Beijing’s threats to retaliate against the United States caused a fall in major US stock indices. The further escalation of the trade conflict immediately affected the New York Stock Exchange. The Dow Jones index lost 695.21 points or 2.68 percent in one trading session and approached to 25,247.16 points. The S&P index, which includes 500 largest US companies, fell by 79.87 points or 2.77 percent and set at 2,801.53 points. The NASDAQ index went down by 247.36 points or 3.12 percent to 7,669.58 points. Such a steep plunge occurred due to China’s threats to increase tariffs on more than 5,000 American products worth about $60 billion. These duties will come into effect on June 1 unless the parties find a compromise.

China decided to raise tariffs in retaliation for a similar increase in fees by the US. The United States is no longer simply threatening but have really imposed high tariffs on Chinese exports. Since the beginning of the trade war, duties have been increased from 10 to 25 percent by $200 billion. Such radical measures were taken after Beijing had not included most of the US requirements in the draft trade agreement. China considered the statement of the American President Donald Trump about the need to lower the interest rate as a signal that the economy of the United States is actually less stable. So, Beijing decided to take a tougher stance in trade negotiations, and it was a huge mistake.

Mark Zuckerberg does not intend to separate Facebook, the most popular network in the world, from WhatsApp and Instagram FB, also owned by the company. The entrepreneur is convinced that breaking up Facebook will not solve issues faced by the network.

This speech of the Facebook founder was an answer to his business partner Chris Hughes who claimed the network to be a monopolist that needed to be broken up. According to Hughes, one of the reasons why Facebook experiences security troubles is that it controls over 80% of the market. The company became a monopoly and does not trust regulators, he outlined. On the other hand, Mark Zuckerberg does not deny there are some difficulties, but he is sure the company can manage the situation without outside intervention. The current issues mainly relate to harmful content as well as maintaining a balance between freedom of expression and the security of users’ personal data. The Facebook chairman added that being a monopolist, the company is responsible for all expenses related to the network’s operation.

Last week, Chris Hughes criticized management by Zuckerberg and urged to break up Facebook. The company’s CEO has “an unprecedented power” and holds about 60% of its shares, he added. This way, Zuckerberg can make decisions on any changes in the social network on his own.

His business partner believes that Facebook should be forced to reverse its acquisitions of Instagram and WhatsApp, while such takeovers should be forbidden at all. In Hughes’ opinion, the company’s shares must be redistributed among shareholders in proportion to their current state. He is sure that breaking up Facebook will have a positive effect on the shares of new companies as well as on the technological component of the social network. 

While Russia is not so successful in its attempt to go into space, the United States, on the contrary, is preparing for the exploration of the Moon and Mars. So, American President Donald Trump decided to boost the NASA budget and provide additional funds of $1.6 billion for the projects on Lunar and Mars exploration.

The US leader has been always interested in large-scale projects, particularly in NASA's plans to land humans on the surface of the Moon and Mars. That is why he spares no means or effort to carry out the mission. “I am updating my budget to include an additional $1.6 billion so that we can return to Space,” Trump said. Previously, these words might be considered as a challenge and the beginning of a new space race. However, given the current situation, the race may include only one participant who has already surpassed the rest. This participant is Elon Musk. But this is the rivalry within one country rather than on the global stage.

Presently, nobody is ready to take up the challenge of Lunar and Mars exploration. In addition, the head of the White House shared his ambitious plans via Twitter saying that under his administration, they were restoring NASA to greatness, and the United States were going back at first to the Moon, and then to Mars. Remarkably, NASA received a $21.5 billion budget for the fiscal year 2019, while the budget of the Russian space agency Roscosmos was slightly above $2 billion. Unluckily for Russia, it is not enough to participate in the race to the Moon and Mars.

Bitcoin managed to surprise both its supporters and opponents. Interestingly, nobody expected such a sudden rally from the world's first cryptocurrency. Long-term stagnation ended with a spike. Bitcoin was able to break out of a rather narrow range where it had been remained for a long time. As a result, it rose by more than a third in value.

