Markets Plunge Amid Global Tariff Concerns, Bitcoin Rebounds Strongly

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

This morning, the markets underwent a sharp sell-off as the impact of Trump’s tariffs on key trading partners, Canada, and Mexico, echoed globally.

Concerns about a potential escalation into a full-blown trade war, disruption of worldwide supply chains, economic slowdown, and rising inflation are valid. However, it remains to be seen if today’s market reaction was an overreaction, as is often the case.

Over the weekend, Bitcoin led the decline, dropping to $93,000 before rebounding and surpassing the $100,000 milestone, eventually reaching $102,000. This strong recovery was partly driven by Trump’s announcement of plans to establish a Bitcoin Sovereign Wealth Fund, a promise from his campaign.

In other news, Mexico announced the deployment of 10,000 National Guard members to prevent drug trafficking to the US, prompting Trump to delay the tariffs for a month. This brief trade war appears to be over, and major indexes have started to recover, reducing some of their early losses.

The US Dollar experienced volatility, oil prices gave up recent gains, and gold, after tumbling overnight, rebounded strongly to end the session at a new record high.

Bond yields were mixed, reflecting uncertainty about the direction of interest rates amid ongoing global trade tensions, with the EU potentially next in line for tariffs.

Who needs a movie when you can be part of this latest market excitement?

2. Current “Buy” Cycles (effective 11/21/2023)

Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.

If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.

3. Trend Tracking Indexes (TTIs)

On Saturday, President Trump announced new tariffs on Canada and Mexico, which unsurprisingly caused a sharp decline in the markets.

Amid the widespread selling, gold stood out as the only asset class that remained resilient. In response to the tariff threat, Mexico quickly agreed to implement stricter border controls, leading to a temporary suspension of the tariffs for a month.

Although the markets rebounded, the recovery was insufficient to close in positive territory. Despite this, our TTIs also suffered a decline but continued to stay well above their respective trend lines, allowing us to maintain a positive outlook.

This is how we closed 02/03/2025:

Domestic TTI: +4.00% above its M/A (prior close +4.57%)—Buy signal effective 11/21/2023.

International TTI: +3.73% above its M/A (prior close +4.77%)—Buy signal effective 11/21/2023.

All linked charts above are courtesy of Bloomberg via ZeroHedge.

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