In today’s briefing:
- US vs EU: Worse to Come
- Tariff Doesn’t List Tire But Throws US Auto Industry Into A Tizzy
- Commodities Crash after Trump’s Tariff Nightmare
- Steno Signals #192 – A March 2020 style reset. Is this a liquidity event?
- Crafting Investment Policy in an America First World
- Europe: Buy On Dip
- [IO Technicals Weekly 2025/14]: IO Volatility Set to Rise Amid Trade Tensions
- [US Nat Gas Options Weekly 2025/14] Henry Hub Retreats Amid Tariff Shock and Warmer Weather Outlook
- Asia base oils demand outlook: Week of 7 April
- The Drill: The Commodity Doom-Loop into Liberation Day
US vs EU: Worse to Come
- Policymakers and investors are not fully recognizing the threat posed by the US in response to ‘Liberation Day’.
- The threat level has increased as ‘transactional Trump’ is replaced by a new president.
- The new president aims to return the US to a perceived golden era in his mission to ‘make America great again’.
Tariff Doesn’t List Tire But Throws US Auto Industry Into A Tizzy
- White House said on March 26 that the 25% tariff would be applied to imported passenger vehicles
- Annexe II, which refers to tariff exclusions, mentions rubber
- Stellantis halts its Canada, Mexico production
Commodities Crash after Trump’s Tariff Nightmare
- *YTD our absolute return strategy is up 7,5% Commodities Crash after Trump’s Tariff Nightmare In his mission to re-shore critical industries, raise revenue for the U.S. and narrow the deficit, Trump rolled out aggressive tariffs on virtually all countries (except Russia, Cuba and North Korea).
- The new 10% tariff baseline is roughly triple the average US tariff rate before Trump reclaimed power in January and the calculation behind each tariff rates seems insane.
- “We will charge them approximately half of what they are and have been charging us,” Trump said of the reciprocal tariffs.
Steno Signals #192 – A March 2020 style reset. Is this a liquidity event?
- Happy Sunday from Copenhagen, if I am allowed to say that after a horrendous week in markets.
- Markets are heading into a tense week as the U.S.-China trade tensions escalate and Europe appears poised to introduce digital tariffs — likely targeting the Magnificent 7 — in response to Trump’s proposed tariff agenda.
- By late Friday, the U.S. dollar surged sharply, accompanied by early signs of capitulation in traditional safe-haven assets like gold and Treasuries.
Crafting Investment Policy in an America First World
- If Trump succeeds in his America First policy, the new winners will be America’s suppliers of labour. The obvious loser under Trump’s win-lose worldview will be the suppliers of capital.
- The investment environment in an America First world will be riskier. Expect more sovereign defaults and restructurings.
- The benchmark portfolio under the new regime should be a basket of global assets.
Europe: Buy On Dip
- Markets are correcting globally on the back of Trump’s Liberation Day tariff bombshell. This an opportunity to increase exposure.
- Business cycle fundamentals, including the corporate profit upcycle, warrant a buy on European equities.
- Value and quality stocks are recommended. Sector bias is towards consumer staples, tech hardware and defence before moving into consumer discretionary and industrials later in the year.
[IO Technicals Weekly 2025/14]: IO Volatility Set to Rise Amid Trade Tensions
- SGX Iron Ore Futures fell $2.78/ton WoW, closing at $99.45/ton on April 4 after breaching key support levels and trading in a wider $5.95/ton range.
- U.S.–China tariff escalation led to a MACD-confirmed downtrend and prices plunging below 100- and 200-day DMAs, signaling heightened bearish momentum.
- Despite sharp price drops, implied volatility declined across all deltas reaching new lows for the year, with skew falling to +0.5%.
[US Nat Gas Options Weekly 2025/14] Henry Hub Retreats Amid Tariff Shock and Warmer Weather Outlook
- For the week ending 04/Apr, U.S. natural gas prices fell by 5.6% on the back of Trump’s tariffs and warmer weather forecasts.
- U.S. natural gas futures continued to decline on 07/April (Mon), hovering around a seven-week low and extending last week’s 5.6% loss.
- Henry Hub OI PCR fell to 0.97 on 04/Apr from 0.98 on 28/Mar. Call OI increased by 5.3% WoW, while put OI grew by 5%.
Asia base oils demand outlook: Week of 7 April
- Asia’s base oils demand could fall in face of slumping crude oil prices and concern about slower-than-expected economic growth in the region.
- Concern about weaker demand cuts fundamentals-related support that could cushion against impact of falling crude oil prices.
- Concern about more muted demand and expected improvement in base oils supply in coming weeks would contrast with increasingly high base oils margins caused by lower crude oil prices.
The Drill: The Commodity Doom-Loop into Liberation Day
- President Trump very clearly lost his patience over the weekend and sharpened his rhetoric against Putin sharply (Iran too – more on that later).
- Trump is now threatening third-party tariffs on countries buying Russian oil – namely China and India, of course.
- To me, this is a sign that Putin is dragging out the negotiations, leveraging the fact that he is in no hurry to reach a peace agreement.
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