February 2025

February 18, 2025

(WILL THE RESERVE BANK OF AUSTRALIA CUT RATES OR HOLD THIS WEEK?

February 18, 2025

Hello everyone

WEEK AHEAD CALENDAR

MONDAY FEB. 17

9:30 a.m. Philadelphia Reserve Bank President Harker speaks in “Global Interdependence Centre Central Banking Series Conference” with the University of the Bahamas.

10:30 p.m. Australia Rate Decision

Previous: 4.35%

Forecast: 4.10%

Markets closed for President’s Day Holiday.

TUESDAY FEB. 18

8:30 a.m. Empire State Index (February)

8:30 a.m. Canada Inflation Rate

Previous: 1.8%

Forecast: 1.8%

10 a.m. NAHB Housing Market Index (February)

Earnings: Arista Networks, Occidental Petroleum, Cadence Design Systems, International Flavors & Fragrances, Devon Energy, CoStar Group, Vulcan Materials

WEDNESDAY FEB. 19

2:00 a.m. UK Inflation Rate

Previous: 2.5%

Forecast: 2.4%

8:30 a.m. Building Permits preliminary (January)

8:30 a.m. Housing Starts (January)

2:00 p.m. FOMC Minutes

Earnings: CF Industries, Analog Devices, Trimble

THURSDAY FEB. 20

8:30 a.m. Continuing Jobless Claims (02/08)

8:30 a.m. Initial Claims (02/15)

8:30 a.m. Philadelphia Fed Index (February)

10:00 a.m. Leading Indicators (January)

6:30 p.m. Japan Inflation Rate

Previous: 3.6%

Forecast: 3.7%

Earnings: Live Nation Entertainment, Insulet, Booking Holdings, Akamai Technologies, Walmart, Hasbro, EPAM Systems, Quanta Services

FRIDAY FEB. 21

9:45 a.m. PMI Composite preliminary (February)

9:45 a.m. S&P PMI Manufacturing preliminary (February)

9:45 a.m. S&P PMI Services preliminary (February)

10:00 a.m. Existing Home Sales (January)

10:00 a.m. Michigan Sentiment final (February)

The market will tell us when the chaos turns “real”.

This year the market seems to be propped up every time it drops sharply.

Is that designed to suck everyone into the market before it well and truly peaks out?

Probably.

Is the market walking through all the noise Trump is making around tariffs, etc?

Yes, because it all seems like bluff and bluster.

Will the word chaos continue?

Yes.

And then, something will break, something will become real.

What it will be, I don’t know.

But I’m sure the media will explain it and how a field day after it happens.

Grok 3 is being launched by Elon Musk’s xAI in 24 hours

What is Grok 3?

Apparently, it is the ‘smartest AI on Earth. ’

It is said to have impressive speed and accuracy, with much better instruction-following capacity.

We shall wait for the demo.

The Reserve Bank of Australia is expected to cut interest rates this week

A cut would bring relief to mortgage holders, who have been waiting for this move since 2020.

But, a series of cuts is probably off the table because of concerns about inflation and the fallout from Donald Trump’s tariffs.

The broader market is pricing in a 90% chance of a cut on Tuesday. By that count, you would think it is almost a given. But many economists think this optimism is too extreme and is not getting carried away until the number is in.

If the Reserve Bank holds on Tuesday, it would be a shock to the market.

Star Entertainment Group may be bailed out by Oaktree Capital

Oaktree Capital has offered 65c in the dollar to buy The Star Entertainment Group’s debt as its future is looking more unsteady by the day.

Oaktree would be willing to provide a total of $650m in two debt facilities with a term of five years.

Star, which owns casinos in Sydney, the Gold Coast, and Brisbane, is exploring various options, including asset sales and raising further equity, as the company has doubt whether it can continue as a going concern.

MARKET UPDATE

S&P500

Choppy movement in the market and no sign yet of a peak.

Support = ~$6015/25

Resistance = ~$6145/55

GOLD

Gold is consolidating from its recent march up to $2943.

Will be looking for any slowing momentum to indicate a shift in this rally.

Support = ~$2,880/$2850/$2525

Resistance = ~$2909/$2940/$2975

BITCOIN

More of the same. More ranging, as we have seen over the last few months.

