The macroeconomic market has entered a low-volatility consolidation phase, with market sentiment returning to the familiar "Goldilocks" mode, and the stock and bond markets gradually rising under moderate economic data and declining volatility.
The Trump administration has released new developments on tariffs, but the market reaction has been relatively cold, indicating that the market has gradually become immune to such news. The latest reciprocal tariff policy has been postponed to April 1 and will be reviewed for major trading partners such as Canada, Mexico, India and China.
Overall, although the market has many imaginations about Trump's policies for his second term, the performance of Trump-related trades has not been good so far this year, lagging the broader market index significantly, with the US dollar and oil prices falling sharply, while emerging market stocks and currencies have performed relatively strongly.
Most notably, the Chinese stock market has performed exceptionally well, initially driven by the DeepSeek AI craze, and more recently by the warming of the government's relationship with domestic tech companies. The Hang Seng Index (HSI) seems to be poised to break out of its downward trend of many years, and important companies like Alibaba are also beginning to attract the attention of US fund managers and institutional investors.
US economic data has been lackluster, with last week's CPI data higher than expected, and last Friday's retail sales data weak, with the market's expectations for a June rate cut rising to around 60%. In a recent congressional financial services committee hearing, Chairman Powell has done his best to downplay market concerns about inflation:
"The CPI data has been almost higher than all forecasts, but I want to remind everyone of two points: first, we will not be overly optimistic due to one or two good data points, nor will we be overly pessimistic due to one or two bad data points. Secondly, our inflation target focuses on the Personal Consumption Expenditures (PCE) price index, as we believe it better reflects the state of inflation." - Powell, February 13, 2024
However, in this seemingly stable market environment, the EPS forecast for S&P 500 companies in 2025 has been significantly revised downward. In addition, Warren Buffet has also been gradually reducing his stock exposure, completely selling out his SPX ETF holdings in the fourth quarter of last year, including a significant reduction in his bank stock holdings.
Although the stock market has not risen much since the beginning of the year, due to the strong demand for physical gold delivery at major exchanges, gold prices have soared. According to a Bloomberg report, the amount of gold transferred from London to New York vaults approved by the US COMEX has increased by more than 70% compared to normal, with about 300-400 tons of gold having been shipped from London to New York over the past 8 months.
The market is concerned that Trump's tariff policy will drive up import prices, so traders have started hoarding gold on a large scale, and the Fed's nonchalance about inflation has further fueled market demand for gold.
In the cryptocurrency market, unlike the stable performance of gold, ETH has been struggling in adversity, with a 20% price drop so far this year, and actual volatility of around 60-70%, making it the worst performing asset among all major cryptocurrencies and major stock indices.
The only bright spot is that market sentiment towards ETH has become extremely pessimistic, and Trump's World Liberty Financial has been continuously buying ETH during this downturn, so will ETH be about to experience a Dead Cat Bounce?
On the other hand, although the BTC price is still fluctuating around $100,000, the cumulative inflow of funds into BTC ETFs remains stable. Tudor Investment's 13F filing shows that as of the end of 2024, the IBIT ETF was the fund's largest single stock holding (with an asset management size of $12 billion).
Finally, FTX will finally start repaying this week (starting with small accounts), and it remains to be seen whether this capital will flow back into the cryptocurrency market.
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