Market Bloodbath On New Tariffs: What’s Next For Stocks, Bitcoin, Commodities | Gareth Soloway

Trump's new tariffs were announced today. It's now past the August 1st deadline. Here's a full list of countries and their new adjusted tariffs. I pulled this out of a Guardian article, check it out on my Twitter, link down below. You can see all five pages with all the countries and their new tariffs. Some countries struck deals before the August 1st deadline. Some did not reach an agreement. In either case, markets did not like today's announcement, even though the news was already well telegraphed. The S&P was down roughly 1.5% as of 11 a.m. eastern time. The Nasdaq's down 2% Gold's up 1.4%, Bitcoin's down 2.4%, the dollar's down 1.2%, Treasury yields 30-year yield is down 1.5%, and crude oil tank 2.7%. Just a bloody day for risk assets overall. Gareth Soloway is here to break down what's going on. He's a president and chief market strategist at Verified Investing. Welcome back to the show, Gareth. Good to see you as always. Hey, good to see you, David. You know, who's not happy to be here is traders right now. So let's just get your initial reaction to what seems like Liberation Day 2.0. Probably not as bad, but I wonder why markets reacted like this. Probably worse than what they were expecting. But you knew the news was coming out August 1st. You knew this was going to be a big day. Did you make any positions prior to the announcement? Obviously nobody knew exactly what the announcement was going to be. Yeah, so in my humble opinion, I don't think it's the tariffs necessarily just them. We got the jobs data this morning. The nonfarm payrolls coming in weak on the day. And I think what we saw is earlier this week, the PCE data was a little hotter than expected, and that's inflation data for those of you at home that may not know that. But the combination of a more hawkish Powell, inflation creeping up, and a weaker jobs report, I think that already set the table. And then it's almost like the tariffs just pushed us over the cliff in the markets. And I think that's really what's going on. And just a couple of tidbits here on this nonfarm payrolls number. So 73,000 is where we came in, 106,000 is what was expected. So it's not a huge miss, but this is where it gets more interesting. Unemployment rate inched up to 4.2%, but the participation rate continues to decline. These are people that are just giving up on looking for jobs. And the U6, which is the underemployment number, spiked to 7.9%. And again, underemployment means someone can find part-time work, but they're not able to get that full-time job. So essentially, they want the full-time job, they just can't find it, i.e. half unemployed, essentially. So I think all of this combined with an uptick in inflation is really making the markets nervous. Because remember, these tariffs are going to go into effect, and they will cause some sort of slight, if just slight, reaction in inflation, which means higher inflation, but a weakening economy. And again, we know what that means. That's that favorite term of stagflation. So I think that's where we are right now, David, and why the markets are having such a big drop. Now, I think honestly, just to throw this out to you, is if the jobs report came in really strong, I bet the markets would be fine today. I mean, they'd probably be down a little bit, but not 1.5%, 1.6% on the S&P. Yeah, your explanation makes a lot of sense, because like I mentioned, this was a very well-telegraphed tariff announcement. And I don't think there were a lot of huge surprises there. Economists, at least from this CNBC article, are saying that this is the slowdown that we've been expecting. Firms are facing a very difficult or different cost structure. They need to adapt to a new cost structure, which means holding off on hiring. So people who are out of the labor force, according to guests I've been talking to, are finding it hard to find a new job, whereas people in the labor force are finding it hard to get a raise. That's the current situation. Do you agree? And I would just love to throw in, the combination of all these cuts on the system or on the psychology of the investor is coming with valuations on stocks basically at all-time highs, right? I mean, the stock market at a forward P.E. of 23 on the S&P, that is very historically rich. And so you have all of these confluence of factors that are spooking markets today. Now, the bigger question is, is this the start of something bigger or not? And let's go into the S&P chart here. I wanna show this to you because I do think this is worth taking note. Look at what's happened here recently. So this is the daily chart of the S&P, and we have the low from October, 2023 to the April 7th, obviously 2025 low, that big sell-off. Now, what I did here, I simply took a line there. You can see I just take that line, each point, connect them, and then drag a parallel up to the highest point right here, and look at what we did yesterday. We