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
Global Market Comments
April 22, 2025
Fiat Lux
Featured Trade:
(THE GOVERNMENT’S WAR ON MONEY)
(TESTIMONIAL)
When I lived as a student in West Berlin during the 1960s, I had a nice little side business.
I organized weekend walking tours through the Berlin Wall at Checkpoint Charlie to visit East Berlin for American students who were too afraid to go alone.
To pay for it, I smuggled in my boots lots of Ostmarks, the currency of East Germany, which I could buy at a 75% discount to the official price in West Berlin. I then covered lunch and all my other bills very cheaply, booking a nice profit on the day.
That would be much more difficult to pull off today, as governments around the world have launched a war on cash that will not end until its ultimate demise.
The truth is, governments hate cash.
This became clearly apparent when the government of India withdrew circulation of its two largest banknotes a few years ago. Some 50% of Indian GDP is thought to take place in the underground economy in cash only.
The move caused a financial panic as consumers sold gold (GLD) and other hard assets to meet bills because they were unable to settle accounts with the large denomination notes they had hoarded.
As we move towards an all-digital economy, the few remaining purposes where cash is essential are largely illegal.
Waitresses, babysitters, and bookies don’t report income to the IRS. Nor do drug dealers or prostitutes (except in Nevada).
This is a big deal because 24 states have legalized marijuana.
Since banks are still banned from handling pot proceeds, this booming business has to take place entirely in cash. Tales about dealers making their runs with gym bags full of $100 bills are rampant.
The IRS estimates that $460 billion in tax revenue is lost every year through unreported income, which is largely earned in cash.
Some half of the entire US paper money supply is held by foreigners, where it is used to evade taxes, bribe foreign officials, and finance terrorism.
The US government’s war on cash is not a new thing. In 1929, it cut the size of US banknotes by one-third to save money on the cost of high-grade paper.
In 1970, the US Treasury banned the circulation of the $10,000, $5,000, $1,000, and $500 bills to halt mafia money laundering. Since then, the IRS has been the biggest beneficiary of the move.
Large denominations of US bills are now solely the domain of collectors.
The US government would love to get out of the cash business entirely, as it is so expensive to run. It spends about $737.4 million a year just to print American $1, $2, $5, $10, $20, $50, and $100 notes.
Paper dollar bills, which are actually made of 75% cotton and 25% linen, are completely worn out and have to be returned in only 18 months.
Coins are even a bigger loser. It costs more than two cents to make a penny.
Since the advent of color printers, counterfeiting has exploded. North Korea runs almost its entire economy on fake $100 bills, which are said to be the best in the world. Only a handful of specialists at the US Treasury can identify them under a high-powered microscope.
Today, some 80% of the entire $1.34 trillion M1 notes and coins in circulation in America are in the form of $100 bills. That works out to $4,200 per person. Where has all that money gone?
The US is now considering eliminating even this convenient denomination. While $1 million in $100s can fit into a tote bag, that quantity of $10 bills would weigh 220 pounds, a quantity much more difficult to sneak around.
An all-digital economy would certainly pose some privacy problems, as it would leave a massive paper trail on everything you do.
When you get audited by the IRS, the first thing they do is obtain your past three years of bank and credit card records detailing your every transaction. If the inspection goes criminal, they go back six years.
State authorities will pursue phone records to establish your physical presence to verify residency. So how long did you really spend in tax-free Florida last year? The late Julian Robertson spent one day too many in New York, and it cost him $450 million in state taxes.
It would also pare back illegal immigration, as this is another industry that runs entirely on cash. Once here, undocumented workers are often paid in cash in restaurants, on construction sites, and on farms.
There is truly no place to hide.
Other countries are already well ahead in the war of cash. In Belgium, some 93% of all financial transactions take place electronically. When I offered to pay cash in Europe this summer, clerks were mildly amused and then annoyed as they had no change. During two weeks in England, the only actual cash I needed was at the flea market on Portobello Road to buy more vintage Hawaiian shirts at $20 each. This saved me about $200 in foreign exchange transaction fees.
