Daily Newsletter 4/9/25
President Trump's 104% (this includes an initial 34% tariff under the reciprocal tariff strategy, followed by an additional 50% increase and another 20% added earlier this year tariffs) on Chinese imports went into effect at midnight, escalating the trade war.
Meanwhile, China has retaliated by raising tariffs on U.S. goods to 84%, up from its previous rate of 34%, effective April 10, 2025.
China's decision has further complicated the global economic landscape.
Individual investors who attempted to buy the dip faced a setback as stocks surrendered their strong opening gains and plunged into negative territory by the afternoon.
We believe the market downturn will persist at least until there is clarity regarding tariffs.
Certainly, a bounce is possible. However, for a full recovery, markets require greater clarity.
We believe that if the global market sell-off persists, central banks will eventually need to step in and inject liquidity into the markets. In times of heightened uncertainty, it is crucial to pay attention to the statements made by Federal Reserve officials. Federal Reserve officials, including Daly and Barkin, are scheduled to speak later in the day, potentially providing insights into monetary policy amid heightened trade tensions.
The Federal Reserve is addressing challenges related to its dual mandate: maintaining inflation control while ensuring the achievement of maximum employment- lower interest rates to mitigate the risk of a recession or keep them elevated to prevent a potential surge in inflation-. The PCE inflation rate stands at 2.5%, exceeding the Federal Reserve's 2% target. Meanwhile, President Trump is urging the Fed to immediately lower interest rates.
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