Wall Street, Gold waved on Trump-Zelenskyy war of words

·       Gold recovered from Trump’s bellicose comments about Zelenskyy as Trump may order a physical DOGE audit to verify US Gold reserve at Fort Knox

·       Trump also threatened 25% tariffs on lumber, which may cause higher housing costs in the US

·       Trump is planning to pay back 25% of DOGE cost-cutting benefit to US taxpayers to offset the higher cost of living because of his tariffs and immigration policies

·       Trump is also planning for a deeper tax cut from his 2017 policy

·       But overall Trump’s Federal cost cutting, rampant firings, deportations, and tariffs policies may cause a synchronized global hard landing rather than a soft landing

On Tuesday, Wall Street Futures closed almost flat as it stumbled from the session high (Ukraine war ceasefire optimism) after Zelenskyy almost poured cold water for an early settlement. But later Trump’s assurance helped to some extent. Trump also threatened 25% tariffs on pharma, autos, and Chips, which dragged the market. Also, hawkish Fed comments dragged the risk trade, although no one is now listening Fed as the market is now under the control of Trump.

Trump said on Tuesday he plans to impose 25% tariffs on semiconductor and pharmaceutical imports. This follows his comments last Friday that similar levies on automobiles could take effect as soon as April 2, a day after his cabinet is set to present reports outlining potential import duties as part of his effort to reshape global trade. Speaking at his Mar-a-Lago estate in Florida, Trump did not specify a timeline for the new tariffs but indicated he wanted to allow drug and chip manufacturers time to establish US factories to avoid the duties.

Since taking office on January 20, he has already launched 10% tariffs on China, 25% tariffs on steel and aluminum imports, and planned for reciprocal tariffs targeting major US trading partners. Separately, China criticized Trump’s tariffs at a WTO meeting Tuesday, citing inflation risk, market distortions, and a possible global recession, and urging Washington to withdraw its moves and engage in multilateral dialogues. Trump 2.0 Chinese tariffs of 10% and counter-tariffs are now active.

On Tuesday, the S&P 500 rose 0.2% to close at a new record, while the Nasdaq 100 and Dow Jones finished near the flat line. Weakness in consumer discretionary and communication services, highlighted by a 2.7% drop in Meta Platforms and a 0.9% decline in Amazon, pressured the broader market. However, energy stocks outperformed, with Exxon Mobil gaining 1.8% and Energy Transfer rising 1.6%. Super Micro Computer surged on an optimistic outlook.

Intel jumped on stake sale reports; competitors Broadcom and TSMC may be considering bids for the chipmaker. Broadcom's bid would focus on Intel's chip design services, while TSMC is considering a deal for its factories. The reports follow months of similar speculation as Intel shares slumped in 2024 amid a troubled turnaround plan. TSM), the biggest chipmaker in the world, are each in the early stages of considering bids for Intel stake buy, if any. Broadcom is considering a bid for Intel's chip design business, while TSMC is focused on a deal for the manufacturing side, though it would be complex and expensive to refit Intel's factories to make chips the way TSMC usually does.

Oil surged above $73 per barrel Wednesday, extending gains for a third straight session, supported by short-term supply risks and fading hopes of an imminent Ukraine war ceasefire. A drone attack on a pumping station in southern Russia disrupted Kazakh crude flows to the Black Sea, potentially cutting transit volumes by 30%. Cold weather also threatened the US oil supply, with North Dakota's output estimated to drop by up to 150 kbpd. But the overall boost was limited amid the progress of the Ukraine and Gaza war ceasefire and the fading risk of an all-out war between Iran and Israel. Elsewhere, President Trump stated that Chevron’s Venezuela crude exports are under review, highlighting ongoing US-Venezuela tensions.

Gold surged to almost 2950 on fading hopes of an imminent Ukraine war ceasefire after Ukrainian President Zelenskyy refused to join or give any credibility to US-Russia peace talks in Saudi Arabia Tuesday. On Tuesday (February 18, 2025), U.S. Secretary of State Marco Rubio and Russian Foreign Minister Sergei Lavrov convened in Saudi Arabia for extensive discussions—the most substantial U.S.-Russia engagement in three years. They agreed to establish a high-level team to support peace negotiations and explore post-war economic opportunities. Notably, Ukrainian and European representatives were absent from these talks, leading to criticism from Ukrainian President Zelenskyy. He rejected the outcomes, emphasizing that Ukraine would not accept any agreements made without its involvement and reiterated his refusal to concede to Russian ultimatums.