Sweden has also been pushing hard on this front, taking the M1 money supply there down by 27% over the past two years.
Many small businesses there now post signs saying they don’t accept cash. The goal is to move to an all-digital economy.
The preferences of Millennials are also moving us towards the cashless economy.
Have you ever been in line at Starbucks and noticed that the kid in front of you just paid $5 for a cup of coffee with his credit card? Or maybe he swiped his Apple Pay account on his iPhone? The last time I handed them a ten-dollar bill, they said, “Oh, dinosaur money.”
Whatever that means, it is clear that hard cash is about to become extinct, just like the Brontosaurus and the Tyrannosaurus Rex.
“Sometimes we stare so long at a door that is closing that we see too late the one that is open,” said Alexander Graham Bell, inventor of the telephone.
The legal system, a cornerstone of societal order, is on the cusp of a profound transformation. Artificial intelligence (AI), with its rapidly advancing capabilities in data analysis, natural language processing, and pattern recognition, is poised to permeate nearly every aspect of how laws are made, interpreted, and enforced. While the full extent of this influence remains to be seen, the trajectory suggests a future legal landscape significantly shaped by algorithmic intelligence. This article delves into the potential ways AI could influence the future legal system, exploring both the opportunities for increased efficiency and access to justice, as well as the inherent challenges and ethical considerations that must be addressed.
I. AI in Legal Research and Discovery: Unearthing the Truth with Unprecedented Speed
One of the most immediate and impactful areas where AI is already making inroads is legal research and discovery. Traditionally, lawyers spend countless hours sifting through vast volumes of case law, statutes, regulations, and other documents to find relevant precedents and evidence. AI-powered legal research tools can analyze these massive datasets with unprecedented speed and accuracy, identifying key information and connections that human lawyers might miss.
Imagine a future where AI algorithms can instantly scan millions of documents to identify all relevant case law on a specific legal issue, complete with summaries and analyses of how different jurisdictions have approached similar matters. This could drastically reduce the time and cost associated with legal research, allowing lawyers to focus on more strategic and nuanced aspects of their cases. Similarly, in the discovery phase of litigation, AI can be used to efficiently review and categorize vast amounts of electronic documents, identifying key evidence and potential inconsistencies far more effectively than manual review. This could streamline the litigation process, reduce discovery costs, and potentially lead to faster resolutions.
II. AI in Contract Drafting and Analysis: Automating the Mundane, Enhancing Precision
Contract drafting and analysis are other labor-intensive areas ripe for AI disruption. AI-powered tools can analyze existing contract templates, identify common clauses, and even suggest optimal language based on specific legal requirements and industry standards. This can automate the creation of routine contracts, reducing the risk of errors and freeing up lawyers to focus on negotiating complex terms and addressing unique circumstances.
Furthermore, AI can be used to analyze existing contracts for potential risks, inconsistencies, or non-compliance issues. Imagine an AI system that can quickly review a portfolio of hundreds of contracts, flagging clauses that deviate from standard terms, identify potential breaches, or highlight areas of contractual ambiguity. This could significantly enhance risk management for businesses and provide lawyers with valuable insights for advising their clients.
III. AI in Predictive Analytics: Forecasting Legal Outcomes and Informing Strategy
Perhaps one of the most transformative potential applications of AI in the legal system lies in predictive analytics. By analyzing historical case data, judicial decisions, and even the behavior of individual judges, AI algorithms could potentially forecast the likely outcomes of ongoing or future legal cases.
Imagine a lawyer being able to use an AI tool to assess the probability of success in a particular lawsuit based on the specific facts, the jurisdiction, and the presiding judge’s past rulings. This could provide invaluable insights for advising clients on whether to settle a case, proceed to trial, or pursue a particular legal strategy. While the legal system is inherently complex and influenced by numerous unpredictable factors, AI-powered predictive analytics could introduce a new level of data-driven decision-making into legal strategy.
IV. AI in Dispute Resolution: Facilitating Efficiency and Access to Justice
AI could also play a significant role in transforming dispute resolution mechanisms. Online dispute resolution (ODR) platforms, powered by AI, could facilitate negotiation, mediation, and even arbitration processes more efficiently and accessibly.
