⚡Liberation Day Approaches

March 31, 2025

Morning everyone,

Back from the tropics to a nice reminder that winter might not be completely over as snow hits the mountains and the hail is piling up outside my window.

Trump’s “Liberation Day” is almost upon us as reciprocal reciprocal tariffs (not a typo) will go into effect on April 2 (Wed).

If you’re trying to play these markets, it’s worth noting that the current environment is challenging for even the most sophisticated traders.

“This kind of volatility we are seeing, which is tweet-driven . . . is very difficult for us to trade around, so we are fairly risk-off right now for that reason,”

~Doug​

What's in this issue:

• Energy Market Recap

• Bombing Iran?

• Liberated

• Headlines

Energy Markets

🛢️WTI ended Friday lower by .8% as equity markets melted. However, prices were up 1.58% on the week, the third straight weekly gain.

Tariffs on Venezuela and maximum pressure on Iran lent support to the market. Now, it seems that Russian oil might be in for additional tariffs if Putin keeps dragging his feet on a deal with Ukraine.

“If a deal isn’t made, and if I think it was Russia’s fault, I’m going to put secondary sanctions on Russia,” where “anybody buying oil from Russia will not be able to sell their product, any product, not just oil, into the United States”

That anybody, of course, being China and India.

Bombing Iran

It seems that patience is also running out for Iran.

"If they don't make a deal, there will be bombing," Trump said in a telephone interview. "It will be bombing the likes of which they have never seen before."

WTI Spreads

May/June: +0.46
Jun/Dec: +2.98
Dec5/Dec6: +1.97

🔥 Natural gas ended Friday higher by 3.57%, pushing it back into positive territory (up 1%) on the week after recovering from a low of $3.732.

This move continued the buying despite a bearish weekly number from the EIA as markets are focused on the overall supply picture. As the WSJ puts it, refilling storage is going to be an uphill task:

“People are starting to look around and say where’s that additional supply going to come from?”

However, analyst John Kemp has a good article out highlighting that the recent inventory builds are happening early compared to historical standards:

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Liberated

So what exactly is expected on April 2? From what I can gather, the best glimpse into the future is the tariffs on automobiles that rolled out last week. As the FT puts it in this great summary:

“White House is looking at a whole host of sectoral levies to unveil on that date. Trump somewhat jumped the gun on Wednesday by setting out 25 per cent tariffs on cars.”

Chips and pharmaceuticals are on deck.

Beyond certain sectors, country-specific tariffs will also come into play. These include the 25% tariffs on all imports from Mexico and Canada that have been delayed until now.

But it’s not just those two trading partners. Further tariffs can be expected on a “country by country” basis, including the EU.

The only thing we probably won’t get is total clarity as retaliations will unfold. Judging by how equity markets accepted the latest news, could be in for a rough week.

Headlines

“Benchmark U.S. copper futures ended Friday at $5.1125 a pound, up 28% this year. That compares with a 13% gain to $9,795 a metric ton—or about $4.44 a pound—on the London Metal Exchange, which is the global trading hub.”
+Copper Is 2025’s Hottest Commodity - WSJ

“When you realise that you’re weakening yourself more than your opponent, then you have to think about whether all of this is right.”"
+Sanctions hurt EU more than Vladimir Putin, says senior German politician - FT

“Pemex owed suppliers 506.2 billion pesos ($24.3 billion) at the end of 2024, the most in at least 13 years, according to data from the nonprofit Mexican Institute for Competitiveness. Some contractors have halted service to the oil company.”
+Oil Rig Workers Ration Tortillas as Pemex Racks Up Unpaid Bills - Bloomberg

Economic Calendar

Monday -
Tuesday - PMI, ISM
Wednesday - ADP Employment, Factory Orders, Crude Oil Storage Report,
Thursday - Initial Jobless Claims, Natural Gas Storage Report
Friday - US Employment