On Wednesday, Ukrainian President Zelensky almost reminded Trump about the Russiagate scandal:

·       Unfortunately, President Trump – I have great respect for him as a leader of a nation that we have great respect for, the American people who always support us – unfortunately lives in this disinformation space--

·       With all due respect to President Donald Trump as a leader--- he is living in this disinformation space—

·       It is Russia that's feeding Trump falsehoods on the conflict and situation in Ukraine

·       As we are talking about 4%, we have seen this disinformation, we understand it’s coming from Russia

·       Ukraine has evidence that Russia is spreading disinformation about the 4% approval rating

·       Zelensky further criticized the US demands to return $500 billion in rare ear5th materials,

·       The claim has not been a serious conversation

·       US actions could weaken Ukraine and strengthen Russia

·       Strange if we cannot buy arms from the US

·       Ukraine does not necessarily need United States troops on its territory to guarantee its security as long as Washington provides other forms of military assistance.

·       Trump administration should give Ukraine more Patriot air defense systems or licenses to produce Patriot missiles domestically.

·       It is strange if the US continues to sell weapons to Middle Eastern partners but not to Kiev.

·       The US to restart discussions on concrete steps to boost support

·       A lot of decisions depend on Washington's direction

·       President Trump should listen to what is going on in Ukraine—he should listen to alternative sources

In a related development, U.S. President Trump issued a stern warning to President Zelenskyy, urging him to swiftly negotiate an end to the war with Russia or risk losing his nation. Trump accused Zelenskyy of being a "comedian dictator without elections" and criticized his alleged misuse of American aid. These remarks followed the U.S.-Russia meeting in Saudi Arabia, from which Ukraine was excluded. Trump suggested that earlier negotiations by Zelenskyy could have prevented the prolonged conflict, which began with Russia's invasion in February 2022.

On Wednesday, Trump wrote about Zelenskyy in his Truth handle:

“Think of it, a modestly successful comedian, Volodymyr Zelenskyy, talked the United States of America into spending $350 Billion Dollars, to go into a War that couldn’t be won, that never had to start, but a War that he, without the U.S. and “TRUMP,” will never be able to settle.

The United States has spent $200 Billion Dollars more than Europe, and Europe’s money is guaranteed, while the United States will get nothing back. Why didn’t Sleepy Joe Biden demand Equalization, in that this War is far more important to Europe than it is to us — We have a big, beautiful Ocean as separation.

On top of this, Zelenskyy admits that half of the money we sent him is “MISSING.” He refuses to have Elections, is very low in Ukrainian Polls, and the only thing he was good at was playing Biden “like a fiddle.” A Dictator without Elections, Zelenskyy better move fast or he is not going to have a Country left.

In the meantime, we are successfully negotiating an end to the War with Russia, something all admit only “TRUMP,” and the Trump Administration can do. Biden never tried, Europe has failed to bring Peace, and Zelenskyy probably wants to keep the “gravy train” going. I love Ukraine, but Zelenskyy has done a terrible job, his Country is shattered, and MILLIONS have unnecessarily died – And so it continues…..”

In response to these developments, Ukrainian military leaders have expressed their determination to continue defending their country. They voiced anger over being excluded from the peace talks and vowed to "fight until the last death," rejecting any deals made without Ukraine's participation. European leaders are considering additional support measures, including the potential deployment of British Typhoon fighter jets to patrol Ukrainian airspace, contingent on Russia dropping its objections. However, Russia opposes the presence of NATO forces in Ukraine under any guise.

Zelenskyy's Position:

President Zelenskyy has softened his previous stance, indicating a willingness to consider ceding some territory occupied by Russia as part of a peace deal. However, he insists that Ukraine must be involved in any negotiations and requires security guarantees from the U.S. and its allies to prevent future Russian aggression. He expressed a desire to end the war within the year but criticized Trump's remarks as being influenced by Russian disinformation. Zelenskyy also emphasized that Ukraine is not for sale and firmly rejected Trump's claim that Ukraine started the war.

Trump's Criticism:

In stark contrast, Trump has been vocal in his criticism of Zelenskyy, labeling him a "Comedian dictator without elections" and suggesting that Ukraine should have acted more decisively to prevent the conflict. He warned Zelenskyy to negotiate quickly or risk losing his nation. Trump also accused Zelenskyy of misleading the U.S. regarding the war's origins and claimed that Ukraine had an opportunity to broker peace before the invasion began.

Current Ceasefire Dynamics:

As of Wednesday (February 19, 2025), discussions regarding a ceasefire continue amidst ongoing military confrontations. Russia has outlined demands for a ceasefire but remains adamant against NATO peacekeepers' involvement in Ukraine. Meanwhile, U.S. officials are engaged in discussions with both Ukrainian and Russian representatives to facilitate dialogue. Despite these efforts, US intelligence assessments suggest that Russia is not prepared to make significant concessions and continues to pursue its maximalist objectives in Ukraine.

Trump has publicly urged for an immediate ceasefire in Ukraine, suggesting that negotiations should begin immediately to stop the ongoing conflict. He has claimed that both Ukraine and Russia have suffered enormous losses and that Zelenskyy wants to make a deal to end the war. Trump emphasized that too many lives have been lost and families destroyed, calling it "madness" that should be stopped. His comments were made shortly after meeting with Zelenskyy and French President Emmanuel Macron in Paris.

But Zelenskyy has expressed skepticism about an immediate ceasefire without solid security guarantees. He has stated that peace cannot simply be concluded with a piece of paper and signatures, as any ceasefire without guarantees could be reignited by Russia, referencing past actions by Putin. Zelenskyy insists on a "just and strong peace" that would prevent future Russian aggression. He has also highlighted the need for U.S. involvement in any peacekeeping force, suggesting that only with U.S. security guarantees can peace be reliable.

Zelenskyy on Trump's Approach:

Although Zelenskyy has acknowledged Trump's desire for a quick resolution to the conflict, viewing Trump's unpredictability as potentially beneficial in dealing with Putin, he has stressed that a rapid end to the war might entail significant losses for Ukraine if not handled fairly. Zelenskyy has also warned about the implications of a ceasefire that could allow Russia to regroup for further aggression.

Potential for further negotiations:

There are indications of upcoming negotiations with Trump's team, involving key U.S. figures like Vice President JD Vance and Secretary of State Marco Rubio, aiming to discuss peace terms. Various reports suggest that the odds of a ceasefire are increasing, with some speculation about territorial swaps or concessions, though these remain speculative based on social media sentiment rather than confirmed policy.

International Context:

The involvement of the U.S. in these negotiations is critical, given its role as Ukraine's major military backer. However, the situation is complicated by Trump's comments about blocking Ukraine into NATO and reducing military aid to Ukraine, which has raised concerns among European allies about the future of the conflict's resolution.

Overall, while there's a push towards ceasefire and negotiations, the specifics of how peace might be achieved, including territorial issues and security guarantees, remain contentious and under discussion.

The reality is that the war raging mainly in the East Ukraine, but there's been no elections or polling whatsoever - and Zelensky's term expired back in May 2024. Last Saturday, Zelensky sought to address the growing criticism of the undemocratic situation, saying his country can't hold elections as martial law is still in effect:

·       I’m focusing on the survival of our country, and I am doing it all my term

·       I’m ready to speak about elections if you want

·       Ukrainians don’t want, totally don’t want, because they are afraid, because otherwise, we will lose the military loan, the war loan, our soldiers will come back home, and (Russian President) Putin will occupy all our territory

·       So it’s not about myself--- It’s about the future of our country. The question is to survive to save Ukraine, our independence, our people, (and) our homes. And if somebody doesn’t like (it), they can choose another citizenship

·       If we are not in NATO, then as I said, NATO has to be in Ukraine

·       We will need an army comparable to the soldiers of Russia; it’s 1.3 or 1.5 million soldiers

