Author: Ignacio Teson

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

Trade War Fears Spark European Reaction; Lagarde Ready for Stagflation

Posted on by Ignacio Teson

The European Central Bank (ECB) continued its expected path of monetary easing, cutting its three key interest rates by 25 basis points.

Christine Lagarde did seem worried about the economy on Thursday
Christine Lagarde did seem worried about the economy on Thursday

This marks the seventh cut in the current easing cycle and the sixth consecutive reduction, with the ECB lowering rates at every meeting since September.

Specifically, the Governing Council set the deposit facility rate (DFR) at 2.25%, the main refinancing operations rate (MRO) at 2.40%, and the marginal lending facility rate (MLF) at 2.65%. These changes will take effect on April 23, 2025.

[[EUR/USD-graph]]

The ECB noted that disinflation is progressing steadily. Officials in Frankfurt highlighted that both headline and core inflation fell in March to 2.2% and 2.4%, respectively—down from 2.3% and 2.6%—in line with the ECB’s projections. Inflation in services also showed a notable slowdown.

Lagarde: “We must be ready for the unpredictable”

The ECB emphasized that most core inflation indicators are stabilizing near the Governing Council’s 2% medium-term target. Wage growth is beginning to moderate, and companies are absorbing part of the labor cost increases in their profit margins, which is helping to ease inflationary pressures.

“I can’t say whether we’ve reached peak uncertainty. Negotiations are ongoing, and it’s hard to predict what could happen,” ECB President Christine Lagarde said. “We must be ready for the unpredictable, remain agile, and rely on the data.”

Trade tensions cloud the outlook

However, not all signals are positive. The ECB warned that rising trade tensions—particularly those stoked by the United States under Donald Trump’s leadership—pose a growing threat to the eurozone economy.

While the region has shown resilience to global shocks, the central bank noted that the outlook for growth has weakened due to escalating international trade frictions. Increased uncertainty could undermine consumer and business confidence, while volatile market reactions could tighten financial conditions—both of which would weigh on the euro area’s economic prospects.

In March, the ECB raised its inflation forecast to 2.3% and cut its economic growth projection to 0.9%.

As a result, the Governing Council reaffirmed its commitment to price stability and reiterated that it aims to bring inflation to 2% over the medium term. In a climate of high uncertainty, the ECB stressed it will maintain a data-dependent approach, evaluating conditions at each meeting before making further policy moves.

Cryptocurrencies Rebound After Sell-Off as Market Digests Fed Message

Posted on by Ignacio Teson

Cryptocurrencies are showing signs of recovery this Thursday, setting the stage for a potentially positive weekly close.

The Trump-Bitcoin Relationship has been a rollercoaster.

Bitcoin (BTC) is holding above $84,000 and is once again approaching the $85,000 mark, consolidating a technical rebound. Ethereum (ETH), meanwhile, is attempting to reclaim the key $1,600 level, which it lost abruptly following recent remarks from the Federal Reserve.

[[BTC/USD-graph]]

Among altcoins, there’s also a modest recovery. Solana (SOL) leads the gains with a 6% increase, while other tokens like Dogecoin (DOGE), XRP, and Cardano (ADA) are posting more modest upticks. Tron (TRX), however, remains under pressure, falling an additional 3% over the past 24 hours.

Powell’s Message and Market Reaction

The recent market turbulence was sparked by comments from Federal Reserve Chair Jerome Powell, who warned about the rising risk of stagflation—a scenario where high inflation coexists with sluggish economic growth—and tempered expectations of imminent rate cuts.

Powell emphasized that the newly imposed tariffs are “larger than anticipated” and may have more persistent economic effects than previously thought. If that outlook materializes, he noted, the Fed could face a “conflict of objectives” between its dual mandate of price stability and full employment. Historically, this kind of scenario tends to weigh heavily on risk assets, including tech stocks and, by extension, cryptocurrencies.

At the same time, Powell acknowledged the need for clearer regulations surrounding stablecoins and hinted that some banking regulations related to crypto might be relaxed. These comments sparked a degree of optimism in the crypto market, which increasingly views regulatory clarity as a pathway to greater legitimacy and institutional adoption.

Wall Street Reacts with Caution

Wall Street, however, responded more negatively. The Nasdaq dropped over 3%, dragged down by a steep 7% decline in Nvidia shares after the company announced a $5.5 billion accounting hit due to U.S. export restrictions on China.

