Dow recovered on hopes of an imminent Ukraine war ceasefire

·       Gold and oil slumped; Nasdaq-100, SPX-500 slips on increasing Trump tech/Chip war against China; Trump also renewed Canada and Mexico tariff threats

On Friday, Wall Street Futures slid on the panic of a hard landing or even an all-out economic recession amid the concern of not only Trump 2.0 but also COVID 2.0 uncertainty. Stock Futures on both sides of the Atlantic, as well as the Pacific, plunged after a report about the potential COVID 2.0 virus in China; oil also slid on the concern of COVID 2.0 global lockdown; while safe-haven assets like Gold and bonds surged.

Trump & Musk’s sudden austerity policies regarding the firing of Federal employees and projects may cause more economic harm than any meaningful real gain.  It seems that Musk is now the real US President in charge, and Trump’s senile, lethargic, and often dementia-like attitude may be indicating that Trump 2.0 may be much weaker than Trump 1.0. In any way, Trump 2.0 may lose trifecta or House majority soon in the 2026 mid-term election. The US/UM consumer sentiment also took a hit, with the University of Michigan’s index falling to 64.7, reflecting growing concerns over inflation, which consumers now expect to rise to 4.3% in the coming year amid Trump 2.0 bellicose policy impact.

On Friday, the broader SPX-500 tumbled 1.7% and tech-heavy NQ-100 slid 2.1%, while blue-chip China-savvy DJ-30 plunged 748 points, marking its biggest loss of the year. UnitedHealth shares plunged following reports that the Department of Justice (DOJ) is investigating its Medicare billing practices, making it the worst-performing Dow component. The slide followed Walmart's subdued guidance and broader fears about the impact of President Trump's tariff policies. On the week, the S&P 500 dropped by 1.6%, while the Dow and Nasdaq slipped 2.5% and 2.4%, respectively.

On Friday, the UM (University of Michigan) Final data shows US consumer sentiment was revised sharply lower to 64.7 in February from a preliminary estimate of 67.8, reaching the lowest level since November’23. The gauge for current economic conditions was also revised lower to 65.7 from 68.7 and the expectations sub-index was revised down to 64 from 67.3. The decrease in sentiment was unanimous across groups by age, income, and wealth. The drop in consumer sentiment was led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff-induced price increases are imminent. Expectations for personal finances and the short-run economic outlook both declined almost 10%, while the long-run economic outlook fell back about 6% to its lowest reading since November 2023 and way below pre-COVID (December’19 levels of around 99.3.

Meanwhile, inflation expectations for the year ahead soared to 4.3%, the highest since November 2023. The five-year outlook increased to 3.5% from a preliminary of 3.3% and above 3.2% in January, the largest mom increase seen since May 2021 and almost 2.0% above pre-COVID levels of 2.3% amid Trump 2.0 tantrum. On Friday, apart from the COVID 2.0 panic, Wall Street was also nosedived on the concern of a hard landing amid increasing inflation and unemployment due to the Trump 2.0 policy tantrum.

The UM said:

“Consumer sentiment extended its early month decline, sliding nearly 10% from January. The decrease was unanimous across groups by age, income, and wealth. All five index components deteriorated this month, led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff-induced price increases are imminent. Expectations for personal finances and the short-run economic outlook both declined almost 10% in February, while the long-run economic outlook fell back about 6% to its lowest reading since November 2023. While sentiment fell for both Democrats and Independents, it was unchanged for Republicans, reflecting continued disagreements on the consequences of new economic policies.

Year-ahead inflation expectations jumped up from 3.3% last month to 4.3% this month, the highest reading since November 2023 and marking two consecutive months of unusually large increases. The current reading is now well above the 2.3-3.0% range seen in the two years before the pandemic.

Long-run inflation expectations rose over the month and climbed from 3.2% in January to 3.5% in February. This is the largest month-over-month increase seen since May 2021. For both short- and long-run inflation expectations, this month’s increases were widespread and seen across income and age groups. Inflation expectations rose this month for Independents and Democrats alike; they fell slightly for Republicans.”

In summary, ‘King’ Trump’s approval rating is declining rapidly as Republicans, Democrats, and even non-partisan Americans are now feeling shaky about Trump’s bellicose policies. During President Trump's first 30 days in the White House, his approval rating saw a decline, which was unusual compared to past American presidents who typically enjoyed a ‘honeymoon period’. This was one of the lowest early approval ratings for a modern U.S. president.

