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.... Show More
This is actually a solid post — it’s refreshing to see something with substance instead of just the usual 'keep calm' messaging. o I dare hope you’ll consider opening a sell position — or is that asking too much? ... Show More
.
We use our own and third-party cookies on our websites to enhance your experience, analyze traffic, and for security and marketing. For more info, see our Cookie Policy or go to Manage Settings.
Privacy Preference Center
When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.
More information
Manage Consent Preferences
Strictly Necessary Cookies
Always Active
These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.
Performance Cookies
These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.
Functional Cookies
These cookies enable the website to provide enhanced functionality and personalisation. They may be set by us or by third party providers whose services we have added to our pages. If you do not allow these cookies then some or all of these services may not function properly.
Targeting Cookies
These cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.
