Fed, Tariffs, and global strife shape market outlook

In this report:

• Data This Week.
• Liberation Day.
• Headlines Unfavourable For Risk Assets.
• More Cuts?
• Cryptonary's Take.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Data this week:

First, let's quickly revisit last Friday's data and the concerning PCE print. The month-on-month figure came in at 0.4% (hot), and the year-on-year figure came in at 2.8%. Both were above their forecasts. Markets have since not reacted well off the back of this, Core PCE (inflation) up whilst growth looks to be slowing amongst all the policy and tariff uncertainty.

This week, we have JOLT's Job Openings on Tuesday, which is expected to come in slightly less than the previous months' figures. Although data-wise, we expect Friday's jobs data (Non-Farm Payrolls and Unemployment Rate) to potentially be more market-moving.

Non-Farm Payrolls is forecasted to come in at 80k, whilst the Unemployment Rate is expected to rise to 4.2%. If the figures were to come in in line with these forecasts, the market would likely sell down on this, as this would potentially be the signs of a real slowdown.

'Liberation day':

This Wednesday is 'liberation day' according to President Trump. This is the day that reciprocal tariffs are implemented. 7-10 days ago, we saw President Trump hint that the tariffs might be 'softer' than had been initially suggested.

However, over the last few days, we've seen that stance harden again, which saw the Index's close substantially lower in last Friday's trading session. Look at the chart of the Nasdaq below.

NDX 1D timeframe:

This whip-sawing from the Trump administration, and to be honest, more just Trump himself, is what's seeing the overall level of uncertainty remain very elevated, and hence the market is not seeing any form of sustainable bid. And why would it? We currently have an administration that almost seemingly looks like it wants to orchestrate this move lower in the markets.

Our expectation is that the tariff numbers announced are going to be big, and if so, the likely result will probably be a significant move lower in risk assets, and a move down that looks more like a 'puke out' rather than an orderly sell down, which is probably what we've seen so far.

In our view, it was only until late last week that we began to see the market really take 'strong tariffs' more seriously, hence we saw the move down in the Index and BTC that we saw. We're expecting strong tariffs, ie, high numbers; however, if the tariffs do come in 'softer' (numbers that are lower than what has been suggested), then the risk could see a substantial rebound rally, as last week's market fears that are now becoming more priced in, unwind.

Headlines unfavourable for risk assets

Adding to all of the above, over the last few days, we've seen a plethora of negative news come out, which just continually adds to the uncertainty. Just over the last few days, we've seen:

• Trump is threatening Iran over their nuclear program,
• Trump is threatening Russia with oil penalties should they not look to agree on a peace deal,
• Trump suggests there are 'methods' for him to run for a third term.

As we've said already, it's almost as if Trump and his administration are trying to engineer a crash here. We're constantly seeing shifts in aggressiveness in their tone, and we're now seeing risk assets react off the back of this, more how you'd expect them to - sell down. When we think back to our key drivers of risk assets and BTC/Crypto, one of the key components is risk appetite. Currently, the appetite in the market to take risks is low.

More cuts?

Recently, the tone out of the institutions has shifted toward more easing, this is in despite of some of the stickier inflation prints we've seen. We've also seen these firms reducing their year-end S&P targets, and we've also seen some increase their number of FED interest rate cut estimates for 2025. In the last 24 hours, we've now seen Goldman Sachs' David Kostin increase 2025 interest rate cuts from 2, to 3, whilst Goldman has also lowered their S&P targets from 6500 (just 3 weeks ago) to now 5900, with 5300 as their 3-month target.

This is a call we've seen by more of the market now over the last few weeks. As many of you know, we expect 4 interest rate cuts this year.

Our expectation is that growth will slow down to a point where the FED has to cut, but they do it in a reactionary way as they wait for the last moment to cut due to them being wary of the inflation front in the short and medium term. This will then lead them to cut when they really have to (growth down substantially), and we expect they'll cut more than what the market currently expects.

Cryptonary's take

We enter a huge week this week, where we expect to get real information on the reciprocal tariffs, and potentially more concrete guidance beyond this - that'll be important. This'll be key in understanding Trump's real aggressiveness on these policies, and we're likely to see a lot of volatility in the markets, particularly on Wednesday (tariff announcement) and Friday (jobs data).

For now, Trump and his policies/tariffs are the real drivers of the markets, so that gets our full attention. We're looking at on-chain levels, of course, and we have identified those potential buying levels in previous reports. Those levels are lower; in the late $50k's up to the mid-$60k's.

We're still a way off that, and we'll report more on this if and when the price moves lower. But right now, the macro (Trump policies and the macro data) gets our full attention, as that's what the market is most responsive to at the moment.

For Bitcoin here, we do expect a breakdown of the $82k level this week, and we wouldn't be surprised to see a move into $75k should Wednesday see a further sell down in risk assets, assuming Trump is aggressive on the tariff front.

We've had to be patient and let this Bitcoin move play out. But, patient we were, and price edged up to our Short box (between $86,300 and $91,700). We filled some Shorts in that area, and the price has moved down since.

We will look to reassess the Short, once/if the $82k lows are broken convincingly. This might look like a more meaningful retest into the $76k to $78k area. The setup played out cleanly, whilst we've seen others in the market not manage this period too well. We remain confident with where we're at in our analysis.

BTC: