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Macrosynthesis
TLDR
Shutdown Averted, But Budget Battle Looms – The Senate passed a last-minute spending bill, avoiding a government shutdown. The measure reallocates $6B to defense while cutting $13B from non-defense programs, deepening divisions within the Democratic Party. Another budget showdown is expected in September.
Trump Tariffs Disrupt Markets – New 25% tariffs on Canadian imports and doubled duties on Chinese goods are rattling global supply chains. Canada retaliated with $30B in tariffs, while the EU is targeting U.S. bourbon and aluminum. Airline profits are under pressure, with Delta and American Airlines slashing forecasts due to trade-related cost spikes.
Gold Hits Record Highs Amid Inflation Fears – Investors are flocking to gold as a hedge, pushing prices past $3,000 per ounce for the first time. Inflation expectations surged to 3.9%, the highest since 1993, as businesses warn that tariffs will drive up costs and squeeze margins.
Fed To Holds Rates as Economic Uncertainty Grows – The Federal Reserve signaled no immediate rate cuts, citing trade risks, slowing job growth, and rising inflation fears. Markets are increasingly pricing out rate cuts for 2025, adding to investor anxiety over the economic outlook.
Shutdown Averted, But Political Battle Lines Harden
With just hours to spare, the Senate passed a Republican-drafted spending bill, avoiding a government shutdown and ensuring funding through September. The 54-46 vote exposed deep fractures within the Democratic Party, as Minority Leader Chuck Schumer faced backlash for conceding to GOP priorities. The bill maintains 2024 spending levels while reallocating $6 billion toward defense and cutting $13 billion from non-defense programs—spending shifts that liberals decried as a surrender. House Democrats, having unanimously opposed the measure, accused Schumer of caving under pressure.
Trump’s Tariff Chaos Unsettles Global Trade and Markets
While Washington averts one crisis, another is unfolding—Trump’s escalating tariffs are rattling industries, sowing uncertainty, and threatening corporate profits. The administration’s sweeping trade war tactics, including 25% levies on Canadian imports and doubled duties on Chinese goods, have disrupted supply chains and triggered retaliatory measures.
The airline industry is feeling the strain. Both American Airlines and Delta Air Lines have slashed profit outlooks, citing higher costs and weakening demand, exacerbated by trade disruptions and government spending cuts from DOGE. Delta cut its profit forecast in half, while American Airlines projected a quarterly loss twice as large as expected. Analysts have responded by trimming S&P 500 earnings growth estimates for 2025, with Goldman Sachs lowering its forecast from 11% to 9%. With consumer spending under pressure and supply chain volatility rising, businesses and investors alike are calling for stability. Yet, as Trump doubles down on economic nationalism, the risk of prolonged market turbulence remains high.
Trump & Musk Are Running the Activist Playbook on The United States
What do activist investors do with struggling or unprofitable companies? There is a playbook which involves a number of steps: 1) cutting costs by layoffs or divesting from unprofitable ventures, 2) bringing in new leadership with a profit-driven approach to management, 3) selling assets to raise revenues and pay off debts to lower interest payments, 4) make new revenue streams, 5) create efficiencies, like automations, to lower operating costs, 6) remove redundancies, 7) fire poor performers, 8) renegotiate supplier contracts to be more favorable, and 9) return money to shareholders through dividends or stock buybacks.
The best investors do this again and again with companies and LevelFields tracks them with our software. This process is all explained in our new video.
Think of the United States federal government as the largest unprofitable business in the world with $4.9 trillion in annual revenues, $6.75 trillion in annual expenses, and $36.6 trillion in debt.
Seeing the U.S. that way puts the Trump/Musk playbook for Uncle Same in perspective. It's largely the same as the activist investors LevelFields tracks. DOGE is engaged in cutting costs, eliminating redundancies across agencies, creating efficiencies, and terminating employees. Trump brought in an entirely new leadership team to run the business units (agencies). Trump is renegotiating contracts with suppliers (other countries) and companies through tariffs and incentives. He's cutting spending in NATO and asking the EU to pay more to cut costs for the U.S.. The idea of selling $5 million Visas to those seeking to live in the U.S. and increasing exports of natural resources like oil, gas, coal, etc. are ways to increase revenues to make the federal government profitable. They are cancelling building leases (expenses) and selling off buildings to pay off debts. And Trump/Musk have recently floated the idea of returning savings as tax refunds to the American public just as activist investors return cash to shareholders via dividends.
