a lot going on at the moment
Tariffs, Bonds, Volatility, Gold, and Game Theory
Headline risk is now a critical component to consider. Technical analysis is no longer sufficient to achieve success in short-term investing.
Trump Administration's Primary Goal
Before interpreting market moves or planning trades, we need to clarify what the Trump administration is actually trying to accomplish. Everything else cascades from that.
There are two primary objectives to monitor:
1. Reducing U.S. Strategic Dependence on China
While tariffs are often interpreted through the lens of trade balance or manufacturing revival, there’s a deeper, geopolitical intent unfolding:
The goal is not "balanced trade." It’s to sever global economic ties with China — or force allies to.
This is about slowing China's industrial rise, curbing its access to Western capital and demand, and limiting its ability to project soft power through exports and technology. If the Trump strategy works, China becomes more isolated, and the U.S. regains leverage as the world’s central industrial and financial platform.
Watch for:
Pressure on U.S. allies (Japan, EU, Israel, Vietnam) to choose sides.
Continued escalation of tariffs on Chinese-origin goods.
Incentives or penalties aimed at preventing re-routing of Chinese exports through third countries (e.g., Mexico, Thailand).
Signals from Beijing — tariffs, threats to Taiwan, or bond sales — as counters to U.S. pressure.
2. Rebalancing Global Economic Burden-Sharing
The U.S. provides two global services:
A security umbrella through NATO and Pacific alliances
The reserve currency through dollar and Treasury markets
Trump’s advisors increasingly view these services as unsustainably free. Their goal is to make allies pay more — either by increasing defense spending or by buying long-dated Treasuries to absorb America’s deficits.
In this context, tariffs aren’t just revenue tools — they are leverage tools.
Watch for:
Segmented tariff regimes that reward countries for alignment on security and dollar support.
Currency commentary or action that attempts to weaken the dollar and support U.S. exports.
Calls for allies to buy longer-duration Treasuries (e.g., 50-year, 100-year bonds).
Withdrawal of swap lines or defense commitments as sticks in this negotiation.
What This Means for Markets
Tariffs & Volatility
Headline-driven price action will dominate. Expect sharp moves in:
Semiconductors & tech: extremely sensitive to Taiwan/China headlines.
Retail & consumer goods: margin pressure from rising import costs.
Industrials & defense: potential winners from re-industrialization and realignment of supply chains.
10-Year Yield
This is a secondary objective but a primary tactical constraint. Trump’s economic success relies on suppressing yields to:
Reduce the debt burden
Support equities
Keep the economy buoyant amid tariff-driven inflation
But so far, yields have not cooperated. Watch this space closely. If the bond market doesn’t “behave,” the Fed may be forced to re-enter.
Gold
Gold is your volatility hedge. Watch for:
Central bank accumulation of gold
Capital flight from Asia or Europe
Key Questions Going Forward
Will Japan, Korea, and Europe capitulate to U.S. pressure, cutting Chinese ties or buying Treasuries?
Will China retaliate financially, or wait out the U.S. election cycle?
Will the Trump administration escalate all at once, or stagger pressure to maintain market calm?
Will the Fed stay sidelined, or begin to coordinate with Treasury again?
Conclusion
The old playbook doesn’t apply anymore. This is game theory, not a mean-reversion setup. It’s critical to track the macro objectives and how they inform each week's news cycle. We are no longer in a cycle of pure fundamentals or technicals.
We are in a geostrategic realignment — and every headline now carries market risk.