Thursday's Markets Update (March 27, 2025)

27 Mar 2025 by rate3

On Thursday, market indexes went down as core PCE jumped to 2.6% in Q4 (vs. 2.2% in Q3), and the economy expanded by 2.4% in Q4 compared to 3.1% in Q3 due to a sharp fall in imports (-1.9%), accompanied by a significant contraction in fixed investments (-1.1%) and intellectual investments (-0.5%). Still, the trade deficit remained at historic highs (-$148B), driven by a sharp rise in industrial supplies (+56%). On a positive note, pending home sales jumped to 2%—the first increase in 3 months.

World's Markets:

EU stocks fell, led by autos, on the announced 25% levies. The German car industry was hit the hardest, as it exports 25% of its output to America.
The Brazilian real continues to strengthen due to the central bank's persistent (since September 2024) hawkishness, added by carry trade amid one of the world’s highest interest rates. Markets went up despite a downgraded GDP projection (+1.9%), boosted by slightly lower inflation (5.26%).
Indian equities stalled after profit-taking, as tariff negotiations continued.
China tripled its debt issuance in Q1 2025 to 1.45T CNY (~$200B USD) and plans to raise it to ~12T CNY in 2025 to support economic growth. The country's industrial profits dropped, especially in coal mining (-47%), but rose in agriculture (+38%). Markets went down on tariffs.
Saudi Arabia's trade surplus, which is primarily made up of oil (69% of all exports) sales to China (13%), South Korea (10%), and Japan (10%), has been gradually diminishing after a 2022 peak when it reached $90B. At the same time, imports (primarily machinery and electrical equipment, which account for 25% of total exports) rose by 44% in December YoY. This shows that as de-globalization continues, regional production hubs are slowing down while the world's major manufacturing centers stall.
Commodities and Currencies:

The dollar index is down, while gold nears the record of $3.1K amid geopolitical and economic turmoil.
Crypto:

BTC, ETH, and SOL continued to side shift as crypto market inflows sank to a 2-year low, and sentiment remained stuck in "fear."
The State Of Markets: Mostly down, the tariff war continues to weigh on all the world's equities as traders succumb to fear and keep selling.

Comment: Strange Things Happening.

Even if you try to stay out of politics altogether, you can't help but notice a couple of strange things happening. The first is that the WH (a.k.a. "government") is saying that they want to "detox" the economy by getting government out of it. However, they do that through one of the most violent means available to government—economically and politically absolutely unsubstantiated, high-sky tariffs (a.k.a. "taxes")—or by having government 100% meddle with the economy.

Second, the WH is saying that "Canada and Mexico (a.k.a. the rest of the world) ripped us off," so now we will be "ripping them off" and implement "us first, no matter what" Truth. However, by doing that, the WH creates a "ripping" effect that not only will get back to them but also let others—even friends—displace us from "being the first" to "being out the door."

Third, the WH claims to be a "peace maker" by threatening independent and legendary peaceful countries with take-overs (a.k.a. "military invasion").

Fourth, the WH is saying that there is so much "fraud and crime" going on in the government without coming out with a shred of evidence. Moreover, if there has been so much (worth a "trillion" USD) "fraud," then mathematically it has to be accumulating over decades—including the time when the same (almost) WH administration was in power.

Fifth, despite all those strange discrepancies, every single major move of the WH can be explained (and even predicted) by one single thing—whether or not two personages—Barack Obama and/or Joe Biden—were somehow involved in that. So, the strangest thing to say (and I am not saying that I am saying that, of course) is that all of these gigantic geopolitical and economic missteps might be explained straightforwardly by one of the most rudimentary but very powerful human emotions—hate and vengeance?

Of course, this can't be, ever. So it's the strangest thing number Six.