In today’s briefing:
- Smart Coffee: 7 April 2025
- EUDR May Be Subject To Revision
- ‘China Plus’ Is Collateral Damage of ‘America First’
- US Bear Market: THIS TIME IS DIFFERENT!
- CX Daily: China’s Export Machine Stalls Under Trump’s New Trade Blitz
- India: RBI Turns Accommodative; Expect Another 100bp of Rate Cuts by Dec’25
Smart Coffee: 7 April 2025
- An interesting day for the market after the announcement of tariffs previous day.
- When analyzing this market move, it may help to look at the countries affected by tariffs in terms of the amount of tariffs (fig. 1, fig 2.). vs the movement on the main indices in that country.
- Many impacted indices are 5% to 10% in the red in April as a result, including the EU indices.
EUDR May Be Subject To Revision
- Importers labeling rubber used as synthetic or compounded to avoid due diligence
- Automated checks may miss incorrect documentation
- Ongoing review for the list of products which need documentation before entering EU
‘China Plus’ Is Collateral Damage of ‘America First’
- The swift escalation in the US-China trade war would ordinarily have been a trigger for faster supply chain diversification.
- But this is unlikely amid skyrocketing uncertainty. Investments will likely slow to a crawl over 2025-26, as firms delay decisions on expansions and relocation of production to new destinations.
- Firms cannot move manufacturing to the US at the rapid pace at which tariffs are being implemented, without running into production bottlenecks and higher costs.
US Bear Market: THIS TIME IS DIFFERENT!
- The US dollar and US treasuries are no longer a safe haven in the wake of the US market sell off.
- Tariffs undercut primary reasons for foreigners to buy and hold US dollar assets, including recycling of export earnings by foreign countries. Lower consumption and higher inflation are additional headwinds.
- Foreign holdings of US stocks and debt will decline as the US isolates itself from the global trading system.
CX Daily: China’s Export Machine Stalls Under Trump’s New Trade Blitz
- Tariffs /In Depth: China’s export machine stalls under Trump’s new trade blitz
- Hong Kong /: Hong Kong stock market rides tech fever to bumper first quarter
- Jewelry /In Depth: For Laopu Gold, the jewelry isn’t the only thing that’s expensive
India: RBI Turns Accommodative; Expect Another 100bp of Rate Cuts by Dec’25
- The Reserve Bank of India (RBI) cut its policy rate by 25bp for the second consecutive time, and shifted from a neutral to an accommodative monetary stance.
- With inflation likely to moderate sharply to 3%YoY in FY26, we expect another 100bp of rate cuts by Dec’25, taking the repo rate down to 5% in Dec/25.
- Real GDP growth averaged 8.2% in FY22-FY25. Lower income tax and interest rates are set to bolster PCE and investment, enabling real GDP growth to rebound to 8% in FY26.
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