☕ Is a recession coming?

Good morning!

It’s all about the stock market this morning, after a dramatic day on Wall Street yesterday. We explain what happened in today’s newsletter, as well as get you across the ‘r’ word. Eek.

I’ve got 30 seconds

Some headlines from this morning:

• A US oil tanker transporting jet fuel has crashed into a Portuguese cargo ship carrying highly toxic chemicals in the North Sea, with one person still missing from the collision. Between them the two boats were carrying jet fuel and highly toxic chemicals, it is known if the chemicals are contained. The crash triggered a major rescue operation, with multiple explosions and a large fire resulting in 32 people requiring medical treatment. Experts are now concerned with any potential ecological impact of the spill. 

• Secretary of State Marco Rubio has told reporters Ukraine may have to “do difficult things” should it reach a peace deal with Russia. Rubio is in Saudi Arabia for talks with Ukraine’s leaders, as both sides aim to revive the critical minerals deal that was set to be signed at the White House earlier this month. Ukrainian President Volodymyr Zelenskyy, who is in Saudi Arabia for the talks, is expected to propose an aerial and naval truce with Russia.

• Elon Musk has claimed that his social media platform X (formerly Twitter) has been targeted by a “massive” cyberattack, resulting in tens of thousands of users unable to access their account. In an interview on Fox Business, Musk alleged the attack must have been carried out by "either a large, coordinated group and/or a country”, singling out a link to an IP address “in the Ukraine area”. It came on the same day as one of Musk’s other companies, Tesla, fell 15% on the Nasdaq - one of its largest single-day drops in history.

• Pope Francis continues to recover from a major health scare which has hospitalized him for over three weeks, according to a statement from the Vatican. Authorities announced today that the 88-year-old was no longer in “imminent danger” due to pneumonia. The prognosis was based on blood tests, and a positive response to drug treatments. Pope Francis, who has held the position for 12 years, has been in hospital since 14 February where he was originally admitted to Rome’s Gemelli Hospital with a complex lung infection.

I’ve got 1 minute

The Canadian province of Ontario has levied 25% tariffs on electricity exports to the US. Premier Doug Ford also promised more drastic action, including cutting off all electricity exports, if President Donald Trump does not end his trade war.

Here’s what that could mean for the US.

Why is Ontario imposing their own tariff?

Ontario, Canada’s most populous province, is a major electricity producer. It supplies power to three states on the other side of the Great Lakes: Minnesota, Michigan, and New York.

At a press conference on Monday, Ford emphasised the tariffs are being imposed in reaction to President Trump’s actions. Trump has twice announced import fees on Canadian goods, before announcing one month delays almost immediately afterwards.

The tariffs, which are expected to bring in up to more than $CA400,000 ($US277,000) per day to the province, were imposed regardless of the current US delays.

Ford said: “It needs to end. Until these tariffs are off the table, until the threat of tariffs is gone for good, Ontario will not relent.”

“I feel terrible for the American people, because it’s not [them] who started this trade war. It’s one person who’s responsible, that’s President Trump,” he added.

Ford expressed frustration that these tariffs would affect the American people, saying the responsibility for the trade war was solely with President Trump.

How is the US reacting?

Despite Ford’s assertion that $CA100 ($US69) per month could be added to consumers' bills, experts told The Associated Press the impact on Minnesota and Michigan is expected to be minimal. This is because the states only buy a small proportion of Ontario’s energy. New York has ordered an investigation into the impact of the tariffs.

Larger concerns have been raised over the threats of escalation should President Trump add further tariffs to Canadian products. Affected states say turning off the power supply completely could remove a layer of protection essential to the energy grid and possibly lead to blackouts.

I’ve got 2 minutes

The US stock market has tumbled, after President Donald Trump refused to rule out the potential for a recession later this year. It comes on top of already-negative reactions to President Trump’s volatile introduction of tariffs on some of the US’s biggest trading partners, including China.

The fears of a recession put to President Trump have continued to grow overnight, as the President aimed to reassure traders the US was in a “period of transition”. Here’s what you need to know.

So, what happened to the markets?

Wall Street dropped 4% yesterday, with technology stocks sustaining the heaviest losses, including a 15% drop for Tesla and stocks in Apple, Microsoft, Alphabet, Amazon, Nvidia and Meta (the group known as the ‘Magnificent Seven’) falling between 2 and 5%. It was the worst day on the Nasdaq since 2022.

It comes after two weeks of what economists call a ‘sell off’ - when previous large, corporate investors in US markets begin to sell some or all of their stock, in anticipation of further declines in the weeks or months ahead. This sort of trading behavior is generally an indicator of investor pessimism in the future of the US economy.

The market sell off began because of shareholder uncertainty over the unpredictability of President Trump’s trade policy, imposing and then delaying tariffs on some of the US’s largest trading partners.

“The market volatility is much less about the bad news of tariffs and much more about the uncertainty of tariffs”, said one market expert.

So are we headed for a recession? What’s that?

A recession is a period of economic decline, usually marked by reduced consumer spending and job losses. Most economists define it as two consecutive three-month periods (quarters) of a country’s Gross Domestic Product (GDP) going backwards.

There are a number of key indicators that can indicate a recession may be imminent - market volatility, consumer attitudes, widespread unemployment, and increased rates of individuals unable to pay credit card bills or home loans.

Most indicators on the US economy remain strong, with hiring and job creation rates keeping economists at ease. However, there are some indicators, such as consumer confidence and the recent market volatility, which indicate an increasing consumer pessimism that could lead to less spending. A number of major financial institutions that release their ‘probability rating’ of a recession have re-evaluated their predictions - for example, JP Morgan now believe a recession is 40% likely, while Goldman Sachs put it at a 20% chance.