$S&P 500(.SPX)$ watch the bond market. The strongest signals will come from there for the foreseeable future. The actions of sovereign buyers and large institutional investors in participating will set prices and yields. if bond prices continue to fall, be prepared for a break in the yield curve. And that could trigger a bloodbath in equities. Unless of course, the current tariff chaos is swiftly shut down.
In investing there's a little brother, the stock market and its big brother, the bond market. The stock market goes up and down and investors are used to that. The bond market is a very serious chap and doesn't believe in jumping up and down. So when he does jump (yields) then some serious shxt is going down
When you're in your late 70s ala DT, you don't think much about the future seeing as you're down to a few years. You think of an impactful legacy. You think in terms of great, magnificent, humongous, BOOM. Exactly what he's doing. And the people around him are gradually waking up to this booming and turning a bit pale since most of them have decades of life left. Eking out potatoes from the scorched earth ain't pleasant.
Way back in 1988 when the world was much younger, DT laid out his views on foreign countries ripping off the USA in an interview with Oprah. He was very clear on what he'd do. He even spoke of winning the elections. And now as president, he's doing everything that he said he would. Back in 1988 and repeated ad nauseum during the elections. And now the media and the pundits and everyone is gnashing their teeth and acting all surprised. Seriously dudes? Where did you miss the message? What part of tariff didn't you understand? I'm not commenting on the validity of tariffs. I'm simply saying the man did what he said he would.
Do not buy the dip as yet. Wait. The markets haven't really worked out tariff impacts on companies as yet. Still doing that. This round of selloffs were just lazy. Easy option, sell. Now will come the smart sales of companies that are truly impacted.Then value stocks will emerge.
Sell offs will continue before markets realise that tariff impacts are limited. Imports are 16 percent of GDP. Lots of imports are components and inputs not finished products hence price impact is lower. You can already see value buying of oversold stocks like Kohls and Skechers.
The market is rebasing. These new lower levels will be the norm for sometime. And after earnings come in lower helped by tariffs, retaliation and etc, expect more value slippage.
Value destruction on such a scale and with such clear intent and speed is unprecedented in modern times. The downward trajectory is now set and hitting the ejector is what many are doing as it looks to be the only rationale choice.