Taleb Warns of Bigger Market Crash

FINANCE
Taleb Warns of Bigger Market Crash

Nassim Taleb, author of The Black Swan, warned that markets should brace for an even worse shock after Nvidia’s record $589 billion stock collapse, triggered by fears over DeepSeek’s low-cost AI. The Nasdaq fell over 3%, highlighting the market’s fragility.

Taleb believes this is just the beginning of a major economic adjustment, as AI disrupts tech valuations and exposes market overreliance on a few stocks like Nvidia. He compared the situation to past tech shifts, where early leaders often lost dominance, like Alta Vista’s fall to Google.

Asked if another crash could happen, Taleb predicted a drop “two or three times bigger” remains possible. He has long warned that markets are at their most fragile point in 20-30 years, driven by overconfidence and dependence on low interest rates. The Nvidia crash, he argues, underscores the risks of excessive speculation and concentrated wealth in a few tech giants.

FINANCE
Trump’s Tariffs Hit Global Automakers

Shares of major automakers plunged on Monday after President Donald Trump imposed new tariffs on goods from Canada, Mexico, and China. The 25% tariffs on Mexican and most Canadian goods, along with 10% duties on Canadian energy products and Chinese imports, take effect Tuesday.

Trump acknowledged Americans may feel “some pain” but justified the tariffs as necessary to combat illegal immigration and fentanyl trafficking. In response, Canada and Mexico threatened retaliatory tariffs, escalating fears of a trade war.

Auto stocks suffered heavily, with Toyota and Nissan down over 5%, Honda falling 7.2%, and Mazda dropping 7.5%. Kia Motors lost 6%, while Renault and Stellantis fell by 2% and 6%, respectively. Germany’s Volkswagen, Porsche, and BMW also declined.

The European Union may be Trump’s next target, worsening Germany’s economic struggles. Volkswagen, Mercedes-Benz, and BMW have already issued profit warnings, citing weak demand in China and economic uncertainty.

ECONOMY
China May Devalue Yuan Over Tariffs

Unlike Canada and Mexico, China has yet to announce retaliatory tariffs after President Donald Trump’s new levies. Instead, Beijing may use currency devaluation as a strategic response, according to former IMF adviser Josh Lipsky.

While Mexico and Canada face 25% tariffs—with Canadian energy hit at 10%—China’s 10% duty is on top of previous tariffs imposed during Trump’s first term. Canada and Mexico retaliated immediately, but China has remained vague, opting to file a WTO complaint while considering “corresponding countermeasures.”

China’s central bank controls the yuan’s value, allowing it to absorb tariff costs by devaluing its currency. The yuan recently hit 7.3 per U.S. dollar, signaling possible further devaluation to boost exports.

China’s economy is less dependent on U.S. trade than Canada and Mexico. With exports making up just 37% of GDP, Beijing has shifted trade towards the EU, Mexico, and Vietnam, reducing its reliance on U.S. economic policies.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.