No quarter for Wall Street

Gold is homing in on its best quarter since 1986, telling you everything you need to know about what’s proven to be a dire quarter for Wall Street. April offers little chance of reprieve as it looks set to kick off with the start of a global trade war.

I’ll get into all the market details below before taking a look at rising fears that the U.S. could take the once-unthinkable step of weaponizing emergency dollar access.

Today’s Market Minute

* Trump said this weekend that the reciprocal tariffs he is set to announce this week will include all nations, not just the 10 to 15 countries with the biggest trade imbalances.

* Gold is heading for its biggest quarterly gain since 1986, as investors embrace the safe-haven appeal of bullion.

* Trump says he’s “pissed off” at Russian President Vladimir Putin and will impose secondary tariffs of 25% to 50% on buyers of Russian oil if he feels Moscow is blocking his efforts to end the war in Ukraine.

* Dude, where’s my car? Toyota buyers are facing long waits for delivery of their new cars as demand for gasoline-electric hybrids booms.

* Billionaire Elon Musk on Sunday handed out million-dollar checks to two voters in Wisconsin and promised smaller payments to others who help elect a conservative candidate to the state’s top court in a closely watched election.

No quarter for Wall Street

There was little to calm markets this morning, as the prospect of universal U.S. import tariffs returned to the radar over the weekend. The turbulent end to last week has barreled into Monday, as stocks across the globe fell sharply on the final day of March.

Japan’s Nikkei lost 4% in its biggest one-day drop since September. And South Korea’s Kospi dropped 3%.

The S&P 500 is already on course for its worst month since 2022 and its worst first quarter since the pandemic in 2020. Futures show those losses may extend even further on Monday.

The White House tariff plan should be announced in full on Wednesday, though the range of possibilities for what will eventually emerge is very large. President Donald Trump jarred markets this weekend by saying all countries could be subject to tariffs, not just the 10 to 15 with the biggest trade imbalances.

The unusual degree of uncertainty being generated by the administration could ultimately end up creating as much discomfort as the impact of the actual tariffs.

On the growth front, more worrying numbers came out on Friday as real personal consumption spending was below forecast. This dragged down first quarter U.S. GDP estimates, while the University of Michigan showed long-term inflation expectations climbing.

Even the Atlanta Federal Reserve’s gold-adjusted “GDPNow” model, which strips out the distortions created by high gold bar imports in January, is signaling that the U.S. economy contracted during the quarter.

That fact and the flight from stocks has had a direct impact on interest rate expectations. Three Fed cuts in 2025 are once again being priced into Fed futures. Two-year Treasury yields, which plunged back below 4% on Friday, dropped another 7 basis points on Monday to just 3.84%.

Investors appear increasingly less confident about what is going to happen next on either the economic or policy fronts in the U.S. These concerns were amplified over the weekend, as Trump’s statements on a whole range of issues seemed more erratic than usual.

Asked whether he was worried about rising prices for foreign autos and other imports, Trump said he “couldn’t care less” and urged consumers to buy American-made cars instead.

He also said he was not joking about seeking a third presidential term, which is barred by the U.S. Constitution, though he said that it was too early to think about doing so.

In geopolitics, Trump said he was “pissed off” with Russian President Vladimir Putin for dragging his heels on the Ukraine peace deal, threatening to extend secondary sanctions on countries who traded with Russia as a punishment for delays.

And he then criticized Putin for questioning the credibility of Ukrainian President Volodymyr Zelenskiy’s leadership - something he has done himself over the past month.

Markets responded to this accordingly. Wall Street’s fear index, the VIX, climbed to its highest in more than two weeks, gold topped $3,100 for the first time, and safety seekers also bought Japanese yen.

European stocks, which have outperformed this year with gains of more than 10%, fell back on Monday too, but the euro held up against a softer dollar.

Monday’s economic diary is quiet, but it’s a big labor market data week on top of the much-anticipated tariff announcements.

Let’s now turn back to the rising concerns about erratic U.S. policy and consider the risk that the dollar could potentially be weaponized in a new way.

‘Coercion’ fears include hijacking dollar dominance

There may be a thin line between ‘transactional’ and ‘coercive’, but U.S. international economic policies judged to have crossed it could weaken the foundations of the dollar’s dominant role in international finance.

Washington has long used its economic and financial heft to wring change out of countries it considers foes, but explicitly threatening its traditional allies is something very new.