Issue #7 - Gold Surges, Tech Stumbles, Tariffs Shift: What Investors Need to Know

Investing Gems

Mr. Market Metaphor: Treat the market as an emotional partner offering daily prices. Use its irrationality to your advantage by buying undervalued stocks and selling overvalued ones.

What’s in This Issue:

In Issue #7 of our newsletter, we take a closer look at the changes influencing global finance. We discuss the market’s strong rally, fuelled by improving US-China trade relations and varied Q1 earnings from major companies like Tesla and Alphabet.

Find out how gold has reached record levels, moving from a safe investment to a speculative one. We also examine Amazon and Microsoft’s decision to pause AI data centre expansions as the market adjusts, Tesla’s underwhelming earnings, and the possibility of the US reducing tariffs with China.

We also touch on important economic updates, such as the IMF’s lowered global growth predictions and Britain’s historically low economic confidence.

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What is Moving the Markets This Week

Wall Street rallied to its second-best weekly gain of 2025, with the S&P 500 rising nearly 5% after a four-day rally fuelled by President Trump easing his aggressive stance on Federal Reserve Chair Powell and China, which boosted market sentiment.

The focus shifted somewhat from tariffs to Q1 earnings, with mixed results from major companies: Tesla’s net income plunged 71%, Alphabet delivered solid earnings, Boeing’s loss was better than expected, and Intel reported a disappointing quarter.

The rally was led by gains in megacap tech stocks like Tesla and Alphabet, despite ongoing trade uncertainties and economic concerns.

Gold Surges to Record Highs as Fear Trade Turns Into Greed Frenzy

Gold prices have soared past $3,500 per troy ounce for the first time ever, transforming what was once a "fear trade”—a safe haven during global financial uncertainty—into the "ultimate greed trade" as investors now flock to gold not just out of caution but for speculative gains.

With the S&P 500 down 10% year-to-date and gold up nearly 30%, the metal has become the most crowded trade among fund managers, according to Bank of America. Demand is especially strong in China, where gold futures and ETF inflows have hit record highs, while U.S. investors are piling into gold ETFs and call options.

Technical indicators show gold trading over 20% above its 120-day moving average, a rare occurrence historically associated with major market turning points, fueling speculation that gold could double again if current trends mirror the monetary reset of 1980.

Amazon and Microsoft Hit Pause on AI Data Centre Expansion Amid Market Cooldown

Analysts are raising concerns after Amazon Web Services (AWS) reportedly paused some new data centre deals, particularly international colocation agreements, mirroring similar recent moves by Microsoft.

This moderation follows a frenzied period of AI-driven data centre growth since the launch of ChatGPT in late 2022, with analysts noting a slowdown in demand and urgency for new capacity, especially in Europe.

While AWS insists strong demand for generative AI and core workloads remains, it frames these pauses as routine capacity management rather than a fundamental shift in strategy.

Despite the current "digestion phase," with fewer large deals and a more cautious approach to expansion, the broader AI cloud race continues, and industry watchers are closely monitoring whether this is a temporary recalibration or signals a longer-term change in hyperscale cloud growth.

Tesla’s Q1 2025 Earnings Disappoint as Auto Revenue Plunges 20% and Profits Collapse

Tesla reported a sharp 20% year-over-year drop in automotive revenue and missed Wall Street’s expectations for both earnings and sales in the first quarter of 2025, with total revenue falling 9% to $19.34 billion and net income plummeting 71% to $409 million.

The company blamed the slump on factory line updates for the refreshed Model Y, lower average selling prices, and increased sales incentives, while warning that rapidly changing trade policies and political uncertainties are straining its global supply chain and cost structure.

Tesla’s vehicle deliveries fell 13%, and the company faces mounting pressure from lower-cost Chinese competitors and lagging progress in the robotaxi market. Despite these setbacks, Tesla reaffirmed plans for a pilot robotaxi launch in Austin and pilot humanoid robot production in California this year.

Energy generation and storage revenue surged 67% but the company’s heavy reliance on regulatory credits and rising AI-related expenses further squeezed margins. Tesla shares are down 41% so far in 2025, reflecting investor concerns over its future growth and profitability.