Support = ~$91k area. Support further down = ~$86/$86.50 area.

Resistance = ~$110/$110.70k area.

QI CORNER

Callum Thomas

Chart of the Week - MEEGA

Make European Equities Great Again... a new cyclical bull market is beginning.

If you’ve been fixated on the news flow around tariffs and stuck on the old narrative that Europe is doomed and can only regulate vs innovate, then you might have missed the fact that European equities are up over +10% YTD.

Change is in the air, a key set of breakouts and improving technical serve as a timely prompt to consider whether there’s more to this —and more left in the move…

What’s driving the strength in European Equities:

1. Valuations: unlike expensive US stocks, European stocks are still cheap/reasonably priced and trade at a record low valuation discount vs US. The thing I always emphasize is that when valuations reach such extremes, they have a habit of speaking for themselves; the rubber band eventually snaps back.

2. Monetary Policy: The European Central Bank began rate cuts earlier (June 2024) than the Fed and cut by a larger amount (from 4.5% to 2.9%); a tailwind for the economy and markets.

3. Geopolitics: Odds are the Russia/Ukraine conflict is going to be put on hold soon, and hopefully, an enduring and constructive peace deal can be reached. This will remove war-related costs, decrease uncertainty, take tail-risks of wider spillover off the table, and maybe even help Europe’s economy through rebuilding.

4. Politics: Germany is looking likely to see a shift in government from left to right in its upcoming elections (echoing the global trend as the pendulum swings). This will likely see a more growth/business-friendly regime, with the prospect of infrastructure investment, lower energy costs, and tax cuts. This positive shift will boost sentiment, and if pro-growth policies eventuate, it will be good for the rest of Europe as its largest economy accelerates.

5. Reforms: There is at least the intention to improve competitiveness, e.g., the Draghi report (400-page report on how to boost innovation and competitiveness; there is a strong likelihood at least some of the ideas get implemented) and moves toward greater focus on shareholder returns.

6. China: as I have noted, China’s economy is starting to turn up from recession and prolonged property market downturn, helped by incremental steps up in stimulus — this will be a boost for Europe’s luxury goods companies, and wider export demand (particularly if US tariffs prompt more trading between non-US countries).

As you can probably gather, some of these are somewhat short-term or already in the price, e.g., monetary policy easing and (geo)politics, but most of them are more medium/longer-term (enduring). So, in other words, I would say it looks like the rally and breakout in European equities is a sign of more things to come.

Basically, it’s time to discard the old narratives and biases on European equities as a new bull market gets underway…

Key point: European equities are breaking out and have ample room to run.

HISTORY CORNER

On this day

WORD OF THE WEEK

Bumfuzzle (derived from Old English – Dumfoozle)

Refers to being confused, flustered, bewildered, disoriented, or to cause confusion.

Are you bumfuzzled about the political landscape right now?

OR

Did the IKEA instructions to put a bed together completely bumfuzzle you?

SOMETHING TO THINK ABOUT

Cheers

Jacquie

February 18, 2025

Diary, Newsletter, Summary

Global Market Comments
February 18, 2025
Fiat Lux

Featured Trade:

(MARKET OUTLOOK FOR THE WEEK AHEAD or THE TALE OF TWO MARKETS)
(GS), (TSLA), (NVDA), (VST)

The Market Outlook for the Week Ahead, or The Tale of Two Markets

Diary, Homepage Posts, Newsletter

While trading one market is hard enough, two is almost more than one can bear. In fact, we have all been trading two markets since 2025 began.

On the up days, it appears that the indexes are about to break out of a tediously narrow trading range. The market’s inability to go down is proof that it has to go up. Thursday was one of those days.

These are followed by down days, it appears that the indexes are about to break down. The market’s inability to stay up is proof that it has to go down. Wednesday was one of those days.

Up….down….up….down. Please excuse me if I get dizzy, which I shouldn’t, as I am a former combat pilot.

The market is calling Trump's bluff, rising in the face of threatened whopping great tariff increases against most of the world. So far, lots of noise, no action. The bark is worse than the bite. As I have been saying all year, ignore the noise and don’t fight the tape.

Which brings me to the price of copper.

