Senior Trump administration officials reaffirmed their commitment to tariff measures over the weekend, dismissing investor concerns about inflation and recession risks. 

Treasury Secretary Steven Mnuchin emphasized no justification for pricing in an economic downturn, while Commerce Secretary Wilbur Ross signaled impending tariff implementations. 

These statements amplified market anxieties ahead of Monday’s opening, triggering significant volatility across asset classes.

Global Market Reactions on Monday Morning

Equities: U.S. index futures plummeted sharply on Monday morning, with S&P 500 futures once down 4%, Nasdaq futures dropping over 5%, and Dow Jones futures declining nearly 4%. Three index futures losses are narrowed as of 06:55 am ET (1:58 pm in Riyadh).

Volatility: The VIX Index Futures once surged 18%, reflecting heightened investor apprehension.

Commodities: WTI Crude Oil briefly fell below 60 dollars per barrel, its lowest since April 2021, while copper futures tumbled 8.2%, and silver was down 2%.

Currencies: The yen rose over 1% as a safe-haven asset, while the Australian dollar depreciated 1% against the USD. Bitcoin briefly dipped below $77,000.

Policy Expectations and Analyst Warnings
Market participants increasingly anticipate aggressive Federal Reserve rate cuts, with federal funds futures pricing in 120 basis points of easing in 2024. 

JPMorgan analysts project sustained cuts extending to early 2026. Prominent figures like Jim Cramer and Bill Ackman cautioned about parallels to historical crashes, with Ackman speculating about potential tariff delays to avert economic contraction.

On Saturday, senior market commentator and CNBC host Jim Cramer stated that the market may repeat the "Black Monday" crash of 1987, when the market first fell for three consecutive days, with a drop of 3.81% on October 14 (Wednesday), 2.39% on October 15 (Thursday), and 4.6% on October 16 (Friday), followed by a weekend leading to a single-day crash of 22% known as "Black Monday."

 

Renowned hedge fund manager Bill Ackman expressed that he would not be surprised if Trump announced a delay in implementing tariffs to allow more time for an agreement when he wakes up on Monday. The risk of not doing so is that a significant increase in uncertainty could lead to an economic recession, potentially a severe one.

Investor Guidance for Volatile Conditions

• Emotional Discipline: Avoid reactive decisions driven by fear or greed; maintain objective analysis of market fundamentals.
• Opportunistic Positioning: Identify undervalued sectors or defensive assets during corrections.
• Strategic Patience: Adhere to predefined investment plans with clear entry/exit rules to navigate uncertainty.

Hedging Tools for "Offense and Defense" Strategy
Key Instruments for Major Indices

Selection Criteria:

• S&P 500: Top 6 largest ETFs by assets (bullish) + top 5 inverse ETFs (bearish).
• NASDAQ/Dow: Top 3 leveraged bullish and bearish ETFs.
• VIX: Top 5 ETFs by assets.

This framework enables investors to tactically balance risk exposure while maintaining flexibility during periods of heightened uncertainty. The inclusion of multi-leverage instruments provides scalability for varying risk appetites.

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