In today’s briefing:
- A Game Theory Analysis of the Trade War
- Estimating Downside Risk
- Copper Tracker 14th April 2025: Green Shoots Emerging After the Trump Tariff Fiasco
- Iron Ore Tracker (14-Apr-2025): Iron Within The Band, Set To Bounce On China Stimulus Talks
A Game Theory Analysis of the Trade War
- No country in the world will be spared damage in a trade war.
- Both the U.S. and China have outlined positions that are little more than posturing.
- However, a game theory analysis of the relative positions indicates that the U.S. holds a weaker hand than China.
Estimating Downside Risk
- The S&P 500 is deeply oversold by historical standards, but it remains an open question of whether stock prices will decline further after a short-term bounce.
- Our estimate of S&P 500 downside is 3900–4500 without a recession, with strong technical support at 4800. Downside risk with a recession is 3300-3800.
- Current readings indicate elevated recession risk based on consensus policy expectations, which can change at any time.
Copper Tracker 14th April 2025: Green Shoots Emerging After the Trump Tariff Fiasco
- The introduction of Trump Tariffs has adversely impacted the commodities market’s promising start to the year, except for gold, which has exceeded 3,200 USD/oz.
- Following a peak of 10,000 USD/ton on March 25, copper prices fell 14% to 8,600 USD/ton before rebounding in the past two trading sessions to 9,150 USD/ton.
- The dollar’s depreciation, Trump’s flexibility on tariffs, and anticipated acceleration in Chinese stimulus have created a more favorable market environment for copper.
Iron Ore Tracker (14-Apr-2025): Iron Within The Band, Set To Bounce On China Stimulus Talks
- Iron ore prices dropped by 5.5% last week, as the tariff war spooked the market and global recession fears gripped the market.
- With the temporary relaxation of the tariffs and a meeting of key Chinese leaders to front-load the stimulus, the market seems slightly less pessimistic about iron ore prices.
- With iron ore prices falling below USD 100 per ton, the higher end of the cost curve, we anticipate a slight rebound toward the USD 105-110 per ton range.
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