Link to report: dezernatzukunft.org/overcoming-m...
A big thank you to @jvtk.bsky.social! Possibly of interest to @olafstorbeck.ft.com @eurobriefing.bsky.social @chrisgiles.ft.com @joelsuss.ft.com @klaus-adam.bsky.social @isabelschnabel.bsky.social @vmrconstancio.bsky.social

Anyhow, US tariffs will be a multiple of what they were. Even if the end would be a 10% tariff on all countries this means a 500% increase. High uncertainty continues as before, and firms will continue to wait for the final negotiations results to make significant decisions.3/3

Negotiations were already foreseen or ongoing, so the delay just allows more time but may not mean a change in Trump’s underlying intentions. Hope just assumed final big reductions in the tariffs, and global markets soared (!!). Goldman withdrew a recession forecast (!!) 2/

The EA inflation deceleration will be helped if the retaliation in the trade war is not concentrated on high across-the-board tariffs, but more selective ones. This then should be accompanied by other retaliations on US firms, e.g. high-tech and financials 6/6

On the contrary, the ECB must cut rates now. It is 100% discounted by the market. Also, inflation in Europe will continue to subside, especially with the decline of oil and gas prices. “Drill, baby, drill” is dead but the high expectations on a recession makes it unnecessary 5/

The FED is in a bind. The tariffs induced price increases impedes beginning cutting rates. It will stay on hold for quite a while until concrete data of unemployment increases materialises. But the floor-system, allows liquidity interventions starting with stopping QT. 4/

The Treasury yields increase aggravate the fear of a repetition of the March 2020 Basis Trade crash involving hedge funds, when the FED had to massively buy Treasury bonds. Some academics and analysts are asking for a FED facility for hedge funds. 3/

The Trade war attained a new peak with an added US 50% tariff on China, bringing the total to 104%, and China retaliated again, bringing the total tariff on US to 84%, plus some export restrictions (eg rare earths) and US firms revised treatment 2/

Professor Scott Galloway
“No company over $1bn in revenue has ever lost 60% of its revenues in a 12 month period in a non-war period. I don’t think that’s ever happened. Twitter is literally the worst-performing business in history since a change in ownership.”

FT: “Trump wrote on Truth Social: “CONGESTION PRICING IS DEAD. Manhattan, and all of New York, is SAVED. LONG LIVE THE KING!”
The White House then shared Trump’s quote in social media accompanied with an image of a crowned Trump on a fake Time magazine cover

Trump will have his club of autocrats but the US will become internationally weaker, without friends or alliances. It’s also not good for the economy. Trump’s idea of a troika deal for the 3 halfing military expenditures is a pure illusion. Whither Europe alone? 6/6

The dangerous lesson for other countries is that sovereignty depends on having a nuclear deterrent. Will we see growing nuclear proliferation? The XXI Century really begins now and is it going back to the XIXth, with world fragmentation and imperialism? 5/

That’s the new international system Trump wanted. A World Troika of autocrats of the US, China and Russia, making deals and expanding their territories. He wants Greenland, Canada.…the others can have...Ukraine, Georgia, Taiwan? Europe doesn’t count- it has no hard power.4/

Realistically, a much different outcome was impossible with Europe also failing Ukraine: “European leaders clashed...in the event of a ceasefire.. the UK offered to put “boots on the ground”, Germany, Italy, Poland and Spain expressed reluctance to do so.”3/

Trump doubles down on reversing decades of US policy, adopting a pro-Moscow stance. The West and NATO are practically dead. Trump wrote: “A Dictator without Elections, Zelenskyy better move fast or he is not going to have a Country left.” It means, accept the settlement or…2/