There is a financial “Game of Thrones” playing out right now, and China’s making its move. Facing the biggest stock market flush in its history, Beijing is stepping in — buying its own market in a desperate attempt to prop it up.
And now President Donald Trump has added even more chaos to the equation.
On Wednesday, Trump announced a 90-day pause on some of the new reciprocal tariffs, and stocks exploded higher on the news. The S&P 500 surged 9.5%, the Dow ripped nearly 3,000 points and the Nasdaq exploded 12.2% — one of the biggest one-day rallies in years.
Is it enough to change the long-term story?
A Temporary Lifeline
China’s emergency stock-buying plan may buy a little time, just like Trump’s tariff pause will give U.S. markets a breather.
The difference is that both moves are bandages on a much bigger wound. China’s markets are still bleeding value daily. Retail investors are fleeing. Foreign investors are pulling out even faster.
It is a classic case of a liquidity crisis colliding with a credibility crisis — and throwing money at it is not a real fix.
On top of that, Trump said he plans to raise tariffs on China even higher — to 125%. If that happens, it will hammer China’s economy even harder right when it can least afford it.
China’s deeper issues — real estate collapse, weak manufacturing, rising unemployment and heavy-handed business crackdowns — are not going away just because the government throws money at the market.
Global Contagion Risk Still Rising
Here is where it gets dangerous for everyone else. China is not just fighting for its own financial system — it is fighting to hold together a critical piece of global economic stability.
Even with the market rally today, the risks are still there. If Beijing’s bailout fails, the pain will not stay contained. U.S. companies with major China exposure like Tesla (TSLA), Apple (AAPL) and Starbucks (SBUX) could feel it. Consumer Discretionary (XLY) stocks would be especially vulnerable. Semiconductors (SMH) would not be far behind, either.
A full-blown crisis in China’s markets would ripple across every sector of the S&P 500 — and given how fragile liquidity conditions still are, another shock could trigger something a lot bigger.
Bottom line — Wednesday’s rally is a welcome break from the selling, but China’s stock market bailout still looks more like a sign of weakness than strength. And if China cannot plug the leak — especially with another tariff storm coming — investors better stay ready for rough waters ahead.
Jeffry Turnmire
Jeffry Turnmire Trading
I host my “Morning Monster” livestream at 9:15 a.m. ET each weekday on YouTube, and then “30 Minutes of Awesome” at 5 p.m. ET each Tuesday!
Please check out my channel and hit that Subscribe button!
You can also follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram:https://t.me/+6TdDE7-F6GlhMmJh
Important Note: No one from the ProsperityPub team or Jeffry Turnmire Trading will ever message you directly on Telegram.
I’m just a regular dude in Knoxville, Tennessee: a husband, father, civil engineer, urban farmer, maker and trader.
I’ve been at this trading thing with real money for 20-plus years, and started paper trading over 35 years ago. I have a knack for making some epic predictions that just may very well come true. Why share them? Because I like helping other people — it’s the Eagle Scout in me.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Is Gold About to Rip Again?
With a forensic audit of the Gold reserves at Fort Knox looming, gold could see a repricing that will set the pace for its price action in coming weeks.
