Just over 40 days into Donald Trump's presidency, global asset markets are showing signs of instability. Bitcoin, a leading cryptocurrency, has retreated to $82,000, and the U.S. stock market's upward trajectory has stalled.

The "Trump Trade," fueled by expectations of pro-market policies like deregulation and tax cuts, is beginning to falter. The Trump administration's focus on trade wars, including tariff hikes, has heightened uncertainty, chilling investor sentiment.

Furthermore, concerns are mounting that the administration's aggressive trade policies could trigger inflation within the U.S. Recent economic indicators falling short of market expectations have even sparked fears of a U.S.-led global stagflation.

Bitcoin, Tesla, and Other "Trump Beneficiaries" Plummet

As of 3 PM on the 27th, Bitcoin was trading at $85,851, down 3.09% from the previous 24 hours, according to Binance. Once considered a prime "Trump beneficiary" and reaching an all-time high just before his inauguration, Bitcoin has now dropped over 20% from its peak due to the administration's cryptocurrency policies failing to meet market expectations.

The U.S. stock market is also showing signs of weakness. The S&P 500 has fallen 3.06% from its peak, while the Dow Jones and Nasdaq have declined by 3.51% and 5.45%, respectively. Tesla and Trump Media & Technology Group, both considered key "Trump Trade" stocks, have plummeted by over 30% since Trump's inauguration. Tesla, in particular, has seen its market capitalization evaporate by nearly $605 billion (approximately 872 trillion KRW) due to recent poor sales in Europe and backlash from European consumers against CEO Elon Musk's political stances.

Tariff Hikes Fuel Stagflation Concerns

The unraveling of the "Trump Trade" is attributed to tariff hikes increasing global economic uncertainty and inflation fears. In fact, U.S. consumer price inflation rose to 3.0% last month, returning to the 3% range for the first time since June of last year.

Meanwhile, key economic indicators are trending downwards. This month's U.S. consumer confidence index experienced its largest drop in four years, and retail sales also declined last month. The perception that the U.S. economy can single-handedly lead global growth is also waning.

U.S.-Led Stagflation Fears Mount

With the U.S. economy showing concerning signs, some are raising concerns about stagflation. Bloomberg News warned of "growing danger signs for the U.S. economy" and stated that "a few more months of weak data would make a U.S. slump difficult to avoid."

The inversion of the yield curve, a classic sign of economic slowdown, has also reappeared. On the 26th (local time), the yield on the 10-year U.S. Treasury note fell to 4.25%, while the 3-month Treasury yield remained at 4.30%.

Mark Hackett, chief of investment research at Nationwide, diagnosed that "the biggest risk facing the market is stagflation."

Warnings are also emerging that U.S.-led stagflation could spread to Europe and Asia. Ahn Dong-hyun, a professor of economics at Seoul National University, pointed out that "if the U.S. is facing a stagflation crisis, the situation for other countries will be even more dire" and cautioned that "South Korea, which is already struggling with a recent economic slowdown, could fall into a deeper stagflation."