Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
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Key Stories from the past week: Tariffs and slipping consumer confidence
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Trump’s trade war escalated ahead of next weeks planned universal tariffs on all countries. And Trump threatened further tariffs on the EU and Canada if they work together "to do economic harm" to the US. France and Spain released surprising low CPI inflation data, with the Marts CPI hitting 0.9% YoY in France. ECB rate cut expectations for the upcoming meeting on 17 April rose to 86% up from 75% earlier in the week.
Autos tariff shock
Automakers across the globe were battered on Thursday after US President Donald Trump announced significant tariffs on imported vehicles and parts, pressing ahead with tough trade policies many fear will spark a recession.
Car tariffs are worse than the worst case scenario
Lululemon signals a consumer slowdown
Activewear maker’s Lululemon shares tumbled 14% as the company’s annual forecasts for sales and profit disappointed, causing concerns that growth will remain weak in American markets. Lululemon furthermore said that US shoppers are keeping their wallets tight and visiting stores less often amid geopolitical strife and high inflation.
Lululemon falls as financial guidance disappoints
Turkish Lira remains under seige
Turkish lira remains under pressure following the weakness experienced last week, where it lost some 10% at one point and hit an all-time low. The weakness comes following the detention of the Mayor of Istanbul. The lira stabilized this week following responding to actions by the Central Bank, where it raised the overnight lending rate to 46% from 44% in an attempt to shore up financial markets. In addition to that, the Central Bank spent some $25 billion defending the currency. Demand for spot remains high despite the Lira seeing equilibrium this week.
Lira interventions unlikely to prove sustainable
Next week’s big event will be the 2nd April ‘reciprocal’ tariff deadline which Donald Trump has referred to as ‘Liberation Day’. Investors will have to react to what is and isn’t implemented in what threatens to be more far reaching that the import levies enacted to date. The economic calendar includes Chinese Mar PMIs, German Mar CPI (Monday), Eurozone Mar CPI, US Manufacturing Mar PMI, US Feb JOLTS (Tuesday), US Mar ADP employment (Wednesday), US Mar Non-Manufacturing PMIs (Thursday), German Feb Factory Orders, US Mar Nonfarm Payrolls, US Mar Unemployment rate (Friday).
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