Disruptive Stocks Strategy
Trump’s "Liberation Day" Crashes Stock Markets – Intense Volatility Continues Stock markets plunged sharply following Trump’s tariff decisions. The tariffs instantly reshaped economic outlooks and the structure of global trade. - Markets are now pricing in a recession - Inflation is expected to rise significantly - The Fed’s hands are tied due to rising inflation expectations - Trump is attempting to reshape the U.S. economic structure The goal is to force companies to relocate production back to the U.S. and reduce the U.S. trade deficit. The objectives may sound ambitious, but the problem is that the U.S. economy hasn’t been built to meet these goals for decades. The U.S. is a 70% consumption-driven economy, reliant on affordable imports from Asia, technological leadership, and strong financial markets. American companies themselves are significant beneficiaries of low-cost labor and imports from Asia. How low could markets go? We’ve estimated the potential downside using technical analysis, market valuation levels, and historical precedents. Our three scenarios place the S&P 500 bottom at: - Best-case scenario: 4950 points - Recession scenario: 4700–4800 points - Worst-case scenario: 4400 points We assign a 95% probability to these three scenarios combined. The remaining 5% accounts for an even deeper downturn. The market already tested our first scenario at 4950 points, where support emerged and the S&P 500 bounced. However, markets remain in a bear market, where sharp declines are interspersed with rally days. These rallies can also be powerful. The market has also shown that with a different policy approach, Trump could reverse the market’s direction, but he does not appear to want that at this time. We are adjusting our portfolio to better suit a volatile market. For example, defensive stock $AAPL (Apple) has proven to be a poor choice in this trade war environment, where Apple has become a tool of economic warfare. Semiconductor stocks, like $NVDA (NVIDIA Corporation) and $AVGO (Broadcom Inc) are at the heart of the trade war due to their critical role in the AI megatrend.
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