The Federal Reserve and Trump have completely fallen out, ushering in the most turbulent moment for US stocks?

Powell has really laid his cards on the table this time. Last night's Fed speech directly pitted Trump against the central bank, with one core message: You handle your trade war, I'll manage monetary policy, and the fate of U.S. stocks is not my concern. What does this rare public rift signify? Simply put—markets will now face not just economic data volatility, but policy fragmentation stemming from the clash between two power centers.

First, let's examine Powell's stance. His willingness to confront Trump stems from the Fed being backed into a corner. With its balance sheet ballooning to $6.7 trillion, inflation retreating from peaks but core PCE stubbornly hovering at 2.8% (far above the 2% target), and the Treasury market resembling a powder keg (10-year yields nearing 4.5%, 30-year mortgage rates back above 7%), premature rate cuts could trigger another bond selloff. Powell's priority is clear: Save Treasuries to save the dollar system. As for stocks? Good luck.

But will Trump concede? His recent moves tell the story: Slapping 100% tariffs on Chinese EVs (up from 25%), 60% on semiconductors, and 50% on solar panels—this isn't trade policy, it's political warfare. More alarmingly, his proposed "Mar-a-Lago Accord" targets the Treasury market itself, floating taxes on foreign bondholders and even delisting Chinese ADRs. The contradiction is glaring: Protecting manufacturing via tariffs while maintaining dollar hegemony; begging foreign capital to buy Treasuries while accusing them of exploitation. It's wanting all the benefits without sharing any crumbs...

This policy rupture creates three market threats. First, a liquidity crunch—the Fed holds rates steady while Treasury floods markets with debt (Q1 issuance surged YoY). Second, earnings collapse—over two-thirds of S&P 500 firms now cite tariffs as a risk, triple 2018's level. Third, valuation chaos—Nasdaq 100's forward P/E remains lofty despite 2%+ real Treasury yields, a divergence seen only three times in 20 years, each preceding stock crashes.

Sector-wise, semiconductors are bleeding. Nvidia faces major H20 chip export revenue losses, AMD's MI308 chips are compromised (both stocks down >15% from highs). Worse, ASML's China orders plummeted, forcing 2024 revenue growth guidance cuts from 15% to 10%. The takeaway: Tech's "globalization dividend" is vanishing, yet valuations ignore this.

So how to trade? Shelly's playbook: 1) Reduce beta—keep Nasdaq 100 exposure below 40% (high-PE growth stocks suffer most in uncertainty); 2) Focus on tariff-proof hard assets like U.S. energy/defense stocks (backed by government contracts); 3) Hedge with gold—its resilience despite Fed hawkishness signals crisis pricing.

Powell's defiance proves the Fed prefers market chaos over compromised policy. For retail investors, this isn't a dip-buying moment—true opportunities emerge only when these titans exhaust themselves. In power struggles, the first casualties are always misaligned capital.$Tesla(TSLA.US) $NVIDIA(NVDA.US) $Dow Jones Industrial Average(.DJI.US) $NASDAQ Composite Index(.IXIC.US) $NASDAQ Composite Index(.IXIC.US)