Stocks and crypto are entering one of the most dangerous combinations of news in recent months.
Two events are happening simultaneously:
1️⃣ Trump's new tariffs against Europe
2️⃣ US Supreme Court decision on the legality of these tariffs
And all this is happening at the moment the markets open. The recipe for extreme volatility is ready. Over the weekend, Trump announced new 10% tariffs on the EU. This is the first serious escalation in almost 3 months. The last time the market faced a tariff shock (October 10):
S&P 500 has sharply declined
Crypto showed the largest drop in 5 years
Trade flows worth almost $1.5 trillion are at risk. But that's not all. In Europe, they are already talking about retaliatory measures. If the EU starts forming trade alliances with countries that the US is pressuring with sanctions, America could be pushed out of key trade routes. This:
Bearish for US stocks
Bearish for the dollar
Bearish for global risk-on
Now the second 'explosion'. On Tuesday, the Supreme Court is supposed to rule on whether Trump's tariffs are legal at all. The decision has already been postponed twice, but now the market is waiting for a verdict. And the market believes that the chance of a ruling against Trump is quite high. Now there are two scenarios, and both are bad.
🟥 If the court is AGAINST Trump:
His tariff policy is legally weak
Confidence in policy stability is collapsing
Markets rose on expectations of 'tariff strength'
This optimism could collapse instantly
A sharp and harsh decline is becoming very likely
🟥 If the court is FOR Trump:
Markets must fully account for the damage from EU tariffs
Trade wars are becoming a reality
Risks for economic growth are rising
Pressure on stocks and crypto remains
Both options are negative for risk assets. That's why next week is so dangerous. The market is simultaneously facing:
Tariff shock
A legal blow to confidence in economic policy
Prepare for:
Sharp movements
False breakouts
An increase in fear and chaos
Volatility will not just be high. It could be insane.
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