Federal Reserve Chair Jerome Powell, known for decisive action in times of crisis, is signaling a different approach as the US economy navigates the turbulent waters of President Donald Trump’s trade policies.

From pledging unwavering support during the Covid-19 pandemic to delivering a stern message on inflation and swiftly backstopping financial markets after the Silicon Valley Bank failure, Powell has demonstrated a willingness to act when the situation demands it.

However, with Powell and the Fed facing as much uncertainty as the rest of the world about the direction of the economy under Trump’s leadership, the Fed chair indicated on Friday that this is not the moment for a “Fed put” – Wall Street’s term for interventions designed to prop up falling stock markets – even as household wealth erodes and real risks to economic activity mount.

Waiting and seeing: the Fed’s cautious approach

“There’s a lot of waiting and seeing going on, including by us, and that just seems like the right thing to do at a time of elevated uncertainty,” Powell stated, making it clear that the Fed is not poised to rush into interest rate cuts as it would during a more conventional crisis requiring a swift central bank response.

The March jobs report, released Friday, showed continued strong growth, although Powell noted that the figures predated Trump’s tariff announcements, adding to the uncertainty.

“It’s not clear at this time … the appropriate path for monetary policy,” he said, emphasizing that “We’re going to need to wait and see how this plays out.”

While stock price movements can impact the economy by affecting household wealth and shifting expectations, the dynamics of Trump’s policies have created a “blizzard of conflicting signals” that have left the Fed hesitant to commit to a particular course of action.

It has become a central tenet of modern central banking to act swiftly and decisively when a problem is clearly defined.

However, the Fed is equally determined to avoid taking steps that might later need to be reversed, a risk that Powell would run if he were to signal support for rate cuts to stabilize the economy at a time when higher inflation, and the potential need for rates to remain elevated, also looms as a significant threat.

A different kind of shock: trade policy as a wild card

Unlike past crises, which stemmed from disease, supply chain disruptions, or oil embargos, the current situation arises from a deliberate White House policy decision to impose tariffs on imports at levels far exceeding expectations, triggering retaliatory measures from China and the potential for further countermoves from other nations.

The emerging consensus is that Trump’s tariffs will hinder economic growth, if not trigger a full-blown recession.

JPMorgan recently joined the chorus of concerned voices, with its economists forecasting a 0.3% decline in full-year gross domestic product, a significant downgrade from an earlier estimate of 1.3% growth.

They also project that the unemployment rate will rise to 5.3% from its current level of 4.2%.

With the average tariff rate on the US’s roughly $3 trillion in annual imports set to potentially jump tenfold, from around 2.5% to 25% or higher, the initial impact is expected to be felt in prices, as producers and importers pass at least some of those costs along to consumers.

Economists anticipate that these higher prices will translate into headline inflation being a percentage point or more higher than it otherwise would be, further distancing it from the Fed’s 2% target.

As households and companies adjust to the higher prices, a slowdown in demand is expected to follow, creating a mix of higher inflation and slower growth – a scenario reminiscent of stagflation.

While Powell and other Fed officials do not believe they have reached a point where their ability to achieve their inflation target directly conflicts with their goal of maintaining low unemployment, they acknowledge the challenges.

“We’re not in a situation like we were in the 1970s,” Powell stated, referring to the period of double-digit inflation and relatively high unemployment.

“But the effects at the margin right now would be for higher inflation and perhaps higher unemployment,” Powell added, noting that “That’s difficult for a central bank” as these two challenges require opposing policy responses.

Until the economic path becomes clearer and the speed of travel is known, “it feels like we don’t need to be in a hurry.”

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AppLovin Corp (NASDAQ: APP) chief executive Adam Foroughi says the ad-tech company’s proposal to acquire TikTok is significantly stronger than the competing bids.

While others are primarily interested in TikTok US only, AppLovin is eyeing a merger with global operations of the social platform, which effectively makes it a “partnership” that stands to benefit Chinese as well.

Foroughi’s remarks arrive shortly after President Trump offered another 75 days to ByteDance to unload its US operations.

TikTok will remain operational in the United States through the extended deadline.

Amidst tariffs driven sell-off and short-seller allegations, AppLovin stock has lost more than 50% since mid-February. 

