by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment today opens with the death of Pope Francis and how it could affect geopolitics and global economics going forward. We next review several other international and US developments with the potential to affect the financial markets today, including another jump in global gold prices to a new record high and signs the Trump administration may soon target its budget-cutting efforts on the National Gallery of Art and other federal cultural institutions.

Global Catholicism: The Vatican this morning announced that Pope Francis has died, less than one day after making a surprise Easter appearance in St. Peter’s Square and also meeting US Vice President Vance. Because of the pope’s advanced age and recent illnesses, we suspect that the Vatican has already made some plans for his funeral and the conclave to pick his successor. Those processes are now expected to unfold over the coming weeks.

• For geopolitics, global economics, and the financial markets, a key question is whether Francis’s successor will maintain his focus on social and economic justice over the Church’s traditional moral teaching.
• As demonstrated by Pope John Paul II at the end of the Cold War, any successor to Francis will have a global pulpit either to support or to push back against the growing trends toward populist nationalism, deglobalization, restricted migration, market deregulation, and the like.

Global Gold Prices: The price of gold so far today has jumped 2.6% to a new record high of $3,417.50, up 28.1% from the end of last year. The jump in gold prices reflects continued global concern about the US economy and economic management — including comments last week from President Trump and his officials suggesting they may try to fire Federal Reserve Chair Powell. Investors worry that if the White House controls monetary policy, it would keep interest rates too low to control consumer price inflation.

• Reflecting that concern, the US Dollar Index has fallen about 1.3% so far today and is now down 9.6% for the year-to-date. The 10-year US Treasury note is also selling off, boosting its yield to 4.406%.
• Given that surging Treasury yields spooked President Trump into pausing his “reciprocal” tariffs earlier this month, a continued rise in those yields now probably has the potential to spur new U-turns in the president’s trade and economic policies.

European Union: Officials in European nations that normally oppose state subsidies — such as Denmark, Belgium, the Netherlands, and the Czech Republic — are reportedly becoming more supportive of Germany’s new plan to dramatically boost its spending on infrastructure and defense. The new support is consistent with our view that Germany’s coming fiscal stimulus is likely to help spur faster economic growth throughout the European Union, potentially helping both EU companies and EU stocks.

Russia-Ukraine War: Late last week, the Trump administration reportedly floated a proposed settlement of the Russia-Ukraine war under which the US would recognize Russia’s 2014 seizure of Crimea and prohibit any Ukrainian accession to the North Atlantic Treaty Organization. If the proposal is accepted by the Western Europeans and Ukraine in the coming days, it would be presented to Russia as the basis of a ceasefire and the start of negotiations toward a peace deal.

• The US proposal would condone Russia’s seizure of Crimea and its illegal 2022 invasion of Ukraine. Going forward, the risk is that the acquiescence to Russia would encourage President Putin to re-launch his invasion of Ukraine in the coming years, after he has used any peace deal to rest, re-arm, and re-build his military forces.
• The interlude would also allow Russia to bulk up its forces to put pressure on an increasingly isolated Western Europe, which now likely can’t rely on US backing as it tries to fend off the Russians.
• Russian pressure would put at risk Western Europe’s enormous wealth and economic potential, especially since the region is increasingly isolated from the US because of the Trump administration’s draconian tariff policies. For investors, the result is likely to be further economic disruption and reduced trade activity.

US-China Trade War: According to the Financial Times, no Chinese entity has accepted delivery of liquified natural gas from the US since early February. All LNG deliveries to China have stopped since February 10, when Beijing imposed a 15% retaliatory tariff on US LNG, which it subsequently hiked to 49%. The reduced imports by China illustrate the potential blowback for US products on account of the administration’s tariffs.

US-China Capital War: According to the Financial Times today, Chinese state-backed entities have started to pull back from investing in US private equity and debt funds. The news appears to confirm our fears that the current US-China trade war, which is focused on tariffs and export embargoes, could soon spread to a broader clampdown on US-China capital flows (as shown in our “Escalation Ladder” of potential new tensions in last Monday’s Comment). Obviously, growing capital controls have the potential to directly impact US firms and investors.

South Korea-United States: In a Saturday interview with the Financial Times, South Korean Acting President Han Duck-soo said his government “will not fight back” against the Trump administration’s tough 25% “reciprocal” tariff on the country. According to Han, South Korea owes a debt of gratitude to the US after its decades of aid following the Korean War, so rather than seeking to end the tariff, he would only seek to modify it and make it more efficient.

• Han’s approach is a reminder that many countries are extremely dependent on the US for both their export markets and their defense, giving them little leverage to resist the new tariffs and nearly ensuring that they will remain allied to the US. We explored this idea in detail in our Bi-Weekly Geopolitical Report from April 7, 2025.
• All the same, Han’s deference to Trump would seem to be risky, given that any sign of weakness or hesitation in fighting back might encourage Trump to reach for more, say by demanding that South Korea pay an exorbitant amount for the US military forces stationed there.
• From the perspective of US businesses and consumers, Han’s acceptance of the tariff means imports from South Korea will almost certainly face what is essentially a tax of 25%. That risks pushing down profit margins for companies in the value chain, driving up prices to the end user, or both.

US Fiscal Policy: Officials from Elon Musk’s Department of Government Efficiency met with leaders of the National Gallery of Art in Washington late last week, signaling the museum could be the next target for major federal spending cuts. The institution got $210 million of its budget from federal appropriations this year. Importantly, any budget pressure from DOGE could also aim to enforce conservative cultural viewpoints at the National Gallery, as the administration has done at the broader Smithsonian Institution and the Kennedy Center.

US Shipping Industry: Late last week, the Trump administration finalized its new port fees for Chinese ships visiting the US. The hefty new fees apply to ships owned, built, or operated by Chinese entities. Coming into force in October, the fees aim to discourage the use of Chinese ships for US imports and exports. They also aim to incentivize more shipbuilding in the US. In the near term, however, the new fees could raise the cost of US imports and boost consumer price inflation.

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