Look at the ten-year chart of the red metal below, and you see a pretty positive formation is taking place. You have a similar set up in the chart of Freeport McMoRan, the world’s largest producer of copper.

This is in the face of huge negatives, like the failure of the Chinese economy to recover, the end of all alternative energy subsidies, the government announcing that it will no longer mint pennies, and the ongoing recession in residential real estate.

The seasoned trader in me knows that when you throw bad news on a commodity and it fails to go down, you buy the heck out of it. Is copper discounting the expansion of the grid independent of government assistance? There is more than meets the eye here.

What if the end of the Ukraine War is the big black swan of 2025? The best estimate for the cost of the reconstruction of Ukraine is $1 trillion. That would require a lot of copper, maybe a China’s worth.

It would also present major positives for the global economy. It would give us a peace dividend on the scale of the last one that started in 1991. For a start, energy prices would collapse as restrictions on the export of 10 million barrels a day of Russian oil come off. Ukraine would reclaim its position as one of the world’s largest food exporters, especially wheat and sunflower oil.

I know that Russia is close to running out of weapons. Some two-thirds of Russia’s tanks and planes have been destroyed, and they don’t have the parts to build new ones. That is forcing them to draw on military stockpiles from the 1950s.

I have first-hand knowledge of this. I learned from the Pentagon that the Russian missile fired at me on the eastern front lines failed to explode because it was 55 years old. The best estimate is that Russia will completely run out of some kinds of weapons by this summer.

February has started with a respectable +2.73% return so far. That takes us to a year-to-date profit of +8.53% so far in 2025. My trailing one-year return stands at a spectacular +86.48% as a bad trade a year ago fell off the one-year record. That takes my average annualized return to +50.14% and my performance since inception to +759.42%.

I used the brief weakness in Goldman Sachs (GS) to add a new long. I took profits on my two longs in Tesla on a bounce. That tops up our portfolio with a remaining short in (TSLA) and longs in (NVDA) and (VST). These latter positions expire in three trading days at max profit.

Some 63 of my 70 round trips, or 90%, were profitable in 2023. Some 74 of 94 trades have been profitable in 2024, and several of those losses were really break-even. That is a success rate of +78.72%.

Try beating that anywhere.

US Q4 Profits Hit Three-Year High. With reports in from nearly 70% of the S&P 500 companies as of Wednesday, fourth-quarter earnings are estimated to have risen 15.1% from a year earlier, up from an estimate of 9.6% growth at the start of January. The S&P 500 communication services sector, which includes companies such as Meta Platforms (META), is leading estimated fourth-quarter earnings gains among sectors, with year-over-year growth of 32.2%.

Core Inflation Rate Comes in Red Hot at 0.50%. Overall, advance was broad, led by shelter, food, and medicine. Shelter accounted for nearly 30% of the advance, according to the report from the Bureau of Labor Statistics out Wednesday. The so-called core CPI also climbed by more than forecast. That reflected higher prices for car insurance, airfares, and a record monthly increase in the cost of prescription drugs. It looks like no interest rate cuts for 2025.

PPI comes in Hot, reversing the gains on inflation of the past two years. The Producer Price Index, a measurement of average price changes seen by producers and manufacturers, rose 0.4% on a monthly basis and 3.5% for the 12 months ended in January. That held steady with December, which was upwardly revised to 3.5% according to Bureau of Labor Statistics data released Thursday.

US announced European Tariffs this Week, tanking stocks on Friday. Steel and metals shares are surging this morning. It’s pretty clear that markets hate all things tariff-related. Can we talk more about deregulation, which markets love? The reality is that markets don’t know how to price in Trump, swinging back and forth between euphoria one moment to Armageddon another. Best case, markets flatline. Worst case, they crash.

Gold (GLD) is headed for $3,000, my long-term target, on central bank and flight to safety buying. What’s the next target? $5,000 is the current turmoil in Washington continues. Notice that it’s the physical metal that’s moving, not the miners.

Foreign Investors Continue to Soak Up US Debt, seeking higher interest rates in an appreciating currency. Americans own 55% of the outstanding $36 trillion in US debt, while foreign investors own 24%, and the Federal Reserve 13%.

