Daily Commentary

MarketMinder’s View: The Trump administration is pressing the World Trade Organization (WTO) to make permanent a global deal that prevents nations from slapping tariffs on the trillions of dollars’ worth of digital services delivered annually via the Internet instead of simply extending forward two-year bans that have rolled over since 1998. We think this would be a positive step, granting firms more clarity around the lay of the land—especially in light of uncertainty surrounding trade and tariffs on goods that has swirled over the past 12 months. Now, that very uncertainty stems from the US, making the administration’s position here a little awkward and leading some analysts to expect another temporary extension. It is possible, as this notes, that the WTO will elect to prolong the agreement for four years versus two in a compromise. But no one expects the deal to end following the late March meeting—it is more whether it will be rolled over, extended for longer or made permanent. Regardless of which is chosen, though, we doubt the market effects are giant. These rollovers have been a virtual rubber stamp for almost 30 years. We will keep an eyeball on it but doubt huge news comes from it.

MarketMinder’s View: Keep the following thoughts in mind when you read this long piece that documents the fact gold is down more than US stocks and as much as the world’s since Israel and the US launched strikes on Iran at February’s end. One, many say gold is a hedge against chaos and war. Two, many say gold is an inflation hedge. Three, many say gold benefits from interest rate cuts. Four, many say it moves opposite the dollar. The trouble is that all four of these theses are contradictory, as the piece inadvertently highlights. If you get chaos and war, people usually flock to the dollar, driving it up versus other currencies, which means point one is offset by point four. If you argue rising oil prices are inflationary, a hedge should rise. But it also likely means you won’t get rate cuts, so point two is offset by point three (and vice versa). It all highlights what we think is a basic point: Gold’s swings are all about sentiment. There is no guideline to apply, no rule, no if-then formula. Investing in it is speculating about others’ emotions, full stop. While it is only a few weeks since the war started, a short period, gold’s slide since is a reminder of just that. All the same holds for silver, which has a little more industrial use, but is still subject to speculation.

MarketMinder’s View: Some clarity is emerging on how major trade partners will approach deals struck with the US mitigating the “Liberation Day” tariffs the US Supreme Court shot down last month. After initially pausing its ratification process, the European Parliament is now moving forward on the US-EU deal that lowered tariffs on EU goods to 15%, with several key exemptions like pharmaceuticals. As documented here, the deal is expected to be approved on Thursday, despite some lingering objections, sending the legislation back to national governments for final votes. All in all, the deal leaves tariffs higher than a year ago, but lower than feared after Liberation Day and—importantly—grants clarity around the relationship after the court’s ruling. That is the key, in our view, as companies have demonstrated an ability to navigate the shifts in trade policy. Just knowing the framework is in place is a positive.