Imagine AI-powered chatbots guiding parties through initial negotiation stages, identifying potential areas of compromise based on their stated positions. AI algorithms could also analyze past mediation outcomes to suggest settlement ranges or even act as neutral facilitators in certain types of disputes. For individuals who cannot afford traditional legal representation, AI-powered ODR platforms could provide a more affordable and accessible means of resolving conflicts.
V. AI in Criminal Justice: Balancing Efficiency with Fairness and Equity
The application of AI in the criminal justice system presents both significant opportunities and profound ethical challenges. AI-powered tools are already being used in areas such as risk assessment, predictive policing, and forensic analysis.
Imagine AI algorithms analyzing vast datasets of criminal records to assess the likelihood of a defendant reoffending, informing decisions about bail, sentencing, and parole. Predictive policing algorithms could analyze crime data to identify potential hotspots and allocate law enforcement resources more efficiently. AI is also being used to enhance forensic analysis, such as analyzing DNA evidence or identifying patterns in crime scene data.
However, the use of AI in criminal justice raises serious concerns about bias, fairness, and due process. AI algorithms are trained on historical data, which may reflect existing societal biases, potentially leading to discriminatory outcomes. Ensuring transparency and accountability in these AI systems is crucial to prevent the perpetuation or even amplification of inequalities within the legal system.
VI. The Ethical and Legal Challenges of AI in Law: Navigating the Algorithmic Frontier
The increasing integration of AI into the legal system brings forth a host of complex ethical and legal challenges that must be carefully considered:
VII. The Future of the Legal Profession: Collaboration Between Humans and Machines
The future legal system is unlikely to be one where AI completely replaces human lawyers and judges. Instead, a more probable scenario is a collaborative partnership between humans and machines. AI will likely handle routine tasks, analyze vast amounts of data, and provide valuable insights, while human legal professionals will focus on strategic thinking, complex legal reasoning, client interaction, and ethical considerations.
The legal profession of the future will require lawyers to develop new skills in working with AI tools, understanding their capabilities and limitations, and critically evaluating their outputs. Legal education will need to adapt to equip future lawyers with the knowledge and skills necessary to navigate this evolving landscape.
Conclusion: Embracing the Potential, Navigating the Perils
Artificial intelligence holds immense potential to transform the future legal system, offering opportunities for increased efficiency, enhanced access to justice, and more data-driven decision-making. However, realizing these benefits while mitigating the inherent risks requires careful consideration of the ethical and legal challenges that accompany this technological revolution. By proactively addressing issues of bias, transparency, accountability, and the preservation of human judgment, we can strive to create a future legal system where AI serves as a powerful tool for upholding the principles of justice and the rule of law. The algorithmic scales of justice are being calibrated, and it is our responsibility to ensure they weigh fairly for all.
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 Technology Letter
April 21, 2025
Fiat Lux
Featured Trade:
(DIFFICULTY OF DOING BUSINESS FOR CHIP COMPANIES)
(NVDA), (TSM), (HUAWEI)
The U.S. appears to have made a massive blunder in its chip control blocking of China.
The U.S. Commerce Department said last week that Nvidia’s H20 graphics processing units — designed to comply with previous U.S. restrictions — would now require export licenses, as would additional chips from AMD. Nvidia says it has already halted exports of the GPUs, resulting in a quarterly charge of approximately $5.5 billion.
Could this be an example of the government getting in its own way?
Examples of these local AI chipmakers include tech powerhouse Huawei and the partially state-owned and publicly listed Cambricon Technologies, which designs GPUs.
Shares of Cambricon were up over 10% in the past five trading days amid news of the latest Nvidia controls. The stock is up over 400% in the past 12 months.
Can China fill the gap?
Huawei is the clear leader in China’s race to find an Nvidia competitor. The U.S.-blacklisted company has been working on its own improvements to compete with the leading technology.
Huawei remains about a generation behind in chips, but that won’t be the case for long.
