A social media post from President Trump threatening a 100% tariff on Chinese goods starting November 1—combined with China’s export controls on rare earths—added fresh fuel to fears about global supply chains and technology sector exposure. The S&P 500 fell roughly 3% on Friday, testing support at its 50-day moving average (50-DMA) on above-average volume, raising concern. If that support fails to hold, downside momentum could accelerate quickly.
That said, I suspect trillions in sidelined cash may view this pullback as an opportunity to buy leading AI stocks. Artificial intelligence and declining short-term rates remain the dominant fundamental drivers of this three-year-old bull market. I remain bullish, but I’ll continue to let the charts guide me—because price is the only thing that pays.
For perspective, there were roughly 275 IPOs in 1999 before that market peaked, compared to only 30 IPOs this year, suggesting we are not in a bubble. Likewise, stock splits are not rampant as they were during prior euphoric tops. However, junk bonds are now trading below their 50-DMA, a signal that risk appetite may be fading, even as AI stocks remain technically constructive.
Gold continues to trend higher, hovering near all-time highs as an inflation hedge, while the U.S. dollar weakens and bonds rally. Oil prices are falling as supply increases and future demand expectations soften. Meanwhile, Bitcoin dropped over 3% on heavy volume, testing its 50-DMA and disappointing those who viewed it as a haven. Ethereum fell about 8%, breaking key support on huge volume—a negative sign for the broader crypto sector. I have no crypto exposure, but I do maintain some gold holdings and may add on weakness.
Most of the new liquidity in the system today originates from the private sector—mainly through commercial bank credit creation and U.S. government deficits—rather than direct Federal Reserve actions. This surge in private credit, combined with massive AI-driven capital expenditures and energy transition funding, is reshaping global markets.
One area to watch closely is high-yield credit. The bankruptcies of The First Brands Group (maker of FRAM oil filters and TRICO wiper blades) and Tricolor pose minor contagion risks, but they likely contributed to Friday’s selloff. The sharp decline in Jefferies Financial could serve as a canary in the coal mine, signaling potential stress building in the credit markets. Meanwhile, retail and restaurant stocks are weakening, suggesting that consumers are increasingly stretched, facing higher prices without matching wage growth.
Those who hope in the LORD will renew their strength. Isaiah 40:31