Markets Roar Back After Trump's Trade War Scare

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😎 Market Vibes

Markets Roar Back After Trump's Trade War Scare

Friday felt like stepping into a time machine back to the worst days of the 2018 tariff wars. Today? Trump hit the reset button, and traders are piling back in like nothing happened.

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📸 Market Snapshot: Relief Rally in Full Swing

Futures are absolutely ripping this morning. Dow futures jumped 400 points (up 0.9%), the S&P 500 is surging 1.1%, and the Nasdaq is leading the charge with a 1.4% premarket gain.

Context matters here. Friday was brutal - the S&P 500 crashed 2.7% to 6,552, its worst day since April. The Nasdaq got hammered even harder, dropping 3.6% to 22,204. The Dow shed 879 points to close at 45,479.

The selloff wiped roughly $2 trillion in stock market value off the board after Trump went nuclear on China over rare earth export controls, threatening "massive" new tariffs. Markets went into full panic mode.

But Sunday brought the walk-back we've all seen before. Trump posted on Truth Social: "Don't worry about China, it will all be fine!" He called President Xi's rare earth move "a bad moment" and insisted neither side wants economic depression.

💻 Tech's Big Bounce - But Don't Forget Friday's Bloodbath

Chip stocks are leading the recovery charge. AMD is up about 3.7% in premarket trading, while Nvidia jumped nearly 3%. Taiwan Semiconductor Manufacturing surged 5% on strong earnings forecasts.

Makes sense - these were the biggest casualties when tariff fears peaked. Remember, the Nasdaq's megacaps lost $770 billion in market value in a single trading session Friday. Let that sink in.

Nvidia alone shed roughly $80 billion. Microsoft dropped $85 billion. Amazon lost $121 billion. Tesla fell $71 billion. When the biggest names on Wall Street take body blows like that, every portfolio feels it.

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📅 Government Shutdown Hits Day 13

While markets focus on trade drama, Washington is still dark. The government shutdown entered its 13th day today, and it's starting to bite. Key economic data releases are delayed - no September CPI, no retail sales numbers, no housing starts.

That means the only window we have into the economy right now comes from private data and corporate earnings. Speaking of which, earnings season kicks off tomorrow with JPMorgan, Citigroup, Wells Fargo, Goldman Sachs, Johnson & Johnson, and BlackRock all reporting.

These aren't just earnings reports - they're our best proxy for economic health while official data stays locked behind government doors. Wall Street will dissect every word looking for clues about consumer spending, business investment, and recession risk.

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🌕 Crypto Corner: Bitcoin Consolidating Above $115K

Bitcoin is trading around $115,000 this morning after pulling back from early October highs above $126,000. The world's largest cryptocurrency lost about 3% on Friday as risk-off sentiment hit everything from stocks to digital assets.

But zoom out and the picture shows resilience. Bitcoin hit record highs above $126,000 in early October, driven by three massive catalysts: dovish Fed policy shifting money into risk assets, sustained institutional demand through spot ETFs, and a supply squeeze as exchange balances hit their lowest levels since 2019.

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🏆 Gold Refuses to Quit

While stocks bounced, gold climbed to $4,074 per ounce, continuing its incredible 2025 run. Gold has risen over 25% since January, hitting fresh all-time highs as investors pile into safe havens.

Think about that for a second. Stocks just tried to stage a relief rally, and gold STILL went up. That tells you something about underlying anxiety in the system. Government shutdown fears, persistent inflation, geopolitical tensions - the factors supporting gold keep stacking up.

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🏦 Rate Cut Odds Stay Sky-High

Despite all the chaos, the Fed's path remains clear. Markets are pricing in a 96% chance of a 25-basis-point rate cut at the October 28-29 FOMC meeting, with an 87% probability of another cut in December.

Lower rates generally support stocks, but they're rocket fuel for gold. Every rate cut erodes the opportunity cost of holding non-yielding assets like precious metals. Combined with record central bank buying and persistent inflation fears, gold's fundamental picture continues to strengthen.

📊 Earnings Season: Finally, Some Real Data

With official economic data stuck behind the shutdown, corporate earnings become our economic dashboard. Tomorrow kicks off bank earnings with JPMorgan Chase, Citigroup, Wells Fargo, and Goldman Sachs. These reports will tell us everything about consumer health, business spending, and credit quality.

Later in the week, we get Johnson & Johnson, BlackRock, and Domino's Pizza. A weird mix, but collectively they touch everything from healthcare to asset management to consumer spending.

Expectations are muted. Analysts predict earnings growth of just 6% for Q3, down from earlier estimates. Tariffs, the shutdown, and economic uncertainty have all taken their toll. The question is whether reality comes in better or worse than those lowered expectations.

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⚖️ The Fed's Balancing Act

All this drama happens against the backdrop of the Fed's rate-cutting cycle. The CME FedWatch Tool shows 95% odds of a cut at the October 28-29 meeting. That's less than three weeks away.

But here's the tension: The Fed wants to cut rates to support growth, but they also need to manage inflation expectations. Big market volatility like we saw Friday makes their job harder. Do they cut to calm markets? Or hold steady to show they're not hostage to Wall Street?

Fed speakers this week will get grilled about their plans. Philadelphia Fed President Anna Paulson speaks today. Her comments will get dissected for any hints about the October meeting.

🤔 What This Means

We're in one of those rare moments where everything feels uncertain. Trade wars brewing. Government shut down. Earnings season starting. Fed decisions looming. Elections coming in 2026.

The current environment isn't one where assumptions hold. It's a time where staying informed matters.

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🎬 Bottom Line

Markets are trying to shake off Friday's nightmare, and the early action looks promising. Trump's walk-back is giving traders permission to buy the dip again.

But don't mistake a relief rally for an all-clear signal. The fundamental issues haven't changed. U.S.-China tensions are real. The government is still shut down. Valuations are still stretched. And volatility could come roaring back with a single tweet.

The window to understand what's happening is right now. Whether that means examining defensive strategies, studying undervalued sectors, or learning about alternative assets like gold and crypto.

One thing's certain: boring markets are over. We're entering a period where being informed matters more than ever.

See you tomorrow with the bank earnings breakdown.

✌️ Thanks for vibing with us.

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