You don't need to like the plan or the people behind it or the way it is being deployed. There's certainly plenty to debate there, but that's not the sandbox we play in. Our role is to help investors invest more successfully, and doing that requires assessing how government actions affect markets. Given all of these actions are moving the entire global supply chain, it's important to see the playbook for what it is: an activist investor playbook on a struggling business launched by two billionaire businessmen who are advised by other business people.
In an activist investor scenario, it takes 12-24 months to turn around the company. Efforts are underway at Starbucks right now. You can get alerted to the activist opportunities via LevelFields' activist scenarios. This is a beginner-friendly, high-return, simple buy and hold for 12 months strategy anyone can do. Following it for Salesforce would have resulted in gains over 100% from the very first activist move.
Fed Signals Rates on Hold as Economic Uncertainty Grows
Federal Reserve Chair Jerome Powell acknowledged heightened economic uncertainty, emphasizing that while the economy remains stable, concerns over trade, immigration, fiscal policy, and regulation are weighing on businesses and consumers. Powell indicated that the Fed will wait for clarity before making any rate adjustments, suggesting that interest rate cuts are unlikely in the near term.
The labor market, though resilient, is showing early signs of strain—February’s job gains came in at 151,000, below expectations, while unemployment ticked up to 4.1%. Markets are now pricing in a high probability that the Fed will hold rates steady at next week’s policy meeting, with expectations for cuts later in the year fading. Powell underscored that the “net effect” of Trump’s economic policies will ultimately dictate future monetary policy, adding another layer of uncertainty. With tariff risks escalating, inflation pressures lingering, and consumer sentiment slipping, investors remain on edge, bracing for further volatility.
Market Jitters Send Gold to Record Highs
As investors grapple with mounting economic uncertainty, gold has emerged as the ultimate safe haven, with spot prices surging past $3,000 per ounce for the first time ever - taking prices up 38% in one year. Renewed fears over inflation, supply chain disruptions, and geopolitical tensions have driven a rush into precious metals, fueling three straight sessions of heavy buying. While central bank demand has played a key role in gold’s historic rally, broader market instability is accelerating the flight to safety.
Despite the record-breaking move, analysts remain cautious. Goldman Sachs warns that a sustained breakout will require fresh catalysts, either through worsening economic data or renewed trade tensions. Meanwhile, silver has joined the rally, with the gold-to-silver ratio dropping from 92x to 88x, signaling increased interest in alternative hedges. As markets remain fragile and investors brace for further volatility, gold’s momentum suggests that uncertainty—not confidence—is driving the current financial landscape.
LevelFields Level 2 members have been receiving guidance on the best ways to profit from this historic run [and other macro events] since the beginning of 2024. These gold trades have produced over 209% in gains, while Gold returned 33 percent. We released our latest guidance last week, which you can access with an annual subscription.
Basel III and the Banking System’s Rush for Gold
As financial institutions scramble for gold ahead of Basel III’s full implementation in July 2025, the Basel Committee has reaffirmed its commitment to enforcing the framework in full, consistently, and as soon as possible. This comes as the global banking sector faces heightened counterparty credit risk and seeks to strengthen supervisory effectiveness following the 2023 banking turmoil.
The new regulations will tighten capital requirements, limit leverage, and elevate gold to Tier 1 collateral, reinforcing its role in stabilizing bank balance sheets. Banks’ interconnections with non-bank financial intermediaries (NBFIs) remain a concern, with data gaps complicating risk measurement. Supervisors are now focused on addressing vulnerabilities in counterparty credit risk management, a response to recent distress in NBFIs.