gapped up on these earnings. And one of the most important things for me in trading and investing is to notice the price action. And what we see is when you have good news, like we had Meta and Microsoft earnings, great news, the stock market gapped up a mile. And when it can't hold those gains, it tells us that bigger money is dumping. They're dumping into the retail buyers here. And I wanna show one last thing here. If you look at since Monday, Monday we opened higher, we sold off and closed flat. Tuesday gapped higher, went negative. Wednesday gapped higher, went negative. Thursday gapped higher, massive reversal. This is all institutions unloading into retail FOMO. And again, I always try to scream from the top of my lungs to let the retail investor know, but this is a telltale sign that something was going to break here. So is today a buying opportunity? It seems like every time, again, we're not, like you said, it's not just tariffs news, but every time in the past six months, Trump announced a tariff or a series of tariffs, we get a sell off and immediately it bounces back. Even Liberation Day lasted only a couple of days, right? So would you be buying the dip right now? So I wouldn't be buying it yet. Again, in general, I've expected a drop pretty much for the last month or so. So again, we're just starting to see this. So number one, the chart here, if we look at this trend line, you could see this was the beginning. The high here was the beginning of a lot of sideways chop, but eventually the big decline and vice versa. The lows of this were the big rallies. And so, if you look at this as a chart, you would say, okay, you're at the higher end of this parallel, the odds favor more downside. The other thing to keep an eye on here is the data. So right now what spooked the markets is we're finally seeing a significant weakening in the labor market and an uptick in inflation. And I think the key is if all of a sudden, let's say in the coming weeks and months, inflation calms down and the labor market strengthens, markets would probably resume their uptrend. I just don't think that is gonna happen. I think, again, like you just showed from the CNBC article is that you have these new cost structures on companies. Now they have a choice. They either can suck up the tariffs and take the hit themselves. And in doing so, they're gonna have to fire people because that's an additional cost they're taking on, or they pass on that inflation to the consumer and that hurts the consumer, the public anyway. So really there's a no win situation for the consumer one way or the other, whether they take the tariffs and eat them, they're still gonna have to lay people off, which will hurt the consuming public, or if they pass along the inflation. I think that's what we're starting to see. And I know a lot of people have been shocked, even myself, at how long the rally has lasted. I think, honestly, it's just been a delayed reaction. There were so many starts and stops with tariffs. Okay, we'll postpone, we'll do this. But now there's finally starting to soak through the system. And I do think there is gonna be repercussions in the system for that. Yeah, I understand your macro viewpoint. I'm just, if I were a contrarian, I would say, well, Gareth, here is a massive opportunity for a potential upside because Trump has in the past, either tacoed, right, he's pulled out, or he has put the hammer down on a huge tariff number and then later rescinded some of that as a deal with that partner country progresses. And so what we could look at is a potential recovery type scenario where some of these tariffs are taken offline. That would be a big boon to the markets. Would you bet on that? No, and I'll tell you why. It's because we basically know his playbook at this point. You're right, the big tariffs that were announced today, those aren't gonna stick. And I don't think the market expects them to stick. What the market now expects is that every partner, it's 15%. And so we now know that once a deal is done, it's basically gonna be 15%, give or take, and that's where the market is now pricing it in. What the market wasn't pricing in is the labor market weakening and an uptick in inflation. And I think the combination of understanding, okay, 15% hike in tariffs across the board, that is gonna cause a price hike. Now who eats it? That's gonna be the question. But either way, the consumer ends up hurting from it one way or the other. Do you think the Fed is going to cut rates sooner than expected? Well, I think Powell did telegraph maybe a September cut at the last FOMC meeting this week, but I'm wondering if that's gonna be enough to kind of swash the market in and provide a boost here. Yeah, what's so fascinating about this, right? So I looked at the FedWatch tool this morning after the jobs data, and yesterday after, and really after the Federal Reserve came out on Wednesday, the market was only pricing in now one cut, not even in September, just one cut in the whole entire rest