US Signals Willingness to Reduce China Tariffs Amid Market Rally and Global Concerns

US Treasury Secretary Scott Bessent stated that the current high tariffs between the US and China are unsustainable, as the Biden administration indicated openness to lowering trade barriers to ease escalating economic tensions.

This shift in tone sparked a rise in US stock markets, raising hopes that both countries might move towards negotiations, although no talks are imminent. Bessent emphasised that tariff levels—currently at 145% on Chinese goods and 125% on US goods—must be reduced before meaningful dialogue can begin, but stressed that the US would not act unilaterally.

While the White House is reportedly considering significant tariff cuts, official statements remain cautious. The ongoing trade conflict has disrupted global shipping, increased fears of recession, and prompted warnings from the IMF about risks to global growth and debt.

Meanwhile, public approval of Trump’s economic management has declined, and legal challenges to the tariffs are mounting from several US states.

Top Economic News

The global economy is experiencing significant turbulence this month, primarily driven by escalating trade tensions and policy uncertainty.

The International Monetary Fund has substantially revised down global growth forecasts following recent US tariff announcements, projecting a slowdown to 2.8% in 2025, down from earlier estimates.

Meanwhile, economic confidence in Britain has plummeted to its lowest level since records began in 1978, with 75% of Britons expecting further economic deterioration. In the United States, early GDP data suggests the economy was already slowing significantly before the full impact of new trade policies took effect.

IMF Downgrades Global Growth Forecasts Amid Trade Tensions - Read More

The International Monetary Fund has dramatically revised its outlook for the global economy following a wave of tariff announcements that began in early 2025.

In its recent World Economic Outlook, the IMF projects global growth to slow to 2.8% this year and 3% in 2026, representing a cumulative downgrade of approximately 0.8 percentage points compared to January forecasts.

This significant revision reflects the economic consequences of what the IMF describes as a "reset" of the global economic system that has operated for the past 80 years.

The deterioration in outlook follows a series of tariff announcements by the United States, which started with targeted measures against Canada, China, and Mexico before expanding to near-universal levies on 2 April.

The resulting policy uncertainty has become a major driver of economic forecasts, with the IMF now presenting a range of scenarios to reflect the fluidity of the current situation.

Impact on Major Economies

For the United States, which was already experiencing softening demand before recent policy announcements, growth estimates for 2025 have been lowered to 1.8%, representing a 0.9 percentage point reduction from January forecasts.

Of this reduction, approximately 0.4 percentage points are directly attributable to tariff impacts. Simultaneously, US inflation forecasts have been raised by about 1 percentage point, up from the previous 2% estimate. 

China's growth forecast has been revised down to 4% for this year, a reduction of 0.6 percentage points, while inflation projections have decreased by approximately 0.8 percentage points.

The euro area, facing relatively lower effective tariffs, has seen a more modest downward revision of 0.2 percentage points, to 0.8% growth. Both China and the euro area are implementing stronger fiscal stimulus measures to provide some economic support through 2025 and 2026.

Record Low Economic Confidence in Britain - Read More

Economic sentiment in Britain has deteriorated dramatically, with confidence regarding the economy over the next 12 months falling to the lowest level recorded since polling began in 1978.

According to recent data from Ipsos MORI, 75% of Britons now expect the economy to worsen over the coming year, representing an increase of 8 percentage points since March alone.

Only 7% of the British population anticipates any improvement in economic conditions during this period, resulting in a net balance of negative 68 – the lowest level of optimism ever recorded in these surveys.

This profound pessimism reflects a convergence of concerns including recent US tariffs and broader worries about the health of the UK economy.

Political Implications

The collapse in economic confidence presents a significant challenge for Labour Prime Minister Keir Starmer, who took office in July 2024 with ambitious goals to make Britain the fastest-growing economy among G7 nations.

According to Gideon Skinner, Ipsos senior director for UK Politics, economic pessimism has already risen by 30 percentage points compared to June 2024, even before the most recent deterioration.

The British government, managing a relatively trade-dependent economy compared to other G20 nations, is now working to avoid reciprocal tariffs from the United States by pursuing a new economic agreement.

