The recent sharp sell-off in equities coincided with the three-year anniversary of this bull market, marking the worst liquidation event in crypto history. A single tweet from President Trump, announcing 100% new tariffs on China and canceling his meeting with Xi in South Korea, was enough to move markets downward. However, there is often more to the story.
To put things in perspective, the $SPX500 hadn’t experienced a 2% drop in a single day since April, and September marked the fifth consecutive month of gains. The ongoing government shutdown has not significantly impacted the markets, aside from the lack of employment data. The Fed’s data dependence is challenged by the absence of data, and with the FOMC meeting approaching, the uncertainty surrounding the shutdown raises questions about its duration and impact. If the market wasn’t anticipating rate cuts, the shutdown would completely irrelevant.
In my view, this situation reflects negotiation tactics by Trump in response to China’s restrictions on rare earth minerals, following the U.S. imposition of semiconductor restrictions. This is a geopolitical issue between two adversaries, and companies often find themselves caught in the crossfire, affecting us as investors. It’s important to note that this was just a tweet, not an official policy, and there is still time before the meeting in South Korea. It’s premature to start the speculation of what will happen.
Addressing the notion that Trump’s tweet crashed the market on purpose to benefit his associates, I find that perspective unfounded. There are more effective means than market manipulation, such as inside information. Nancy Pelosi and others members of Congress have showed that. While I may be mistaken, I believe it’s crucial to remain rational.
Regarding my portfolio, I will not be joining the panic selling crowd and trend. I maintained this approach during April this year and during the bear market of 2022, which proved effective. I plan to add funds next week, ready to deploy as needed. My recent profit-taking on TSLA 0.00%↑ AMD 0.00%↑ and NVDA 0.00%↑ helped mitigate losses, and I also made a defensive purchase of BJ 0.00%↑ which performed well yesterday. While I acknowledge I may not have done enough, I do not possess a crystal ball. My copiers have no reason for concern, and we will take advantage of this latest drama as we always do. As always, I will share the trades in real time and keep you updated with any new developments.
Thank you for reading and have a wonderful weekend! 🥃