of the year. After the jobs data today, it's back to a cut in September with a 67% chance, which is very, very high. And ultimately another cut later this year. So we're back to two cuts because of the jobs data. And so again, the market is swinging towards it. And one thing I can show you here, look at what happened to the 10 year. And so this is telling you all you need to know, right? All of a sudden the 10 year just dove and broke a major support trend line that tells you the economy is now really being recognized as weakening and the Fed is likely to cut rates. A minor note, the Fed does not control the 10 year, the long end, they only control the short end, but they can influence it obviously by different things like cutting rates. And what's interesting to me is, if I can just share my screen real quick before I jump back to your screen, the 10 year breakeven inflation rate, which is a measure of inflation expectations, not actual inflation. Yeah, that's been trending up all year. Recently, they've seen a bit of a pullback, but the overall trend line has been up and kind of flattish. If you take a look at it from a five year perspective. So it's not like inflation expectations have jumped through the moon in the last year, it's still in line with what's been happening since the end of COVID. And I'm wondering how this is gonna eventually translate to consumer sentiment, because consumer sentiment, here's another thing, consumer confidence came out this week and sentiment has improved. A lot of that has to do with the fact that, I guess up until today, people were expecting lower inflation. So I do wonder ultimately what the Fed is going to do. Are they gonna look at the last CPI print, which is lagging data and say, well, we're gonna keep rates where they are? Or are they gonna look at this deteriorating unemployment figure and say, well, eventually the labor market needs help? Yeah, and I think this is gonna put Jerome Powell in a very tight spot. I mean, he was already in a tight spot with President Trump kind of hammering him on social media and really pushing him to cut rates. But now you're getting these signals that the economy is weakening, that's gonna put more pressure on him. But at the same time, he has to kind of toe the line. You don't wanna be the Fed chairman where he knows he's not in office come next May and May, June, right? So he doesn't wanna be the guy that cuts rates aggressively, kickstarts inflation up and gets blamed for that. So he has to walk this fine line and I don't envy him one bit. It is a situation where if it was me, I'd hold strong, because I think inflation is worse than a slowing economy. I think the economy naturally needs to go through business cycles, which are slowing periods and expansionary periods. But listen, it's gonna be interesting to see what happens in September at the meeting. All right, well, in the second half of the interview, let's just walk through each asset class. So we started with the S&P and the broad markets. Let's move on to Bitcoin. Bitcoin took a huge hit today. No surprise there because it's still trading kind of lockstep with the NASDAQ. Any Bitcoin levels you can educate us on at this point after today? Yeah, so let's talk some technical analysis here. So I've been bearish in calling this a bear flag. A lot of people would say, oh, wait, isn't this a bull flag, right? Because you have an up move in sideways consolidation. The reason it is not a bull flag in technical analysis is because you always take the most dominant signal in recent history. That was this candle right here. This is a topping tail. It's a reversal bearish, a bearish reversal signal of price. And so you can see reversal in price this way. And then the consolidation is actually bearish here. And notice how price is breaking down here. Notice by the way, with the stock market as well. So that risk asset factor is playing a role here in bringing Bitcoin to the downside. Now, there is gonna be major, major support. Once you get down to this 111 to approximately 110 level, you can see all of these high pivots right along here before the latest breakout. This is going to be where the bulls need to make a stand on price. It's not far away at this point, only about $4,000 to $5,000 away. But again, that is going to be unbelievably key. Last thing I wanna show you here is an additional trend line I'm watching. It coexists right with that same level. This is so important for the bulls, because again, upsloping trend line, flat top of support, two support levels. As long as the bulls can hold the line here, we're good. If you break this, you're going a lot lower. So watch 111 to 110 on Bitcoin. Okay, gold shot up dramatically. Big move following weeks of consolidation. Let's take a look at what's going on with gold. Yeah, gold has broken a wedge pattern to the downside. It's getting a bounce back here. But what's interesting is that when you break a wedge in technical analysis, that wedge, those two trend lines now become