This level of economic negativity is exceptionally rare for a prime minister at this stage of their tenure, adding political complexity to the economic challenges. 

US Economy Slowdown Precedes Full Trade Impact - Read More

The American economy was already showing signs of deceleration before the full effects of recent trade tensions could materialise.

Preliminary assessment of first-quarter GDP suggests the US economy expanded at an annualised rate of just 0.4%, marking the slowest growth in nearly three years. This significant slowdown has raised concerns about potential recession risks and job market stability.

Bloomberg Economics estimates confirm this sharp deceleration, noting that real GDP slowed to approximately 0.4% in the first quarter, down from 2.4% in the final quarter of 2024.

The trade deficit appears to be a primary contributor to this slowdown, as businesses rushed to import goods ahead of anticipated tariff increases initiated by the Trump administration.

Consumer Behaviour and Market Outlook

Consumer behaviour has been noticeably affected by trade tensions, with many Americans rushing to purchase items expected to see price increases due to tariffs, particularly vehicles. Nevertheless, consumers have generally maintained a cautious approach to spending.

The latest Bloomberg monthly economist survey indicates that GDP growth will remain below 1% in each of the three quarters remaining this year, with private consumption expected to contract.

Despite the economic deceleration, the labour market has shown resilience so far. While hiring has slowed slightly, there are currently no signs of significant layoffs.

The upcoming monthly employment report is anticipated to show an increase of approximately 130,000 jobs – about 100,000 fewer than the unexpectedly strong gains recorded in March – with the unemployment rate expected to hold steady at 4.2%.

Conclusion

The global economic landscape is experiencing significant disruption as trade tensions escalate and policy uncertainty reaches unprecedented levels.

The IMF's substantial downward revision of growth forecasts reflects the widespread impact of recent tariff announcements, affecting economies worldwide. In Britain, economic confidence has collapsed to historic lows, presenting both economic and political challenges.

Meanwhile, the US economy shows signs of significant slowing even before the full effects of trade tensions have materialised.

These developments collectively point to a period of heightened economic uncertainty and potentially subdued growth throughout 2025, as policymakers and market participants navigate an increasingly complex global trade environment.

Looking Forward: What We Anticipate Next Week

Investors face a packed week as hundreds of companies, including Apple, Microsoft, Meta, and Amazon, are set to report quarterly earnings, while investors also await critical economic data such as the U.S. Q1 GDP growth estimate and the Fed’s preferred inflation gauge, the core PCE index.

The market’s recent rally, driven by easing trade tensions and strong tech stock performance, will be tested by these updates, especially as President Trump’s ongoing trade war and tariff policies continue to create uncertainty for Big Tech and the broader economy.

Analysts expect GDP growth to slow sharply, and the labor market to remain stable, but the outlook for stocks and economic momentum will hinge on this week’s corporate results and economic reports.

Next Week in the Markets

Monday, April 28

Earnings Reports:

 - Waste Management (WM) 

 - Roper Technologies (ROP) 

 - Domino’s Pizza (DPZ)

- No major economic data releases scheduled.

Tuesday, April 29

Earnings Reports:

 - Visa (V) 

 - Coca-Cola (KO) 

 - Honeywell (HON) 

 - Pfizer (PFE) 

 - Spotify (SPOT) 

 - Starbucks (SBUX)[2][5]

Key Events:

 - US Treasury Refunding Estimates: Government outlines borrowing plans for the next quarter, which can impact bond yields and equity markets.

Wednesday, April 30

Earnings Reports:

 - Microsoft 

 - Meta Platforms 

 - Qualcomm (QCOM) 

 - Caterpillar (CAT)

Key Events:

 - US JOLTs Job Openings: Expected to fall from 7.57M to 7.4M, signalling potential labour market cooling.

 - China NBS Manufacturing PMI: Forecasted to drop from 50.5 to 48.5, indicating possible contraction in factory activity.

 - US Treasury Refunding Announcement: Confirms the size and structure of upcoming debt sales, which may affect yields and stocks.

