Consumers losing confidence as uncertainty rises
Overall, it shows that the US consumer is getting more and more worried about the trade war and uncertainty around the policies of the Trump administration.
In an environment of repeated threats of tariffs and higher market volatility, the University of Michigan consumer survey showed that consumer sentiment dropped to 57.9, way below previous month’s 64.7 and the expected 63.1. It declined for the third consecutive month, and is at the lowest level since November 2022. The inflation expectations over the 1-year horizon jumped to 4.9%, also the highest level since November 2022, from last month’s 4.3%.
Overall, it shows that the US consumer is getting more and more worried about the trade war and uncertainty around the policies of the Trump administration. However, actual inflation has been surprising to the downside as shown by the Consumer Price Index and the Producer Price Index data releases last week.
With consumer confidence low and fears of recession at recent highs, any good news is likely to boost risk sentiment in the near term.
Tradertainment
Neural Implants That Restore Memory
Imagine a world where lost memories could be retrieved with the push of a button. This isn’t science fiction anymore—neuroscientists have successfully developed neural implants that can restore memory function in patients with brain damage.
The technology, originally designed for individuals with Alzheimer’s and traumatic brain injuries, works by mimicking the brain’s natural memory processes. The implant records neural activity when a person successfully forms a memory and later replays that pattern when recall is needed. In early trials, patients with severe memory loss saw up to a 37% improvement in recall ability, a breakthrough that could change how we approach cognitive disorders.
Beyond medical applications, this technology raises some profound ethical and futuristic questions. Could we one day upload and share memories? Would it be possible to enhance our minds beyond natural human limits? Could this tech create an unfair advantage in learning, career success, or even personal relationships?
While we’re still in the early stages, one thing is certain: the boundary between human cognition and artificial intelligence is starting to blur. And in the not-so-distant future, the ability to "back up" our brains might be as common as saving files on a hard drive.
Week Ahead
Monday, March 17:
United States:
Retail Sales MoM (Feb): Previous: -0.9%; Forecast: 0.7%
China:
Press Conference by State Council on consumption-boosting measures
Tuesday, March 18:
Canada:
Core Inflation Rate YoY (Feb): Previous: 2.1%
Inflation Rate YoY (Feb): Previous: 1.9%; Forecast: 2.1%
Wednesday, March 19:
Japan:
Bank of Japan Interest Rate Decision: Current: 0.5%; Forecast: 0.5%
Euro Area:
Core Inflation Rate YoY Final (Feb): Previous: 2.7%; Forecast: 2.6%
Inflation Rate YoY Final (Feb): Previous: 2.5%; Forecast: 2.4%
United States:
Federal Reserve Interest Rate Decision: Current: 4.5%; Forecast: 4.5%
Federal Reserve Summary of Economic Projections (last Summary was in Dec 2024)
Thursday, March 20:
United Kingdom:
Unemployment Rate (Jan): Previous: 4.4%; Forecast: 4.5%
Bank of England Interest Rate Decision: Current: 4.5%; Forecast: 4.5%
Friday, March 21:
Euro Area:
Consumer Confidence Flash (Mar): Previous: -9.5; Forecast: -10
Trading Plan
1. Currencies:
Neutral for now.
2. Commodities:
Gold - Looking for an opportunity to get long.
Uranium & Energy - Stay invested for now.
3. Stocks:
US Stock Index: The US stock market recovered strongly on Friday, with S&P500 and Nasdaq rising by more than +2%, as there were no new tariffs related headlines.
(For more timely info on our Trading plan, click HERE)
Single Stocks: TrackRecord Model Portfolio is tracking the broader market for now.
Key risks: A downside surprise in US Retail Sales could weaken risk sentiment because it will increase the fear of a recession.
What Happened Yesterday
Market Movements as of New York Close 14 Mar 25 (16 Mar for Crypto)
Economic Data:
United States: University of Michigan’s preliminary consumer sentiment survey
Consumer Sentiment (57.9 actual vs 63.1 exp and 64.7 prev)
1-year Inflation Expectations (4.9% vs 4.3% prev)
5-year Inflation Expectations (3.9% vs 3.5% prev)
Market reaction was muted despite it being the weakest consumer index since November 2022.
U.S. Stock Market:
The U.S. stock market staged a recovery after a tumultuous week as the market saw a relief from the tariff headlines.
S&P 500: gained +2.13% (intraday high: +2.24%, low: +0.77%)
Dow Jones Industrial Average: rose +1.65% (intraday high: +1.75%, low: +0.28%)
Nasdaq 100: increased +2.49%, (intraday high: +2.62%, low: +1.10%)
Global Markets:
Asia:
The Chinese market traded higher on Friday as well due to improved risk sentiment.
Cryptocurrency Market:
Cryptocurrencies traded higher through the weekend as the positive risk sentiment from the US stock market spilled over.
Foreign Exchange (FX) Market:
The USD traded slightly weaker with most currency pairs trading in a relatively tight range.
Headlines & Market Impact
Treasury Secretary Bessent says White House is heading off a ‘guaranteed’ financial crisis
Notable Snippet: Treasury Secretary Scott Bessent said Sunday the Trump administration is focused on preventing a financial crisis that could be the result of massive government spending over the past few years.
