Weekly Market Update: One Rule for Thee

The fiat circus is crumbling

Step right up to the greatest economic spectacle on Earth, where President Trump, the ultimate ringmaster, juggles fiery tariffs and ballooning government debt under a global spotlight. 

The U.S. economy is a high-wire act: Q2 GDP dazzled at 2.5% growth, yet a dismal jobs report sent the dollar tumbling as recession fears grip the markets once again. 

The Federal Reserve, stubborn as ever, holds rates steady and higher for longer, while the M2 money supply inflates like a cartoonish bouncy castle, defying a frozen housing market and exhausted consumers. Banks, like sly magicians, keep deposits flowing, propped up by government cash injections that pump hot air into this surreal show.

In the main event, Trump’s tariffs crack like a whip across the BRICS nations, aiming to hobble their economic swagger. Russia faces a staggering 500% energy sanction threat, China juggles 150% tariff talks, Brazil gets hit with a 50% sledgehammer, South Africa stumbles under 30% and India tap-dances around a 25% hit. 

But Trump’s no amateur showman – his tariffs are a sleight-of-hand. For example, Brazil’s tariffs spare over 60% of its exports, including everything from energy to orange juice, while coffee, sugar and beef will have no trouble finding new buyers. 

South Africa’s platinum and pharmaceuticals dodged the blow, and India’s semiconductors and drugs slipped through unscathed. It’s calculated chaos, designed to disrupt without collapsing the global stage!

Yet the plot thickens. Just when the world breathed a sigh of relief for tariff certainty, Trump has again escalated tensions with India, accusing them of profiting from Russian oil sales amid the Ukraine conflict and threatening to substantially raise tariffs.

India quickly fired back, exposing mindblowing hypocrisy citing that Russia is still the largest supplier of enriched uranium for the U.S. nuclear program. Talk about ‘one rule for thee and another for me’! 

This tariff circus has truly unleashed chaos – retaliation still brews as U.S. consumers brace for wallet-gouging prices and exporters try to dodge the flying knives of this absurd act.

Amid this madness, where Trump fires the Commissioner of Labor Statistics over unfavorable data and trades playground insults with nuclear rivals on social media – like some Cold War era nightmare –  the fiat dollar’s shine continues to fade. 

Since abandoning the gold standard in 1971, the U.S. dollar has already lost 98% of its value, drowned in a system of excesses and weaponized policy. It appears that the fiat circus is crumbling.

Step out of the fiat circus and enter into the world of crypto, where digital assets steal the show. Bitcoin guards your wealth like a lion tamer’s whip, immune to out-of-control money printing. Stablecoins zip across borders with trapeze-like grace, bypassing the chaos of trade wars. 

Now is the moment that self-sovereignty comes into the spotlight, as the new digital economy takes center stage.

Market sentiment has dropped back to: Neutral

Crypto market moves:

• Despite a volatile week in the markets with Trump tariffs taking effect, Bitcoin showed remarkable resilience touching just below $112k before recovering to close the week over $114k, holding the previous $112k breakout level as key support.
• Ethereum recorded $238 billion in on-chain volume in July, +70% MoM increase and its highest since December 2021.
• Bitcoin ETF inflows were relatively muted last week, for a second week in a row, until a deep sell off on Friday.
• Bitcoin RSI key momentum indicator has held above the ‘bullish’ 70 level despite the correction & consolidation.
• BTC dominance is back at 61% as ETH : BTC ratio holds above 3% – showing relative Altcoin strength and appetite for a rally.
• Total crypto market cap dropped to $3.7 trillion as liquidity was drained from leveraged positions and speculative Altcoins, but is slowly trending back up again.
• The Fear and Greed index dropped back into Neutral territory as the bulls grapple to remain in control.
• The big winner of the week is LTC (Litecoin) +12.1%, as it shows some signs of life after months of sluggish performance.
• The big loser of the week is BONK down -18.3%, winning this title for a second week.

