“I think it is possible for ordinary people to choose to be extraordinary.” – Said Elon Musk
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
(THE TARIFF FIX)
March 19, 2025
Hello everyone
We all know that markets and uncertainty don’t mix well. And right now, there is a lot of uncertainty surrounding U.S. trade policy.
While the Trump administration tariffs on Mexico and Canada have been delayed for a month, the 10% tariff on Chinese goods has gone into effect. The move has rattled markets, leaving many American businesses and consumers wondering what comes next.
Tariffs are a double-edged sword. On the one hand, they can serve as a powerful negotiating tool, as President Trump has pointed out. The U.S. economy is the largest in the world, and many countries rely on American consumers to buy their goods. By imposing tariffs, the U.S. can pressure trading partners into more favourable deals and protect domestic industries from unfair competition.
On the other hand, tariffs raise costs for businesses and consumers. About half of America’s annual imports – more than $1.3 trillion annually – come from China, Canada and Mexico.
We know that certain sectors will be impacted harder than others. The automotive industry, for instance, relies heavily on parts from Mexico and Canada. Energy prices could spike as well, given that over 70% of U.S. crude oil imports come from these two countries. Let’s also not forget about gas. Just in the Midwest alone, gas prices could rise by as much as $0.50 per gallon, according to the Council on Foreign Relations. And then there’s something we all rely on – food. Mexico supplies over 60% of the fresh vegetables and nearly half of all fruit and nuts consumed in the U.S. Higher import costs could mean higher prices at the grocery store.
A historical perspective on Tariffs
Historically, tariffs used to be a major source of government revenue. Between 1798 and 1913, they accounted for anywhere from 50% to 90% of federal income.
Then, times changed. Over the past 70 years, tariffs have rarely contributed more than 2% of federal revenue. Free trade was the typical landscape.
For example, last year, U.S. Customs and Border Protection collected $77 billion in tariffs – just 1.57% of total government income. Since the 1930s, the U.S. has moved away from protectionism in favour of trade liberalization. Agreements like the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), have dramatically lowered global tariffs. Today, roughly 70% of all products enter the U.S. duty-free.
Trump’s approach marks a shift back toward tariffs as a policy tool. Arguably, the U.S. has more leverage than most countries – as many economies depend on access to the U.S. market – but tariffs aren’t without consequences.
China has already retaliated, imposing its own tariffs on U.S. goods. These include a 15% duty on coal and liquefied natural gas (LNG), as well as 10% tariffs on agricultural machinery, crude oil, and some vehicles. Beijing has also launched an antitrust investigation into Google – likely as a form of economic retribution.
Time will tell how well the U.S. economy navigates the changing trade policy.
Bitcoin and its short to medium-term movement
Bitcoin is attempting to form a base. There is a possibility it could fall to make a third point, (see the trendline drawn above) thereby making two points makes a third pattern, which is usually bullish. Or it could rally from its present position. Another week or so of messy price action is possible before a move to the upside is seen.
Cheers
Jacquie
Global Market Comments
March 19, 2025
Fiat Lux
Featured Trade:
(PROFITING FROM AMERICA'S DEMOGRAPHIC COLLAPSE)
Demographics is destiny.
If you ignore it as an investor, you will be constantly behind the curve wondering why your performance is so bad.
Get ahead of it, and people will think you are a genius.
I figured all this out when I was about 20.
I realized then, back in 1972, that if I could just get ahead of the baby boomer generation, everything magically seemed to work.
Buy what boomers want to buy next, and the world will be your oyster.
That strategy is still working today.
Back then, that meant buying residential real estate in California and New York, which has since risen in value 100 fold, and more, once the generous tax breaks of homeownership are added in.
Now it means investing in health care and big pharma, this year’s best performers in the stock market.
Except now, there is a new crowd in town: The Millennials.
As a long-term observer of America’s demographic picture, I was shocked to hear of a recent report from the US Census Bureau.
The US population grew by 1.75 million, or a scant 0.53% in 2023, the lowest since 1942.
