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The $1 Trillion Trade Conundrum

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The $1 Trillion Trade Conundrum

While China’s domestic economy continues to be sluggish, demand for its products is rising.

The difference between Chinese exports and imports is set to reach almost $1 trillion, according to Bloomberg calculations:

This illustrates that China has been relying on its cheap exports to buoy a struggling domestic economy.

It adds fuel to the fire that the incoming Trump administration is likely to increase tariffs on Chinese goods coming into the United States. Countries in South America have already raised tariffs on goods from China, such as steel and electric vehicles.

Chinese import-export surplus with the U.S. rose 4.4% this year compared to last year and 9.6% with the European Union.

The disproportion between imports and exports in China is largely due to the slowing economy and the rising replacement of foreign-manufactured items with domestic alternatives … pushing down import demand.

In October, the surplus between imports and exports in China was the third-highest in history.

Fun fact: China now exports more goods to nearly 170 countries and economies than it buys from them… the most since 2021.

The Second Super Boom Catalyst Triggered Last Week

The Federal Reserve added more fuel to last week’s rally when it announced its second interest rate cut since September. Fed Chair Jerome Powell and crew trimmed its benchmark rate by another 25 basis points.

We’ve mentioned it before here in Money & Markets Daily, but lower rates mean cheaper financing for smaller, high-growth companies in innovative industries like artificial intelligence (AI). If you thought the first stage of the AI stock bull market was impressive, just wait.

Lower rates and AI are just two catalysts in what Chief Investment Strategist Adam O’Dell is calling the “Super Boom.” We hold the third key.

If you want to find out what that is and three stocks Adam has pinpointed for incredible outperformance, click here to check out his “Super Boom” presentation.

The Rise of Bitcoin

If there is one asset enjoying the fruits of a Donald Trump presidential victory, it’s bitcoin.

Since November 4, the price of the most popular cryptocurrency has jumped nearly 22%:

On Sunday, bitcoin reached the $80,000 mark for the first time in history… a run that continued into Monday morning.

And bitcoin isn’t alone in this post-election rise.

Ether topped the $3,000 mark over the weekend and pushed above $3,200 on Monday, while the decentralized finance token tied to Cardano moved 2.7% higher.

Memecoins like dogecoin and Shiba Inu also jumped 11% and 5%, respectively.

Relative to cryptocurrencies rising, stocks related to crypto also popped Monday morning.

Coinbase Global, MicroStrategy and Robinhood rose between 7% and 15% in premarket trading.

Elon Musk Keeps Getting Richer

Elsewhere on the “politics can influence the market” front, Tesla Inc. (Nasdaq: TSLA) is another stock reaping the rewards of a bullish market,

Shares of Elon Musk’s electric vehicle company have soared more than 32% since Trump’s election win:

The rise in TSLA stock has also done wonders for the fortunes of its owner and CEO.

After last week’s 29% jump in share price, Musk’s fortune roared past $300 billion as Tesla’s market capitalization surpassed $1 trillion.

Musk currently owns a 20% stake in Tesla and 42% equity in SpaceX.

The idea behind Tesla’s instant rise is the belief that the incoming president could help facilitate approval of Tesla’s autonomous driving technology and push the U.S. National Highway Traffic Safety Administration to hold off on enforcing actions involving the safety of the company’s driver assistance systems, according to the New York Post.

Are You More Bullish Now?

If there’s one thing that we as investors can’t stand, it’s uncertainty.

We want to know as much about the risks before investing our hard-earned cash in any particular asset.

Massive events such as elections sow seeds of doubt.

Now that we know Trump will return to the White House in January, we wanted to know how certain you are about markets now.

Vote in our latest poll now.

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Have a great week!

Safe trading,

Matt Clark, CMSA®

Chief Research Analyst, Money & Markets