Reasons for the Decline of Trump’s approval rate:

Controversial Executive Orders

The most notable was the "travel ban" (Executive Order 13769) restricting entry from several Muslim-majority countries. This led to nationwide protests, legal challenges, and confusion at airports. The order was blocked by Federal courts, leading to criticism of the administration's handling of the policy.

Chaotic White House Operations

Trump's early days were marked by staff infighting and reports of disorganization. Michael Flynn, his National Security Advisor, was forced to resign after just 24 days over misleading statements about his contact with Russia.

Media Battles & ‘Alternative Facts’

Trump's team, including Sean Spicer and Kellyanne Conway, made statements that were widely criticized, such as the ‘alternative facts’ defense of his inauguration crowd size. Trump’s frequent attacks on the media as ‘fake news’ are leading to a ‘war of words’ with journalists.

Immigration Raids & Deportations

Increased immigration enforcement, including raids by ICE, has sparked fears and backlash from various legal/illegal immigrant communities and activists.

Obamacare Repeal Struggles

Despite promising to repeal the Affordable Care Act (Obamacare) immediately, Trump and Republicans struggled to present a clear replacement, frustrating both supporters and critics.

Russia Investigation Begins to Unfold

Allegations of Russian interference in the 2016 election and Trump campaign ties to Russia began gaining attention, raising concerns over his administration’s credibility.

Overall Impact

These issues made Trump's presidency appear divisive and turbulent from the start, leading to a quick drop in approval ratings. While his core supporters remained loyal, independents and moderates became skeptical early on. In the first 30 days of Trump's second term as President, his approval rating experienced a decline. Initially, his approval rating was around 47% to 49% in various polls, which is historically low compared to other presidents at the start of their terms. By the end of the first month, his approval rating had dipped further, with a Reuters/Ipsos poll showing it at 44%, while his disapproval rating rose to 51%.

Reasons Behind the Decline

Economic Concerns: A significant factor contributing to the decline is the public's perception of the economy. A majority of Americans (53%) believe the economy is heading in the wrong direction, and only 32% approve of Trump's handling of inflation by cutting Federal employees and switching off various Federal projects/funds. Trump’s and Musk’s strategy to bring down inflation by cutting US public deficit and debt may be theoretically correct in the longer term, but it may not work at present due to Trump tariffs, higher imported inflation, and also supply chain disruptions. This economic dissatisfaction is a major concern for many Americans and even some die-hard Trump supporters.

Polarized Public Opinion: Trump's presidency has been marked by strong partisan divisions. While he retains strong support from Republicans, his approval among independents and Democrats remains low. This polarization contributes to the volatility in his approval ratings.

Government and Policy Controversies: Trump's administration has faced criticism for aggressive spending cuts and restructuring efforts, including the involvement of Musk in government efficiency (DOGE) initiatives. Many Americans are now thinking of Nusk as the de-facto US President amid tired/exhausted and senile-looking Trump, approaching 80 years of age by the next mid-term election (November 26). It seems that Trump is being heavily controlled by Musk & Co (tech & military-industrial lobby). Additionally, Trump's controversial foreign policy statements and frequent tariff threats have drawn criticism.

Rampant Firing of Federal Employees: ‘King’ Trump and Musk’s action of rampant firing of Federal employees in the name of Federal cost-cutting and efficiency increasing has a profound impact on not only affected employees and their families but also various Federal contractors and their private employees. Trump and Musk’s action may cost around 3K direct Federal employees and 7K private employees under various Federal contractors. Trump & Musk’s dictatorship attitude with totalitarian behavior is causing widespread dissatisfaction, and declining consumer confidence in job security issues even in government and related sectors.

Trump is now ruling like a monarchy with a dictator attitude in an electoral democracy:

In summary, the decline in Trump's approval rating during his first 30 days in office is attributed to economic concerns, inflation, polarized public opinion, and controversies surrounding his policies and administration actions. In the first 30 days of Trump's second term, starting January 20, 2025, his approval rating has shown a noticeable decline according to various polls. While exact figures differ slightly across sources, the general trend indicates a drop from an initial high in the high 40s to low 50s down to the mid-40s or lower by mid-February 2025. For instance, polls suggest his approval started around 47-49% and fell by approximately 5 to 13 points, with disapproval rising correspondingly, often surpassing 50%.

Trump & Musk’s 1st month of shock & awe treatment

Several factors appear to be driving this decline. A key reason is economic concern tied to Trump’s policy actions. His administration quickly implemented aggressive economic measures, including widespread tariffs and threats against multiple countries, which have raised fears about rising prices and economic instability. Many Americans expected Trump to address affordability and lower costs—promises central to his campaign—but early indications, like soaring egg prices due to bird flu and limits on purchases, have fueled perceptions that he’s not delivering fast enough. Polls show only about a third of people approve of his handling of inflation, a critical issue after years of price increases under the previous Biden administration.