You can’t start or expand a family when an essential partner in the process is off fighting WWII, and there were 17 million of them back then.
This is far below the 2.09% replacement rate that the country was holding on to only a few years ago.
As of today, there are 341,233,396 Americans. This accounts for 4.21% of the global population of 8.1 billion.
This places American population growth close to the bottom of the international reproduction sweepstakes, down with Italy (0.32%), Germany (0.11%), and Poland (0.02%).
According to the World Bank, 22 countries suffered population declines, like Portugal (-0.29%) and Japan (-0.20%). Click here for the link
The tiny Sultanate of Oman, one of my old stomping grounds as a Marine Corps pilot, enjoys the planet’s highest growth rate at 9.13%.
But then it helps if you have four wives.
The obvious cause here of America’s demographic dilemma was the pandemic. There is a high correlation between economic health and fertility a year later. Not only did one million Americans die, but women were afraid to socialize in person and eventually go to hospitals to deliver children.
So, we can only hope that the improvement in the economy sent more to the maternity ward.
If it doesn’t, it could be great news for your investment portfolio. Fewer births today translate into a shortage of workers in 20 years. That brings rising wages, flying inflation, and rapid price hikes. And stock markets love inflation because companies can pass costs on to consumers, while bondholders can’t.
Corporate profits go through the roof, as do share prices. It also produces fewer relying on government services in 40 years, which makes it easier for the government to balance the budget.
This Goldilocks scenario was already scheduled for the decade of the 2020s, when a 15-year demographic headwind flipped to a tailwind, thanks to the coming demise of the “baby boomer” generation, now a big cost to the economy and the emergency of Millennials as big spenders. But the 2024 election may have canceled out these beneficial effects.
As long as I hike ten miles a day I’ll probably live forever. I’ve already outlived three doctors. Quitting smoking when my first kids came along 40 years ago was a big help.
California is the most populous state, with over 40 million, followed by Texas (29.53 million) and New York (8.5 million). Two states saw population declines, Maine and West Virginia, where the collapse of the coal industry is sucking the life out of local businesses.
Parsing through the report, it is clear that predictions of population trends are becoming vastly more complicated, thanks to the increasingly minestrone-like makeup of the US people.
By 2040 no single racial group will be in a majority in the US. That is already the case for the entire States of California and Texas now. Hispanics now account for 38% of the population of the Golden State, followed by Caucasians at 37%.
America will come to resemble other, much smaller multiethnic societies, like Singapore, South Africa, England, and Israel. This explains much about the current state of politics in the US today.
Some 80% of new Texans were Hispanic and black, confirming my belief that the Lone Star State will become the next battleground in presidential elections.
Single ethnic groups historically will only lose their majority with a fight.
This is why gerrymandering (redistricting) is such a big deal there, with the white establishment battling to hang on to power at any cost.
Further complicating any serious analysis is the rapid decline of the traditional American nuclear family, where married parents live with their children.
With a vast concentration of wealth at the top and a long-term decline in middle-class earnings, kids are increasingly becoming a luxury of a prosperous elite.
As a result, the country’s birthrate has declined by half since 1960.
Those who do are having fewer kids, with the average family size dropping from three to two. In 1964, the final year of the baby boom, 36% of Americans were under the age of 18.
Today, that figure is just 23.5% and is expected to fall to 21% by 2050. Only 80% of women have children now, compared to 90% in the 1970’s.
One possible explanation is that the full, end-to-end cost of child rearing has soared to over $250,000 per child now.
I was a bargain as a kid, costing my parents only a tenth of that. Rocketing college costs are another barrier, with 70% of high school grads at least starting some higher education.
I went to Boy Scouts and Little League baseball, each of which cost $1 a month. A full scholarship covered my college expenses.
When I look at the checks I have written for my own children for ski lessons, soccer, youth sailing, braces, international travel, and assorted master's degrees and PhDs, I recoil in horror.