Reactions after Trump’s bellicose comments about Zelenskyy:

Ukrainian Foreign Minister:

·       Ukraine will defend our right to exist

·       Ukraine withstood the most horrific military attack in Europe's modern history and three years of a total war

·       The Ukrainian people and their President Zelensky refused to give in to Putin's pressure

·       Nobody can force Ukraine to give up

Ukrainian Parliament Chairman:

·       Ukraine needs bullets, not ballots

·       Zelensky was elected in democratic elections and that

·       He is currently leading the fight for freedom, independence, and the lives of Ukrainians

·       Ukrainian legislation allows for elections to be held only after the end of martial law. "

·       Weapons, sanctions, and unwavering support are what will stop the war and allow Ukraine to hold elections the way they should be in a true democracy: fairly, safely, and freely.

Overall, European leaders like Franc’s Macron, Germany’s Scholz, and the UK’s Starmer are all criticizing Trump for his comments about Zelenskyy; Britain’s former PM Johnson even suggested using frozen Russian assets to repay US support. Trump is set to meet Macron and Stramer in the US next week.

On late Wednesday, Zelenskyy said:

·       It is important for his country that meeting and working with the United States in general is constructive

·       Together with America and Europe, peace can be more reliable, and this is our goal

·       The main thing is that this be not only our goal but also a common goal with our partners

Conclusions:

Europe is divided about Ukraine’s NATO membership, while the US/Trump has already rejected it. Although Ukraine’s NATO proximity and membership issue may be the primary reason behind the Russian attack, the main issue here is the control of Ukraine’s vast untapped reserve of rare earth materials, essential for today’s modern economy including military equipment. In this way, Ukraine is now a major issue for not only European/EU politics but also economics. Europe is the biggest loser in the Ukraine war as it is dependent on Russian/imported oil & gas, foods, and also various other commodities. Overall, we may have at least a temporary Ukraine war ceasefire by March’25.

Unlike most of the European politicians/leaders and even Biden, Trump is not a fan of Zelenskyy from the beginning. As per Trump, Zelenskyy is the ‘smartest salesman on the earth’ who can ‘sell’ Ukraine as a ‘victim card’ to ‘sleepy Joe’ (Biden) and other European leaders for billions of dollars in a minute. Now, is there any real Russiagate narrative or not, as a businessman and also a responsible President Trump will not allow such Ukraine aid for long, be it in dollars or military equipment.

Trump is now seeking Ukraine’s rare earth materials in return for almost $500B aid. The real reason behind the Ukraine proxy war between the US/EU/NATO-Russia may be the control of Ukraine’s substantial deposit of rare earth materials required for the modern world and military force by the US/NATO and Russia/China. The West wants to reduce Chinese dependency on rare earth materials. As per reports, Russia now controls almost 50% of Ukraine’s rare earth materials reserve lands; Trump now is making a deal with Putin for the rest of the 50%. But Ukraine may not be amused by such a deal.

Market impact:

On Tuesday, Wall Street Futures waved on Trump’s Ukraine tantrum. Dow Future, Gold stumbled after Trump’s bellicose comments about Zelenskyy. But soon recovered after reconciliatory tones from Zele4nskyy as he may have now realized that Trump and Biden’s approach to the Ukraine war is quite different and it’s not easy to sell ‘Ukraine’s victim card story” to Trump & co.

Musk also supported Trump and said: “The President’s instincts on Ukraine are absolutely right. It is really sad that so many parents have lost their sons, and so many sons their fathers in this pointless war.”

On Wednesday, Wall Street was also boosted by Trump & Co’ plan to hand over a part of DOGE’s cost-cutting effort to taxpayers. Trump said he’s considering returning 20% of the savings from Musk’s Department of Government Efficiency (DOGE) initiative directly to taxpayers: There’s even under consideration a new concept where we give 20% of the DOGE savings to American citizens and 20% goes to paying down debt. The numbers are incredible, Elon, so many billions — hundreds of billions — and we’re thinking about giving 20% back to the American citizens”.