Wall Street Souring on Magnificent Seven. The market stronghold has diminished slightly, as the cohort struggles to meet ever-loftier expectations, and investors rotate into other parts of the market such as small caps. Tech titans also took a hit in late January after the emergence of Chinese startup DeepSeek raised concerns over how much spending will be needed to implement AI capabilities.

Market is Giving Up on any Interest Rate Cuts this Year, as the prospects of rising inflation from trade wars weigh on the market. Economists have warned that a wide-scale trade war could significantly raise prices, and consumers appear to be worried as well. Respondents to the University of Michigan’s consumer sentiment poll released Friday indicated they expect inflation to run at a 4.3% rate a year from now, up a full percentage point from the January reading.

Tesla Tanks 7%, and down 34% since December after Chinese competitor BYD announces a partnership with DeepSeek. The move is expected to accelerate BYD’s move into full self-driving. Tesla sales are falling in all major markets. Call it DeepSeek hit part 2.

Weekly Jobless Claims Fall. Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 213,000 for the week ended February 8, the Labor Department said on Thursday. Economists polled by Reuters had forecast 215,000 claims for the latest week.

My Ten-Year View – A Reassessment

We have to substantially downsize our expectations of equity returns in view of the election outcome. My new American Golden Age, or the next Roaring Twenties, is now looking at multiple gale force headwinds. The economy will completely stop decarbonizing. Technological innovation will slow. Trade wars will exact a high price. Inflation will return. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old.

My Dow 240,000 target has been pushed back to 2035.

On Monday, February 17, markets are closed for President's Day.

On Tuesday, February 18 at 8:30 AM EST, the New York Empire State Manufacturing Index is released.

On Wednesday, February 19 at 8:30 AM EST, the New Housing Starts are printed.

On Thursday, February 20 at 8:30 AM, the Weekly Jobless Claims are disclosed.

On Friday, February 21 at 8:30 AM, the Existing Home Sales are announced. At 2:00 PM the Baker Hughes Rig Count is printed.

As for me, I was having lunch at the Paris France casino in Las Vegas at Mon Ami Gabi, one of the top ten grossing restaurants in the United States. My usual waiter, Pierre from Bordeaux, took care of me in his typical ebullient way, graciously letting me practice my rusty French.

As I finished an excellent but calorie-packed breakfast (eggs Benedict, caramelized bacon, hash browns, and a café au lait), I noticed an elderly couple sitting at the table next to me. Easily in their 80s, they were dressed to the nines and out on the town.

I told them I wanted to be like them when I grew up.

Then I asked when they first went to Paris, expecting a date sometime after WWII. The gentleman responded, “Seven years ago”.

And what brought them to France?

“My father is buried there. He’s at the American Military Cemetery at Colleville-sur-Mer along with 9,386 other Americans. He died on Omaha Beach on D-Day. I went for the D-Day 70^th anniversary.” He also mentioned that he never met his dad, as he was killed in action weeks after he was born.

I reeled with the possibilities. First, I mentioned that I participated in the 40-year D-Day anniversary with my uncle, Medal of Honor winner Mitchell Paige, and met with President Ronald Reagan.

We joined the RAF fly-past in my own private plane and flew low over the invasion beaches at 200 feet, spotting the remaining bunkers and the rusted-out remains of the once floating pier. Pont du Hoc is a sight to behold from above, pockmarked with shell craters like the moon. When we landed at a nearby airport, I taxied over railroad tracks that were the launch site for the German V1 “buzz bomb” rockets.

D-Day was a close-run thing and was nearly lost. Only the determination of individual American soldiers saved the day. The US Navy helped too, bringing destroyers right to the shoreline to pummel the German defenses with their five-inch guns. Eventually, battleships working in concert with very lightweight Stinson L5 spotter planes made sure that anything the Germans brought to within 20 miles of the coast was destroyed.

Then the gentleman noticed the gold Marine Corps pin on my lapel and volunteered that he had been with the Third Marine Division in Vietnam. I replied that my father had been with the Third Marine Division during WWII at Bougainville and Guadalcanal and that I had been with the Third Marine Air Wing during Desert Storm.

I also informed him that I had led an expedition to Guadalcanal two years ago looking for some of the 400 Marines still missing in action. We found 30 dog tags and sent them to the Marine Historical Division at Quantico, Virginia, for tracing. I proudly showed them my pictures.