The price of Bitcoin easily surpassed the $5,000 mark and then continued to move towards new heights. After having passed the marks of $6,000 and $7,000, Bitcoin spiked to $8,400. The last time the price saw this point was in May 2018. Many cryptocurrency market players had lost hope that the price of Bitcoin would ever rise. However, Bitcoin proved once again that it was capable of regaining ground without any drivers. In early May, the price hardly reached $4,000. The Bitcoin price rally kicked off on May 7, when Bitcoin soared above $6,000, then smashed through $7,000 on May 12, and breached the $8,000 mark on May 14.

Notably, the price of Bitcoin increased from $8,000 to $20,000 in the period from November to December in 2017. In May 2018, it returned to $7,500-8,000. In December, the cryptocurrency sank to its lowest level of the year - $3,242. Now it’s hard to say what comes out of this rally, but the market will most likely see new currency gains.

According to Morgan Stanley's chief US strategist and chief investment officer Mike Wilson, the standoff between the United States and China may trap the whole world in an economic conflict. The expert provides an overview of his expectations and highlights three main problems faced by the US stock market amid the escalating US-China trade war.

1) US stock market volatility

The expert from Morgan Stanley points out that the volatility of the US stock market is currently extremely high. Moreover, the market is expected to remain volatile even if a trade agreement between Washington and Beijing is reached. According to Mike Wilson, even in a best-case scenario,  the recovery in the US stock market will take long. The analyst believes that geopolitical instability will force the volatility to remain at its peak for the next two years.

2) Unstable and modest profit

Another important problem, in the view of Mike Wilson, is unstable and modest profits of some American corporates. Though some S&P 500 companies provided positive reports, their earnings are not stable. Next year, they will hardly meet the analysts’ expectations. The report for the fourth quarter of 2018 showed that 69% of the S&P 500 companies posted better-than-expected results in terms of profit, while 61% of them were in line with expectations in terms of revenue. However, the strategist from Morgan Stanley stresses that both indicators are below their five-year averages.

3) High risk of recession

Mike Wilson believes that the American economy is at an increasing risk of a recession. He claims that the US economy is experiencing a recession. However, the slowdown has not reached its lowest point yet, and the “bearish” market has been gaining momentum, the expert says.

Recently, the Chinese authorities have struck back in the trade war with the United States. Earlier, US President Donald Trump imposed tariffs on $200 billion worth of Chinese goods. In response, Beijing imposed mirror tariffs on $60 billion worth of US goods. Interestingly, experts considered it as a reason that the US stock market crashed.

As a result, US stock indices hit their lows. The S&P 500, a broad market index, showed the worst reading since January 2019. In one trading session, it dropped by almost 70 points, reaching a critical level of 2,812 points. The Dow Jones Industrial Average lost 2.38%, falling by 617.38 points and reaching its lowest level since January of this year. The worst collapse was recorded by the Nasdaq, which hit its annual low. In a day, it went down by 270 points to 7,647 points. Analysts expect the recovery of the US market to be slow.

Bloomberg reported that the Turkish lira plummeted to 5.9973 versus the US dollar, the lowest level in seven months. Experts think that political turmoil in Turkey is to blame for the persistent weakness of the lira.

The country plunged into civil unrest as President Recep Tayyip Erdogan put pressure on the electoral board insisting on rerunning the mayoral election in Istanbul. On March 31, 2019, Ekrem Imamoglu, a nominee from the opposition Republican People’s Party, won the mayor’s office with a narrow margin outpacing the President’s candidate. Turkey’s leader rejected the victory of the opposition nominee citing numerous violations in the course of the election. Eventually, Erdogan’s party demanded a new vote. Experts at Bloomberg warn that the new mayoral contest will deal a blow to the domestic economy. Moreover, Turkey is on the verge of political chaos. Meanwhile, Turkey’s markets have been hurt by higher volatility in global stock markets. The Turkish lira has been on a losing streak for four weeks in a row. On May 6, it slumped to the worst mark in the recent six months. Apart from domestic troubles, the lira is suffering amid tensions in the relations between Ankara and Washington.