Another contributing factor is the public’s mixed reaction to his broader agenda. While some of his immigration policies, like ramping up deportations, retain support (around 47% approval in some surveys), other moves—such as mass federal job cuts, proposals to end birthright citizenship, and pardons for January 6 rioters—have sparked backlash.

These actions, combined with a chaotic communication style described as "over the top" by some, have alienated portions of the electorate who supported his general direction but disliked the execution. Town halls in Republican areas have seen criticism of both Trump and figures like Musk, whose role in government efficiency efforts has also drawn scrutiny and often raised conflict of interest. Musk may be also targeting specific Federal employees, investigating various regulatory actions against his listed companies (like share price manipulation).

Additionally, the lack of a traditional "honeymoon period" reflects a polarized and fatigued electorate. Unlike most modern presidents, Trump’s divisive history and rapid pace of executive orders—over 100 in his first few days—left little room for broad goodwill to take root. Even among Republicans, while support remains high (around 90% approvals), overall national sentiment has shifted as independents and moderates express growing unease. The economy, promised as strength, is emerging as vulnerability, with higher inflation, higher unemployment labor shortages, and deficits looming as potential fallout from his policies.

The US may be heading towards a hard landing or stagflation and even an all-out economic recession under 2nd term of President Trump. In short, Trump’s approval rating has slipped in his first 30 days due to unmet economic expectations, controversial policy rollouts, and a turbulent start that’s failed to unify or reassure a wary public.

The market is now dancing to the Trump tune, his morning mood, and Truth comments.

On Monday, Trump wrote in his Truth handle:

“Today, President Emmanuel Macron of France joined me in the Oval Office to speak to the G7 Summit. The meeting was convened by Governor Justin Trudeau of Canada, the current chair of G7, to acknowledge the Third Anniversary of the Russia-Ukraine War – Which would have never started if I was President. Everyone expressed their goal of seeing the War ended, and I emphasized the importance of the vital “Critical Minerals and Rare-Earths Deal” between the United States and Ukraine, which we hope will be signed very soon!

This deal, which is an “Economic Partnership,” will ensure the American people recoup the Tens of Billions of Dollars and Military Equipment sent to Ukraine, while also helping Ukraine’s economy grow as this Brutal and Savage War comes to an end. At the same time, I am in serious discussions with President Vladimir Putin of Russia concerning the ending of the War, and also major Economic Development transactions that will take place between the United States and Russia. Talks are proceeding very well!”

Ukraine war ceasefire may be imminent by February-March’25:

Overall, recent developments indicate a potential shift towards peace in the three-year-long bloody Russia-Ukraine war. French President Macron, during his visit to Washington, expressed optimism about achieving a ceasefire within weeks, emphasizing that peace should not equate to Ukraine's surrender and highlighting the importance of maintaining its sovereignty. U.S. President Trump urged European nations to take a leading role in the negotiations and security arrangements for Ukraine, suggesting that Europe should also bear the primary responsibility for reconstruction efforts.

But despite these positive signals, challenges persist as Ukraine may be divided to allow control of its untapped rare earth mineral reserve to the U.S. and EU in exchange for war-related aids; grants have now converted into debts. Also, all of Ukraine remains under air raid alerts due to ongoing Russian attacks, with recent strikes causing injuries and property damage in the Kyiv region.

Russia has expressed a preference for a long-term peace agreement that addresses the root causes of the conflict, rather than a swift, U.S.-backed ceasefire, to prevent future hostilities. European leaders convened an emergency summit in Paris to discuss the situation, emphasizing the need for Europe to assert its role in security and peace efforts. European Commission President Ursula von der Leyen (VDL) stressed the importance of supporting Ukraine and increasing European defense spending. The summit aimed to ensure that Europe has a significant role in any future security arrangements for Ukraine, amidst concerns over being excluded from U.S.-Russia peace talks.

In summary, while diplomatic efforts are intensifying, the path to sustainable peace in Ukraine remains complex, requiring coordinated international engagement and addressing the fundamental issues underlying the conflict.

Russian Position: Kremlin officials have rejected any ceasefire that does not involve Ukraine's capitulation and the West's acceptance of Russia's terms, including a ban on Ukraine joining NATO. They emphasize that any peace agreement must address the "root causes" of the conflict, which they define as NATO's eastward expansion and alleged discrimination against ethnic Russians in Ukraine.

