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1. Europe’s best month starts with tariffs.

April is typically the best month of the year for European stocks. However, overall conviction is low. European stocks have outperformed so much already this year that market participants are now wondering if the trend has further to go.

And while the S&P 500 has bounced, it has only reclaimed about a third of losses since a peak in February. Positioning is now much cleaner in the US, though dip-buying has been limited.

“It still feels like investors are not convicted enough to buy,” says Goldman Sachs market specialist Peter Callahan, pointing to low volume in recent days.

“Positioning, technicals and valuations are no longer the headwinds they once were, creating a bit of upside risk in the event that macro / geopolitical headlines continue to ease.”

2. Deutsche Bank sees ’material risk’ of U.S. entering recession.

Deutsche Bank analysts warned of a “material risk” of a U.S. recession if aggressive tariffs are implemented, arguing that the Federal Reserve may need to break conventional policy rules to respond.

In a recent note, Deutsche Bank outlined various tariff scenarios and their potential economic impacts. They explained that the best-case scenario, in which reciprocal tariffs are limited to tariff rates or a lower share of VATs (e.g., 25%), would still push core PCE inflation 75-100 basis points above the Fed’s target but allow the Fed to keep rates on hold for the year.

DoubleLine Capital's bond expert Jeffrey Gundlach claimed that the probability of a recession is between 50% to 60%, reported CNBC.

As per Morgan Stanley's note on Monday, “The recent equity market correction was punctuated by the ‘uncertainty shock’ of ever-evolving tariff policy, with investors concerned it could morph into a slowdown or even recession,” quoted CNBC. Morgan Stanley also added that, “What’s really at the heart of the conundrum, however, is that the U.S. might be at risk for a bout of stagflation, where growth slows and inflation remains sticky,” quoted CNBC.

3. Goldman Sachs boosts its end-2025 gold price outlook.

Goldman Sachs upped its year-end gold price outlook from $3,100 to $3,300 per troy ounce and its forecast range to $3,250-$3,520, citing unexpected rises in exchange-traded fund (ETF) inflows and sustained robust demand from central banks.

The report also highlights the possibility that, under tail-risk scenarios, gold prices could surpass $4,200 per ounce by the end of 2025. China’s role in the global gold market remains pivotal, with its central bank continuing to accumulate gold as part of a broader diversification strategy.

Earlier this week, Bank of America also raised its gold price target, to $3,500 per ounce, a level it expects gold to reach within two years.

4. Security software will remain a “Safe Haven”.

Morgan Stanley software analists expect “Generative AI” to significantly propel Cybersecurity demand. Their latest survey supports this view: 75% of respondents expect the demand environment to improve over the next 6 months.

Overall security demand is expected to be stable or improving throughout 2025.

5. Surging demand for electricity presents huge new investment needs.

Since 2022, utilities have raised expected peak demand for 2029 by 12%, or 101 gigawatts.

The drivers are data centers for AI, cloud computing and cryptocurrency, new factories and the gradual adoption of electric vehicles, heat pumps, and hydrogen production.

Dominion Energy, a US electricity provider, plans to double generation capacity over the next 15 years to 56 gigawatts, much of that to power Northern Virginia’s “Data Center Alley.” Solar is expected to account for 45% of that, requiring the construction of numerous new facilities every year.

Below: An Amazon data center next to a nuclear plant.

Source: WSJ

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