Weekly PROPHET NOTES 4/7/25
Global Outlook: Are you tired of winning yet?
I expected some turmoil before the tariffs were announced, but in my wildest dreams I didn’t think Trump will impose a weighted average of ca. 22%. That’s the highest since 1900s. Higher than Smoot-Hawley Tariff Act that worsened the Great Depression.
Well, he did. And markets are in free fall now. I’m currently writing the piece on the whole drama with my forecast of things to come. Hint: it’s not pretty.
I know we are all busy with the global economy imploding, but things happen all the time. While your X timeline is filled with market experts, take a look below to see what is what in other domains.
Weekly Outlook
Global depression is surely the most important topic. But there are plenty of things happening in the background. Amid the shock to the financial system the world is realigning.
US Inc.
While the stock market is in the free fall, people took to the streets in the US. Over the weekend there were massive protests across America, most notably in the biggest cities. Meanwhile Trump urged Americans to “hank tough” and praises low oil prices amid calls that inflation is no more.
Moving to other Trump promises, while deportations are going slow, the border crossings are at least partly contained. In March around 7,180 crossing were recorded, while previously the monthly average was at 155,000.
Lastly, Eric Adams, the NYC mayor, had seen his charges dropped. I suspect this is the reward for supporting Trump’s immigration policies during the campaign. Lesson here: choose your sides wisely.
The Americas
For lack of better events, you deserve an update on the situation in Haiti. The now forgotten island country is still embroiled in nothing short of the civil war. Gangs are gaining ground, having attacked Mirebalais recently. A town ca. 19 miles (30 km) from Port-au-Prince is now embroiled in chaos after the gangs freed close to 500 inmates.
I guess that the Kenyan Police is not that effective against ruthless gangs.
Asia
Trump is busy with tariffs and China is busy with responding. Not only did they impose a 34% additional tariff of their own, but also engaged in live fire military drills around Taiwan.
Additionally, there are incoming reports that China is getting ready for Taiwan invasion in 6 months, just in time for the October weather window. I had the invasion (or at least a blockade) in the books for sometime before 2030, most probably 2027-2030, but considering the current geopolitical and financial situation, their hand may be forced to act now. I guess we need to enjoy living through “once in a generation global events” on an annual basis now…
Moving from China, I’ve been vindicated on my trade for Yoon not being reinstated. After a lot of delays in Constitutional Court sentencing, last Friday they decided that the martial law was in fact unconstitutional. With that in, the presidential election will be held on the 3rd of June. Next two months are shaping up to be interesting on this front with now Canada, Poland and South Korea.
Middle East & Africa
Moving to pretty much war zones, after the botched ceasefire revival trials, Israel is now expanding its military operation in Gaza. As I repeatedly said, the hostage situation is now beneficial to Israel, as they can justify atrocities by saying that they need to eliminate Hamas. So now we have only two options on the table:
Hamas surrenders and gives up Gaza entirely.
Hamas is eliminated by force, sooner or later.
With full US backing no one will stop Israel from achieving its goals. Yet there is still some amount of hopium in the markets, soon to be eradicated:
Moving a bit south, South Sudan was visited by a team of mediators from the African Union. The situation is fragile for now.
And staying in Africa, after military coups were successful in the recent years in Burkina Faso, Mali and Niger, the current leaders of the countries traveled to Moscow to negotiate weapons and training from Russia. I can easily say now that France is losing West Africa and seemingly there is no will to stop the movement. It looks increasingly likely that China and Russia will take Africa from Team West and take advantage of the corrupt political systems and vast amount of resources.
Europe
Staying in war zone territory, first news from Europe is that Finland has joined Estonia, Latvia, Lithuania and Poland and announced that it will withdraw from the global treaty banning the use of landmines. Prudent approach since Finland has decoupled from strategic neutrality vis a vis Russia and joined NATO. On the more level-headed not, the president, Alexander Stubb, said that Finland needs to mentally prepare to restore relations with Russia at some point.
In the meantime Russia has called up additional 160,000 men between the ages of 18 to 30 for the armed forces. They won’t be immediately sent to Ukraine, but it is surely a sign of things to come. Ceasefire bulls should strongly reconsider their approach when there is still time. The disagreement between Russia and US Inc. is to wide to reach a compromise at this point.
In line with the ReArm White Paper, Europe is also making some moves to support Ukraine. Zelensky said that plans to deploy foreign troops would be finalized within a month. There are no details on the contingent, but we know that it will be tasked with patrolling Ukrainian land, sea and airspace.
Lastly, after Netanyahu’s visit to Hungary, government there has said that it would withdraw from the ICC.
Business, Finance & Economics
The headline of the week - Trump tariffs. The president not only announced a blanket tariff of 10% on the whole world, but also some country specific rates, where he said that the US has been treated unfairly. Among some notable examples:
EU: 20%,
India: 27%,
Japan: 24%,
Vietnam: 46%,
China: additional 34% tariff, making the total reach 65%.
The only carve-out is auto industry which will face universal 25% tariff. While Trump said that the rates were based on the rates that these countries taxed the US, discounted by 50%, the reality is that the formula was much more different. Namely the delta of exports and imports divided by imports.
The 10% tariff went into effect on the 4th of April, while the higher rates are set to kick in on the 9th of April. While many are still hoping that Trump will reverse course, the markets already took a massive beating, entering bear market (20% drawdown from recent top) in most cases (including US stocks as of Monday morning).
I’m writing a big article on tariffs now, but the only thing I’ll say here is that Trump is looking to erase the trade deficit of the US, so zero-tariff proposal from countries will have little effect on his policy. He needs deals on purchasing American industrial output.
With the hopium of Trump reversal and / or rate cuts (not happening since tariffs, especially blanket tariffs, are highly inflationary) the markets are still reacting pretty orderly, but we are already seeing some effects that will be hard to overturn. For example Jaguar and Land Rover are pausing all shipments to the US while they consider the effects of tariffs. There are probably many more cases like this, which will have massive impact on global trade.
And all the hopium might be a bit too much - Trump and his team are for now committed to the policy with many comments over the weekend to “hank tough”.
Also Trump has extended the TikTok deadline by 75 days in hopes that under the pressure from tariffs, the Chinese will cave and agree to sell. I’m bearish on it.
Enough on the tariffs, you’ll have plenty to read tomorrow. From other news, last week SoftBank has invested additional $40 billion in OpenAI at $300 billion valuation. They may regret it now.
And lastly, there are reports that the American government sent a letter to several large companies in Europe, urging them to comply with Trump’s ban on diversity initiatives. Supposedly the order applies to companies that are either a supplier or service provider to the American government, even if outside of the US.
Wrap up
That’s all for now. What a week it was and what a week it will be. Plenty of turmoil ahead of us while the markets are tanking. Stay tuned for the article on tariffs and forecast on the next developments!
In the meantime stay strong and remember that prediction markets are not influenced by general financial turmoil!
This is not official investment or life advice. Do your own research. This are only my opinions and I encourage anyone to do their own research before putting any money anywhere.