When the stories came back, it turned out that many survivors were children now in their 80s who had never met their fathers because they were killed in action on Guadalcanal.

Small world.

I didn’t want to infringe any further on their fine morning out, so I excused myself. He said Semper Fi, the Marine Corps motto, thanked me for my service, and gave me a fist pump and a smile. I responded in kind and made my way home.

Oh, and say “Hi” when you visit Mon Ami Gabi. Tell Pierre that John Thomas sent you and give him a big tip. It’s not easy for a Frenchman to cater to all these loud Americans.

Third Marine Air Wing

The D-Day Couple

The American Military Cemetery at Colleville-sur-Mer

Stay Healthy,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

Deepseek's Impact on the Stock Market and its Competitors

Mad Hedge AI

Deepseek, a Chinese artificial intelligence (AI) company, has recently made headlines with its innovative AI model. The company claims that its model is more efficient and less expensive to train than its competitors. This has sent shockwaves through the stock market, with investors reacting to the potential implications of Deepseek's technology.

In this article, we will take a closer look at the effects of Deepseek's emergence on the stock market and its competitors. We will also discuss the potential implications of Deepseek's technology for the future of AI.

Short-Term Effects

The immediate effect of Deepseek's announcement was a sharp decline in the stock prices of major AI players. Nvidia, the leading provider of chips for AI training, saw its stock price fall by more than 10% in a single day. Other AI companies, such as Google and Microsoft, also saw their stock prices decline.

The market reacted to the possibility that Deepseek's technology could reduce the demand for Nvidia's products. If Deepseek's model is truly more efficient and less expensive to train, then companies may be less likely to purchase Nvidia's chips.

However, it is important to note that the stock market is often volatile in the short term. The decline in stock prices may simply be a reaction to the uncertainty surrounding Deepseek's technology. It is possible that the stock prices of AI companies will recover in the long run.

Long-Term Effects

The long-term effects of Deepseek's emergence are still uncertain. Some analysts believe that Deepseek's technology could lead to a more competitive AI market. This could benefit consumers in the long run, as companies would be forced to lower their prices and improve their products in order to compete.

Others are concerned that Deepseek's technology could give Chinese companies an advantage in the AI race. This could have implications for national security, as AI is becoming increasingly important in areas such as defense and surveillance.

It is also possible that Deepseek's technology could lead to the development of new AI applications. If Deepseek's model is truly more efficient and less expensive to train, then it could be used to develop AI models for a wider range of applications. This could lead to the development of new products and services that are powered by AI.

Deepseek's Competitors

Deepseek's emergence has put pressure on its competitors to innovate. Companies such as Google and Microsoft are now investing heavily in AI research and development in order to compete with Deepseek.

It is possible that Deepseek's competitors will be able to develop their own technologies that are as efficient and inexpensive as Deepseek's. However, it is also possible that Deepseek will be able to maintain its lead in the AI market.

The Future of AI

The emergence of Deepseek is a sign that the AI market is becoming increasingly competitive. This is good news for consumers, as it could lead to lower prices and better products.

However, it is also important to be aware of the potential risks of AI. AI is a powerful technology that could be used for both good and bad purposes. It is important to ensure that AI is developed and used in a responsible manner.

Conclusion

Deepseek's appearance on the scene has sent shockwaves through the stock market. The company's innovative AI model has the potential to disrupt the AI market. However, the long-term effects of Deepseek's emergence are still uncertain.

It is important to keep an eye on Deepseek and its competitors in the years to come. The future of AI is likely to be shaped by the companies that are able to develop the most innovative and efficient AI technologies.

Additional Points

It is important to note that Deepseek is a relatively new company. It remains to be seen whether the company will be able to maintain its lead in the AI market.
Deepseek's technology is still under development. It is possible that the company will make further improvements to its model in the future.
The AI market is constantly evolving. It is possible that new AI technologies will emerge in the future that are even more efficient and inexpensive than Deepseek's.

February 14, 2025

Tech Letter

Mad Hedge Technology Letter
February 14, 2025
Fiat Lux

Featured Trade:

(AIRBNB DOES JUST ENOUGH)
(ABNB)

Airbnb Does Just Enough

Tech Letter

Americans still have money to travel, so ignore all those wacky reports that the consumer is about to go missing.