Interestingly, technical analysts from Bloomberg say that the USD/TRY pair has formed a bullish candlestick pattern called the golden cross when the short-term 50-day moving average crossed above the long-term 200-day moving average.

The Reserve Bank of Australia decided to keep its interest rate unchanged at a record low. However, the regulator said it would consider cutting it unless the unemployment rate falls.

Some market participants were surprised by the bank’s decision to keep the rate at 1.50%. It contributed to a sharp rise in the Australian dollar by 0.9% to a weekly high of $0.7048. Many economists predicted that the RBA would cut its interest rates twice by the end of 2019.

A number of analysts admitted that the Australian financial regulator might take a more accommodative stance. Such an opinion was caused by the weak inflation data for the first quarter of 2019. The CPI did not match the forecasts and remained below the central bank target range of 2%-3% over the past 13 quarters.

According to the RBA Board of Governors, it is necessary to control the situation on the labor market. The regulator assumed that it would be crucial to improve the labor market conditions in the near future so that inflation reached the goal of 2%. However, the Australian central bank considers the current conditions to be quite strong. A decline in the unemployment rate to 4.75% is expected in 2021. At the moment, it is at 5% and has been holding at this level for almost six months.

According to the report of Alphabet A, its earnings in Q1 of 2019 topped expectations. However, another indicator, showing the revenue level, missed forecasts.  

During the reporting period, the company’s earnings totaled $11.90 per share on revenue of $36.34. Analysts predicted earnings of $10.53 per share on total revenue of $37.3. Last year, Alphabet’s earnings accounted for $13.33 per share on revenue of $31.15.

As for the previous quarter, Alphabet A reported earnings of $12.77 per share on revenue of $39.28. Experts said that this technology giant followed the general upward trend observed among IT companies. The corporation’s shares were traded at $1,246,64.

This year, Alphabet's share price has gone up by 24.04 percent; but this figure is below the average for the Nasdaq-100 Index. However, experts believe that the income of Alphabet A will slightly increase in the near future.

According to experts, uncertainty related to protracted process of UK’s withdrawal from the European Union affected the country’s economy causing a significant reduction in investments.

In a note entitled “Brexit – Withdrawal Symptoms”, analysts at Goldman Sachs said that this situation would not change until the UK leaves the European Union. Experts paid special attention to the risks of steady low investments and weak labor productivity in the British economy.

Goldman Sachs noted that the side effects, such as shrinking investment, had been seen in the UK economy for a long time. Brexit has taken a toll on the country, even though it has not happened yet.

Business investment has increased by just 0.3 percent in cumulative terms since the June 2016 referendum. Last year was the first year for the UK in half a century during which business investment went down in every quarter without a recession in the economy.

Goldman Sachs predicted that low investment would lead to the worsening chronic underperformance of the UK in relation to other developed countries. Analysts warned that labor productivity would eventually decrease.

Bank experts stated that the Brexit deal requires appropriate amendments to smooth out the negative impact on the British economy. In 2020, with Brexit resolved, Goldman Sachs does expect a pick-up in the domestic economy. 

For several years, there has been a tendency among some countries to abandon the US dollar in international settlements, that is, the so-called de-dollarization. The experts of FinExpertiza, an audit and consulting network, estimated that during the sanctions regime, Russia managed to decrease the use of US dollar in its foreign trade by 12.6 percent. At the same time, the share of trade deals settled in the euro increased significantly, by 26.4 percent, while the share of invoices in the national currency surged by 14 percent. In general, the US dollar still accounts for the lion's share of payments - 56.1 percent, or 388 billion dollars. The euro takes the second position with the share of 21.9 percent, or 151 billion dollars. And the Russian ruble closes the top three with the figure of 20 percent, or 136 billion dollars. Other currencies account for 2.4 percent.

Even considering the fact that other major players such as the European Union and China have also decided to work towards the de-dollarization, it is impossible to do this in the coming years. The dollar is actively used in international settlements and it has no intention to lose ground. According to the international rating agency Moody's, it will take decades to make substantial progress on the issue. Despite the active development of regional trade and new reserve currencies, it is still difficult for the countries to abandon the currency of geographically distant states as reserve ones. Besides, it will not reduce the need to use the dollar in global trade much.