Because TSMC’s chipmaking equipment includes U.S. technology, the company has complied with U.S. trade restrictions on Huawei and the shipment of advanced chips to China. That has left Chinese companies increasingly reliant on domestic foundries like Semiconductor Manufacturing International Corporation.
Nevertheless, SMIC is under its own export controls, which prevent it from accessing some of the world’s most advanced chipmaking equipment.
Are export controls working?
Chinese chip makers won’t need to immediately fill this H20 demand thanks to stockpiles and previous export exemptions and loopholes.
The U.S. government’s aggressive policy against the semiconductor industry is backfiring.
It is interesting that the Federal government never takes into consideration that loopholes and workarounds are possible and what the aftereffects are.
Sanctions can usually be subverted by using a third country to move the goods, and that is what we are seeing.
The end result is higher prices for all.
In general, an increase in the price of semiconductor chips would result in anything tech-related going up in price, and that is after a generation of deflation made devices cheap.
This also raises the price of doing business in AI. The GPUs needed for AI data centers will become more costly.
I could envision the future where harnessing AI software might be reserved for the well-off, because it won’t be cheap to use.
Each pressing day, the cost of business goes up as the globalization trends from post-World War 2 are being ripped to shreds by the existing administration.
Deglobalization is painful for the average person, but when you add on a tech sector in dysfunction, it really turns the screws on the investors.
What’s the end result?
In the short-term, semiconductor stocks will cool off because government obstruction means it is way harder to do business, let alone at profitable prices.
This restriction, this tariff, this rule, this forced export control, and the circus keep going with corporate management wishing one day to operate in a stable business environment.
Nothing is stable about the business environment now, forcing investment dollars to the sidelines.
In the short-term, sell any bear market rally in chip stocks.
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
(WANT A HIGHLY RESILIENT STOCK DURING A RECESSION – THEN LOOK AT NETFLIX)
April 21, 2025
Hello everyone
WEEK AHEAD CALENDAR
Monday, April 21
10:00 a.m. Leading Indicators (March)
Earnings: W.R. Berkley
Tuesday, April 22
8:30 a.m. Canada PPI MoM
Previous: 0.4%
Forecast: 0.5%
9:30 a.m. Philadelphia Reserve Bank President Harker speaks on Economic Mobility in Regional Economics, Philadelphia
10:00 a.m. Richmond Fed Index (April)
Earnings: Baker Hughes, Intuitive Surgical, Enphase Energy, Capital One Financial, Tesla, Stell Dynamics, Lockheed Martin, Verizon Communications, Kimberly-Clark, Genuine Parts, MSCI, Quest Diagnostics, PulteGroup, 3M, Equifax, Synchrony Financial, Elevance Health, Danaher, RTX, Northern Trust, Northrop Grumman, GE Aerospace.
Wednesday, April 23
8:00 a.m. Building Permits final (March)
9:45 a.m. PMI Composite preliminary (April)
Previous: 53.5
Forecast: 51
9:45 a.m. S&P PMI Services preliminary (April)
10:00 a.m. New Home Sales (April)
2:00 p.m. Fed Beige Book
Earnings: ServiceNow, Chipotle Mexican Grill, Lam Research, Texas Instruments, Tyler Technologies, O’Reilly Automotive, International Business Machines, FirstEnergy, Discover Financial Services, NextEra Energy, Old Dominion Freight Line, General Dynamics, CME Group, Boston Scientific, Thermo Fisher Scientific, AT&T, Otis Worldwide, Norfolk Southern, GE Vernova, Boeing, Raymond James Financial, Philip Morris International.
Thursday, April 24
8:30 a.m. Chicago Fed National Activity Index (March)
8:30 a.m. Continuing Jobless Claims (March)
8:30 a.m. Durable Orders preliminary (March)
Previous: 0.9%
Forecast: 1.8%
8:30 a.m. Initial Claims (04/19)
10:00 a.m. Existing Home Sales (March)
11:00 a.m. Kansas City Fed Manufacturing Index (April)
Earnings: Hartford Insurance Group, Eastman Chemical, T-Mobile US, Gilead Sciences, Alphabet, Intel, Comcast, Freeport-McMoRan, Union Pacific, Keurig Dr Pepper, Bristol Myers Squibb, Tractor Supply, Procter & Gamble, CBRE Group, Southwest Airlines, Valero Energy, Hasbro, PepsiCo, PG&E, L3 Harris Technologies, Ameriprise Financial.
