Friday’s Bump or Slump

The turbulence on Friday October 10th, 2025 is just another reminder of market information being readily available for retail investors like you and I. All of that technical analysis is meaningless when Trump sends out a new tweet sending the markets into a frenzy lol. 😅 

On Oct. 10th, 2025 at exactly 10:57AM, the market went into blood red all over. The S&P 500 slumped 2.7% and NASDAQ dropped 3.6% while the Dow lost 1.9%. Today’s black swan cancelled out nearly 2 weeks worth of growth.  

Historically, US stock market corrections come fast and quick usually giving us a very short time frame to react. However, market corrections are part of the game as we cannot predict the future; hence, hindsight is always 20-20.  

I’d argue this slump isn’t too bad if you look at it from a different perspective. In other words, if you retreated too early you could have also hurt your gains. But then again, the gains on top of your initially invested principal isn’t really yours to begin with if you never sold for profit.  

Let’s use tech darling Nvidia as an example. The stock dropped 4.91% on Friday’s close, but if you look closely that is about the same price as it was on Tuesday’s close. This means if you went in on Nvidia before Tuesday, then you didn’t really hurt your principal. The only “issue” you’d have is being undecided to let it go due to Friday’s black swan event. I think this creates an interesting dynamic… retail investors used to be at a disadvantage due to information/time lag, but now we all have the technology on our fingertips yet we react and process the information differently.    

So what caused today’s black swan event and when is Trump going to TACO…again?

The Ministry of Commerce of China (MOFCOM) published Announcements 61 and 62 regarding rare earths export controls on Oct. 9th, 2025 (Thursday) Beijing time.

This isn’t the first time China has sanctioned restrictions but this time around these 2 announcements widened the coverage of export controls. The regulations require foreign companies to get special approval to export items that contain even small traces of rare earth elements sourced from China. Beijing will also impose permit requirements on exports of technologies related to rare earths mining, smelting, recycling and magnet making.

For example, if a Malaysian factory is using Chinese rare earths to produce a product, even if the rare earth is 0.1% of the value of the final good, the final exporting to another country will require a permit from MOFCOM. Furthermore fuel to the fire, MOFCOM has officially updated its document requirement to WPS format, which is a file type developed by Chinese software company Kingsoft, instead of the more commonly used Word and PDF formats; indicating further divergence from the West.

China’s storage of rare earths is about 38% on the global scale but accounts for nearly 70% of the world’s rare earth mining. It also controls roughly 90% of global rare earths processing. And the US is heavily reliant on these rare earths from China.  

So what are rare earths? It’s a group of 17 elements used in magnet motors for EVs, wind turbines, defense electronics and other high-tech products. These elements are rare in the sense that they’re hard to extract and produce highly toxic wastes since they are byproducts of other mining processes. Over the years, China has perfected the supply chain as well as sacrificed environmental protocols which culminated an edge over other nations that also have rare earths. China is employing this as their trump card (pardon the pun) to negotiate trade deals as the global supply chain will be severely disrupted if China restricts exports.     

To give you an example, a smartphone needs up to 15 rare earths. Global smartphone production uses roughly 10,000 tons of rare earths per year.

However, data suggests reliance of Chinese rare earths from the US has lessened over the years. From 2014 – 2017, the reliance factor was 80%, in 2021 it dropped to 74% as other nations are trying to break away from Chinese reliance. Although reliance has weakened, nations are not going to break away any time soon as Chinese mining of rare earths has already matured.

OK, so let’s just blame China for the stock market decline on Friday then? Well not quite…  

MOFCOM made the announcements on Oct. 9th (Thursday) in the morning. The market slumped exactly at 10:57AM on Oct. 10th (Friday) coinciding with Trump’s post on Truth Social. (insert shrugging emoji lol 🤷‍♂️)

The real nuke to the markets was Trump’s threats of a 100% tariff towards Chinese imports. The markets have continued to accumulate ATHs therefore it is highly sensitive to any sort of triggering news; which Trump delivered promptly that sent fear into investors who are very cognizant to the heightening of trade war tensions. It goes back to what I was saying initially. We can do all the analysis we want but we cannot predict human nature as we take and process information differently. 

Another bit of news that will affect our Monday outlook is the Federal Reserve’s next-in-line is down to 5 possible candidates. Las Vegas have bettors favoring current Fed governor Chris Waller as the next Fed Reserve Chair. Waller has a clear cut dovish stance on rates as he supports slowing the economy and getting inflation back to 2%.

However, as you can see the real stimulant to the markets is trade war tensions. If there’s no big news during our wonderful Canadian Thanksgiving, then tomorrow the markets should bounce back up.

JPM’s chief commander, Jamie Dimon, suggests in the next 6mths to 2yrs, the US stock market will continue with turbulence but he is very optimistic of the AI boom. If we’re reading between the lines, Dimon is suggesting a sharp slump coming to the stock market. This similar sentiment has been there since the start of the AI boom though, I’m not saying we should ignore the signs but definitely take it with a hint of salt. 

Wedbush’s analyst Dan Ives says he’s seeing another 7% increase on tech stocks by year end. Ives is encouraging investors to continue buying tech stocks during the sell-offs and tune out the noise of the Trump-Xi feud for now.

To be fair, with all the points from analysts and big bank CEOs, we must always do our own due diligence. Personally, I won’t count out the US stock market as it is the world’s most mature exchange to make money outside of your actual day job. The exchanges are tech heavy but traditionally other sectors have never displayed moving power like the tech sector anyways. I’m hedged with gold and Canadian financial & utility stocks, so I can afford to ride this dip as I’m prepared with my optimism that the US stock market will finish strong this year end.  

However, in conclusion, let us remain cautiously bold as always.