In terms of monetary policy, markets have now recalibrated their expectations. While CME’s FedWatch tool still projects three to four rate cuts by year-end, the likelihood of those cuts happening as early as May or June has decreased significantly.

Wall Street Slips After Powell’s Remarks; Nvidia Drops Nearly 7%

Posted on by Ignacio Teson

U.S. stock markets fell sharply midweek after Federal Reserve Chair Jerome Powell expressed concerns about the economic impact of tariffs on the U.S. economy.

All three major Wall Street indexes ended the session in the red. The Dow Jones Industrial Average, which tracks 30 blue-chip companies, dropped 1.73% to 39,669.39 points. The S&P 500, which reflects the performance of the largest U.S. companies, fell 2.24% to 5,275.70 points. The tech-heavy Nasdaq Composite plunged 3.07% to 16,307.16.

[[SPX-graph]]

Speaking at the Economic Club of Chicago, Powell said U.S. economic growth appears to be slowing, with consumer spending increasing only modestly. He also noted that a surge in imports ahead of new tariffs could weigh on future growth estimates.

Powell’s comments confirmed investors’ growing concerns about a potential economic slowdown paired with stubborn inflation, driven by ongoing trade tensions and tariffs.

Nvidia Tumbles on Export Restrictions

Among the biggest losers of the day was Nvidia, whose shares sank 6.87% after the company warned of significant charges related to new U.S. restrictions on chip exports to China. The Philadelphia Semiconductor Index dropped 4.10%.

The new export controls are part of the Trump administration’s ongoing efforts to block the sale of advanced semiconductors to China. As tech stocks slid, investors flocked to safe-haven assets—pushing gold to a new all-time high above $3,340 per ounce.

Tariff Confusion Rattles Markets

Markets were also shaken by tariff confusion on Wednesday, following the release of a White House fact sheet suggesting that certain Chinese imports are now subject to tariffs of up to 245%.

The document stated: “China now faces up to 245% tariffs on imports to the United States as a result of its retaliatory actions.” This figure caused alarm, as it significantly exceeds the 145% rate that traders had been pricing in.

The White House quickly clarified that the 245% figure is not new and that reports treating it as a newly announced tariff were “misleading.”

Mexican Peso Gains on Weaker Dollar, Closes at 19.96

Posted on by Ignacio Teson

The Mexican peso appreciated against the U.S. dollar on Wednesday, buoyed by a weaker greenback and stronger-than-expected economic data from China, just ahead of the Easter holiday period, which typically sees reduced market activity.

The exchange rate closed the session at 19.9622 pesos per dollar, according to official figures from the Bank of Mexico (Banxico), marking a gain of 16.13 centavos or 0.80% compared to Tuesday’s close of 20.1235.

During the day, the dollar traded within a range of 20.1361 to 19.9555 pesos. The U.S. Dollar Index (DXY), which measures the dollar’s performance against a basket of six major currencies, fell 0.82% to 99.34 points by the end of the session.

[[USD/MXN-graph]]

Despite positive U.S. retail sales data, the dollar remained under pressure throughout the day, touching multi-year lows amid persistent uncertainty.

Boost from China and a Weaker Dollar

China’s economy provided a surprise upside by growing 5.4% in the first quarter, exceeding the consensus estimate of 5.1%. The stronger performance reflected sustained momentum from late 2024, supported by significant government stimulus measures.

This encouraging data gave emerging market currencies like the peso a lift, especially as the dollar continued to weaken amid concerns surrounding new tariffs imposed by U.S. President Donald Trump on Chinese goods.

The dollar’s decline and the boost from China’s economic figures overshadowed positive data from the United States, where retail sales rose by 1.4% in March, slightly above the 1.3% expected by analysts.

Further pressuring the dollar, Trump announced a new investigation into potential tariffs on critical minerals and maintained threats against sectors including pharmaceuticals, copper, and semiconductors.

Powell’s Speech

Markets were also digesting comments from Federal Reserve Chair Jerome Powell, who stated that the Fed is well-positioned to wait for greater clarity on the economic impact of the tariffs before making any monetary policy adjustments.

Powell acknowledged signs of a slowdown in the world’s largest economy, with consumer spending growing modestly and a surge in imports ahead of the tariffs likely to weigh on future growth estimates.