As U.S. banks work to comply, many are repatriating gold reserves to shore up liquidity. The broader financial sector’s adaptation to these changes—amid persistent economic uncertainty—is fueling further demand for physical gold, with markets closely watching the impact on liquidity, stability, and global monetary policy.
Trump, Ukraine, and Europe's Growing Military Spending Crisis
As financial instability grows, geopolitical tensions are accelerating Europe's military expansion. President Trump’s latest call with Putin, where he urged clemency for encircled Ukrainian troops in Kursk, has reinforced the perception that Ukraine is losing ground militarily. The Kremlin’s response—offering a conditional surrender—suggests Russia’s confidence in achieving strategic gains. Meanwhile, Zelensky refuses to cede territory, demanding stronger Western support even as battlefield losses mount.
Against this backdrop, European nations are facing an urgent dilemma: rapidly expand their defense capabilities or risk being caught unprepared in an increasingly unstable security environment. With Trump urging NATO allies to bear more of the financial burden, European leaders are responding with a historic shift in military spending. The EU is actively debating a €800 billion joint defense fund, designed to bolster arms production and supply chain resilience. This mirrors the COVID-era recovery financing model, which saw large-scale mutualized debt issuance.
Germany, long the anchor of EU fiscal conservatism, is now reconsidering its “debt brake” policy, which has historically capped deficit spending. A shift away from strict fiscal discipline could lead to higher inflation, market volatility, and rising bond yields—especially for heavily indebted nations like France, Italy, and the UK. At the same time, European policymakers are under pressure to rebuild the continent’s military-industrial base, which has suffered decades of underinvestment.
The logistical challenge of expanding Europe’s defense sector is significant. U.S. arms manufacturers lack the capacity to meet Europe’s growing demand, forcing the continent to develop its own supply chains. Major European defense firms, such as Rheinmetall, are already repurposing factories for military production. Meanwhile, policymakers are working to remove regulatory obstacles, including ESG-related restrictions on defense industry financing.
The economic implications are profound. Military-driven fiscal expansion could provide a short-term growth boost, but it also raises concerns over debt sustainability. With central banks maintaining restrictive monetary policy, higher government borrowing could fuel inflation, forcing interest rates to stay elevated. European bond markets are already reacting—Bund yields have surged 50bps, marking their highest levels since the early 2010s.
If Trump succeeds in brokering a ceasefire in Ukraine, Europe’s military calculus could shift yet again. A frozen conflict may reduce the urgency of military rearmament, but the strategic imperative of deterring future Russian aggression will remain. The larger question is whether Europe can sustain its newfound commitment to defense spending without triggering broader financial instability.
Last Week's Market Performance
U.S. stock markets faced a broad decline last week, with the Dow Jones dropping 3.1% to 41,488, the S&P 500 down 2.3% to 5,639, and the Nasdaq losing 2.4% to 17,754. The Russell 2000 fell 1.7%, while market volatility surged, with the CBOE Volatility Index rising 6.9% to 21.77.
Sector performance last week was mixed, with energy stocks up +2.6% and utility stocks rising +1.9%, making them the only gainers. On the downside, consumer staple stocks dropped -4.3%, consumer discretionary stocks declined -3.7%, and telecom stocks lost -3.5%. The information technology sector fell -2.1%, contributing to broader weakness in growth stocks.
Low volatility stocks outperformed early in the week, but by Friday, momentum stocks came roaring back, outperforming other strategies. Similarly, small cap growth stocks in the Russell 2000 sold off hard through Thursday, then rallied 2.5% Friday to close in neutral territory for the week.
Upcoming Events This Week
The upcoming week is dominated by central bank decisions, with the U.S. Federal Reserve’s interest rate announcement in focus on the 18th. Alongside the rate decision, investors will closely watch the Fed’s economic outlook and "dot plot" projections for future policy direction.
Key U.S. economic data releases include retail sales, industrial production, and housing market updates, such as housing starts, building permits, and existing home sales, which will offer insight into economic momentum.