Friday, April 25
2:00 a.m. UK Retail Sales
Previous: 1.0%
Forecast: -0.3%
10:00 a.m. Michigan Sentiment final (April)
Earnings: Schlumberger, Phillips 66, Charter Communications, Colgate-Palmolive, Centene, AbbVie, Abbott Laboratories.
A Bunker Worthy Stock
One company that we might be able to hide away from all the angst in the world now is Netflix (NFLX). Its business is booming and appears well-protected from any economic headwinds.
It has a goal of reaching $1 trillion in market capitalization by 2030, and that seems reasonable. It looks like the streaming giant is poised to benefit whether the U.S. goes into recession.
Netflix’s earnings were better than expected. It has a market cap of $416.2 billion, based on FactSet.
The company expects to double its advertising revenue growth in 2025 after it launched its advertising-backed service in the U.S. on April 1. The second quarter will see an international build-up.
Even with the price increases in the U.S., Netflix has not reported any downgrades or defections, and that is certainly a sign of strength and resilience.
Many analysts, including Oppenheimer and Pivotal Research, have price targets of $1,200 or even $1,450.
Netflix (NFLX) $973.03 – April 17, 2025
In the chart above, you can see a clear flag pattern has formed. Additionally, you can also notice there is a clear divergence as shown on the MACD. Plus, we see that the stock has come down to test the 200-day MA, (not quite reaching it) and bounced strongly.
The Jumpy Bond Market
I don’t care what side of the political fence you sit on, a bond market under pressure commands attention.
Trump wants Powell to lower interest rates, but Powell has made it clear that the Fed would put US interest rates on hold until the impact of Trump’s trade policies became clearer. When that happens, Powell might be forced to choose between prioritising fighting higher inflation or rising unemployment in a slowing economy.
Trump is under the belief that he can oust the Fed Governor. But any attempt to sack Powell would surely set off a backlash from financial markets because it would damage the Fed’s credibility as an independent, non-political central bank.
Were the White House to exert influence over the Fed, the implications would most probably be that US monetary policies would become more stimulative and inflationary, and the US economic cycle more volatile.
And then think about what would happen to the US bond market and the dollar. The US dollar, as the world’s reserve currency, and the haven of the US bond market, could both be at risk from Trump’s attacks on Powell and his trade war on everyone.
Trump’s policymaking is erratic and has induced enormous day-to-day volatility within financial markets. The markets are, on any day, at risk of another downward spiral in response to an unexpected Trump social media post.
Dollar weakness shows a wave of funds leaving the US to what are believed to be more stable jurisdictions such as Japan, Germany, and Switzerland.
If that dollar depreciation and capital flight were sustained, they would have implications for the US government’s massive refinancing tasks this year.
MARKET UPDATE
S&P500
The index is showing a choppy pattern behaviour. Volatility will be with us for a while. In the short term there is scope for more weakness back toward the base = part of larger period of ranging.
Resistance: 5345/5485/5525
Support: 5210/5150/4800/35 area
GOLD
Gold just keeps making new highs, reaching $3358 on April 17th. Market is overbought, but still no evidence in the patterns that a top is forming yet. Bias is therefore to the upside.
Resistance: $3357/$3396/$3420
Support: $3281/$3242/$3165
BITCOIN
We will be beset with more ranging behaviour over the near term as part of the larger bottoming, and with eventual gains above that Jan. peak at 109~ thereafter.
As I have already suggested, there is still some scope for a retest or even a slight break of the April 7th low at 74.4k, before the larger upside is seen. (My research is saying we could go as low as 67k).
Resistance: 85.8/86.3/92/93k (If we can close & hold above 86, we may have seen the low).
Support: ~80.5
HISTORY CORNER
On April 21
QI CORNER
SOMETHING TO THINK ABOUT
Cheers
Jacquie