Thursday, May 1

- Earnings Reports:

 - Apple 

 - Amazon 

 - Eli Lilly (LLY) 

 - Mastercard (MA) 

 - McDonald’s (MCD)

Key Events:

 - Australia Trade Balance: Expected surplus increase from $2.97B to $4B, supporting the AUD and signalling commodity demand.

 - Bank of Japan Interest Rate Decision: No change expected (0.5%). Any policy hints could move the yen and global bonds. 

Friday, May 2

Earnings Reports:

 - Exxon Mobil (XOM) 

 - Chevron (CVX) 

 - Cigna (CI) 

 - Apollo Global Management (APO)

Key Events:

 - US Unemployment Rate: Forecast to hold steady at 4.2%. A stable rate with cooling inflation could support Fed rate cuts, bullish for stocks.

Spotlight

This week is dominated by major tech and blue-chip earnings, including Apple, Microsoft, Amazon, Meta, Visa, Mastercard, Exxon, Chevron, Coca-Cola, and McDonald’s. Economic data and central bank announcements will also be closely watched for market direction.

Things I’m Paying Attention To

Google’s Case

After losing a major antitrust lawsuit, Google faces the possibility of being forced by the U.S. Department of Justice (DOJ) to sell its Chrome browser to another company as part of efforts to break up its monopoly in search.

Parisa Tabriz, Chrome’s General Manager, testified in court that only Google can truly operate Chrome due to its deep integration and complex interdependencies within the Google ecosystem, highlighting features like safe browsing and password alerts that depend on Google infrastructure.

Tabriz emphasised that Google has contributed over 90% of Chromium’s code since 2015 and invests hundreds of millions of dollars in its development, making any separation unprecedented and technically challenging.

Meanwhile, the DOJ is also pushing for Google to share user data with competitors and to stop paying for default search placements, which could impact deals like Google’s arrangement with Apple. Despite the technical challenges, companies such as OpenAI, Perplexity, and Yahoo have shown interest in acquiring Chrome if a sale is mandated.

BYD heats up pressure on Tesla 

Chinese electric vehicle manufacturer BYD has doubled its profit to $13 billion and surpassed Tesla in annual revenue, exceeding $100 billion, as it continues to outpace Elon Musk’s company amid growing competition in China.

BYD’s quarterly revenue rose 36% to about $23.5 billion, with electric vehicle and plug-in hybrid sales surging 60% to nearly one million units, while Tesla’s deliveries fell 13% to 336,681.

BYD’s rapid expansion in key markets like Europe, Mexico, and South America, along with innovations such as five-minute charging and advanced autonomous driving technology, have strengthened its position as China’s leading car brand.

Despite not selling in the US due to tariffs, BYD’s vertical integration has helped it weather trade tensions. Meanwhile, Tesla faces challenges from an aging vehicle lineup and Musk’s divided focus as he plans to reduce his involvement in government work.

Perplexity on Google’s Neck

Perplexity CEO Aravind Srinivas is positioning his AI startup to challenge Google by focusing on partnerships and the emerging battleground of the web browser. Following a deal to have Perplexity preinstalled on Motorola’s new Razr phones-a move enabled by increased antitrust scrutiny of Google-Srinivas announced plans to launch Perplexity’s own browser, Comet, which he views as the ideal platform for building powerful AI agents capable of acting on users’ behalf across the web.

He argues that browsers, acting as containerised operating systems, can uniquely access and interact with third-party services, giving AI assistants more context and capability than current mobile or desktop assistants.

As Perplexity rapidly grows its user base and query volume, Srinivas believes that owning the browser interface will be crucial to competing with giants like Google, OpenAI, and Microsoft, and ultimately to creating the next generation of truly personalised, action-oriented AI assistants.

Hot Take 🔥

This week’s market chaos is a gift for bold investors. With the S&P 500 still clawing its way out of an 18.9% slump and “peak fear” hitting on April 8, sentiment is deeply bearish-over 50% of investors are pessimistic, and major indexes have seen multiple 4-5% drops in a matter of days.

But history shows that these moments of panic often mark the best buying opportunities, as rapid corrections tend to be short-lived and markets have always rebounded from even the ugliest selloffs. 