AppLovin deal could boost ad dollars spent on TikTok

CEO Adam Foroughi also touted President Trump as a “great dealmaker” in an interview with CNBC, adding what AppLovin is proposing is essentially a “bigger version of all the deals contemplated.”

The Nasdaq-listed firm has an algorithm that, if combined with TikTok’s audience, could trigger an exceptional increase in the ad dollars spent on the social platform.

Other US entities interested in buying TikTok US include cloud giant Oracle, retail behemoth Amazon, billionaire Frank McCourt, and a bunch of private equity companies.

Note that APP is pushing to takeover TikTok at a time when it’s already wrestling with allegations of dubious practices from Muddy Waters and claims of ad fraud from Fuzzy Panda Research.

AppLovin’s financials remain strong

AppLovin stock has crashed in recent months even though the ad-tech company reported earnings for its fourth financial quarter that handily topped Street estimates in February.

APP earned $1.73 a share in its latest reported quarter on $1.37 billion in revenue – well ahead of $1.24 a share and $1.26 billion that experts had forecast.

More importantly, the Nasdaq listed firm guided for $1.36 billion to $1.39 billion in revenue for Q1 at the time, also ahead of analysts’ expectations of $1.32 billion.

AppLovin stock does not, however, pay a dividend at the time of writing.

Should you invest in AppLovin stock in April?

While AppLovin shares have tanked significantly amidst myriad of headwinds in recent months, Wall Street remains bullish at large on APP.

Earlier this week, Citi reiterated its “buy” rating on the mobile technology firm.

The firm currently has a $600 price target on AppLovin stock that indicates potential for a more than 170% upside from current levels.

In it research note, the investment firm agreed that buying TikTok, even just the social platform’s US assets, could prove significantly beneficial for the Nasdaq listed firm in the long run.

However, Citi also warned that the possibility of an AppLovin-TikTok deal was “far below 1%”.

Note that the ongoing sell-off has made AppLovin stock give back all of its post US elections 2024 gains. 

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Global stock markets plunged on Monday, deepening last week’s heavy losses, as escalating trade tensions triggered renewed fears of a worldwide recession.

London’s FTSE 100 bore the brunt, falling by 488 points, or 6%, to 7566 — its lowest level since February 2024.

The fresh rout eclipsed even Friday’s near-5% slide, which followed China’s retaliation against US tariffs with levies of its own.

The mood among investors darkened further over the weekend, as President Donald Trump defended his aggressive tariff policy, calling it “medicine” for the economy.

Every share in the FTSE 100 index ended in negative territory, with industrial stalwart Rolls-Royce slumping by 13%.

Miners, banks, and investment firms also found themselves at the sharp end of the sell-off, reflecting broad-based concerns about the global economic outlook.

Barclays and Lloyds shares plunge as banks and commodities hit hard

The banking sector, already under pressure from expectations of lower interest rates, saw some of the steepest falls.

Barclays dropped by 7%, Lloyds Banking Group slipped 5%, and NatWest shed 7%.

Asia-focused lenders were similarly battered, with HSBC down 5% and Standard Chartered tumbling 7%.

Commodities were not spared. Mining giants Glencore and Anglo American each saw losses of 7% and 8%, respectively.

Energy stocks followed suit as Brent crude oil prices fell below $64 per barrel, dragging BP and Shell down by 7%.

Kathleen Brooks, research director at XTB, remarked that markets are searching for definitive action rather than rhetoric.

“The best panacea for financial markets right now would be a pause or reversal from the US on its tariff programme,” she said.

DAX plunges 10% as Europe and Asia slide

The turmoil spread across Europe, where Germany’s DAX index plunged 10% in early trading, France’s CAC lost 6.6%, and Italy’s FTSE MIB fell 5.7%.

The regional Stoxx 600, already reeling from its worst week in five years, slid further into negative territory.

In Asia, stocks continued to bleed, with China at the forefront of the sell-off.

Trump’s sweeping tariffs hit not only China with 34% duties but also extended to Vietnam, Cambodia, and Sri Lanka, compounding fears for global supply chains.

Richard Hunter, head of markets at Interactive Investor, said, “China is clearly in the mood for the fight, and with the world’s two largest economies at loggerheads, the result has been ugly for investors.