Granted, I wouldn’t say people are flush with cash, but enough to go on holiday and pay for short-term rentals from the likes of good ‘ol company Airbnb (ABNB).

The big takeaway from Airbnb’s earnings report is that the tech rally will continue albeit it in a choppier form than we are generally used to.

But it will keep chugging along, translating into traders and investors buying the big dips when tech stocks go on discount.

That dip buying is what prevents stocks from real weakness, which is something more like a 10% or 20% drop.

Have you noticed that tech stocks hardly go down anymore?

Well, there is money waiting like a parachute to a paratrooper, and this dynamic will underpin the market even though I admit that tech stocks are expensive and losing steam in their internal business models.

Cross-border travel drove a majority of nights booked in the APAC region.

Its North American business, where there were signs of slowing demand last summer, also saw faster growth with a “mid-single digits” gain in nights booked during the holiday season. That’s “driven by broad strength of underlying travel trends within the region,” the company said, while also citing higher pricing of stays and strength in short-term bookings and entire homes.

Booking’s growing 8.5% is nothing to throw a parade over, but the market delivered the stock a 14% return at the time of this writing.

I remember for that type of sumptuous pop, we used to need 30% or more in revenue expansion, and tech just isn’t delivering on that, and it is a sign of the times of Silicon Valley running out of great ideas.

We are still living on Steve Jobs’ ideas for better or worse.

Zuckerberg is still doing the Facebook and Instagram thing, and CEO of Airbnb Brian Cheksy is still doing the short-term rental thing.

His other ideas aren’t stupid, but they won’t move the needle.

Chesky is doubling down on “other products.”

Airbnb will invest $200 million to $250 million into launching and scaling those new products starting in May. His plans are to build on the experiences business for tours, classes, and workshops, and offering add-on amenities during stays such as personal chefs, midweek cleaning, and in-home massages.

Airbnb’s co-host marketplace, which allows homeowners to hire fellow hosts to manage their rentals, is really a nothing-burger.

Getting someone more ruthless to squeeze out higher profits from a rental is not some revolutionary idea, nor will it attract new shareholders.

It is basically hiring a property manager for a short-term rental. It also scales very poorly and is not an efficient use of time.

I am also not sold on the “experiences” business and find it overreaching.

Just the other day, I opened Airbnb’s homepage only to be forced and overruled into an “experience” page of the location I was hoping to search for even though I still hadn’t found a rental unit.

I had to click out of it, wasting my precious time.

Luckily, after I reloaded the page, Airbnb didn’t force-opt me again into their marginal experience page, and I was able to search for my rental.

After all these years, call me arrogant, but I think I know enough to plan my trip and don’t need tech companies to hold my hand or put digital sensors up my butt.

In fact, I will call Airbnb out, their service has been getting incrementally crappier the last few years, but they have a monopoly so they get away with it. Life is unfair, isn’t it?

Tech companies risk alienating many customers, but Airbnb is still a great buy-the-dip company and gives us brilliant insight into the health of the North American consumers.

Buy the dip in tech and ABNB until you shouldn’t.

February 14, 2025 - Quote of the Day

Tech Letter

“I say something, and then it usually happens. Maybe not on schedule, but it usually happens.” – Said Tesla CEO Elon Musk

Trade Alert - (NVDA) February 14, 2025 - TAKE PROFITS - SELL

Tech Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

February 14, 2025

Jacque's Post

(SUMMARY OF JOHN’S FEBRUARY 12, 2025 WEBINAR)

February 14, 2025

Hello everyone

TITLE: Trade Wars

PERFORMANCE

MTD: 0.48%

Trailing One Year Return: 83.45%

Average Annualised Return: 49.92%

Since inception: 758.24%

PORTFOLIO

Risk On

(TESLA)2/$300-$310 call spread (closed)

(GS) 3/$580-$590 call spread

(NVDA)2/$90-$95 call spread

(VST)2/$100-$110 call spread

Risk Off

(TSLA) 2/$540-$550 spread

THE METHOD TO MY MADNESS

The market has stalled because of continued uncertainty about everything.

Financials are still leading on deregulation party, but M&A has yet to start.

