The one thing we promised in the last couple of posts was market volatility with Donald Trump at the helm. We had the initial euphoria when Trump won the election with the promise of lower taxes and less regulation with Bitcoin and ‘crypto brothers’ rallying hard on the basis of now being ‘Trump endorsed’.
But the mood has changed over the past 2 / 3 weeks due to sheer change of policies on a daily/weekly basis from Trump but particularly around trade tariffs which are on/off (depending on what day of the week it is) – 25% on Mexico and Canada and 20% on China supplemented by threats of tariffs on European goods. All the tariff receiving countries are introducing reciprocal tariffs on US exports to them.
Not only do financial markets hate uncertainty, the economic reality is not good. 75% of all Canadian exports are to the US, and 33% of all imports are from the US. This means
Higher prices of all goods inside and outside US i.e. inflation (which pre-Trump we looked like we had just about beaten – US /UK inflation was 3% against 2% target)
Loss of jobs as it is no longer viable to run certain businesses involving export/import plus tariffs
Lower consumer demand as prices rise.
Lower consumer demand as individuals feel ‘less well off’ as the stock market tumbles.
The uncertain geopolitical situation i.e. Ukraine and more is another factor undermining global investor sentiment.
What is the price action (as of March 11)?
US S&P 500 (Main stock index in US)
5,550 – down from 6,150 (Feb 19 2025) = minus 9.7%
US NASDAQ (US Technology Index)
17,250 – down from 20,056 (Feb 19 2025) = minus 14%
The US Dollar is (DXY Index) is down from 110 at the start of the year to 103 (minus 6.5%)
as investors sell US assets.
BITCOIN
79,950 – down from $104,800 (Jan 25 2025) = minus 23.7%
In this difficult market investors have put their money into Bonds and Gold with the latter at at a record high $2,950 per ounce.
Whether the market fall is temporary or the start of a much bigger global stock market problem only time will tell but it is unlikely the market will regain the confidence or the high stock prices of early January any time soon.
NOTHING WRITTEN HERE IS INVESTMENT ADVICE
