to 4.1%, while it jumped to 8% (from 7.5%) - the highest since October 2021 if part-timers are counted.

World's Markets:

The EU economy grew by 1.2% YoY in Q4 - the fastest since 2023 - driven by growing consumption, led by Spain and followed by France and Italy, while German GDP shrank. EU stocks closed lower under the weight of the banking and retail sectors.
The Brazilian economy showed growth of 3.4% in 2024 - the best since 2021 - but decelerated on a quarterly basis across both industry and services. Meanwhile, the country's trade balance turned to a deficit due to plummeting resource exports and a 30% jump in manufacturing imports. Markets reacted with a decline but then rebounded on technical factors.
Indian stocks remained unchanged, but capital flight continues.
Chinese equities closed lower as exports dropped more than expected due to the trade war.
Commodities and Currencies:

Oil prices increased after Trump threatened to impose sanctions to stop the war. The dollar remains near a 4-month low after five days of decline - the longest streak in a year. Gold is trading near its ATH. Food prices increased globally, led by sugar and dairy products.
Crypto:

BTC, ETH, and SOL continued to fluctuate within a converging triangle, with bearish traders' sentiment prevailing after "Trump's tariffs crush.
The State Of Markets: Mostly Down, with American equities experiencing a technical correction upward, also helped by Powell's remarks, despite worsening macroeconomic conditions, while the rest of the world's markets either declined or stalled due to the trade war.

On Week 11, investors will monitor domestic inflation, job openings, and consumer sentiment, UK GDP, and Germany's trade balance. Canada's rate decision, China's CPI, and India's inflation will also be key, alongside industrial data from Turkey and the Euro Area.

Comment: Well-Wishing Horseman Of Apocalypse.

If the plan of the White House is to cause a full-scale recession by crushing the markets and increasing inflation in order to spark the 'American ingenuity,' which then will make 'America Great Again,' this plan might be called Apocalyptic. Here's why.

To have a breakthrough on a country level, there must be preliminary conditions that will make it possible. The number of those conditions is very limited: sheep, educated and very productive labor, an abundance of readily available and easily accessible natural resources, a regulatory environment with very low taxes and the absence of bureaucratic barriers for entrepreneurship, an increasing uninterrupted flow of investments, and, most importantly, very large and growing markets (external or internal) that will be able to consume all produced products and services.

At present, none of those conditions are present in America. Labor is very expensive, easily available resources are very limited, and their extraction is very costly. The regulatory environment is very complex and non-inviting, especially for SMEs. Internal consumption is only 50% of national GDP, so it will be necessary to open external markets to boost current GDP further, which is not possible due to a growingly hostile geopolitics. The only readily available factor is investments, but if the current Administration intends to crash stocks, this resource will be depleted. The notion that DOGE will free SMEs from regulation has not yet been realized and, by the look of it, won't be realized soon.

So, if the current Washington Administration's plan is, indeed, to orchestrate the recession (I am not sure if that is true or not) to 'clear the field' for genius entrepreneurs, it might be compared to the plan of Emperor Nero, who burned the Rome to free places for his new edifices and, of course, to amuse and immortalize himself at the same time.