@NewbieHK - as I understand it (from Trump's Truth Social post and the WSJ commentary) it wasn't Trump initiating this. It was China/Xi who have, apparently, sent a shot across the US's and the ROW's bow by declaring new and more extensive Export Controls on a range of materials/goods.

The 100% tariffs are Trump's reaction, but he is not the one driving this latest development. The US was apparently blindsided by the Chinese move.

@Clio so China shifts from defence and goes on the offensive against Trump!

This is very interesting and could suggest some “technological progress” that has them confident this move is far bigger than their 600B trade surplus with the US being significantly diminished.

Alternatively, as China has been living with the most recent Trump tarrifs for sometime, and the front loading of import purchases by US companies apparently, close to unwinding, is the US about to potentially feel the impacts of higher prices!

Maybe, they want to see how the US public and politicians responds if inflation dramatically spikes?

Are they Trumping Trump?

We knew they would eventually play the rare earths card so the question is why now?

Interesting times!

Makes sense they give him a bit of a whack while he is already on the Blackfoot with the whole government shutdown

It is fascinating (as well as depressing, scary) @mikebrisy

Hard to imagine how the shutdown couldnt have a major impact on GDP, especially if it continues to drag on.

But I am mindful that markets have a way of doing the unexpected, and the fact that lots of experts are calling for a correction makes me somewhat cautious of that perspective. Not that it's not reasonable, mind you. And absent any intervention that feels like it would be unavoidable. But that's the thing -- The state of the sharemarket and the economy are core to Trump's personal measure of success, and I can see him doing whatever it takes to ensure they pump. Even though the way he will try and engineer that will only make matters worse longer term.

Specifically, if there is any wobble in markets, I can easily imagine a giant stimulus of some kind -- further tax cuts, ramp up in spending, reduced interest rates etc -- which will only make the deficit/debt situation worse, but will see things run hot for a time. Moreover, it will further undermine the value proposition of US bonds as a safe haven, which will make equities, gold, property etc relatively more attractive. Even if they look elevated against traditional metrics.

There *may* just be some emerging market characteristics at play here.

Venezuela, for example, has seen GDP collapse over the last decade, and inflation run (very) hard. It's a hot mess, but their stock market is going to the moon. It's a monetary phenomenon, of course, and in 'real' terms the situation is very different, but it shows that things can be bad economically and people still bid up asset prices because, well, where else are you going to put your money?

But honestly, who knows!?

We live in interesting times :)

Your surmising is definitely a possibility @mikebrisy and I am in and have done much the same as you. But I am not concerned even if it does happen because I routinely apply this thought process - “will my day to day life change much even if we have a 50% correction - and the answer is no. It’s purely a trimming of paper profits’. The tide comes in, the tide goes out. Having 18 months supply of living costs in cash makes sleeping easier.

Lets face it talks of a correction have abounded ever since Noah incorrectly allowed two unicorns (Steve and Geoff) onto the ark. I regrettably took the bait in 2008 and sold down to go to cash - what a mistake. At the time I was taken in by the spin of the doomsday newsletter writers.

I like to think I am somewhat wiser these days and I only invest in solid businesses with extra strong Balance Sheets. The 2008 fiasco taught me the pumped up maybe baby businesses are the ones most likely not to make it.

@mikebrisy Well, I haven't much to add, except that you are right, not many are focusing on it. I'm certainly not, not at all. I'm probably like the rest, trying to work out the AI cross-investing (which is fascinating, BTW) scenarios. markets are unpredictable, though, so it's in the who-knows category for me. possible not probable for me

As always, very well thought out case @mikebrisy

As a starting point, I don't see how the markets could nosedive in any meaningful way while the money printers are running, interest rates are trending down, unemployment is holding steady, and the TGA keeps getting bigger and bigger (my assumption being this money will also flow into the economy at some point).

I also can't help but think Trump's ego won't allow a massive crash to occur on his watch. He would see that as too much for his legacy to take, and sadly, his legacy is way more important to him than the long-term view. But, to be fair, that’s true of pretty much all politicians to some degree. Anyhow, I digress.

That said, I guess an extremely protracted shutdown where money supply reporting stops, employment reporting stops, etc., and the Fed uses that as an excuse to stop cutting rates could cause some issues, but even that is unlikely to lead to a massive reset.

My next quarter of DCA'ing is the first week of November, so I will just stick to that schedule.

Having said the above, I do think that there is a massive reset on its way, as the math just says we can't keep going down this path. But... that could be 20 years away, who knows.

Fascinating for sure, but who knows…

Insert the “don’t try and predict the weather, buy the boat that can weather the storm” metaphor here.…

I mean the shutdown is one thing, but likewise something unpredictably positive could happen at any time…

-Putin could die and the war in Ukraine could end

-Might be an energy tech breakthrough….

-Ange Postecoglu’s Nottingham Forest may start winning

only one thing is certain…something unpredictable will happen.

Thanks all for the thoughts shared!

I have been putting some thought to this recently also and would summarize it as such:

• The number of federal workers going without paychecks in a country where a lot of people sadly live paycheck to paycheck must surely have an impact if it carries on another few weeks?
• I feel the impact if any will be a blip or the radar longer term given the amount of money pouring into equities in the US due to stimulus and tax cuts.
• An additional factor I personally feel is going to come home to roost is short term AI sentiment / results. Whilst I dont believe AI is in a bubble at all, I feel investments vs returns and sentiment in the media will put some pressure there short term especially for AI success stories like Palantir which are heavily involved with government contracts (from govt shutdown if any impact).
• Main impact I expect would be companies relying on consumer spending (from govt shutdown)

Verdict: Pain to start next week as long as the shutdown persists + a little more but a blip on the radar longer term.

Well pain in the hip pocket is where trump will lose his billionaire support…

Personally this is the only lever the democrats have….

Pull and hold I say until Trump starts to lose some of his big money backing and does a backflip on heathcare…

It seems one point I didn't factor in was President Muppet picking another fight with China that, like the first time, he can't win!

While the most likely outcome is that this will blow over, I guess there is a non zero chance that any protracted trade fight with China could lead to sustained downturns... Anyway, for now, I will bring forward some funds to grab some cheaper Bitcoin and my USA stocks when their markets open on Monday and will continue to do so if prices keep falling.

Side note: Is it a coincidence that the Muppet in Chief has done this on the same day he didn't win the Nobel Peace Prize? Perhaps he's looking to deflect the media?