Trump & Bessent vs Powell - Investing Option.
Told You So !
As I have rightly pointed out in my 03 Apr 2025 post (click here ! for details, Repost to share ok), US market nosedived for a 2nd day on Fri, 04 Apr 2025.
And it continued:
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On Tue, 8 Apr 2025 a day before reciprocal tariff kicked in.
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On Thu, 10 Apr 2025, when effect of “reciprocal tariff was put on hold for 90 days” has worn off.
It is confirmed that :
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The Nasdaq Composite was in a bear market.
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The Dow was in a correction.
All these, due to an anticipated global trade war in the making, spurring the biggest losses since the Covid pandemic.
With China just upped its tariffs against US imports to 125% in retaliation against US’s crazy 145% tariffs on Chinese imports (see above), the tit-for-tat global war has just gone up a notch between the world’s two superpower.
Post Tariff Announcement.
Fallout from Trump's sweeping tariffs stoked fears of a global recession, wiping $5 trillions of dollars of value from US companies, over the past 2 days.
This could not have been more evident than record-breaking number of shares being traded:
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On Fri, 4 Apr 2025, trading volume on US exchanges were approximately 26.79 billion shares.
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Compared to the last registered ‘ high’ of 24.48 billion shares on 27 Jan 2021.
Best round up was from Interactive Brokers, Chief strategist, Steve Sosnick:
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Right now, how bad it gets depends on how committed the Trump administration is to this set of policies that clearly, the market is voting against.
When US Market closed at 4pm:
DJIA:
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-2.50% (-1,014.79 to 39,593.66).
S&P 500:
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-3.46% (-188.85 to 5,268.05).
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No new 52-week highs and 9 new lows.
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Worst performance since end of World War II and rivaled by 1987 Black Monday stock market rout
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Losses this time round surpassed damages unleashed by the 2020 Covid pandemic
Nasdaq:
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-4.31% (-737.66 to 16,387.31).
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867 stocks rose and 3,588 fell.
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13 new highs and 166 new lows.
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Declining issues outnumbered advancers by a 4.14-to-1 ratio.
Trading volume on US exchanges was 23.65 billion shares, compared with the 18.50 billion average for the full session over the last 20 trading days.
Listen to Trump/Bessent or Powell, when mayhem plays?
(1) Donald Trump said.
Since announcing the irresponsible sweeping tariffs on 02 Apr 2025, Trump continued to defend his actions, emphasizing their necessity to (a) address trade imbalances and (b) protect domestic industries.
Trump described the tariffs as "reciprocal" measures aimed at countering existing duties & non-tariff barriers imposed on U.S. products by other nations.
He has been asserting that the tariffs would (1) bolster domestic manufacturing employment and (2) reduce exploitation by foreign countries.
In the face of criticism, he remained thick-skinned and firm, stating that further tariff measures on (i) semiconductors, (ii) pharmaceuticals, and (iii) critical minerals are under consideration.
(2) Scott Bessent said.
US Treasury Secretary adopted a more cautious approach.
He warned against retaliatory actions by other nations, arguing that such measures would escalate tensions further.
In his public address, Bessent attempted to shift focus away from the stock market turmoil caused by the tariffs, that has wiped out $1.5 trillion in equity value.
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He attributed market sell-off to broader economic factors instead., eg. deflation of the AI bubble earlier in the year.
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He also emphasized the importance of lowering borrowing costs to manage the looming debt refinancing crisis and stabilize the US economy.
(3) Jerome Powell said.
On Fri, 04 Apr 2025, Fed chair delivered a speech at the Society for Advancing Business Editing and Writing Annual Conference.
He addressed US economic outlook for the first time after Trump’s tariffs announcement and amidst heightened market volatility in the aftermath.
Powell emphasized US central bank's commitment to its dual mandate of:
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Maximum employment.
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Stable prices.
He acknowledged that while the economy remains robust, outlook has become "highly uncertain" due to the new tariffs, that are (1) expected to raise inflation and (2) slow economic growth.