International Efforts: Despite these challenges, there are ongoing discussions about the possibility of a ceasefire. The UN has also been involved in efforts to promote peace, with various draft resolutions aimed at achieving lasting peace in Ukraine.

Trump-Macron Meeting

Meeting Overview: On February 24, 2025, US President Trump and French President Macron met at the White House to discuss the Ukraine conflict. While both leaders expressed a desire for peace, they displayed significant differences in their approaches.

Divergent Views:

Trump's Approach: Trump emphasized the need for an immediate ceasefire and suggested that he might visit Russia to meet with President Putin once an agreement is reached. He also stated that Europe should bear more of the financial responsibility for ensuring peace in Ukraine.

Macron's Approach: Macron advocated for a more measured strategy, starting with a truce followed by a comprehensive peace settlement that includes security guarantees for Ukraine. He stressed that any agreement must not imply Ukraine's capitulation and should ensure long-term protection.

Security Guarantees: Macron highlighted the importance of security guarantees in any peace agreement, a point not addressed by Trump during their joint press conference. Macron also mentioned the possibility of European peacekeeping forces in Ukraine, though Russia has expressed opposition to this idea.

As of Monday (February 24, 2025), there have been significant developments regarding a potential ceasefire in the Ukraine war, particularly tied to discussions between U.S. President Trump and French President Macron. The two leaders met at the White House on, coinciding with the third anniversary of Russia’s invasion of Ukraine. Their talks focused on ending the conflict, though their approaches revealed both alignment and divergence.

Trump has expressed optimism about concluding the war swiftly, suggesting it could end "within weeks." He emphasized the urgency of a ceasefire, stating that his administration is working toward "achieving a ceasefire as soon as possible and ultimately a permanent peace." During the meeting, Trump claimed that Russian President Putin is willing to accept European peacekeepers in Ukraine as part of a deal, a point he said he confirmed directly with Putin. He also noted that Ukrainian President Zelenskyy might visit the White House soon to finalize an agreement, potentially involving U.S. access to Ukraine’s mineral resources (rare earth materials) as ‘repayment’ for American aid.

Trump stressed that Europe should bear the primary "cost and burden" of securing peace, a stance Macron appeared to support in principle, Macron, however, took a more cautious tone, insisting that any peace deal "must not mean a surrender of Ukraine" and should include verifiable security guarantees to ensure long-term stability. He described Trump’s return to power as a "game changer" and suggested a truce could be feasible "in the weeks to come," but only if it avoids a "weak" agreement. Macron also highlighted Europe’s readiness to contribute, including through peacekeeping forces that would not be positioned on the front lines but would enforce a ceasefire once agreed. He also corrected Trump during their talks, clarifying that Europe has provided substantial aid to Ukraine, not merely loans as Trump had implied. Macron also pointed out that Russia’s frozen assets at the disposal of West/NATO/US/EU may be used to pay back Ukraine war aid including that of IS and also EU.

The meeting occurred against a backdrop of tension. Just hours after Trump claimed Putin was going "all-out" to end the war, Russian forces struck Kyiv, injuring at least one person and damaging homes, underscoring the ongoing violence. Meanwhile, European leaders, including Macron, are grappling with Trump’s push for a rapid resolution, which some fear could sideline Ukraine and European interests. Ukrainian President Zelensky has reiterated his hope to end the war "this year" but insists on security guarantees to prevent future Russian aggression.

On Monday, France’s President Macron said:

·       Today's discussion showed several areas of progress

·       Trump has confirmed he will meet with Ukraine’s President Zelenskyy soon on minerals deal

·       Thinks Feasible to Have Truce in Ukraine

·       Truce in Ukraine could happen in weeks to come

·       EU to announce short-term defense financing

·       Trade conflict would impede the European Union's rise in defense expenditure

·       A minerals deal will help guarantee Ukraine's sovereignty

·       Peace must not mean a surrender of Ukraine

·       I went into detail with Trump on the different steps of negotiations and discussed the deployment of peacekeeping forces on Ukrainian soil

·       Other countries are ready to join the peace mission

·       Europeans are ready to do more

·       I spoke with Trump on economic matters

·       I want fair competition between the US and EU, our economies are extremely intertwined

·       I call for smooth trade and more investment with the US

·       The US is a big exporter of tech services to Europe

·       We are on the United States side to work for more security in the Middle East

·       France’s President Macron after talks with President Trump, I am convinced there is a path

·       New US Admin. provides a new context for talks

·       There is good reason to reengage now with Putin

·       Deterrence capacities are the only way to ensure peace

·       The US minerals deal will be a good occasion for a Trump-Zelenskyy meeting

Trump said:

·       Tariffs on Canada and Mexico 'will go forward'

·       Trump on Canada and Mexico: We're on time with the tariffs, moving along rapidly

·       All we want is reciprocity

·       The meeting in Saudi Arabia is a fantastic one

·       My people are dealing with Putin's people constantly

·       We are working on transactions now, in particular, to end the war

·       The goal is to get the war stopped with a ceasefire or directly with agreement

On Monday, Russian President Putin said:

·       On talks with the US: We could agree with the US to cut defense budgets, that's a good idea

·       On Aluminium: Russia and the US could consider working together on aluminium production; We could think of a joint project with the US in Russia.

