And there it is, right on cue.

Is this the mini-panic I referred to last week? A big ‘Buy the Dip’ moment?

Here’s what happened.

Trump’s tariff tantrum wiped ~US$2 trillion off markets in a single trading session on Friday.

A lone Truth Social post threatening ‘massive’ new tariffs (roughly 100%) on Chinese goods sent the S&P 500 tumbling ~2.7%.

It’s the worst day since April’s so-called Liberation Day selloff.

The tech-heavy Nasdaq sank ~3.6% as China-exposed giants took a hammering.

Nvidia plunged nearly ~5%, AMD got crushed by ~8%.

But here’s what’s fascinating about tariff theatre.

And why my ‘market rip through to 2026’ thesis from last week is still well and truly in play.

This latest escalation follows Beijing’s decision to tighten rare earth export controls.

China announced that foreign entities must now secure individual licenses to export products using Chinese rare earths, with military applications flatly denied.

Since China controls roughly 70% of global rare earth supply, this gave Trump a reason to threaten retaliatory 100% tariffs plus software export restrictions.

Hmmm…chips vs. critical minerals, who will win?

The immediate carnage reveals something crucial about how markets now process tariff risk.

Rather than viewing them as simple consumer taxes, traders increasingly see them as market reshuffling mechanisms.

Some sectors crater while others benefit from supply chain diversification and domestic preference.

Tellingly, the dollar actually weakened on Friday’s tariff news.

While gold surged over ~1.5%.

So markets are pricing tariffs as potentially backfiring on the US more than their intended targets.

Is this a sequel? I swear I’ve seen these market actors before…

Tariff Meltdown Part Two: Two Tickers Say This Time It’s NOT Different

The chart below tells a compelling story about how institutional money is positioning.

Both [SPY] and [QQQ] put volumes have surged to levels not seen since April’s capitulation. Puts are options to sell at lower prices and are often used to hedge.

With ‘capitulation-level volume coming in, highest since April bottom’ clearly marked on the SPY display:

Source: Macro Charts

Here’s what’s happening with SPY…

SPY represents the SPDR S&P 500 ETF liquid exposure to the entire US market.

SPY puts give you the right to sell this broad index at a set price, regardless of how far it might crater.

The surge in SPY put buying signals institutional money is hedging systematic risk across the whole market.

Friday’s action saw massive volume in near-term puts as traders scrambled for immediate protection against further tariff-induced chaos.

Now for QQQ…

QQQ tracks the Nasdaq-100, dominated by mega-cap tech names with heavy China exposure.

QQQ puts serve as targeted protection against growth stock carnage and supply chain disruption.

The dramatic spike reflects specific anxiety about how tariff escalation hammers companies dependent on Chinese manufacturing.

Put options accounted for over 58% of QQQ’s daily volume on multiple recent sessions.

Deep out-of-the-money ‘disaster puts’ have been particularly active, with traders paying premiums for crash protection rather than mild pullback insurance.

So, should you be worried?

I don’t think so just yet, and it all comes back to the people that really run the market: central bankers.

Madman Theory: Two Central Banks
Enter, One Leaves

Here’s where the contrarian thesis gets compelling. The Federal Reserve still has significant firepower, with rates sitting at 4.00-4.25% after September’s .25% cut.

Meanwhile, Trump’s tariff posturing increasingly resembles his first-term negotiating playbook.

This is the ‘madman theory’ approach, ultimately creating uncertainty about his true intentions.

Announce dramatic tariffs, let markets panic, then offer last-minute reprieves in exchange for concessions.

Is this a capitulation by the US, and is China winning?

Well, things aren’t exactly all roses out East.

China’s central bank might arguably have less ammo than the US Fed.

This is the chart to watch over the next year:

Source: Trading Economics

The Chinese central bank (PBoC) has repeatedly dropped Reserve Requirement Ratio cuts since mid-2021, injecting more cash into their economy and supporting global liquidity.

This means that even if the market prices the US as losing this latest confrontation, the US may have the (semi) last laugh in the US-China rate cut ThunderDome.

For a simple reason: the US Fed can inject more liquidity into the market than the PBoC.

Which leads me to this conclusion…

This looks like a buy-the-dip moment to me.

I could be wrong — we could be headed to total market Armageddon.

I certainly hope not.

Or…central bankers and politicians will do everything they always do.

The Fed has more monetary ammo, Trump has his tactical playbook, and both will likely be deployed to prevent lasting damage to the world’s largest consumer economy.

Like I said last week — you really ain’t seen nothing yet.