According to analysts, the main drivers of the US economic growth in the first quarter of 2019 were a fall in the trade deficit and an accumulation of inventories which posted their best growth in four years.

The report from the US Department of Commerce showed that in the first quarter of this year, the gross domestic product of the country jumped by 3.2%. The growth also resulted from an increase in public investment which offset a sharp slowdown in consumer and business spending. Experts believe that this report may significantly alleviate concerns about a possible recession in the US which will in turn lead to an imbalance in the market.

In the first quarter of 2019, exports surged and imports declined causing a slight deficit that added 1.03 percentage points to GDP. Trade tensions between the United States and China resulted in sharp swings in the trade deficit. This situation turned out to be misleading for global exporters and importers who tried to stay ahead of the tariff war between the two world's largest economies.

The trade war is also reflected in inventories which increased by $128.4 billion in the first quarter of this year, the highest pace since 2015. During the reporting period, inventories grew by $96.8 billion. The main reason for this accumulation is weak demand, especially in the automotive sector which is expected to eventually weigh on output.

US President Donald Trump claimed that he had teamed up with Saudi Arabia and a number of other countries to boost oil exports. However, the head of the White House provided no details concerning these other countries.

Last week, Donald Trump said that he would not extend the sanction waivers to some importers of Iranian oil. As planned, the exemptions were terminated on May 2, 2019. Earlier, the US authorities granted six-month waivers to the eight main buyers of oil from Iran: China, India, Italy, Greece, Japan, South Korea, and Taiwan. To date, Greece, Italy, and Taiwan have slashed their Iranian oil imports to zero.

The American leader recently noted that the OPEC countries, including Saudi Arabia, would easily replace Iran in the oil market. The White House believes that Saudi Arabia and the United Arab Emirates will support the United States with respect to the decisions on Iran and fill any gap left in the oil market.

Theories that the fate of countries are decided by bankers, rather than governments, are becoming more evident. That’s what Turkish President Recep Erdogan thinks. He accused the American banks of pushing Turkey towards a financial catastrophe.

The lira has been unstable over the past few years. Any comments on this currency immediately affect its value. One of the recent vivid examples of the lira’s vulnerability was a recommendation from JP Morgan analysts. That day, the lira fell at a faster pace than usual, and after JP Morgan forecast was released, its slump worsened. The analysts recommended that customers sell the lira, for the reason that the authorities were not interested in the stability of the lira after the elections. As a result, the Turkish government launched an investigation against the bank. Thereafter, Turkey’s financial regulator concluded that “the statement by JP Morgan analysts misled the market participants and contained signs of manipulation, which led to instability in the markets and undermined the reputation of Turkish banks.”

From the outside, it seems an attempt to find a scapegoat in order to lay the blame for the fall of the lira. But the currency's problems do not end here. JP Morgan has been replaced by another financial giant, Goldman Sachs, whose experts predict a further collapse of the Turkish currency and expect it to hit a new historical low in the coming months.

According to the International Aluminum Institute (IAI), comprising the world's leading manufacturers of aluminum, the production of this metal in the first quarter of 2019 amounted to 15.741 million tons. This figure is 0.3 percent higher than last year, when aluminum production totaled 15.69 million tons.

During the reporting period, a number of US enterprises produced 947 thousand tons of aluminum, while production in Latin America reached 253 thousand tons. In the first quarter of this year, the countries of Western Europe produced 877 thousand tons of aluminum, and production in Central and Eastern Europe accounted for 1.008 million tons.

In terms of aluminum production, China caught up with European countries: about 8.925 million tons of this metal were produced in this country during the reporting period. Aluminum production in other Asian countries amounted to 1,092 million tons. In Oceania, 469 thousand tons were produced, while the Gulf States produced 1.308 million tons. In Africa, the output of this metal increased by almost 0.7 percent to 412 thousand tons.