In summary, the Trump-Macron meeting marked a step toward a potential ceasefire, with both leaders agreeing on the need for peace and European involvement, yet differing on the pace and conditions. Trump favors a quick fix, while Macron pushes for a durable solution that protects Ukraine’s sovereignty. The US Treasury Secretary Bessent Says Russia could win sanctions relief if cooperative in peace talks. Overall, the Trump admin is doing a good & commendable job in reducing geopolitical tensions like Gaza and Ukraine war.

Even Trump critics may appreciate Trump 2.0 admin’s initiative in this geopolitical policy space that Tariff King Trump is not a war-savvy US President, unlike most of his predecessors, especially Biden, who may have forced or even trapped Putin to start the Ukraine war 2.0. And Putin has also made a great policy mistake in starting this never-ending Ukraine proxy war with NATO. In this way, the main purpose of this Ukraine war may be solely the control of rare earth materials for NATO/US and to reduce dependency on China. Now deal maker Trump is making a good deal with Russia/China to divide the untapped rare earth among them (US/NATO-Russia/China).

Market impact:

On Monday, Wall Street Futures recovered from Trump 2.0 and COVID 2.0 panic low amid the progress of the Ukraine war ceasefire, Gaza war ceasefire (2nd phase), and Trump’s call back of some Federal employees engaged in critical Federal departments like Nuclear stockpiles. Also, there was no fresh panic COVID 2.0 report out of China and the Chinese market and currency are trading normally.

On Monday the broader S&P 500 was 0.3% higher and the Dow gained over 200 points, while the Nasdaq 100 erased a 1.2% intra-session slump. Apple shares were 1% higher after the company announced plans to invest $500 billion in the US over the next four years and hire 20,000 new workers. Also, Berkshire Hathaway jumped by nearly 4% after releasing their balance sheets over the weekend, supported Wall Street, Chair Buffet’ dovish annual letter to shareholders about bubble valuation of the Wall Street, dot.com bubble-type situation now in AI/Crypto space, and record cash holding by Berkshire Hathway dented the overall risk sentiment. 

On the other hand, Microsoft fell 1% amid reports that it canceled leases for data center capacity, marking a contrast with the sector’s race to secure AI infrastructure. In the meantime, Nvidia shares were flat ahead of its earnings release on Wednesday, with large anticipation over their guidance update following the emergence of efficient AI models from China.

On Tuesday, Wall Street closed mixed, with the S&P 500 lost by 0.5%, as concerns over economic growth and global trade tensions weighed on sentiment. The Nasdaq 100 dropped 1.2%, turning negative for the year, while the Dow Jones outperformed, rising 159 points. Tech stocks led the downturn, led by NVIDIA as Trump admin may restrict high-end AI chip exports to China. Palantir and Tesla plunged, pushing the company’s market cap below $1 trillion. The market uncertainty deepened after President Trump revived tariff threats on Mexico and Canada, while also signaling potential new restrictions on China's semiconductor industry. Overall, Wall Street got some boost on hopes of an imminent Ukraine war ceasefire, while Oil and gold slid.

Weekly-Technical trading levels: DJ-30, NQ-100, and Gold 

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 44650) now has to sustain over 45300-45500 any further rally; otherwise sustaining below 45200, DJ-30 may again fall to 44500/44100-43700/43300 and 42800/41900 and further 41200/40600-40400/40000 in the coming days.

Similarly, NQ-100 Future (22300) has to sustain over 22400 for a further rally to 22500/22700-23000/23300 in the coming days; otherwise, sustaining below 22350-22100, NQ-100 may again fall to 21700/21300-21100/20700 and further 20500/20300-20100/19250 in the coming days.

Also, technically Gold (CMP: 2945) has to sustain over 2965-2975 for a further rally to 3000/3025-3050/3075; otherwise sustaining below 2955-2950 may again fall to 2925/2895-2875/2860 and 2840/2825-2800/2780 and 2750/2740-2725/2690 and further 2675/2655-2610/2560 in the coming days.