significant resistance. Ultimately, mid to long-term, I think gold is going to four, five, 6,000. But in the shorter term here, over the next three weeks to a month, this is going to be resistance. And you have to understand that price is likely gonna get rejected here. I know that's counterintuitive after what we're seeing in the markets here, but it's not my job to guess on things. It's my job to translate the probabilities in the charts. And this tells me that you should have major resistance around 3,400 or so, and price likely will have one more dip to the downside. My big support level where I'm gonna start accumulating is around 3,140 right here. Pivot high, pivot low. That tells me there's support right in that range. So again, near term, maybe a little uptick in here, but for the most part in the next couple of weeks, I would expect further downside until we get to about 3,140, and then I would start to accumulate. A few other metals charts I wanna bring out just because they've moved a lot. Can you pull up copper? Oh yeah, that's a wild one. Yeah, the premium between the CME and the COMEX disappeared basically overnight in anticipation of a rescinding of tariffs. It went down even further today, probably after the tariff announcement. But a lot of this was just arbitrage taken out from the 50% copper tax that was announced a couple of weeks ago, but I'll let you evaluate this chart. I mean, as a trader, when you're looking at this, this is the COMEX, right? The LME chart doesn't look like this, but this is the US futures. What do you do with this? Yeah, so what's beautiful about this chart is that it actually gave me a guide. I actually went short the copper in this upper range here because of this, and what we can see is that the high pivot from September 2024 connects perfectly here, and look, you hit it here, pull back, hit it here again, and then you collapsed back down. And so I already got out of my short on copper, done with that, now I'm actually eyeing a long on copper as a swing trade, and same methodology here, just find the lows and connect them, and you have this beautiful pivot low from October of 2023 through the April low, and if we get down to about 420 on copper here on this chart, that should be a significant bounce level. So again, remember folks, I don't talk long-term investing, I'm shorter term, I'm a trader, swing trader, day trader, and at that 420 level, we should technically get a bounce. Hmm, interesting, okay, so you would be a buyer of copper now or wait a little bit more? I'm gonna wait a little bit more, I'm a function of my levels, my levels dictate where I make maneuvering, that's the discipline of being a trader. So if it comes down to 420, I buy, if not, I step back and I say, okay, it wasn't meant to be, and I move on to the next trade. By the way, just a technical analysis question, I see this in the comments sometimes, the orange trend line that you drew, that determines the bottom range, right? But if you just change the slope a little bit, your bottom range changes, so how do you decide the slope and the angle of that chart? Yeah, this is where technical analysis is partially a science, but partially an art form. Sometimes you can be wrong, right? Like who's to say the trend line shouldn't be right there and connect through that low and this, and then that would technically be at 428. And so as a technician, there's a couple ways to handle this. One, you could just stick with 420 and say, hey, I'm a player at 420, or you could say, all right, let me divide up my entry price into two lots, meaning that you start a position at 428. And therefore, if it doesn't go to 420 and go to that lower line that I just had before, then you don't miss out on the trade. And then you could always add down there where your dollar cost average would be essentially in the midpoint. And so there are different ways to do this, but you're absolutely right. There's nothing perfect about technical analysis because us humans are drawing the lines. And so while we can be generally accurate, there's always gonna be slight variations where things aren't perfectly aligned. One more metal I wanna show, platinum. I just wanna get your reaction to this chart. It went up like 50% in the last six, seven weeks, recently seeing a bit of a pullback. When something runs up, yeah, when something runs up this dramatic, which doesn't usually happen in platinum's history, and now we're seeing a bit of a pullback, what's your, what do you do with that? Yeah, so the kicker here is usually, and it went up 68% basically from April to July. So that's a huge move on platinum. Usually what you see is this is irrational exuberance once it goes up this high and you'll see a pullback, right? Eventually people start taking profits and that brings it back down. And so when you have a dramatic move, this essentially becomes a flagpole, right? And so you're looking for the pullback off of that to buy. And so for me, what I do right away is I say, okay, well, where