He described the tariffs as "considerably larger than anticipated" noting the probable economic repercussions eg. (i) heightened inflation and (ii) decelerated growth, they could be significant and remain uncertain in magnitude and duration.
Mr Powell refrained from committing to any immediate policy adjustments (eg. interest cut), despite mounting pressure from President Trump to lower interest rates.
The Fed is "well-positioned to wait for greater clarity" before determining the appropriate action course.
He underscored the importance of preventing a temporary rise in inflation from evolving into a persistent issue, clearly indicating that the Fed would prioritize managing inflation expectations over reacting prematurely to current events.
His speech also highlighted broader concerns about dimming economic expectations, as reflected in surveys of households and businesses, all pointing to increased uncertainty surrounding trade policies.
Powell reiterated that the Fed would closely monitor incoming data and policy developments before making decisions on monetary policy adjustments.
CME Fedwatch Tool.
Latest CME Fedwatch tool (as of 10 Apr 2025) for May 2025 still have an 80% probability that Fed funds rate remain status quo at 4.25 - 4.5%.
My viewpoints: (mine only)
3 important figures and 3 conflicting viewpoints. How quaint !
What we have is the blind, leading the self denial, followed by a held-up hostage having to react accordingly to situation.
(1) Trump's Tariff Impact
If the intention is really to seek a balance, then it is “working” to a certain extent as the “weaker economy” countries like Indonesia, Vietnam have sent their Trade ministers to US to negotiate.
Again, the 02 Apr 2025 sweeping tariffs have triggered a $5 trillion market selloff, with S&P 500 futures plunging -4.8% in a single day.
While Trump frames these measures as economic "liberation," markets view them as catalysts for (a) inflation, (b) growth slowdown, and (c) potential global retaliation (e.g., China's 34% tariff response). Sectors like Energy & Materials face immediate earnings risks.
(2) Bessent's Tech-Centric Narrative
The Treasury Secretary attributes market woes primarily to the deflating "AI bubble" tied to China's DeepSeek, arguing the Nasdaq's -13% correction reflects a "Mag 7 problem" (Amazon, Tesla, Nvidia, etc.) rather than tariffs.
While tech valuations have indeed retreated, this stance ignores tariff-induced uncertainties in corporate guidance and consumer confidence.
(3) Powell's Inflation Focus
The Fed Chair has refused to preemptively cut rates despite market pressure, emphasizing data dependence and inflation containment.
This suggests monetary policy won't immediately offset tariff-driven price pressures or growth fears.
Actionable Takeaways
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Diversify exposure: Lean into undervalued sectors like $Health Care Select Sector SPDR Fund(XLV)$ healthcare (with a +38% projected earnings growth) and wide-moat stocks, while remaining cautious on tariff-sensitive industries.
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Monitor refinancing risks: Bessent's focus on lowering Treasury yields could benefit rate-sensitive sectors if borrowing costs stabilize.
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Prepare for earnings revisions: Q1 reports (especially Tech & Materials) will clarify tariff impacts. Funds to get an average out view - $Technology Select Sector SPDR Fund(XLK)$ & $Materials Select Sector SPDR Fund(XLB)$.
While Trump's policies drive near-term volatility, Bessent's debt management and Powell's inflation vigilance will likely shape longer-term market dynamics.
It is a power struggle mind-game played out on an international scale.
It is “better” that the rest of the world suffers in unison with the US, rather than US going at it alone domestically - right ?
Just like poker, with his (Trump) cards laid out in clear, now is other players’ response time.
Whoever “folds” loses.
Singapore did not even bother with negotiation considerations and folded. Now we wait as the game unfolds.
Investors will need to prioritize fundamental analysis over political rhetoric, focusing on companies with pricing power and resilient balance sheets. Still Investing in turbulent times ?
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Do you think US market will continue to get worse through the coming months ?
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Do you think you believe Trump, Bessent or Powell, when it comes to investing in Q2 2025?
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