GLOBAL TRADE WAR TENSION INTENSIFY

The trade war between the US and China has officially escalated, with China announcing a 34% tariff on all US goods. This move is a direct retaliation against President Trump's tariffs, and it's sending shockwaves through the markets. The S&P 500 has already lost $3.5 trillion in just two days, with oil prices plummeting 15% over the same period.

China's tariffs will affect all US imports, and they've also added 11 American companies to their "unreliable entities" list and 16 to their "export control" list. Furthermore, China is imposing export controls on rare earth metals, including samarium, gadolinium, and terbium.

The impact of these tariffs will be substantial, with estimates suggesting that US GDP could contract by 3-4% if they remain in place long-term. Inflation is also expected to rise, with PCE inflation potentially reaching 4% in the coming months.

The bond market is already pricing in a recession, with the 10-year note yield down 90 basis points over the past two months. The S&P 500 futures are currently down 3%, on track for an 8% loss in two days.

Key Takeaways:

- Tariffs: China's 34% tariff on all US goods is a significant escalation in the trade war.

- Market Impact: The S&P 500 has lost $3.5 trillion in two days, with oil prices down 15%.

- GDP Contraction: US GDP could contract by 3-4% if tariffs remain in place long-term.

- Inflation: PCE inflation could reach 4% in the coming months.

- Recession: The bond market is pricing in a recession, with the 10-year note yield down 90 basis points.