is the technical levels? And what you start to see is there's a big zone here. Let me get up a drawing tool here where basically you have this high here, all the way over here down to about, we'll call it down to this area. So 1172 down to about 1090. And once, if price, and I should say if, cause there's no guarantees, but if price were to come back in this zone, I would actually be a buyer of it. I still think long-term with the printing of money, with the US debt, with the global debt, I still think all the metals will eventually go higher. So buy pullbacks on platinum. I actually think platinum and palladium, they are more precious than gold, meaning that they're rarer in the earth's crust, but people obviously don't use them for that. They use them for catalytic converters and such. So, but I do think that rarity element makes them a very attractive way to offset fiat currencies. Interesting. And we'll talk a bit more about that in detail next time. Let's just run through the gamut of the other asset classes that moved a lot today. Oil was down. It was pushing towards 70 bucks. Now it's down to 68. Yeah, 67 actually, 67. There we go. Yeah, what I ended up doing here is, just the other day I shorted oil. I had this trend line right here, which was this former bear flag. We broke below, then we went up. And right there, that told me again, see how it gets rejected there to short oil. So we're in the money. Now it needs to break back down. But the kicker here is you have a couple support levels. You have $60 and then 53. 53 is your ultimate target because that's this bigger parallel here. If I zoom out, you guys can see that we're in this down-sloping parallel. So if we get down to 53-ish, give or take, that should be significant support. But I think what the biggest takeaway is that as soon as the US economy starts to weaken, that's a demand issue. And that is going to likely bring oil down. And so we know again, these tariffs will slow because prices go up, slowing demand. And again, I would expect oil to be trading lower. My target where I probably take profits is around the $60 level. I'm not super aggressive for the 53 at this point. Interesting. All right, the 10-year yield we talked about, 30-year yield as well, both the long end of the curves down. So yeah, we're looking at a big bounce in bonds and yields just tanking. Alongside the dollar, by the way, the DXY is down 1.2%, which is a huge move, single-day move for the dollar index. Yeah, your thoughts on the dollar, Gareth? Yeah, I think the kicker is this. So interestingly enough, the dollar actually broke its downtrend recently. So let me just walk through this. Why is it a downtrend? Well, because you have the highs on this, high, lower high, lower high, lower high, lower high, all the way down and lower lows, right? So what's interesting is here, right over here, we made a low, higher low, high, higher high. And that tells me that again, the trajectory of the dollar in the near term, remember, I'm a short-term trader, is now bullish. Now, it doesn't mean you're not gonna pull back like we see today. We're obviously pulling back because people are now anticipating stimulus and Federal Reserve cutting and all these other things, right? But look at this. You have this classic trend line right through here, which was our little breakout level. And even like a little inverse head and shoulders, you can see shoulder, head, and shoulder, and we've broken out. And so what I would look to do on the dollar is I would say start to go bullish around 98 in the near term. 98, we should get a pullback into that. That's gonna be technical support now, and we should turn back up. I think we go up, not that much. I mean, there's not a lot of upside here, but there's a trend line I've been following right through here at around 100.75. So I think you get a pullback, one more move up to about 100.75, and then I'll have to reevaluate at that point to see what's the next move in the dollar. Okay. All right. And then I think that's all I wanted to cover with you today. If you have any more questions for Gareth, please write in the comments down below. We can ask him for next time. I just wanna finish off on your overall outlook on the assets that we covered today, your most bearish and bullish assets that we've discussed, or maybe something else we haven't discussed. Yeah, so I think that you've seen the semiconductors get way over their skis. We've seen, again, incredible moves. They are starting to correct here. I would say that, again, look for a pullback in that asset class to continue, maybe 10% off of the highs, maybe 15%, then reevaluate. Overall, what I'm looking at is the Chinese stocks are looking very attractive to me down here. The valuations are low. And then again, I'm much more in this environment where the markets are so pricey, I'm looking for what sectors are cheap, and the cheap areas are the drug stocks right now. Obviously, they've been hammered by a lot of what the administration has talked