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Natural Gas
+14.74% (1W Chg)
+27.73% (1M Chg)
Gold
+1.91% (1W Chg)
+10.94% (YTD Chg)
Silver
+4.42% (1W Chg)
+12.56% (YTD Chg)
Eggs
-14.9% (1M Chg)
+17.98% (YTD Chg)
Company News
LevelFields AI Stock Alerts Last Week
Volcon Stock Rallies +21% on $2M Share Buyback Authorization – Volcon (VLCN) stock rose 20.56% (1D) after announcing a $2 million share repurchase program, reinforcing confidence in its financial position. The company also reiterated its current cash balance, signaling stability amid market volatility.
PagerDuty Stock Jumps on $150M Share Buyback Approval – PagerDuty stock (PD) surged +17.75% (1D) after its Board of Directors authorized a new $150 million share repurchase program. The move highlights management’s commitment to shareholder value and confidence in long-term growth.
Great Lakes Gains +10%on Share Repurchase Plan signaling strong cash flow management and a focus on shareholder returns.
Airlines Slash Forecasts as Economic Uncertainty Weighs on Demand
Delta Air Lines (DAL) shares plunged 14% after the company slashed its Q1 2025 earnings forecast, citing weakening consumer and corporate confidence due to economic uncertainty. Delta pointed to softening domestic demand as the key driver behind its weaker outlook, though premium, international, and loyalty revenues remain on track. The airline also noted Trump’s tariffs and recession fears as potential headwinds, which have sent market volatility soaring. Revenue growth is now expected at 3-4% YoY, down from 7-9%. Earnings Per Share: Cut to $0.30 - $0.50, down from $0.70 - $1.00
Following Delta’s profit warning, United Airlines (UAL) and American Airlines (AAL) also cut Q1 guidance, citing weakening consumer confidence, reduced government travel, and macroeconomic pressures.
- United Airlines (UAL) now expects earnings at the lower end of guidance after a 50% drop in government travel bookings. The airline is cutting capacity and retiring 21 aircraft early to control costs.
- American Airlines (AAL) forecasts a wider Q1 loss, citing softening revenue and macro headwinds.
- Southwest Airlines (LUV) lowered revenue projections, blaming reduced federal travel and California wildfires.
The S&P 500 Airlines Index is down -23% in the last month, with UAL (-28%) and DAL (-29%) tumbling amid economic concerns. Airlines remain bullish on premium and international travel, but near-term headwinds may force further capacity reductions post-summer. All eyes on Q2 guidance as industry outlook darkens.
Oracle Misses on Earnings, Cuts Revenue Guidance
Oracle (ORCL) stock shares slid -8.2% after missing Q3 earnings estimates and issuing weaker-than-expected revenue guidance, citing higher capital expenditures for AI infrastructure.
- EPS: $1.47 (vs. $1.49 expected)
- Revenue: $14.13B (+6% YoY, missing $14.39B forecast)
- Cloud Infrastructure Revenue: $2.7B (+49% YoY)
Despite booming AI-driven cloud demand, Oracle’s revenue growth fell short, and cloud & on-premises licenses revenue dropped -10% YoY. The company raised its quarterly dividend by +25% but warned Q1 EPS will be $1.61-$1.65, missing analysts' $1.79 target.
CEO Safra Catz noted $16B in spending was needed to double data center capacity, aligning with Trump’s AI-focused “Stargate” initiative. While AI expansion remains a growth driver, investors reacted negatively to slower revenue momentum and ongoing investment costs. Shares are down 11% YTD as Oracle navigates rising expenses against AI demand tailwinds.
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Palantir Teams Up With Flying Taxi Archer
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Upcoming Earnings
This section is here for information only. It's not any endorsement. We will bold stocks included in previous alerts, or if they are market bellwhethers.
MON.
Science Applications (SAIC), Getty Images (GETY)
TUES.
Tencent Music (TME)
WED.
General Mills (GIS), Super Micro Computer (SMCI)
THURS.
FactSet (FDS), Shoe Carnival (SCVL), FedEx (FDX), Lennar (LEN), NIO (NIO)
FRI.
No Notable Earnings
This is not financial advice. All information represent opinions only for informational purposes. Given the vast number of stocks we cover in these reports, assume staff covering stocks have positions in stocks discussed.
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