Tariff-Driven Inflation!
Check out my latest YouTube interview for a quick take on where things are headed.
Gold is trading near an all-time high of $3,250/oz as central banks continue to build reserves and inflation shows no signs of fading. I’ve added a 15% position in a physical gold ETF, anticipating further upside in the precious metals space.
Since April 4, 2025, we’ve seen some dramatic moves:
- 20-year Treasury Bonds have dropped 6.4%
- The U.S. dollar is down 2.9%
- The Swiss Franc is up 8.4%
- The Euro has gained 5.2%
These are significant moves, especially for currencies typically known for their stability. This may indicate that China is selling U.S. debt in response to the 145% Trump tariffs. If that’s the case, big money is shifting away from America, seeking new trade partners for their goods.
If these tariffs remain in place, prices in the U.S. could continue to rise, contributing to tariff-driven inflation. That means Trump may need to find ways to stimulate economic growth to offset rising costs.
The Federal Reserve is in a tough spot. If they lower rates or increase the money supply, it could worsen inflation. Between September 16, 2024, and January 13, 2025—just 81 market days—the Fed cut the Fed Funds Rate by 100bps (18.6%), but the 10-year Treasury yield rose 110bps (32%). That’s a clear message from the bond market: don’t fight inflation with rate cuts.
The bond market is massive, and it’s signaling concerns. With $9 trillion of the $37 trillion U.S. national debt due for refinancing this year, bond investors are demanding higher yields. Currently, interest payments on our debt are around $3 billion/day, but tariff revenue only brings in about $2 billion—a big gap to close. Maybe Trump will start looking at creative options like privatizing national parks to raise cash.
On the bright side, key tech items—smartphones, servers, chips, solar panels, and TVs—were exempted from the 145% Chinese tariffs. That could offer some relief for markets in the short term.
I’m watching for a Follow-Through Day (FTD), a 1% index gain on higher volume, at least four days after a rally attempt. While not a green light to go all in, it’s a strong signal that institutional investors may be returning to growth stocks. Once we get that, I’ll turn to my watch list (below) for potential buys.
Despite all the uncertainty, we’re on the verge of a great opportunity. When the time is right, I’ll be ready. Grace & Peace to You and Your Loved Ones!
Watch List: ADMA, BOW, BRBR, EAT, EHC, GEV, IBN, LOAR, LRN, PAAS, PLMR, PLTR, ROL, RYAN, SFM, SKWD, TGTX, TKO, WGS.
Those who trust in the Lord will renew their strength; they will soar on wings like eagles; they will run and not become weary; they will walk and not faint. Isaiah 40:31
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Dexter Lyons, Portfolio Manager
337-983-0676, ChristianMoneyBlog.net
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Actively Managing Risk Since 1990!