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US MARKETS

Wall Street’s rocky week went from bad to worse on Thursday, with stocks tumbling ahead of the all-important U.S. jobs report as markets largely shrugged off Trump’s latest attempt to soften tariff actions.

The temporary rollback on steep tariffs targeting Canada and Mexico was supposed to ease market tensions, but traders weren’t biting. Instead, the focus remains on a now undeniable slowdown in the U.S. economy—a reality that’s been creeping up for months but is now flashing in bright red warning lights.

It’s becoming painfully clear that White House moral suasion is proving ineffective against the relentless fog of trade uncertainty. When markets don’t know what’s next, they sell first and ask questions later. The unpredictable swings in policy and their corresponding economic ripple effects are keeping investors firmly on edge, with significant market fluctuations becoming the new normal.

While there may be glimpses of compromise on trade, the underlying macro forces suggest that volatility is here to stay. Until factual clarity emerges on near-term trade protocols, market participants are left grappling with one key question—what’s next, who’s next, and to what magnitude?

Thursday’s market mayhem had everything—a rate cut from the ECB, Germany’s biggest fiscal splurge since reunification, and yet another brutal selloff on Wall Street. The U.S.-Europe divergence isn’t just widening; it’s becoming a full-blown chasm.

Wall Street got clobbered by a nasty cocktail of historic layoffs, a record trade deficit, and lingering trade war confusion. Trump may have thrown a bone with temporary tariff exemptions, but traders weren’t biting. All three major U.S. indices sank as the fog of uncertainty thickened.

Now, all eyes are on Friday’s U.S. jobs report and Powell’s speech. Sentiment is already circling the drain, and if Powell doesn’t deliver a dovish lifeline, markets may be in for an even rougher ride. The bar for a relief rally keeps rising, and at this rate, it might take a full-blown Fed pivot to shake off the gloom.

ASIA MARKETS

Asian equities are set for a turbulent session as Wall Street’s struggles spill over into Friday’s trading. With U.S. markets closing lower amidst a trifecta of concerns—tariffs, slowing growth, and overarching uncertainty—investors in the region are bracing for potential downside across key indices.

EUROPEAN MARKETS

The ECB played its part, delivering the widely expected rate cut, but Lagarde’s messaging stole the show. With Germany set to unleash a trillion-euro spending tsunami, Lagarde adopted a stance of “attentive and vigilant”—which is central bank code for, “We have no clue how this plays out, but good luck to everyone.”

The market response? German stocks roared to fresh all-time highs, bund yields ripped higher, and eurozone growth forecasts got a rapid upgrade. Meanwhile, over in the U.S., it was a completely different horror show.

Germany’s decision to unleash its biggest public spending spree in 35 years is already sending shockwaves through European debt markets. Long-term borrowing costs across the eurozone are climbing, and while that’s a given in any major fiscal expansion, the global implications remain an open question. Is this a net positive or just another slow-burning debt bomb?

For now, the honeymoon phase of Germany’s fiscal splurge is still running its course. Markets are giving it the benefit of the doubt, pricing in stronger growth rather than focusing on the long-term risks. Sure, bond yields can spike for the wrong reasons—widening deficits, ballooning debt loads, or rising inflation—but they can also rise for the right reasons, like stronger economic momentum and improved investment prospects, which is clearly the initiall market take

The key issue? Germany’s spending binge isn’t just about Germany—it’s burdening the entire EU debt load most can’t handle. Historically, these kinds of aggressive fiscal shifts come with consequences, and at some point, the reality check will hit. But until then, the short-term takeaway is simple: for now, markets are happy to ride the euro-positive wave, and the growth narrative is winning the battle.

THE VIEW

While many traders will argue otherwise, I’ll put my hands up on this one—the “Deal Maker in Chief” Trump Put is still in play, but in this “ America First” rewrite, Main Street comes first. The breadcrumbs are there, and his key lieutenant is strategically dropping them, Treasury Secretary Scott Bessent, who has been subtly floating the idea of a “rebalance” toward small businesses and consumers. That’s the political code for shifting economic muscle away from Wall Street and back to Main Street.

But here’s the kicker—activating this "put" likely requires either the Fed blinking or the S&P 500 taking a proper beating, somewhere in the 5-10% range. Historically, Trump has treated the stock market as the ultimate barometer of economic success, but this time, something feels different. Even when markets were rallying, he was unusually quiet—a subtle but telling shift in priorities.

Rather than obsessing over Wall Street, Trump’s focus appears to be on Main Street, particularly in engineering lower interest rates to make housing and borrowing more affordable for the average American. So be it if that means letting markets sweat a little to force the Fed’s hand. This could be less about market optics and more about setting the stage for a lower-rate, pro-consumer economic environment heading into 2026. And, of course, this will be an environment that benefits all stock and companies, but more so in the low to mid-cap sector.

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