To The Moon

Global investors and American voters may now regret elevating Trump—a leader whose erratic nature has repeatedly pushed financial markets to "witness history" within days. While Trump insists these developments are part of his grand plan, feedback from China and Europe clearly indicates his bluffing strategies have backfired. At this point, figuring out a graceful way to step back has become the most urgent task.

Previously, we discussed how the new president would need to trigger a correction in overvalued assets while fostering his own leading stocks. However, the real challenge lies in managing the market disruption caused by these operational adjustments. The last double-digit weekly drop in U.S. equities happened five years ago during Trump's presidency, though this time, there's no external reason to blame—the fallout stems entirely from his own decisions. With the situation spiraling out of control, focusing on technical indicators now seems futile. Still, it’s worth noting that a rebound is possible, as the market has retraced over 20% from absolute highs, coupled with previous weekly highs. For those who have stayed on the sidelines until now, I personally believe U.S. stocks and most risk assets are due for a correction, offering potential opportunities at the current price levels.

Under emotion-driven market conditions, news factors exert even greater influence. In last week's livestream, we analyzed how foreign nations’ counteractions against U.S. tariff policies could shape market trajectories: A stronger retaliation from China and Europe would lead to further market corrections, while acquiescence might prompt short-term rebounds. Today, we see clear countermeasures, particularly from China, signaling a limited range of choices for Trump. If he persists in confronting these challenges head-on, he’ll face not only external pressures but also increasing domestic backlash—such as last weekend's anti-Trump protests—which foreshadow an even tougher second term. More worryingly, refusing to compromise or engage in dialogue could amplify long-term geopolitical risks.

From a practical and business-oriented perspective, Trump should now consider an approach that allows him to save face while reopening tariff negotiations with China, Europe, and other nations. One might speculate that news of phone calls with other leaders or announcements of international visits within the next 1–2 months could signify preparatory moves toward reconciliation. If similar developments emerge this week, it may be worth anticipating a market rebound.

Regarding asset performance, Bitcoin has shown the strongest resilience among risk assets from last week into early this week and could exhibit even greater robustness during a rebound. On the other hand, commodities like oil, which recently broke critical levels, may see further movement if a reversal occurs. In precious metals, silver continues to underperform as we’ve consistently noted, while gold remains a special case requiring caution.

Gold prices recently peaked at $3,200, meeting minimum expectations for long-term targets. Yet, the market has not confirmed a definitive top. Under such circumstances, waiting for significant pullbacks and buying opportunities remains the most prudent strategy. However, if news-driven rebounds take gold toward historical highs, it could be reasonable to consider shorting gold—or silver within the same timeframe. Given its current market dynamics, gold seems more challenging to handle, so avoiding it altogether might be the better option.

In summary, after the U.S. stock indices retraced over 20% from their highs, stabilizing the market this week will be critical. Staying alert to developments and news over the next couple of days will be key for making informed investment decisions.

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