Cryptocurrencies Reverse Losses Despite Nvidia’s Plunge

Posted on by Ignacio Teson

Cryptocurrencies have reversed earlier losses after starting the day on a downtrend. Bitcoin has corrected and risen 0.2% to $85,230, according to Binance, while other cryptocurrencies also show slight movements.

The biggest losses are led by SUI, down by up to 3%, followed by Toncoin (-2.8%) and Avalanche (-2%). Ethereum, notably, has lost its support zone at $1,600. Among the gainers, Tron stands out with a 2% increase.

[[BTC/USD-graph]]

What Caused the Reversal in Cryptocurrencies?

As is often the case, attention is focused on the U.S., particularly the tech sector. After Wall Street closed moderately lower, a new announcement from Nvidia sparked a negative reaction in the markets. The tech company plunged in pre-market trading after revealing it would have to take a $5.5 billion charge due to U.S. restrictions on the sale of its H2O graphics processing units (GPUs) to China.

The H2O is an artificial intelligence (AI) chip designed to meet the export restrictions imposed by the previous administration under Joe Biden. In 2024, Nvidia had projected revenue of between $12 billion and $15 billion from this chip.

The same chip was used by the Chinese company DeepSeek to develop an AI system at a much lower cost than ChatGPT, making it a direct competitor. Yes, Nvidia’s decline not only affects the company but also other tech firms related to it, such as Broadcom and AMD, and, ultimately, Bitcoin.

In recent times, Bitcoin and cryptocurrencies, in general, have shown a strong correlation with risk assets, especially tech stocks.

On another front, analysts are keeping an eye on March’s retail sales report from the U.S., seeking insights into consumer spending behavior amid tariff-related uncertainties. However, there is a risk that the markets may dismiss this data, viewing it as outdated and not reflecting the recent escalation in trade tensions.

Tariff Policies and Growing Market Uncertainty

Regarding tariff policies, U.S. President Donald Trump imposed several tariffs, though he suspended some and announced more specific duties on certain products. These constant changes are causing discomfort in the markets, although the apparent moderation in recent days suggests that Washington is beginning to recognize the impact its volatile policy is having.

JP Morgan analysts, led by Jamie Dimon, warn that the global economy is at risk of entering a recession if the U.S. does not moderate its approach to the tariff conflict. Meanwhile, other major banks, such as Citi and Bank of America, have maintained a more optimistic outlook in their latest reports.

All Eyes on the Fed

Finally, attention is now focused on Federal Reserve Chairman Jerome Powell, who will share his view on the U.S. economy this Wednesday. Powell has been cautious about the impact of tariffs on inflation, a stance reflected in the minutes of the central bank’s last meeting.

Analysts expect that the Fed may need to cut interest rates more than previously anticipated this year, potentially three or four times, due to the growing risk of recession. However, some Fed members, like Kashkari and Goolsbee, remain more skeptical, fearing they could lose control of inflation.

Oil Rises Nearly 2% on U.S.-China Negotiation Reports

Posted on by Ignacio Teson

Oil prices reversed early losses and gained nearly 2% on Wednesday, as the market took a bullish view on China’s stance regarding potential trade talks with the U.S.

However, gains were limited by ongoing concerns that the trade war could hinder energy demand.

Brent futures rose 1.7% to $65.79 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed 1.7% to $62.34.

[[USOIL-graph]]

China Demands “More Respect” from U.S.

Prices initially fell, but analysts noted that the momentum shifted after a Bloomberg report cited an anonymous source stating that China demands more respect from the U.S. government before agreeing to talks. The source also mentioned that China wanted the U.S. to appoint a new main contact for future negotiations.

A de-escalation of the U.S.-China trade war could reduce the downside risks to economic growth prospects and limit the negative impact on global oil demand growth.

Global oil demand is expected to grow at its slowest pace in five years in 2025, with U.S. production growth also set to decline due to President Trump’s tariffs on trading partners and retaliatory measures, the International Energy Agency (IEA) said on Tuesday.

Global Oil Demand Outlook

This year, global oil demand is expected to increase by 730,000 barrels per day (bpd), the IEA said, a sharp decline from the 1.03 million bpd forecasted last month. The reduction is larger than the demand cuts made by the Organization of the Petroleum Exporting Countries (OPEC) on Monday.

Concerns over Trump’s tariff escalation, combined with rising production from the OPEC+ group, which includes Russia, have already dragged oil prices down by about 13% this month.