John says all interest rate plays remain dead in the water, including gold, silver, homebuilders, bonds & REITS.

US dollar remains bid on trade war.

Big technology stalling

Energy sells off on trade wars.

John says financials are the only sure thing this year.

Keep your discipline – don’t look for trades that aren’t there.

THE GLOBAL ECONOMY – CONFUSED

Fed leaves interest rates unchanged at 4.25%, and they might remain there for the rest of 2025.

Nonfarm payroll plunges to 145,000 in January.

The headline unemployment rate came in at 4.0%.

US Job Openings hit 14-month low.

Consumer sentiment falls, according to The University of Michigan.

China counters attacks in trade war.

US Factory Orders fall.

Consumer Inflation Expectations come in soft.

STOCKS – DOWNTREND

Wall Street is souring on Magnificent 7, except for Meta.

Goldman Sachs sees a correction coming in the face of deteriorating global macro conditions, trade wars, and sky-high valuations.

Technology stocks destroyed on news of China’s Deep Seek.

Tariffs to cut US earnings by 5%.

The exemption race is on with many industries pleading for special treatment in the new trade wars.

Palantir soars 25% on the prospect of a surge in government contracts.

Chevron post first loss in four years.

U.S. business activity slowed to a nine-month low.

BONDS – RALLYING

Foreign investors continue to soak up US debt, seeking higher interest.

Americans own 55% of the outstanding $36 trillion in US debt, while foreign investors own 24%, and the federal reserve 13%.

The market is giving up on any interest rate cuts this year, as the prospect of rising inflation from trade wars weighs on the market.

All fixed-income plays have gone dead.

Higher rates for longer don’t fit in here anywhere.

Possible target for (TLT) = $82

FOREIGN CURRENCIES – TRADE WAR BOOST

Trade wars are pushing up the US dollar, making American exports more expensive.

High import duties will shrink US imports dramatically and impoverish our foreign customers, creating dollar strength.

Ten-year US Treasuries have risen from 4.40% to 4.50%.

The mere fact that rates have stalled has allowed currencies to rally.

Higher for longer interest rates mean higher for longer US dollar.

Avoid (FXA), (FXE), (FXB), (FXC), and (FXY).

ENERGY & COMMODITIES

US global economic disruption sink oil prices.

Oil & Gas dealmaking hits $105 billion in 2024.

Government to stop minting new pennies.

Nuclear plays like (VST) and (CCJ) rebound sharply.

The EIA said it expects Brent Crude oil prices to fall 8% to average $74 a barrel in 2025 and then fall further to $66 in 2026.

PRECIOUS METALS – BID AGAIN

Government may revalue gold holdings from the current 1932 price of $42 an ounce to $2936.

It is just a bookkeeping move, but it has put the yellow metal back in the spotlight.

As of January 2025, the United States government owned 133.45 tons of gold worth $39.9 billion at current market prices. This makes the US the country with the largest gold reserves in the world.

Gold has become the only way the average Chinese can save as they can no longer speculate in real estate or copper, and the population doesn’t trust the Chinese Yuan, so there is support lower down.

Central banks in emerging market countries are continuing to buy gold.

REAL ESTATE – STAY AWAY

Homebuyer Mortgage demand is collapsing, with the 30-year fixed at a buzzkill 7.0%.

Demand is 35% lower YOY, with housing demand at a 30-year low.

Homes are sitting on the market much longer. Avoid all real estate plays.

US Home Sales hit a 30-year low in 2024, the second year in a row of weak sales.

High costs related to homeownership sapped sales again.

The average rate for a 30-year fixed mortgage has hovered between 6% and 8% since late 2022.

Avoid real estate plays.

TRADE SHEET

Stocks – buy the next big dip, sell rallies.

Bonds – sell rallies

Commodities – stand aside.

Currencies – stand aside.

Precious metals – buy dips.

Energy – buy nuclear dips.

Volatility – sell over $30.

Real estate – stand aside.

NEXT STRATEGY WEBINAR
12:00 EST Wednesday, February 26, 2025, from Incline Village, NV.

Cheers

Jacquie

February 14, 2025

Diary, Newsletter, Summary

Global Market Comments
February 14, 2025
Fiat Lux

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