China Trade Deal And Rate Cuts Will Send Markets Higher

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To investors,

Asset prices love responding to market catalysts. Sometimes catalysts are telegraphed and other times they come as a surprise. Take the Federal Reserve’s planned meeting on Tuesday and Wednesday this week.

Every investor knows it is coming. It has been marked on calendars all year. Most investors expect the central bank to cut interest rates. In fact, Polymarket is currently showing a 98% chance of a 25 basis point cut.

Asset prices like cheaper capital because investors push further out on the risk curve. Lower rates signal a continued tailwind for stocks and bitcoin. And it is not just the Federal Reserve’s monetary policy decisions that matter in this regard.

Bitwise’s André Dragosch writes “the number of global rate cuts [in the] past 24 months is already higher than after Covid but bears still think bitcoin has already peaked.”

It is crazy to see 312 interest rate cuts around the world over the last 24 months when you realize the Fed’s interest rate is still set at 4% or higher. There is a lot of room to go for America’s central bank to bring rates back down to 1-2%.

But the interest rate cuts this week are only part of the story. Everyone knows those cuts are coming, but what we didn’t know until this weekend was how likely a US-China trade deal was.

Treasury Secretary Scott Bessent did the media rounds Sunday morning and wanted to make sure the world knew a trade deal is coming. Bloomberg writes:

“Top trade negotiators for the US and China said they came to terms on a range of contentious points, setting the table for leaders Donald Trump and Xi Jinping to finalize a deal and ease trade tensions that have rattled global markets.

After two days of talks in Malaysia wrapped up Sunday, a Chinese official said the two sides reached a preliminary consensus on topics including export controls, fentanyl and shipping levies.

US Treasury Secretary Scott Bessent, speaking later in an interview with CBS News, said Trump’s threat of 100% tariffs on Chinese goods “is effectively off the table” and he expected the Asian nation to make “substantial” soybean purchases as well as offer a deferral on sweeping rare earth controls. The US wouldn’t change its export controls directed at China, he added.”

So what should we expect to happen if the US-China trade deal gets announced? Jordi Visser explains how bullish it should be for stocks and bitcoin:

Investors like certainty. They want predictability. If they get clarity in the US-China trade negotiations, markets are going to take off higher. Don’t believe me? Scott Bessent’s commentary from the weekend has already sent stocks and bitcoin inching higher as investors anticipate the big trade deal confirmation.

See here is the thing people don’t want to admit: the world operates in the middle of extreme positions. It is true that US and China are locked in economic competition. They both wish they could decouple. But that is not reality. These two countries depend on each other. So the trade deal is going to get done.

And markets know this. The market also knows rates are going to come down and the government will never stop printing money. Each of these three things are bullish for stocks and bitcoin.

But I do have one surprise for you. Gold’s explosive move in the last few months probably signals we are unlikely to see further price appreciation through the end of the year. In fact, we are already seeing gold sell off over the last two weeks and I think that could continue for the rest of 2025.

In that scenario, Bizyugo points out the bitcoin mania started in 2020 when gold peaked.

There is no guarantee we will see a repeat of 2020, but the macro environment is setting us up almost perfectly. I would be surprised if bitcoin didn’t run into the end of the year. And stocks will be side-by-side the digital currency.

The S&P 500, Dow and Nasdaq are all at record highs. Things in motion stay in motion. And I am guessing the party is just getting started.

Hope everyone has a great start to your week. I’ll talk to you tomorrow.

- Anthony Pompliano

Founder & CEO, Professional Capital Management

Proof That Bitcoin & AI Are Going Much Higher

Jordi Visser is a macro investor with over 30 years of Wall Street experience. He also writes a Substack called “VisserLabs” and puts out investing YouTube videos.

In this conversation, we cover Tesla’s robo-taxis, inflation, interest rates, and the U.S.–China trade dynamic. Jordi also shares how he’s positioning his portfolio, and what Bitcoin, gold, and market psychology reveal about where investors are headed next.

Enjoy!

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