Last year, global aluminum production grew by 1.5 percent to 64.34 million tons. The IAI emphasized that this data was preliminary and could be further adjusted.

Coca-Cola, the world's largest producer of soft drinks, posted a corporate earnings report for Q1 2019. The report reads, its net earnings soared 23% in Q1 on a yearly basis totaling $1.678 billion.  

During the reporting period, Coca-Cola's diluted earnings per share grew to $0.39, compared to $0.32 a year earlier. Year-on-year, the company's revenues increased by 5 percent to $8.02 billion. This figure topped forecasts as analysts had expected revenues of $7.88 billion.

The global producer of soft drinks predicts revenue growth of 4 percent by the end of this year. Experts also said that net capital expenditure might go up to $2 billion in 2019.

Fanta and Sprite are the most famous brands of Coca-Cola. In general, the corporation has over 500 brands. The staff of the company exceeds 700 thousand employees.

Iranian Oil Minister Bijan Zanganeh stated that the US attempts to bring Iran’s oil exports to zero would fail. The official said such an initiative would never be realized.

Iranian authorities sharply oppose US sanctions. “We will work with full force toward breaking America’s sanctions,” Mr Zanganeh noted. He added that several countries in the Middle East had announced had unveiled fake data on their oil inventories. According to the official, the aim is to encourage the US government to put pressure on Tehran.

In 2018, the United States unilaterally withdrew from the Iranian nuclear deal and then reimposed sanctions on Tehran. However, the US granted temporary exemptions to several countries, including China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea. These waivers allow the countries to import limited quantities of crude oil from Iran without triggering US sanctions.

Recently, the US stepped up pressure on Iran’s oil sector that has been the main reason for a spike in oil prices. Apart from sanctions on Iran, the rally of oil prices is supported by clashes in Venezuela and Libya which cannot be tackled in the short term. Thus, oil is likely to overcome $75 per barrel.

Importantly, the United States decided to cancel the waivers originally granted to eight countries importing oil from Iran. These countries are willing to avoid confrontation with the United States due to Iran. Even China only delays the process of abandoning Iranian supplies. As a result, especially in view of the OPEC + deal, the world oil market may face a deficit which will push oil prices higher. But the growth is going to be temporary since Saudi Arabia and the UAE will easily boost production and meet the demand. However, this will put an end to the agreement on production cuts signed by OPEC and other major oil exporters including Russia. In the long run, any attempt to offset Iranian supplies may cause a glut in the market that will inevitably lead to a collapse in prices.

Amid the risk of a worse slowdown in the global economy, investors’ fears could resurface that would trigger massive oil sell-offs by the end of the year. Besides, if the opposition in Venezuela succeeds in overthrowing strongman Nicolas Maduro, it would be a good excuse for the US to relax or lift the sanctions in full, which means Venezuelan oil will go back to the market.

CNBC, a reputable US news agency, warns that a revival in China’s economy in Q1 2019 could prompt the authorities to hold back stimulus programs. However, CNBC experts consider such measures harmful to China’s economy.

In mid-April, the government data revealed that China’s economy expanded by 6.4% in Q1 2019 on a yearly basis. The actual GDP growth beat the consensus.

In 2018, Beijing adopted a package of measures to prop up momentum. One of the measures was to encourage banks to provide more loans because the domestic economy was hurt by the protracted trade conflict with the US.

At present, China’s authorities point out the prospects of economic recovery. Such an outlook could give the government the idea of scaling back stimulus measures. This move is viewed by experts as untimely as it could disrupt modest economic growth in China. Analysts at Nomura Holdings Inc. also think that a pace of economic growth in China is still far from steady, so it could relapse into a slowdown anytime. Experts at Japan’s investment bank believe that it is premature to cancel monetary easing.

The Macquarie Capital research group shares the same viewpoint. They think Beijing has to maintain stimulus programs to cushion the domestic economy in case of a sudden downturn. Experts reckon that such stimulus instruments will be appropriate to tackle another slowdown which could be around the corner. Earlier, China’s authorities downgraded the goal for economic growth this year setting a GDP target at 6% - 6.5%. Last year, its GDP slipped to 6.6% in annual terms that was the lowest economic growth in the recent 28 years.

