Market Beats | Fed Could Cut Rate Twice Starting September; Gold Reaches $3,000 for the First Time; Builders Form Alliance to Speed Up LA Home Recovery; US Consumer Sentiment Drops to Two-Year Low; Tesla Warns of Potential Trade War Retaliations

—— Fed Could Cut Rate Twice Starting September; Gold Reaches $3,000 for the First Time; Builders Form Alliance to Speed Up LA Home Recovery; US Consumer Sentiment Drops to Two-Year Low; Tesla Warns of Potential Trade War Retaliations

1. Fed Could Cut Rate Twice Starting September

US consumer prices advanced at the slowest rate in four months in February, a bit of welcome news for American households still wary of tariff-induced price hikes.

According to Bureau of Labor Statistics data released on Wednesday, the consumer price index inched up by 0.2% in February, following a sharper 0.5% increase in January. The core CPI—which strips out the typically volatile food and energy categories—also rose by 0.2%.

This modest slowdown, helped by lower prices for cars and gasoline, might not last long. Economists predict that a worsening trade war could eventually push up prices on a wide range of products, from food to clothing, putting further strain on consumers and the overall economy.

Despite the encouraging numbers, Nationwide’s chief economist, Kathy Bostjancic, cautioned that the positive report is “old news.” “There’s no disinflation momentum right now,” she said. “We are predicting a little bit of a bump up in the coming months because of these tariffs.”

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2. Gold Reaches $3,000 for the First Time

Gold prices broke the $3,000 per ounce barrier for the first time ever, propelled by a wave of central bank buying, global economic uncertainty, and President Donald Trump’s aggressive tariff policies targeting both allies and strategic competitors. On Friday, bullion climbed 0.4% to reach $3,001.20 per ounce, underscoring gold’s age-old reputation as a safe haven during turbulent periods and a barometer for market fear. Over the past 25 years, the price of gold has surged tenfold—outpacing the S&P 500, which has only quadrupled in the same timeframe.

More than 23 million ounces of gold, valued at about $70 billion, flowed into the New York Comex futures exchange depositories between election day and March 12, an influx so significant it contributed to a record U.S. trade deficit in January.

As the prospect of new tariffs loomed, U.S. gold prices surged above international benchmarks, prompting dealers to rush large quantities of bullion into America ahead of the levies.

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3. Builders Form Alliance to Speed Up LA Home Recovery

Homebuilders including Brookfield Residential, Lennar Corp., and Toll Brothers Inc. are joining forces to help rebuild homes affected by the Los Angeles wildfires in January. The group plans to form a “Builders Alliance” designed to boost efficiency and reduce costs.

According to a presentation seen by Bloomberg News, the alliance will launch an online portal where displaced residents can choose from a curated set of home plans. By partnering with other companies, the group aims to secure bulk discounts on materials and provide temporary housing for up to 3,000 tradesmen to enhance productivity, said Adrian Foley, CEO of Brookfield Residential.

The alliance will also collaborate with government agencies to streamline the permitting process, with the goal of scaling up efforts to accelerate reconstruction in the fire-ravaged areas.

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4. US Consumer Sentiment Drops to Two-Year Low

Alphabet Inc.’s AI lab is set to unveil two new robotics models designed to help developers train robots for unpredictable scenarios—a long-standing hurdle in the field.

Google DeepMind announced on Tuesday that it will introduce Gemini Robotics, an offshoot of its flagship AI model tailored to create robots that are more agile and interactive. The lab is also launching Gemini Robotics-ER, a model that specializes in spatial understanding, equipping robot manufacturers with enhanced reasoning capabilities to develop new programs.

DeepMind engineer Kanishka Rao explained in a media briefing that by integrating Gemini into robotic systems, Google is moving closer to realizing “general purpose robotics” capable of handling a wide range of tasks. “Our worlds are super messy and dynamic and rich, and I think a general-purpose intelligent robot needs to be able to deal with that messiness,” he said.

This push underscores a renewed interest in robotics across Silicon Valley. With companies like Meta Platforms Inc., Tesla Inc., and OpenAI stepping up their robotics efforts—and startups securing funding at high valuations—the dream of building robots that can perform at human levels is once again gaining traction.

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5. Tesla Warns of Potential Trade War Retaliations

Tesla Inc. has raised alarms about the risk of retaliatory actions by other nations amid an escalating trade war, following President Donald Trump’s recent move to impose tariffs on a wide array of imports. The automaker warned that such countermeasures could drive up its manufacturing costs and diminish the competitiveness of its vehicles in international markets.

In a March 11 letter to US Trade Representative Jamieson Greer, Tesla emphasized that US exporters are particularly vulnerable to disproportionate impacts when foreign countries respond to US trade actions. The company noted that past US trade policies have often provoked immediate retaliatory measures, such as increased tariffs on imported electric vehicles.

In its letter this week, Tesla urged the administration to consider the potential impact of its policies on the EV and battery supply chain, which remains heavily reliant on international sources.

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6. US Budget Deficit Hits Record in February

The US budget deficit continued to expand in February, reaching $1.15 trillion over the first five months of the fiscal year. Rising Medicare costs and higher expenses for servicing government debt have been key contributors to this increase.

In February alone, the deficit grew by $307 billion, according to a Treasury Department release on Wednesday. When adjusted for calendar differences, the current fiscal year’s gap is 17% larger than that of the previous year.

This persistent widening could complicate President Donald Trump’s plans to extend and build upon his 2017 tax-cut package—most of which is due to expire at the end of this year. Some congressional fiscal conservatives may push for additional measures to prevent further deterioration of the fiscal outlook, while tax-cut advocates warn that failing to extend the cuts could harm economic growth.

When asked whether the Elon Musk-led initiative to cut federal spending was impacting the budget numbers, an agency official directed reporters to DOGE and noted that few spending categories registered significant declines in the report.

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7. US Stocks Tank Amid Tariffs

U.S. stocks faced a downturn on Friday afternoon, closing in negative territory as the automotive and Chinese sectors led the fall. This decline was primarily driven by an announcement from the White House confirming President Donald Trump’s intention to proceed with significant tariffs on imports from Mexico, Canada, and China starting Saturday.

Specifically, Trump’s administration plans to impose a 25% tariff on goods from Mexico and Canada, and a 10% tariff on Chinese imports. This news negatively impacted investor sentiment, particularly affecting a UBS Group AG basket of stocks deemed at risk from these tariffs, which plunged by 3.7%. Additionally, despite an initial gain, the S&P 500 Index ended the day down by 0.5%.

The financial markets reacted swiftly, with the Bloomberg Dollar Spot Index reaching a session high, indicating a flight to safety among investors. Meanwhile, the Cboe Volatility Index (VIX), often referred to as the “fear gauge,” increased to just over 16, reflecting growing uncertainty and risk aversion among traders.

The ongoing threat of tariffs has been a significant concern for U.S. equity markets since Trump’s election victory in November. Analysts and strategists have cautioned that such high levies could spark inflationary pressures, potentially leading to broader economic disruptions and negatively impacting stock valuations.

Given this backdrop, sectors such as automotive, technology, and manufacturing, which have substantial exposure to international trade, are particularly vulnerable to the effects of prolonged trade wars and the imposition of tariffs.

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