about in terms of pricing. But again, usually from fear comes opportunity. And so I like the dividend that Pfizer pays, for instance, where it's located on the chart. Merck is another one. I would expect those to outperform along with other outside country stocks. Okay, two final questions before we close off. I forgot to ask you when talking about Bitcoin. But if you take a look at my screen here, here's the Bitcoin price chart. The range between 100 to 108 was kind of the consolidating range for almost a month, month and a half. And before we got this big jump up and now, is 115 to 120 kind of the new floor here? Is that one way to look at it? The new ceiling? Yeah, so I would say really the topping tail, the way you view it is, when you have a topping tail in a chart, that high now becomes your break point. So the topping tail rules the roost as a bearish reversal signal, unless price closes above it. So I think that was 123,200. So I would remain neutral to bearish on Bitcoin down to that 110, 111 level and then reevaluate. But if Bitcoin can eclipse 123,200, now you get another bull move likely into the 130s would be your next spike higher. So if you're looking as a bullish bearish signal, that topping tail high is your break point. A lot of people have told me that by the end of the year, we're likely gonna see 200K. I mean, it's already 1st of August, we've got a few months left. It's not impossible, but how would you evaluate the likelihood of that happening just based on technicals? Yeah, so what I've learned is that, my best predictions are shorter term, a few weeks out to a few months out. Whenever you hear people calling for these crazy price targets, it's usually a near a cycle top or a pullback. And so always remember- That's exactly what I told a friend at dinner today. Yeah, yeah, okay. I mean, 2021, look at that. I mean, we were hearing targets of half a million dollars by the end of the year, and it was already October when I did that interview with you, where I said, hey, it's at 68, look for it to come back to 20,000. And it did obviously, but the key is just be aware of that folks out there, just aware that people's emotion tends to dictate these kind of crazy things. In reality, especially with an asset now that is multiple trillion dollars, it doesn't mean it can't double, and I think it will double eventually, but it just can take a little bit more time. There's more money that has to be soaked up to drive it higher. And the final question I have for you, I think people ultimately wanna know if today's announcement on tariffs is gonna be Liberation Day 2.0. Keep in mind what happened on April 1st, we had a drawdown of roughly 12% before things bottomed out and we had a V-shaped recovery. We're now down about 3% from the top, so nowhere near as bad, but is this the beginning of another 12% downturn is what I would be wondering if I were trading. How would you go about analyzing that question? So for me, I look at it like a psychology question, which is that programming for retail investors has been to buy the dip. And so you're gonna see most likely a much slower decline, but I actually think it could be even bigger by early next year, meaning that it's not gonna be this massive flush where we go down in a matter of a week, 10% or so, but much more of a 3% down, 1% up, 3% down, 1% or 2% up type market step down. And I think the buy the dippers are gonna think, this is a no brainer, it's down 5% or 3%, let's buy. And they're gonna look right for a day or two, and then it's gonna go lower. And then we'll say, all right, well, this has to be the bottom and they'll buy in. And I ultimately think the tariffs are not as big of a news. The market has digested that. We went through Liberation Day, we kind of get the whole Trump tariff thing and where things are gonna settle out. Again, it's all gonna come back to the US economy, which is again, remember for these companies in the S&P, they rely on consumer spending. So if you see a slowdown in the economy, how do you justify a 23 forward PE on the S&P? You just can't. And I think that's gonna be the kicker is that that slowly realization will take markets lower over the next six to 12 months. Good stuff, Garrett. Thank you so much for coming on such short notice today. Big day, so we needed you. Where can we learn more from you? Simply at verifiedinvesting.com where it's no BS, just charts and probabilities, folks. Again, I've gotten my early career was spent following crazy predictions like we always hear in the media and on social media. And when I went to the charts, I didn't become a perfect trader, but I became a high win rate trader and that's really the difference maker. So at Verified Investing, that's what I wanna bring to you guys is just probabilities and charts. Let's make decisions off that. All right, put the link down below. Check out Verified Investing Garrett there. Thanks again, Garrett. We'll speak next time and thank you for watching. Don't forget to like and subscribe.