On Wall Street, investors braced for further volatility after the “Magnificent Seven” tech giants saw a staggering $1 trillion in market value erased in just one day last week.

Despite the market carnage, President Trump remains resolute.

Speaking to reporters on Sunday, he insisted, “Sometimes you have to take medicine to fix something,” suggesting no imminent change in course.

The futures market indicates the US S&P 500 will slump by another 3.5% when trading begins later today, with the tech-focused Nasdaq index on track for a 4.5% tumble.

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The DAX index continued its strong downward trend on Monday as investors dumped their global equities as risks jumped. It slumped to a low of €18,900, its lowest level since September 12 last year. It has plummeted by more than 17% from the highest point this year.

The German DAX’s crash has mirrored the performance of other global indices. In Europe, the CAC 40 index dropped by 5.65% on Monday, while the Euro Stoxx 50 moved downwards by 6%. Other indices like AEX, FTSE MIB, and Swiss Market Index (SMI) also dived by over 5%.

Donald Trump adamant about tariffs

Top indices like the German DAX, Swiss SMI, Italy’s FTSE MIB, and the French CAC 40 dropped as Donald Trump remained adamant about the US tariffs on other countries. In a Truth Social post, Trump lamented about the substantially high trade deficit the US has with the European Union. 

Data shows that the US had a goods trade deficit worth over $235 billion with the EU last year, a 12.9% increase from a year earlier. However, the trade deficit narrows substantially when services are included. The US had a service surplus of over $109 billion in 2023, meaning that the overall surplus deficit is less than $60 billion. 

Also, the numbers don’t factor the fact that many US companies do a lot of business in Europe. Some of these firms are Procter & Gamble, Apple, Microsoft, and Colgate-Palmolive.

Trump insists that his tariffs are necessary to reduce these tariffs, which he believes are unsustainable. However, analysts worry that his thinking is flawed. For one, his basis for the 20% tariff he imposed on Europe was wrong.

Instead of imposing a real reciprocal tariff, Trump simply calculated the trade deficit, divided it with the total exports to the US, and then multiplied it with 100. He then divided the final figure with 2, coming up with 20%, a figure that economists and non-economists believe is flawed.

At the same time, a trade deficit is not necessarily a bad thing. A deficit is calculated by subtracting imports from exports. The challenge is that the US imports so much without selling more goods.

One way to lower the deficit would be to boost exports, which is highly unlikely because of the high labor costs and regulations. 

Top DAX, IBEX 35, FTSE MIB, and SMI indices laggards

Most companies in the DAX, IBEX 35, FTSE MIB, and the SMI indices have crashed as investors predict a recession in the both sides of the Atlantic. The most affected companies are those that do a lot of the Atlantic. 

Infineon, a top semiconductor in the DAX index, has plunged by over 22% in the last week because of its exposure to the US, which accounts for 10% of its total sales.  The other top laggards in the DAX are firms like Siemens, Adidas, Siemens Energy, Mercedes Benz, and Volkswagen. 

The top laggards in the IBEX 35 are companies like Repsol, ArceloMittal, IAG, and Bankiter, and Amadeus were among the top laggards. 

Is it safe to buy the dip in these European indices?

Analysts are questioning whether this is the best time to buy the dip in European indices like the German DAX, IBEX 35, FTSE MIB, and Swiss Market Index (SMI).

Most strategists believe that many of these indices will bounce back later this year once the market exits the extreme fear zone. Many of them recommend staying on the sidelines until the market stabilizes. Others recommend using the dollar cost averaging approach, which involves buying the dip slowly as the dip intensifies. 

They believe that these indices will ultimately bounce back once the Federal Reserve and the European Central Bank (ECB) intervenes.

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Donald Trump’s aggressive push for sweeping reciprocal tariffs is increasingly drawing sharp criticism not just from global trading partners, but also from his allies in the business community and his own party.

What began as a bold economic move to shore up domestic manufacturing has now spiralled into a source of growing alarm, as concerns mount over potential damage to the US economy and its global standing.

Prez losing the confidence of global business leaders: Ackman tweets

The discontent spilled into the open over the weekend, as prominent investor Bill Ackman, a former Trump endorser, issued a rare and pointed rebuke.

In a lengthy statement, Ackman cautioned that the president’s tariff-heavy strategy could isolate the United States and trigger a devastating global economic backlash.