The real risk now isn’t more downside-it's missing out on the recovery. While short-term forecasts remain cautious and some analysts warn the long bull market may be ending, the sheer scale of recent declines means quality stocks and dividend payers are trading at rare discounts.

For those willing to “be greedy when others are fearful,” this could be the once-in-a-decade setup to build serious wealth as the dust settles and markets inevitably grind higher.

What Else is Happening?

DoorDash Proposes $3.6 Billion Takeover of UK Rival Deliveroo - Read More

US-based food delivery giant DoorDash has made a preliminary offer to acquire London-based Deliveroo for $3.6 billion (£2.7 billion), aiming to strengthen its foothold in the UK market. Deliveroo, the second largest food delivery app in the UK with 7.1 million active users and £2.07 billion in revenue in 2024, confirmed ongoing talks but noted no firm offer has yet been made.

DoorDash, which leads the US market with 42 million monthly users and $10.7 billion revenue in 2024, has until May 23 to present a formal bid. Both companies have been diversifying beyond food delivery into groceries and other services, with DoorDash’s CEO emphasising the need for broader digital innovation to become a dominant global player.

Temu and Shein Raise Prices as U.S. Ends Tariff Loophole for Cheap Imports - Read More

Prices on popular Chinese shopping platforms Temu and Shein are already increasing as the U.S. prepares to end the "de minimis" tariff exemption for imports under $800, a move set to take effect on May 2 following an executive order aimed at combating China’s role in the opioid crisis.

While experts doubt the new policy will significantly impact fentanyl trafficking, it is expected to disproportionately burden lower-income and minority consumers, according to a Yale and UCLA study. Both Temu and Shein have warned customers of price hikes due to the new tariffs, which threaten their low-cost business models and have prompted disappointment among bargain-hunting shoppers.

Despite efforts to expand U.S. operations, the companies face major challenges as most of their inventory is sourced from China, making it difficult to absorb the increased costs without passing them on to consumers.

EU Fines Apple and Meta Nearly €700 Million for Breaching Digital Antitrust Rules - Read More

The European Union has fined Apple €500 million and Meta €200 million for violating the bloc’s strict digital competition laws under the Digital Markets Act (DMA). Apple was penalised for failing to comply with “anti-steering” obligations, which require the company to allow app developers to inform users about alternative offers outside of the App Store.

The EU ordered Apple to remove restrictions and avoid repeating such non-compliant behaviour, though Apple has stated it will appeal, claiming the decision is unfair and detrimental to user privacy and product quality. Meta was fined for forcing users to either consent to data sharing or pay for an ad-free version of Facebook and Instagram, a practice the EU deemed illegal.

Meta’s chief global affairs officer criticised the ruling as an attempt to disadvantage successful American firms, arguing it imposes a de facto multi-billion-dollar tariff and harms European businesses by restricting personalised advertising. The EU is also demanding further changes to Meta’s less personalised ads option within 60 days or face additional penalties.

These decisions come amid heightened US-EU trade tensions, with President Trump threatening and imposing tariffs in response to what he describes as unfair targeting of American tech companies.

Behavioural Economics: Understanding Real-World Decision-Making - Read More

Behavioural economics is a field that blends economics and psychology to explore how people actually make decisions, often challenging the traditional economic assumption that individuals always act rationally and in their own best interest.

Pioneered by figures like Nobel laureate Richard Thaler at the University of Chicago, as well as Amos Tversky and Daniel Kahneman, behavioural economics uses experiments and empirical observations to reveal that human choices are frequently influenced by emotions, cognitive biases, and environmental factors.

Unlike classical economics, which sees people as logical actors with perfect self-control, behavioural economics recognises that people often make suboptimal decisions-such as delaying retirement savings or taking irrational risks while gambling-due to impulsivity and context.

Insights from this field have led to the development of "nudges" and other policy tools designed to help people make better choices in areas like health, finance, and public policy.

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Disclaimer

Please remember this is not investment advice—I’m simply sharing my personal opinions and research. Always conduct your own due diligence before making any investment decisions.