“What I could guarantee is we would have had a financial crisis. I’ve studied it, I’ve taught it, and if we had kept up at these spending levels that -- everything was unsustainable,” Bessent said on NBC’s “Meet the Press.” “We are resetting, and we are putting things on a sustainable path.”
President Donald Trump has made getting the government’s fiscal house in order a priority since taking office. He created the so-called Department of Government Efficiency, led by Elon Musk, to spearhead job cuts and early retirement incentives across multiple federal agencies.
Still, the U.S. debt and deficit problem worsened during Trump’s first month in office, as the budget shortfall for February passed the $1 trillion mark.
Bessent noted that there are “no guarantees” there won’t be a recession.
The market has been on a tumultuous ride as of late as Trump’s widespread tariffs raised concerns about inflation and economic slowdown. The S&P 500 on Thursday fell into a 10% correction from its February high as volatility spiked.
Bessent believes pullbacks like the one the market is in right now are benign, and Trump’s pro-business policies will boost the market and the economy over the long run.
“I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy. They’re normal,” he said. “What’s not healthy is straight up, that you get these euphoric markets. That’s how you get a financial crisis. It would have been much healthier if someone had put the brakes on in ’06, ’07. We wouldn’t have had the problems in ’08.”
“I’m not worried about the markets. Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great,” Bessent added. “I say that one week does not make the market.”
What we think: Treasury Secretary Scott Bessent’s assertion that the White House is averting a “guaranteed” financial crisis reflects the administration’s focus on fiscal tightening. While efforts to rein in government spending and cut federal jobs align with Trump’s pro-business stance, the immediate market reaction has been one of volatility. With tariffs amplifying economic uncertainty and the deficit widening, investors remain skeptical about the sustainability of the administration’s economic strategy.
China's Jan-Feb industrial output slows, retail sales growth picks up speed
Notable Snippet: China's industrial output grew 5.9% year-on-year in the first two months, slowing from the 6.2% expansion in December, according to the data from the National Bureau of Statistics (NBS). However, it was ahead of expectations for a 5.3% rise in a Reuters poll of 26 analysts.
Retail sales, a gauge of consumption, rose 4.0% in the January-February period, better than a 3.7% rise in December and marking the quickest rate since November 2024. Analysts had expected retail sales to grow 4.0%.
Household consumption in the first two months were buoyed by holiday spending during the 8-day Lunar New Year holidays, when China's box office raked in record takings with animated hit "Nezha 2".
In the annual parliament meeting earlier this month, China's leaders pledged stronger fiscal and monetary support for the economy.
Policymakers have put expanding domestic demand as the top priority this year. Among other measures, they have lined up 300 billion yuan ($41.5 billion) for a recently-expanded consumer goods trade-in scheme for electric vehicles, appliances and other goods.
On Sunday, China's State Council unveiled a "special action plan" to boost domestic consumption, featuring measures including increasing residents' income and establishing a childcare subsidy scheme.
Officials from the country's top economic ministries will brief the media on consumption-boosting measures later on Monday.
The urban survey-based jobless rate in February climbed to 5.4%, the highest in two years.
Fixed asset investment, which includes property and infrastructure investment, expanded 4.1% in the Jan-Feb period from the same period a year earlier, versus expectations for a 3.6% rise. It grew 3.2% in 2024.
What we think: China’s slowing industrial output but improved retail sales highlight a fragile recovery driven by temporary Lunar New Year spending rather than structural economic strength. While policymakers have pledged increased stimulus and domestic demand expansion, rising unemployment and ongoing trade disputes with the U.S. could undermine growth momentum. Investors will watch how effectively Beijing navigates these pressures while maintaining its 5% GDP target.
China’s Baidu launches two new AI models as industry competition heats up
Notable Snippet: China’s Baidu said on Sunday it has launched two new artificial intelligence models, including a new reasoning-focused model that it said rivalled DeepSeek’s model, as it vies to stand out in a fiercely competitive AI race.
Chinese AI startup DeepSeek’s roll-out of AI models which it says is on par with, or even better than, industry-leading models in the United States at a fraction of the cost, has roiled the industry and re-energised the global AI race.
“ERNIE X1 delivers performance on par with DeepSeek R1 at only half the price,” Baidu said of one of the new models. The X1 has “stronger understanding, planning, reflection, and evolution capabilities,” Baidu said, adding that it is the first deep thinking model that uses tools autonomously.
Baidu said its latest foundation model ERNIE 4.5 has “excellent multimodal understanding ability. It has more advanced language ability, and its understanding, generation, logic, and memory abilities are comprehensively improved.”
It also has “high EQ”, and it is easy to understand network memes and satirical cartoons, Baidu said.
One of China’s earliest tech giants to launch a ChatGPT-style chatbot, Baidu has struggled to gain widespread adoption for its Ernie large language model, despite claiming performance comparable to OpenAI’s GPT-4, amid fierce competition.
Multimodal AI systems are capable of processing and integrating various types of data including text, video, images and audio, and can convert content across these formats.
What we think: Baidu’s new AI models mark its latest attempt to solidify its position in China’s intensifying AI race, but it remains in the shadow of more widely adopted competitors. The company’s claims of matching DeepSeek at a lower cost highlight the price war unfolding in AI development. As China pushes to challenge U.S. dominance in AI, Baidu’s success (or failure) will be a key indicator of the sector’s global competitiveness.
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Best,
Phan Vee Leung
CIO & Founder, TrackRecord