Welcome to the last day of March ahead of the hotly anticipated “Liberation Day” on Wednesday. US and European markets are sharply lower and Asian equity markets are also sinking as the fear of what it may contain continues to build (the Nikkei tumbled into a correction overnight). As Goldman trader John Flood writes, “brace yourself for a crazy week ahead. S&P 500’s implied move through Friday” (4/4) is 260bps (he will take the over).
…
According to Flood, the Grand Daddy of this week’s events is the tariffs announcement on April 2: he notes that Goldman economists believe that “risks lean towards a negative surprise on announcement day for 2 main reasons: First, administration officials have said that the soon-to-be announced tariff rates are intended as the basis for negotiation, which incentivizes the proposal of higher rates at the outset. Second, their recent survey showed that market participants anticipate the reciprocal tariff rate to be 9% on average, while GS economists believe the initial proposal could be closer to double that expectation.”
