Proflex Market Update - Wk 04

Welcome back to weekly review of markets as new era of Trumponomics take effect this week.

A Historic Moment in U.S. Leadership and Its Implications

As markets remain closed today in observance of Martin Luther King, Jr. Day, we are witnessing a transformational moment in U.S. economic and political history. With Donald Trump taking office again, the pendulum has swung sharply to the right, signaling a potential new era for the economy, markets, and geopolitics. Let’s unpack what this means for investors and how we can navigate the shifting landscape.

Trump’s Crypto Era: Memecoins, Frenzy, and a New Paradigm

One of the most controversial developments in the lead-up to Trump’s inauguration has been the launch of memecoins in his name, creating a frenzy in the crypto world. While the crypto community is divided on whether this sets a dangerous precedent, it’s undeniable that this administration signals a new reality for digital assets:

• Trump-Backed Crypto Projects: From Trump NFTs to DeFi initiatives and now memecoins, the president-elect has embraced crypto projects publicly, legitimizing an industry that was once on the fringes of the financial system.

• Funding by the Crypto Lobby: Trump’s campaign and policy direction have been visibly influenced by crypto lobbyists, marking a stark departure from the Biden administration’s “hawkish” stance.

• Open Transparency: Critics argue about the moral implications of such projects, but it’s important to recognize that this graft is happening transparently in open-source markets, unlike behind-closed-door activities that often misuse taxpayer funds.

• A New World: With the incoming administration validating memecoins and digital assets, the era of “meme economics” has begun. As investors, the key takeaway is that crypto projects have now entered the mainstream—and this shift cannot be ignored.

Optimism in the Stock Markets: A Tech-Focused Future

Trump’s return to office has brought renewed optimism to the stock market, particularly in the tech sector. Supported by a coalition of major tech leaders and lobbyists, Trump has promised 100 executive orders in his first days in office. This is expected to bolster tech investments and regulatory support for AI and digital innovation.

• Tech Rally Expectations: The anticipation of a tech-friendly administration has already driven optimism in AI trade leaders like NVDA, AMD, and META.

• Executive Orders Awaited: The market is watching for details of the executive orders, many of which are rumored to focus on deregulation, tax incentives, and infrastructure spending to support growth.

AI Trade Momentum and Earnings on Deck

The market’s near-term focus remains on AI-driven earnings announcements from key players in the tech sector. This will provide insights into:

1. Sustained AI Capex Growth: Investors are watching for updates from hyperscalers on their spending plans.

2. Tech Stock Momentum: Earnings will confirm whether the recent optimism has staying power.

Bond Yields Retreat, Peak Pessimism Reverses

Last week, bond yields surged, reaching peak levels of pessimism. However, this created an excellent buying opportunity, as we highlighted in our special update to All-Access members.

• Economic Data Stabilizes: Inflation data came in line with expectations, easing fears of a runaway inflation scenario.

• Deflationary Tailwinds from Tech: We’ve maintained our view that technology—especially with the rapid adoption of AI—will act as a deflationary force over the next decade.

• Bond Yields Retreat: With yields pulling back from their peaks, risk assets, including stocks, have started to recover.

Opportunities in a Changing World

The combination of Trump’s tech-friendly policies, the stabilization of bond yields, and the continued momentum in AI and crypto provide a solid foundation for 2025. However, investors must remain vigilant for short-term volatility, especially as the market digests the implications of the administration’s early actions.

We believe in the strong growth potential of technology and digital assets and continue to see opportunities across these sectors. As always, stay tuned for actionable insights and updates as we navigate this pivotal period together.

Let’s make 2025 another successful year! 🚀

Best regards,

Raman Bindlish

Editor-in-Chief,

Blockstart Research

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