05.04.25 - Black Friday - trade war is real

No, it is not November yet. However, on financial markets it feels like everything is on sale.
Indices were not able to recover from yesterday’s sell-off yet when China announced tariffs on all US goods with 34%. In addition, the Ministry of Commerce announced new sanctions. It added 11 companies from the US to its unreliable entity list and placed 16 US-based entities on the export control list.

Furthermore, President Trump said that tariffs on the Chip and Pharma sector will be announced soon. So far they were excluded from the latest round of tariff announcements.

Markets: European indices currently down between 4-5%, US Futures down around 3%, oil loses another 6%, US 10-year Treasury below 4% (3.9%), gold flat, cryptos turning red after trying to recover.

My view: Once feared by all and dismissed by many, the trade war is now a reality. Its impact on markets is about to intensify.

My first strategy, to navigate the portfolio through the storm, with a focus on limiting the downside which is currently working quite well. Even with some heavy losses on certain positions, the losses are covered from the side of short positions keeping the portfolio in balance for the time being.

And the key question now is, what is the next news and catalyst poised to impact the markets?

And second, is it the moment to buy the dip?

At this stage, this still does not look like a buying opportunity to me. Fear is clearly widespread and intensifying, the sentiment has clearly shifted into panic mode. A sign of full capitulation could then be a first step back into adding new risk exposure. However, if the recession scenario is becoming real, there is more room for downside!

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