View all top gainers: Visit the top gainers page to find out more.

Highlights from the crypto space

The crypto markets were not exempt from the chaotic end to last week as Trump tariffs took effect, culminating in a sharp sell-off across the board! Bitcoin held up better than most large cap Alts and has led a recovery rally into the new week.

Strategy (MSTR), the largest corporate holder of Bitcoin, posted Q2 operating earnings of $114 billion beating estimates. Michael Saylor then filed to raise a further $2.4 billion, the largest U.S. initial public offering this year, to buy another 21,000 Bitcoin,

Robinhood posted Q2 revenues that beat Wall Street estimates, with a notable mention of the contribution from their new cryptocurrency trading service.

According to a Deloitte’s Q2 survey, 99% of Chief Financial Officers at billion-dollar firms are expecting to use cryptocurrency for business in the long term.

The White House released their first cryptocurrency report mid-last week offering a detailed framework for regulators and legislators to execute President Trump’s pledge to usher in a ‘golden age’ for digital assets – but to the disappointment of the markets, there was no mention of any further plans for the digital asset stockpile.

The SEC decided to allow certain cryptocurrency exchange-traded products (like ETFs) to use “in-kind” creations and redemptions.

This means investors can swap their crypto assets directly for shares in the ETP, or vice versa, instead of using cash – which makes trading these crypto funds more efficient and potentially cheaper.

SEC Chair Paul Atkins also clarified his position that “most crypto assets are not securities,” announcing “Project Crypto,” an initiative to modernize the agency for the digital finance age. Great news!  

The iconic statue of Bitcoin creator Satoshi Nakamoto in Lugano, Switzerland was reported stolen on Saturday, but has since been recovered by Satoshigallery, the art collective responsible for installing the statue.

In other crypto news…

• Ethereum celebrated its 10th birthday last Wednesday, with renewed institutional momentum fueling hopes of an all-time high in coming months. Let’s see!

• Coinbase has announced plans to launch tokenized stocks and predictions markets for U.S. users in coming months.

• Coinbase has also launched a new U.K. musical ad that is causing quite a stir!

• JPMorgan Chase customers will be able to connect their bank accounts to their Coinbase wallets from next year, strengthening the ties between the crypto and TradFi.

• Despite numerous reports on social media, Chinese regulators have not made any new announcements regarding their cryptocurrency ban and regulations in recent months.

• President Trump is expected to sign an executive order that targets banks that have ‘discriminated against businesses’ including crypto companies.

• Solana co-founder Anatoly Yakovenko said, “We need cryptography because the only thing that AI can’t generate are cryptographic signatures.” Amen to that!

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🌎 Macro news TLDR: The world doesn’t need a trade dictator

Trump tariffs took effect on Friday sending shakes and shivers through the markets!

Many tariffs were higher than expected, including for NZ, but finally gave some sense of temporary relief and certainty – at least until the next feud or flare up. 

Before Trump’s first term tariff upheavals in 2018, the U.S. last flexed broad global tariffs in 2002 under George W. Bush – citing national security and slapping up to 30% duties on imports – sparking a global outcry and retaliation that saw them repealed that following year.

This was a rare protectionist blip in a post-WWII era dominated by trade liberalization through GATT, NAFTA and the WTO, which slashed tariffs to promote globalisation.

Trump’s latest trade war has ignited a new level of chaos and uncertainty, as manufacturers are scrambling and supply chains are beginning to choke.

Take copper for example: a rumored 50% tariff sent prices soaring, only to crash more than 20% in one day when Trump clarified that the tariff exempted finished products.

This level of unpredictability disrupts commodity cycles, stifling investment into exploration and production and risking either significant supply bottlenecks or skyrocking price shocks. 

The short sightedness of U.S. tariffs, aimed at rising short-term liquidity to finance ballooning government debt through a period of stubbornly high interest rates, threatens three decades of globalization’s gains, polarizing trade and straining alliances. 

