First, Donald Trump said yesterday that the US and Japan made ‘big progress’ in trade negotiations. The latter headlines helped the Nikkei gain over 2% yesterday and extend gains by about 0.64% this morning. He also said that there could be a deal with the EU, even though I’m reading that the EU is preparing export restrictions toward the US, provided that the first round of talks didn’t result in anything other than frustration for the Europeans. The Chinese are open to talk if Trump and team respect them, so that’s not an easy win. But overall, things haven’t gotten worse over the past 24 hours—with the old friends, nor with China. The CSI 300 is preparing to close the week slightly higher. I guess that’s a win.

Politics, politics

While things look better across the global financial markets into this Easter Friday, they got worse with Trump’s long-time public enemy Powell—who was, by the way, appointed by Trump himself in his first term, but is not willing to cut rates as Trump would like him to! In fact, Powell didn’t react to the 20% selloff in US equities since February, and he didn’t even react to the bond selloff by buying bonds either... He basically didn’t do the kind of things you would expect him to do to help improve the market narrative.

Many now see this inaction—or reluctance to act—as a political choice to let Trump sink with the markets. Trump kept a poker face when stock prices dived, but he pulled out the white flag when bond yields spiked. Why? Because rising bond yields make borrowing costlier and interfere with his tax-cutting plans. And that further increases recession bets for the US. Worse, combined with rising inflation expectations due to tariffs, it increases the chances of stagflation in the US.

There are rising rumours that the US is already in a recession. Bloomberg Opinion warns, with a scary chart, that back in 2008, the recession wasn’t confirmed until the S&P 500 was down by 50% from its peak. The problem is, Powell doesn’t think so. Or... he does, but chooses not to say it for political reasons. The bad news is, if Powell doesn’t want to play ball, he could let the US economy—and the stock and bond markets—dive.

The other bad news is that his term doesn’t end before 2026. So when Trump says that the end of Powell’s term ‘can’t come fast enough’—that’s what he posted on Truth Social—he means it. The question is whether Powell could get fired. Apparently, Trump doesn’t have the power to do that.

In summary, Powell looks like the only one who could counter—and win against—Trump. But the markets could well continue to be the collateral damage. Interestingly, yesterday’s US jobless claims fell to the lowest level in two months, allowing Powell’s Federal Reserve (Fed) to use the “employment is stable and fine” narrative for a few more days.

Markets

The American chaos continues to weigh on the US dollar while helping major currencies perform surprisingly well in the face of tariffs, as other central banks fight alongside their economies to counter Trump’s aggressions. The EURUSD was slightly softer yesterday after the widely expected 25bp cut from the European Central Bank (ECB), but the single currency is better bid this morning despite expectations that the ECB will continue cutting rates. The Stoxx 600 closed above the major 38.2% Fibonacci retracement of the March–April retreat, in the bullish consolidation zone—hinting that if trade tensions ease, the rebound could continue.

In the US, the S&P 500 and Nasdaq 100 closed flat yesterday. TSM gained 0.10% after announcing Q1 results—yes, only 0.10%—despite reporting a 60% increase in net income last quarter, which was higher than expected, and despite maintaining its full-year revenue growth forecast. They still expect mid-20% growth in USD terms this year. In vain. Nvidia—which would normally be expected to react positively to such news—dropped 2.87% yesterday and tested the $100 per share level. The $100 level will probably attract some investors despite the uncertainties. And if we see improvement in trade negotiations—I know that’s not a given—but if we do, tech, energy, and financials could rebound more strongly than other sectors.

And if you’re looking for a chaos-proof place, don’t look further than Netflix. The company announced yesterday a 12.5% increase in revenue compared to a year ago. Net income rose 24%, EPS comfortably beat expectations, and operating margin climbed from 28.1% to 31.7%. As expected, Netflix stopped disclosing the number of new subscriptions to steer investor focus toward profitability. They are also expected to see only a limited impact from tariffs, since analysts don’t expect users to cancel Netflix accounts just because their purchasing power is hit by rising prices. The stock price jumped 3.5% in after-hours trading.

Alas, markets are closed due to the Easter holiday. It will be a calm day, so I’ll wrap up the week and wish you all a Happy Easter break!