Uncertainty surrounding trade tensions has led several banks, including UBS, BNP Paribas, and HSBC, to revise their crude price forecasts lower.

Wednesday’s data showed that China’s GDP grew by 5.4% year-on-year in the first quarter, surpassing the 5.1% expected in a Reuters survey.

Wall Street Slips Despite Strong Bank Earnings

Posted on by Ignacio Teson

U.S. markets edged lower on Tuesday, weighed down by renewed uncertainty over potential U.S. tariff policies, even as upbeat bank earnings provided some support.

All three major Wall Street indexes closed slightly down. The Dow Jones Industrial Average, which tracks 30 blue-chip companies, fell 0.38% to 40,368.96. The S&P 500, representing the largest publicly traded companies, slipped 0.17% to 5,396.63. The tech-heavy Nasdaq Composite dipped 0.05% to 16,823.17.

[[SPX-graph]]

Tariff Uncertainty Undermines Optimism

Investor sentiment was shaken after former President Donald Trump hinted at possible exemptions on tariffs for automobiles and auto parts. This followed his earlier move to temporarily exclude smartphones and other electronics from tariffs targeting Chinese imports.

However, filings in the Federal Register revealed that the Trump administration is also moving forward with investigations into pharmaceutical and semiconductor imports, signaling the potential for further trade restrictions.

These developments reversed earlier gains and pushed markets into negative territory, despite encouraging earnings from major banks. Bank of America rose 3.60% and Citigroup gained 1.76%, helping lift the financial sector, which led gains within the S&P 500.

Mixed Results Across Sectors

Among individual stocks, Johnson & Johnson fell 0.48% after reporting weaker-than-expected sales in its medical devices segment, despite beating Wall Street forecasts for overall revenue and earnings in Q1.

In contrast, Netflix surged 4.83% after setting an ambitious target of reaching a $1 trillion market capitalization and doubling its revenue to $39 billion by 2030, according to The Wall Street Journal. The streaming giant is scheduled to report its quarterly earnings this Thursday.

Mexican Peso Slips as Markets Eye Trump’s Trade Policies

Posted on by Ignacio Teson

The Mexican peso depreciated slightly against the U.S. dollar on Tuesday, in a session where it briefly challenged the psychological barrier of 20 per dollar.

Market participants remained focused on U.S. President Donald Trump’s trade policy announcements.

The exchange rate closed at 20.1235 pesos per dollar, compared to Monday’s official close of 20.1029, according to the Bank of Mexico. This represents a modest loss of 2.06 centavos, or 0.10%.

[[USD/MXN-graph]]

During the session, the dollar traded in a range between 19.9297 and 20.1452 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.46% to 100.1 points by the close.

Markets React to Mixed Signals from Trump

Trump hinted at possible tariff exemptions on cars and auto parts, after previously boosting market sentiment by temporarily excluding smartphones and other electronics from tariffs on Chinese imports.

However, Federal Register filings revealed the Trump administration is also pursuing investigations into pharmaceutical and semiconductor imports—suggesting more trade measures could be on the horizon.

Peso Rebounds, But Fails to Break 20-Mark

Earlier in the session, the peso strengthened to 19.9300 per dollar—its best level since April 4—before retreating, unable to hold below the 20-mark. At that peak, the currency had gained nearly 2% over three sessions.

Mexican Stocks Close Higher

Mexico’s stock markets closed slightly higher, buoyed by investor focus on U.S. trade developments. The benchmark S&P/BMV IPC index rose 0.48% to 52,643.04 points, while the FTSE BIVA index gained 0.65% to 1,071.42 points.

Cryptocurrencies Struggle to Recover as Bitcoin Falls Below $83,500

Posted on by Ignacio Teson

The cryptocurrency market continues to experience high volatility, failing to show signs of a sustained recovery after recent shocks.

Bitcoin (BTC) is down 1.4% in the last 24 hours, trading below $83,500 according to Binance, while Ethereum (ETH) has fallen 2.2%, slipping below $1,600.

Although cryptocurrencies showed some early gains on Tuesday, the trend turned decisively negative by the end of the trading session.

[[BTC/USD-graph]]

The global context continues to weigh heavily on markets. The ongoing trade dispute between the United States and China—driven by President Donald Trump—remains a major source of uncertainty. On Monday, stock markets reacted positively to the announcement of temporary tariff exemptions on certain electronic goods. However, Trump clarified that key products like smartphones and chips would still face specific tariffs.

