Trump "pressures" Powell to cut interest rates again, and US stocks suffer another "Black Monday"!

President Donald Trump calls for a rate cut by the Federal Reserve Chairman, while at the same time, increasing signs indicate that his trade war is pushing the US economy towards the edge of a recession. As a result, the US stock market sharply decreased, the US dollar and long-term Treasury bond prices fell, while the price of gold increased. Last night, the S&P 500 index closed down 2.4%, the Nasdaq 100 index fell by 2.5%, and the Cboe Global Markets Inc Volatility Index (Cboe VIX) hovered around 34. Tesla, Inc. stock prices plummeted by 5.7% before the release of its earnings report on Tuesday; after the Chief Operating Officer of the salad chain restaurant Sweetgreen (SG.US) announced resignation, the stock price fell by 8.2%. Trump's latest pressure on Jerome Powell once again raised concerns in the market about the President's intervention in the Fed's policy. Since last week, Trump's series of criticisms have led people to question whether the Fed can maintain its political independence - something that is a cornerstone of market confidence in American Financial Group, Inc. At the same time, the latest data on the inflation indicators favored by the Fed still remain above the target level. During the earnings season, Trump's inconsistent trade policies have made the market increasingly nervous, with the peak of earnings releases starting on Tuesday. Many companies have lowered or canceled their annual performance expectations, and analysts are rushing to lower their profit growth forecasts for large US companies. Marta Norton, Chief Investment Strategist at Empower, said, "Today's stock price trends reflect three negative factors: the background of tariffs, poor earnings performance, and the President's pressure on Chairman Powell. Trump's dissatisfaction with Powell has been long-standing, but his unexpected comments on 'liberation day' on April 2 may have made investors realize that his statements on social media are worth more attention than before." Sale waves have also been triggered in other US assets. People are increasingly questioning the US's status as the preferred destination for global capital, as well as its long-term core role in the international financial system. The US dollar exchange rate declined, the bond market showed differentiated performance, with long-term Treasury bond prices falling and short-term Treasury bond prices rising. Multiple risks entwined have intensified concerns in the market about economic growth and inflation prospects, as well as raised questions about how the Fed will balance the two. Although traders expect the US to cut interest rates at least three times this year, former New York Fed President Bill Dudley pointed out in a Bloomberg opinion piece that policymakers' actions may be slower than expected. All 11 sectors of the S&P 500 index experienced declines, with non-essential consumer goods and information technology sectors leading the way. Trump's contradictory trade policies have continued to put pressure on the stock market. Since Trump announced significant tariffs on most of the US trading partners (and later suspended several measures a week later), the S&P 500 index has cumulatively fallen by 9%, a drop of 16% from its record high in February. NVIDIA Corporation's stock price fell by 4.5%, Delta Air Lines, Inc. fell by 3.4%, and Constellation Energy Group plummeted by 6.8%. However, there are exceptions, with streaming giant Netflix (NFLX.US) reporting record profits in the first quarter, driving its stock price up by 1.5%. Meanwhile, Tesla, Inc. (TSLA.US) saw a significant decline in stock price, with Dan Ives of Wedbush Securities pointing out that the electric car manufacturer is facing a "red alert" moment. Mark Haefele, Chief Market Strategist at Nationwide, said that the Trump administration has been openly advocating for interest rate cuts, but "the final outcome is hard to predict." He added that the current situation is similar to 2018 and 2019, "however, as with the issue of tariffs, this time the public pressure is likely aimed at influencing decisions through public opinion, because once the Fed chairman is actually dismissed, it will undoubtedly cause market turmoil." Trump has openly criticized the Fed Chairman for being too slow in cutting rates. While legal scholars believe that the President cannot easily dismiss the Fed Chairman, and Powell has no intention of resigning, the White House's stance on this issue still worries investors. Mike Reynolds of Glenmede said, "There are concerns that forcing the Fed to cut rates through public opinion may backfire. We believe that the current leadership of the Fed will not be influenced by political factors in decision-making, and we expect them to continue focusing on achieving the dual mandate based on available information." The earnings season continues, with giants like Tesla, Inc., Alphabet Inc. Class C parent company Alphabet (GOOGL.US), Boeing Company (BA.US), and Intel Corporation (INTC.US) set to release earnings this week. Tesla, Inc. will announce its first quarter earnings on Tuesday, and the electric car manufacturer is facing a brand crisis sparked by Elon Musk and uncertainty brought by tariffs. Michael Graham of Canadian Imperial Bank of Commerce thinks that the earnings reports revealed so far are "mixed." In a report on Monday, Graham wrote, "These companies' earnings reports have yet to fully reflect the impact of tariffs. Due to the early spending and economic data fluctuations caused by tariffs, it may take a few more months to draw definite conclusions." Meanwhile, data compiled by Michael Wilson of Morgan Stanley shows that the breadth of earnings expectations adjustments (the ratio of analyst upward revisions to downward revisions) for S&P 500 index constituents is at rare levels, close to extreme lows outside of economic downturn periods. Sade Davis, President and CEO of Aureus, said, "Over the past few weeks, the market has been digesting expectations of an economic slowdown, hoping that most of the adjustments have been made. This week is crucial for US corporate earnings, as professional investors will carefully read the reports to look for signs of economic weakness."