Usually, there is nothing much to say about the Swiss franc. Analysts prefer to make predictions about other currencies, such as the US dollar and the euro. However, the Swiss franc comes under the spotlight from time to time. It occurs during some crises when people need a reliable currency and neither the dollar nor the yen is credible. Nonetheless, the Swiss franc has recently gone through the most difficult period in the last two years and has not yet recovered.

Swissie lost 2.5 percent against the euro in a very short period of time. It was the reason for the revision of forecasts for the Swiss franc, especially against the background of growing demand for reserve currencies. Concerns over the global economy are exaggerated, Jeremy Stretch from the Canadian Imperial Bank of Commerce said. Over the next few months, the administration of the Swiss National Bank (SNB) is likely to feel more soothed than at the end of the first quarter, he added.

Reducing the value of the national currency against the euro is an important part of the current strategy of the Swiss National Bank. The SNB is ,therefore, aiming for a substantial and sustained weakening of the Swiss franc as part of the program to boost the price growth. Despite the negative interest rates, inflation has not yet reached 1 percent. Thus, the regulator continues to press the Swiss franc. Experts of the canadian bank expect that over the next 6 months, the franc will weaken to 1.15 against the euro. Next year, the Swiss currency should attain 1.16 for €1, analysts predict.

It is quite hard to define what is going on in the US economy. On the one hand, it seems rather difficult to surprise the market with good news. However, on the other hand, investors are amazed with the unexpectedly upbeat results of the US economy and its high indicators.

Therefore, market participants are evaluating scrupulously everything that is happening to the world's largest economy. For instance, the main stock market indexes which are viewed as barometers of the US economy are showing its highest values. As a rule, when indexes are falling, the recession is coming and the economy is going to collapse. When the indexes are flat, it signifies stagnation and again leads to the collapse of the economy. Finally, when the indexes are growing sharply, the situation known as an economic bubble is around the corner, the crisis is coming and the economy, as you may guess, is about to crash. In other words, whatever happens to the US stock market, the result is quite definite — the foreseeable economic collapse.

The precursor of the upcoming economic collapse was the news about the record rally of the major US indexes. Some investors were perplexed by such record highs. For example, S&P closed at its historic high, when there was not a single reason or prediction for that. Using the formula for calculating the future of the US economy given above, it becomes extremely clear where the US economy is heading.

Additionally, Donald Trump seems to accelerate the whole situation. He, personally, insisted on changing the Fed's interest rate policy due to his own political whim. As a consequence, the regulator was forced to abandon the normalization of monetary policy. Taking all these facts into account, the risk of economic collapse increases every day.

Many experts find it difficult to predict the dynamic of the Swiss national currency. At the moment, it is hard to say where the currency will move - up or down. At present, the Swiss franc is going through the most difficult period in the last two years, but local policymakers are entirely satisfied with the current state of affairs.

In April 2019, the Swiss franc fell by more than 2.5% against the European currency, reaching its lowest level since July 2017. As a result, a number of analysts revised their forecasts given that market volatility restrained the growth in demand for reserve currencies.

Options traders show a “bearish” attitude towards the Swiss franc since risk forecasts for the euro are becoming increasingly pessimistic. Notably, the Swiss National Bank sought to weaken the national currency in order to stoke inflation which had been below 1% for a long time.

On Tuesday, April 23, the Swiss franc reached 1.1445 per euro, its weakest level since November 2018. The currency is trading cheaper than the 1.1300 forecast by analysts from Bloomberg.

Experts from the Canadian Bank believe that the Swiss franc will sail towards 1.15 per euro in the next six months. According to specialists, the Swiss currency will reach 1.16 per euro in 2020. Some analysts estimate that the Swiss franc has softened due to such factors as decreased demand for safe-haven currencies by investors and the recent positive statistics from China. It triggered investor optimism about the potential profits of the eurozone’s manufacturing sector which contributed to the euro's appreciation against other currencies, the Swiss franc in particular.