what just happened

Markets got Trumped. Again

The S&P 500 dropped 2.5%
The Dow lost 2.2%
The Nasdaq fell 3%

Worst week in nearly two months.

Why? Trump floated a 50% tariff on EU goods and a 25% tariff on iPhones made outside the US. The idea alone was enough to send shockwaves through global markets. Apple fell 3%, pulling Big Tech and the broader indices down with it. This was not a minor skirmish. It was a full blown market tantrum triggered by a potential policy rerun of the trade wars we thought we left behind.

Bond yields surged. The 10Y Treasury yield jumped to 4.61% as inflation fears collided with growth concerns. Stagflation is not just an economic term from the 70s anymore. It is the scenario investors are quietly starting to price in.

Meanwhile, gold spiked. The dollar dipped. Risk appetite collapsed. It was not just about the threat of tariffs. It was about the reminder that global supply chains are still vulnerable, and politics can upend profit margins faster than any earnings miss.

story of the week: campaign trail chaos hits your portfolio

Trump does not need to be in the Oval Office to move the market. He just has to talk. This week, he proved that again.

A few comments on tariffs, framed as part of his 2024 campaign push, turned into real market catalysts. The mention of a 25% levy on iPhones made outside the US was not just posturing. It was a reminder that Apple, and companies like it, are deeply exposed to political volatility. In 2018, Trump focused on China. In 2025, the playbook includes Europe and even American icons.

This is not about Apple earnings, which dropped weeks ago. It is about how Apple became the symbol of risk. Global production. Chinese assembly. European regulation. American pressure. In one sentence, Trump reminded investors that Apple is not just a stock. It is a geopolitical flashpoint.

And that makes everything else fragile too. Because if Apple can be targeted, who is safe? Nvidia? Microsoft? Tesla?

Investors are learning that we are no longer just in a market driven by fundamentals. We are in a market driven by friction. Supply chains, policy risk, populism. They all have a price tag, and this week, we started to see what that tag looks like.

It is not about whether the tariffs actually happen. It is about how quickly capital repositions when it believes they could.

tesla said vroom and the stock said ok

Tesla did not make headlines this week because of its earnings. It made headlines because Elon Musk made a move.

On a livestream, Musk confirmed that Tesla will launch a limited robotaxi fleet in Austin, Texas, as early as this summer. Ten to twenty Model Ys using full self driving software, with teleoperation support from human supervisors. That was enough to lift the stock, even as China delivery numbers disappointed.

Musk also committed to staying Tesla CEO for at least five more years. And in a rare statement, said he would stop making political donations.

The market interpreted both as stabilizers. Leadership continuity. Focused narrative. Less political noise.

Why does it matter? Because the robotaxi rollout is not about Q2 numbers. It is about long term belief. That Tesla is not just an automaker. It is a technology company. A mobility platform. A future delivery vehicle.

Even if the rollout is small. Even if the tech is imperfect. What it signals is that Tesla is not standing still. And in a market that is suddenly obsessed with downside risk, that was enough to pull in some optimism.

Tesla still faces huge challenges. China competition. Demand volatility. Margin pressure. But this week, it managed to reclaim the narrative, at least for a minute.

macro weirdness

The Fed is losing money

The central bank of the United States is operating at a loss. Not hypothetically. Not on paper. In real accounting terms.

The Fed reported losses of $114 billion in 2023. Another $78 billion in 2024. And 2025 is on pace to continue the bleed. That has never happened at this scale before.

The reason is structural. Since 2020, the Fed ballooned its balance sheet. It bought trillions in bonds. Then interest rates rose. Now it is paying higher interest on reserves than it is earning on those assets. The result? Negative income. Red ink.

The Fed is still operational. It does not need profits to function. But symbolically, it is a shift. The institution designed to backstop markets is now underwater. And that changes how it is perceived. Less like an omnipotent stabilizer. More like a stretched out balance sheet with fewer levers to pull.

The deeper question is what it means for monetary credibility. Can the Fed fight inflation if its own operations are upside down? Can it shrink its balance sheet without triggering more volatility?

That weirdness does not show up in stock tickers day to day. But it is there. In the backdrop. Adding tension.

investor behavior watch

Risk off and gold on

The shift was fast. By midweek, as the Trump tariff noise grew louder, traders started pulling back from risk.

Gold climbed more than 5% in a matter of days. Treasurys rallied hard. The VIX jumped, signaling rising fear. Hedge funds cut exposure. Retail flows slowed. Everyone hit pause.

This was not a liquidity crisis. This was a sentiment pivot.

And what triggered it was not earnings. It was narrative risk. The idea that headlines, not balance sheets, were now steering the ship.

Capital started looking for safety. For assets that do not get tariffed. For returns that do not rely on stable geopolitics. That is not a short term trade. That is a reallocation impulse.

If the campaign season heats up with more trade talk, that shift could stick.

meta week

When sentiment broke away from fundamentals

One of the most interesting parts of this week was not what happened. It was what investors started to believe might happen.

Tariffs are not reality yet. But they became real enough in people’s minds to change asset allocation. That is the power of sentiment.

This was the week the market remembered how fast risk can turn. Not because of a surprise earnings miss. Not because of a black swan event. But because of one candidate’s comments at a rally.

The old tools do not fully work here. Discounted cash flow models cannot price in trade threats. Risk parity does not hedge political chaos. There is no spreadsheet cell for election vibes.

And yet, portfolios are moving.

It is not panic. But it is awareness. And that is enough to shift the game.

takeaway of the week

The market does not fear volatility. It fears vulnerability.