The prospect of the trade conflict escalating again is keeping investors on edge. In the coming days, representatives from Europe and Asia are expected to visit Washington in hopes of reaching an agreement to avoid the reimposition of tariffs, which were postponed for 90 days last week.

Truce Between Trump and the Fed Fails to Ease Fears

Despite the temporary tariff relief being welcomed by markets, investor confidence remains fragile. Institutions such as JP Morgan, led by CEO Jamie Dimon, warn that the current environment could push the global economy—especially the U.S.—toward a recession. Ray Dalio, influential investor and founder of Bridgewater Associates, takes it a step further, suggesting that Trump’s policies could trigger a structural disruption of global trade and reshape geopolitical relationships.

“We are shifting from a U.S.-led multilateral order to a more unilateral environment marked by deep conflict,” Dalio warned.

There are also signs of concern on the monetary front. Federal Reserve Governor Christopher Waller stated that a reactivation of Trump’s tariffs could force the central bank to respond swiftly, with more aggressive rate cuts than previously anticipated. According to Waller, the potential negative effects on economic activity and employment could be long-lasting, requiring a more expansionary monetary policy stance.

Market expectations reflect these worries: data from CME Group’s FedWatch tool show that investors are now pricing in three to four rate cuts in the near term, driven by fears of a sharper slowdown. However, not all members of the Fed agree. Officials like Neel Kashkari and Austan Goolsbee have expressed caution, warning that such rate cuts could pose risks to inflation stability.

Seven Major Banks Trim Earnings Forecasts for the S&P 500 in 2025

Posted on by Ignacio Teson

The downward revision of S&P 500 projections by major Wall Street firms signals a marked shift in tone, reflecting growing concerns about the risks stemming from U.S. trade policy.

In a sign of increasing caution regarding the U.S. stock market’s trajectory, several top Wall Street firms have downgraded their S&P 500 forecasts for the remainder of 2025. Warnings of potential stagflation, the economic impact of new tariff policies, and a more uncertain global landscape are behind the shift in analyst sentiment.

Optimism Fading

The latest firm to join this trend is Jefferies, which cut its S&P 500 estimate from 6,000 to 5,300 points, cautioning that while a formal recession is not expected, the growth slowdown will directly impact corporate profits. The firm also raised concerns about the increased risk of stagflation—a combination of low growth and high inflation—following the reintroduction of tariffs by the Trump administration.

[[SPX-graph]]

Since 2001, periods marked by stagflation characteristics have been associated with lackluster returns in the markets. As part of its adjustment, Jefferies reduced its expected price-to-earnings (P/E) multiple to 19 times, in line with the average over the past decade, applying that metric to a projected 2026 earnings per share of USD 280.

S&P 500 Bank Projections

J.P. Morgan remains even more conservative, with a target of 5,200 points, the lowest among the major firms. Goldman Sachs recently lowered its forecast from 6,500 to 6,200 points, citing political uncertainty and growth risks. Meanwhile, both Bank of America and Evercore revised their estimates down to 5,600 points. Oppenheimer also reduced its target to 5,950 points, marking a more than 16% cut from its previous projection.

On the other end of the spectrum, Deutsche Bank maintains a more optimistic outlook, keeping its estimate at 7,000 points, the highest among major investment banks.

In this new environment, Jefferies recommended adopting a more defensive stance in portfolios, underweighting cyclical stocks and focusing on sectors that have historically shown greater resilience during stagflation cycles. It also highlighted opportunities in “fallen angel” stocks—those with attractive valuations, strong profitability, and stable cash flows, along with positive or neutral earnings revisions.

Wall Street Forecast Cuts:

  • Jefferies: Downgrades its S&P 500 estimate to 5,300 points (from 6,000), warning about stagflation risks.

  • J.P. Morgan: Lowers its target to 5,200 points, the most conservative among major firms.

  • Goldman Sachs: Reduces its forecast from 6,500 to 6,200 points due to political uncertainty and lower expected growth.

  • Bank of America: Adjusts its target to 5,600 points, aligning with a moderate cooling scenario.

  • Evercore: Cuts its projection to 5,600 points, reflecting a defensive approach.

  • Oppenheimer: Lowers its estimate to 5,950 points, a 16% cut from its previous forecast.

  • Deutsche Bank: Maintains its optimistic view with a target of 7,000 points by year-end.