Our post-Covid world needs balance, open markets and strategic nationalism to stabilize a teetering global economy – not an economic own goal!

Economic news from the Americas

In a decision marred by controversy, the Fed held rates steady again, stating that whilst tariffs added inflationary pressure on some goods the broader impact still remains unclear – and no decisions have yet been made regarding the September meeting.

Expectedly, President Trump waged war on Fed Chair Powell saying “each point costs us $365 billion and it’s all because of the Fed.” And Treasury Secretary Bessent went on to confirm that a replacement Fed Chair has been shortlisted.

Powell was redeemed somewhat by the Q2 GDP results showing the U.S. economy grew by +3% and better than the 2.3% estimate, reversing a 0.5% decline in the prior period. Is the much anticipated U.S. recession well and truly in the review mirror?

Not so fast! When the Bureau of Labor Statistics reported job market results on Friday, the narrative quickly collapsed as the U.S. added just 73,000 new jobs in July, well below expectations – and only added 19,000 jobs in May and June, rather than the 291,000 jobs initially reported. 

President Trump responded by firing the Commissioner of Labour Statistics.

This news, on the day that the U.S. tariffs took effect including some higher than expected for key trading partners, sent the markets into a sharp sell-off shedding $1.1 trillion in a few hours!

The stock market recovered most of the losses in early week trading – and CME FedWatch is now showing a >90% chance of rate cut in September.

On the lighter side, President Trump demanded an investigation into Nancy Pelosi for insider stock trading, saying “You know, Nancy Pelosi became rich by having insider information… She has the highest return of practically anybody in the history of Wall Street, save a few.”

Over in Europe & the Middle East…

Eurozone GDP rose just 0.1% in Q2, down from 0.6% in Q1, as Germany and Italy slipped into contraction. Spain led growth at 0.7%, while France surprised with 0.3% growth

Oil prices slipped on Monday after OPEC+ agreed to another large production hike in September, raising oil production by 547,000 barrels per day, as concerns mount over potential supply disruptions linked to Russia.

President Trump ordered the repositioning of two U.S. nuclear submarines to “appropriate regions” as he grows increasingly frustrated over stalling Russia-Ukraine peace talks and following a spat with Dmitry Medvedev, Moscow’s military leader and former president.

And in Asia Pacific…

The U.S. threatened China with even bigger tariffs if they continue to purchase sanctioned Russian oil – Beijing rejected the demands prioritising energy sovereignty. The 12 Aug deadline looms for a U.S. trade deal with China.

President Trump took a sharp jab at India and Russia last week, saying that the two nations could “take their dead economies down together” – revealing 25% tariffs on India and unspecified penalties if they continue to buy Russian oil.

The Reserve Bank of Australia will likely cut the official cash rate 3 more times this year after a favourable inflation print for the June quarter showed an annual CPI increase of 2.1%, down from 2.4 per cent.

In NZ, the housing slump continued in July as stock levels remained uncomfortably high – and the number of non-performing housing loans are still climbing.

Consumer confidence remained weak in July, as the index slipped 4 points to 94.7, and inflation remained “front of mind” for households. The Government is still promising “relief is on its way.” 

Adding to the pain, President Trump surprised with a higher than expected 15% tariff rate on NZ exports and other countries with a current trade surplus – putting NZ exporters at a disadvantage to AU and the U.K. who retained 10%.

New Zealand’s jobless rate hit a 5 year high in June, rising from 5.1% to 5.2% – StatsNZ said unemployment was up 11.1% to 158,000 people, with an additional 16,000 searching for a job. The only silver lining here is an increased chance of further OCR cuts in Aug.

That’s a wrap for this week!

Please note: we won’t publish a newsletter next week due to the CryptoWinter conference – please stay tuned for the next weekly newsletter on Wed 20 Aug.

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