Proflex Market Update - Wk 01

Dear Subscribers,

Welcome to another weekly review of markets as we see market momentum back in action in the new year!!!

Markets Resume Uptrend After Winter Break

The markets have started the new year on a strong note, continuing their uptrend as investors returned from the holiday season. As we highlighted in prior updates, the year-end profit-taking was primarily driven by money flows and portfolio rebalancing rather than changes in fundamentals.

With those adjustments behind us, the market’s focus has shifted back to the AI trade, which has been the driving force for the past two years. Major players like Nvidia and AMD are off to a strong start, regaining momentum and leading the rally. The renewed optimism in AI-related sectors signals that growth in CapEx spending on AI infrastructure remains a significant tailwind for the market.

Bond Yields in Critical Territory

While equities are showing strength, the bond market continues to send mixed signals. The 10-year Treasury yield is hovering around 4.6%, a critical zone.

A move above 4.7% and closer to 5% could spark renewed concerns in equity markets, especially with inflationary pressures still present.

These concerns are amplified by media commentary and expectations of Trump’s tariff policies, which could fuel inflation in the short term. The recent updates though are calming down the market as new reports emerged that tariffs will be much more watered-down as compared to what market has been expecting.

The Dollar’s Strength and Its Market Implications

One factor the market may be underestimating is the dollar’s appreciation since Trump’s election win. A stronger dollar:

1. Deflationary Effects: It helps offset inflationary pressures on imported goods, particularly those subject to tariffs.

2. Impact on Global Revenue: For tech players like Apple, which rely heavily on international markets, the stronger dollar could negatively impact USD revenues.

On the global front, China’s willingness to let its currency depreciate against the dollar to stay competitive adds another layer of complexity. While this is generally positive for inflation control, it could create headwinds for US-based companies with significant overseas exposure. We’ll be closely monitoring upcoming earnings reports and management commentary for insights into how the strong dollar is impacting global tech giants.

Bitcoin Regains Momentum Above $100k

After year-end selling subsided, Bitcoin has surged back above the $100k mark, reflecting renewed enthusiasm as we approach the inauguration of a pro-crypto Trump administration.

2025 is shaping up to be a historic year for crypto, with the US government set to embrace pro-crypto policies for the first time. Industry excitement is building, as expectations rise for regulatory clarity, institutional adoption, and strategic moves like incorporating Bitcoin into reserve assets. This renewed optimism is likely to support the next leg of growth in the crypto space.

Looking Ahead

As the year gains momentum, markets appear well-positioned for continued growth, driven by the AI trade and a promising outlook for crypto and tech sectors. However, bond yields and currency fluctuations remain key risks to watch in the weeks ahead.

We’ll keep you updated on these evolving trends and provide actionable insights as they develop. Let’s make 2025 another strong year for strategic investing! 🚀

Proflex All-Access Continues to outperform the markets

We are thrilled to share that Proflex All-Access has achieved exceptional results for the second consecutive year in 2024, delivering market-leading insights and strategies that have empowered our subscribers to capitalize on extraordinary opportunities. From the AI trade boom to Bitcoin’s historic rally, our timely analysis and actionable recommendations have consistently kept our subscribers ahead of the curve. Beyond delivering returns, we take immense pride in continuing to educate our community on evolving market trends, macroeconomic dynamics, and high-conviction opportunities. Together, we’re building a smarter, more informed investment journey, and we’re excited to carry this momentum into 2025 and beyond!

Best regards,

Raman Bindlish

Editor-in-Chief,

Blockstart Research

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