Fewer women are following that old adage of “marriage before carriage.” Some 41% of children are born out of wedlock, up 400% in 40 years.
It is definitely an education and class-driven divide. Only 10% of college-educated mothers are still single, compared to 57% of those with a high school education or less.
It is a truism in the science of demographics that educated women have fewer children. It makes possible careers that enable them to bring home paychecks instead of babies, which husbands prefer.
Blame Roe versus Wade, the Equal Rights Act, and Title Nine, but every social reform benefiting women of the past half-century has helped send the birthrate plummeting.
More women wearing pants in the family hurts the fertility rate as well, as they are unable, or unwilling, to bear the large families of yore. The share of families where women are the primary breadwinners has leaped from 11% to 40% since 1960.
When couples do marry, they are sometimes of the same sex, now that gay marriage is legal, further muddying traditional data sources.
Some 2 million children are now being raised by gay parents. In fact, there is a gay baby boom underway, which those in the community call the “gayby” boom.”
All female couples have produced one million children over the last 30 years, 95% of whom select for blond-haired, blue-eyed, Aryan sperm donors who are over six feet tall ($40 a shot for donors if you guys are interested and live within walking distance from UC Berkeley).
I’m told by the sources that know that water polo players are particularly favored.
The numbers are so large that it is impacting the makeup of the US population.
There was a time when I could usually identify the people standing next to me on San Francisco cable cars. That time has long passed. Now I don’t have a clue.
Whenever we go to war, we become our enemy to a modest degree, both as a people and a culture.
After WWII, 50,000 German and 50,000 Japanese wives were brought home as war prizes. Sushi, hot tubs, Toyotas, and Volkswagens quickly followed.
The problem is that the US has invaded another 20 countries since 1945 and is now maintaining a military presence in 140. That generates a hell of a lot of green cards.
This has spawned sizeable Korean, and later, Iranian communities in Los Angeles, a Vietnamese one in Louisiana, a Somali enclave in Minneapolis, and a large minority of Afghans in San Jose, CA. The Arab population of Michigan could have decided the 2024 presidential election.
The fall of the Soviet Union in 1992 unleashed another dozen Eastern European ethnic groups and languages on the US. Haven’t you noticed the proliferation of Arab fast-food restaurants in your neighborhood since we sent 20 divisions to the Middle East?
What all this means is that the grand experiment called the United States is entering a new phase.
Different ethnic, racial, religious, and even political groups are blending with each other to create a population unseen in the history of the world, with untold economic consequences.
It is also setting up an example for other countries to follow.
Get your investment portfolio out in front of it, and you could prosper mightily.
Ignore Demographics at Your Portfolio’s Peril
"Everybody talks about the Volatility Index (VIX), but the new fear gauge is the 10-year Treasury bond," said Art Cashin of UBS Financial Services.
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
Mad Hedge Biotech and Healthcare Letter
March 18, 2025
Fiat Lux
Featured Trade:
(WHEN THE MARKET GIVES BACK WHAT IT ONCE TOOK AWAY)
(ABT), (ISRG), (SYK), (BSX)
If Wall Street had a confessional booth, I'd be first in line. "Forgive me, market gods, for I underestimated how quickly sentiment could shift."
When I last wrote about Abbott Laboratories (ABT), the market was treating this medical device powerhouse like last week's leftovers—despite growth that would make most CEOs weep with joy.
Fast forward a few months, and Abbott's stock has rocketed 25%, outpacing the broader medical device sector by about 20%.
It has kept stride with Boston Scientific (BSX) while leaving Intuitive Surgical (ISRG) and Stryker (SYK) eating dust.
This kind of market whiplash reminds me of reporting from Tokyo trading floors in the 1980s—fortunes changing direction faster than a day trader after espresso, fundamentals barely shifting while sentiment performed aerial gymnastics.
So what changed? Abbott became a flight-to-safety darling.
While economic storms gather, it sits comfortably in its non-elective procedure fortress, with minimal tariff exposure and a recent legal victory reducing liability concerns.