“By placing massive and disproportionate tariffs on our friends and our enemies alike and thereby launching a global economic war against the whole world at once, we are in the process of destroying confidence in our country as a trading partner, as a place to do business, and as a market to invest capital,” Ackman said.

He urged Trump to pause for 90 days to negotiate fairer trade agreements rather than escalate tensions.

“If, on April 9th, we launch economic nuclear war on every country in the world, business investment will grind to a halt, consumers will close their wallets and pocket books, and we will severely damage our reputation with the rest of the world that will take years and potentially decades to rehabilitate,” Ackman warned.

Corporate America grows anxious as market turmoil deepens

Business leaders are increasingly voicing their concerns, albeit cautiously.

At the Yale CEO Caucus held last month, an impromptu poll revealed a growing sense of unease among top executives about the potential fallout from Trump’s trade policies, Fortune reported.

According to the Wall Street Journal, 44% of CEOs said they would raise their concerns if markets plunged by 20%, while 22% pointed to a 30% drop, and 10% cited a catastrophic 50% decline.

Nearly a quarter believed it was not their role to intervene.

Jeffrey Sonnenfeld, the Yale professor who convened the summit, noted that many CEOs feel caught between their economic anxieties and political risks.

“They don’t want to be the lightning rod,” he said. “Then it becomes personalized to them.”

Privately, corporate board members are urging discreet lobbying rather than public confrontation.

“You don’t want to be the barking dog for everyone else because you’re going to be the one who will get shot,” one board member told the Financial Times.

Another emphasised the need for quiet diplomacy, advising Trump’s aides that tariffs would hurt his core constituents through rising prices and job losses.

Adding to the growing chorus, the Business Roundtable issued a carefully worded statement supporting the president’s goal of fair trade but cautioning that universal tariffs between 10% and 50% risk severe harm to American manufacturers, workers, and families.

Republican dissent signals cracks in party unity

The business community is not alone in its apprehensions. Republican lawmakers are beginning to break ranks, publicly questioning the wisdom of Trump’s tariff blitz.

Senator Ted Cruz of Texas issued a stark warning, predicting that Republicans could face a “bloodbath” in the 2026 midterm elections if Trump’s tariffs triggered a recession.

“There are voices within the administration that want to see these tariffs continue for ever and ever,” Cruz cautioned.

He emphasised that retaliatory measures from other nations could devastate American jobs and the broader economy.

Senator Thom Tillis of North Carolina voiced similar concerns, highlighting the risks to farmers in his state.

“Anyone who says there may be a little bit of pain before we get things right need to talk to my farmers who are one crop away from bankruptcy,” he told CNN.

Further cracks emerged just hours after Trump unveiled what he called “liberation day” tariffs.

Four Republican senators defied the president by voting for a Democrat-led Senate resolution demanding the reversal of a 25% tariff on Canadian goods.

While largely symbolic, the resolution garnered support from prominent Republicans including Senate Minority Leader Mitch McConnell, Rand Paul, and Susan Collins.

The dissenting voices reflect a broader, though often muted, discomfort within the party. Many fear political repercussions from Trump loyalists but privately acknowledge the potential economic fallout.

Markets reel as tariffs spark global rout

Meanwhile, despite the warnings, Trump remains defiant. Speaking to reporters aboard Air Force One on Sunday, the president defended his strategy, claiming that short-term pain was necessary for long-term gain.

“Sometimes you have to take medicine to fix something,” he remarked. Trump predicted that jobs and investment would flood back to the United States, making it “wealthy like never before.”

His top officials reinforced that message, insisting the tariffs would proceed as planned and downplaying the threat of recession.

Yet, global markets told a different story.

Within hours of Trump’s comments, Asian markets plunged. Japan’s Nikkei 225 tumbled 7.8%, while Hong Kong’s Hang Seng Index suffered an even steeper fall of over 12%.

According to Deutsche Bank analysts, the rout marked the fourth worst two-day market slump since World War II, eclipsed only by the crashes of 1987, the 2008 financial crisis, and the early days of the Covid-19 pandemic.

Deutsche further warned that the market disruption was the most severe since President Richard Nixon abandoned the gold standard in 1971, underlining the gravity of the unfolding turmoil.

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