Trump floated the potential refund after Musk tweeted Tuesday that he would “check with the President,” in response to a post from an influential investor, seeking such subsidy/direct fiscal grants for US taxpayers, facing a significantly higher cost of living. Trump has also promised to deepen his 2017 personal tax cuts this time with active cooperation from his Republican and Democrat colleagues.

Although it’s unclear precisely how much DOGE has saved to date, Musk has stated a goal of $1 trillion in annual cost cuts as his 100-person DOGE team blazes through the federal bureaucracy, effectively closing some agencies, mass-firing employees at others and canceling contracts deemed wasteful; now various legal cases are pending against such DOGE/Presidential action. Overall, Trump’s first 30 days of admin are quite chaotic from immigration, deportations, tariffs, and the random firing of Federal employees and termination of various projects including US Federal aid.

On Wednesday, the latest FOMC minutes show Fed officials are quite worried about Trump’s bellicose policies, especially tariffs’ impact on inflation and see rate cuts on hold for at least till June’25. Trump is also planning a phase two China trade deal with more volume of Chinese buying of US goods & services. Trump is also planning 25% tariffs on lumbers, which may increase housing costs. In summary, Trump’s Federal cost cutting (DOGE), immigration, and tariff policies may cause more price rises or higher cost of living and unemployment, causing a hard landing of the US economy rather than the Fed’s target of a soft landing.

On Wednesday, the S&P 500 and Nasdaq 100 both closed at record highs, rising by 0.2% and 0.1%, respectively, while the Dow Jones added 73 points. Investors weighed the latest Federal Reserve minutes and President Trump’s renewed tariff threats. Wall Street was boosted by healthcare (25% tariffs positive for domestic producers), consumer staples, energy, utilities, real estate, techs, industrials, and consumer discretionary, while dragged by materials, and banks & financials to some extent.

On Wednesday, Dow Jones (DJ-30) was boosted by Merck, United Health, J&J, Verizon, Travelers, Walt Disney, Microsoft, and Boeing, while dragged by Home Depot, Salesforce, Nike, McDonald’s, American Express, Visa, Caterpillar, JPM and NVIDIA.

Among mega caps, Microsoft gained 1.3% after unveiling its first quantum computing chip, and Tesla rose 1.7%. Microsoft announced Wednesday it introduced Majorana-1, its first quantum chip designed to make powerful quantum computers a reality much sooner. It uses a special material called a topo conductor, which helps create "more reliable and scalable qubits." With this technology, Microsoft says it can fit "one million qubits on a single chip that can fit in the palm of one's hand," a key step toward solving big real-world problems.

Microsoft explained that achieving this breakthrough required developing a new materials stack using indium arsenide and aluminum, designed atom by atom. The company also noted that practical applications will demand trillions of operations across a million qubits; something that today’s methods, which rely on precise analog control of each qubit, cannot efficiently support.

On early Thursday, Gold made another new life time high of around $2955 AFTER Trump may order a regular physical audit of the US Gold reserve at Fort Knox which was done 50 years ago in 1974. Musk’s DOGE team may physically check whether Fort Knox indeed has the 4580 tons of US sovereign gold reserve it’s supposed to have. Also, lower USD because of less dovish BOJ comments helped Gold's early Asian and European session on Thursday. Overall, Trump’s ‘peace’ policies such as the Gaza and Ukraine war permanent ceasefire are positive for the risk stock market (risk assets) negative for haven assets such as Gold, and bonds, and also negative for defense stocks.

Bottom line

Trump’s unconventional policies may isolate the US on the global front even among known allies, paving the way for China to take center stage on global trade and geopolitical influence. For example, Canada may be planning to send its crude oil to China rather than the US for refining and reselling to the rest of the world. Although Trump is using ‘tariffs’ as a negotiation tactic to get favorable deals/concessions from various countries on various issues and may not impose them even after March’25, the resultant flip-flops are creating immense policy uncertainty not only for the US Fed but also for other major global central banks and policymakers.

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.

Technically, Germany’s Dax-40 now has to sustain over 23000 for a further rally; otherwise sustaining below 22900-22700, may again fall to 21800-21200 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.