The irony? Sentiment has now sprinted ahead of business performance. While Abbott remains a leader, its valuation leaves little room for missteps.
And if I'm overpaying for med-tech, I might as well reach for Boston Scientific instead, where growth is comparable but the valuation looks more reasonable.
Abbott’s fourth-quarter results weren’t showstopping, but they were reassuring.
Revenue landed slightly below expectations in some areas, but crucial segments—like Medical Devices—delivered strong results. Meanwhile, profit margins surprised pleasantly, reinforcing Abbott’s operational strength.
Overall revenue grew 9% organically, with Medical Devices leading at 14% growth.
The Diagnostics division posted just 1% growth, but that’s misleading—strip out COVID-19 testing effects, and underlying growth jumps to 6%.
Margins impressed, too. Gross margin improved to 56.9%, and adjusted operating income climbed 10%.
Abbott even managed a narrow revenue beat while missing slightly on EBITDA and free cash flow, largely due to tax timing that caught most analysts off guard.
I've spent decades analyzing companies across multiple sectors, and I can tell you Abbott’s medical device business deserves genuine admiration.
It maintained 14% growth from start to finish—a remarkable consistency while competitors slowed from 9.5% to 9.2% growth during the same period.
Looking at the fourth-quarter specifics, Structural Heart shone with 23% growth, outpacing Boston Scientific’s 20% and Medtronic’s 12%.
The Diabetes segment posted an impressive 20% growth, more than doubling DexCom’s 8%. Even in slower segments like Cardiac Rhythm (7%) and Neuromodulation (8%), Abbott still outperformed key competitors.
The bottom line: Abbott is executing at an exceptional level across its device portfolio.
Even its Diagnostics business, with 6% underlying growth, holds up well against Roche’s 8% and substantially outperforms Siemens Healthineers’ anemic sub-1% and Danaher’s 2% contraction.
There are three developments that investors should be paying attention to.
First, Abbott’s exposure to new tariffs is minimal—just 5% of COGS from Mexico and 1% from China. This translates to a low single-digit EPS impact, barely a rounding error in today’s environment.
Second, TriClip may have more growth potential than I previously thought. Recent data from Edwards Lifesciences’ (EW) competing Evoque device showed no mortality benefit and only modest hospitalization improvements.
This lets Abbott position TriClip as the safer approach without sacrificing quality-of-life benefits.
Third—and most significant—Abbott won a crucial legal victory in October regarding its infant formula.
A jury unanimously found the company not at fault in a necrotizing enterocolitis case, though the judge recently granted a new trial.
With 10,000 cases still pending, this development could strengthen Abbott’s settlement position and potentially cap damages below $1 billion—substantial but manageable.
I expect slight moderation next year, but Abbott should still deliver 7% growth over the next three to five years.
Newer products like Lingo (blood glucose monitoring for non-diabetics) are performing well, with significant potential in Amulet and upcoming PFA and lithotripsy offerings.
On margins, I expect EBITDA to climb above 28% within four years, with free cash flow margins reaching high-teens to low-20%.
This should drive high single-digit to low double-digit FCF growth—performance that typically earns management teams effusive praise.
Valuation, however, is challenging after the recent surge. My former 5x revenue multiple only gets to around $125, while a more aggressive 6x model approaches $150—making me about as comfortable as a cat in a dog show.
I’m surprised by how quickly sentiment shifted on Abbott, likely due to investors seeking safety amid economic uncertainty.
Whether this outperformance has staying power remains uncertain, but Abbott is certainly delivering growth that matches or exceeds competitors across most business lines.
For now, I'm watching Abbott with the same fascination I once had for Sierra mountain expeditions—impressed by the ascent but keenly aware that the air gets thinner the higher you climb.
After all, what's that old market adage? Oh right—the view is spectacular, but nobody rings a bell at the top.
Global Market Comments
March 18, 2025
Fiat Lux
Featured Trade:
(HOW TO HANDLE THE FRIDAY, MARCH 21 OPTIONS EXPIRATION)
