Archive
Hot Tips
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May 27, 2025
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MicroStrategy Issued $2 billion in Preferred Stock,
yielding a 10% dividend, which it will use to buy more Bitcoin. The shares fell by 7.5%, even though the dilution of existing shareholders is only 2%. I get back to my argument that even though total Bitcoin issuance is limited to 21 million coins by 2040, there is no limit on Bitcoin derivatives.
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Global Shipping Rates are Soaring,
as a result of the on-again, off-again trade war. Port congestion is worsening at key gateways in northern Europe, with waiting times for berth space increasing significantly in Bremerhaven, Antwerp, and Hamburg due to labor shortages and low water levels on the Rhine River. The congestion is also affecting other hubs, including Shenzhen, Los Angeles, and New York, and is expected to continue for several weeks, with shipping lines facing delays and higher costs that may require freight rate hikes. Waiting times for berth space jumped 77% in Bremerhaven, Germany, between late March and mid-May.
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The 60/40 Portfolio is Dead for Now,
with both stocks and bonds going down at the same time. This isn’t supposed to happen. Bonds usually rise going into a recession. But foreign boycotts of new US bond issues and the “Sell America” trade have taken the (TLT) down from $94 to $83 this year, a loss of 11.7%. In the meantime, stocks have gone nowhere this year.
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The Shale Oil Boom is Over,
due to tax-subsidized US overproduction, weak Chinese consumption, and recession fears. As a result, oil companies are scaling back capital investment. Texas, Oklahoma, and Louisiana will get hit the hardest.
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US Steel (X) Takeover Goes Through,
at $55 a share, with Nippon Steel investing $14 billion of investment over the next 14 months to modernize antiquated technology. U.S. Steel's headquarters will remain in Pittsburgh, the president said. U.S. Steel shares were up more than 1% on Tuesday. Going into a recession, and with tariffs demolishing the auto industry, steel is not a business you want to be in right now.
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May 23, 2025
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Trump Threatens 25% Tariff Against Apple,
unless the company builds an iPhone in the US, which can’t be done. The shares dropped 5% on the news. A further 50% tariffs were threatened for Europe because of the lack of progress with negotiations there. Stocks dumped 400 points at the opening. Another day, another trade war. Maintain your (AAPL) short.
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US Dollar Hits Two-Year Low,
as the “Sell America” trade continues. It’s almost unprecedented for a currency to fall when its interest rates rise. Debt, default, and trade wars are now the larger concern. Keep buying dips in (FXE), (FXA), (FXB), and (FXY).
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Administration Pushes US Nuclear Industry,
which had been slowed by safety regulations under previous administrations. An all-electric economy with AI is going to need a 400% increase in the electric power grid. Buy Cameco and Vistra Energy on dips, past Mad Hedge recommendations.
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New Home Sales Hit Three-Year High,
up 10.9%, but rising mortgage rates and economic uncertainty remained headwinds for the housing market. Builders are definitely trying to unload inventory ahead of a recession. Data for February and March was revised significantly down, taking some of the shine from the unexpected increase in sales last month. New homes are now cheaper than existing ones.
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Yes, Tom Cruise Really did Get to Borrow a US Aircraft Carrier,
the USS George W. Bush, for his latest movie, The Final Reckoning. The Pentagon reviews scripts for accuracy and depiction of the military, and charges for equipment use and personnel support, but in this case, the carrier and crew were already on scheduled training missions, so no reimbursement was required. The crew spent three days in the Adriatic Sea filming aboard a nuclear-powered Nimitz-class carrier commissioned in 2009. All of the Top Gun movies have led to a massive surge in Navy recruiting, although few qualify.
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May 22, 2025
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The Bond Vigilantes are Back,
and are not to be taken lightly, as seen by yesterday’s failed auction of 20 US Treasury bonds. The last time they were this upset, they took ten-year US Treasury bill yields up to 16%, causing a three-year-long recession. Stocks fell by 30% from already very low lows. The 20% inflation rate then was caused by an oil shock and a collapsing US dollar, not tariffs. Don’t kid yourself, this can’t happen again.
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Walmart is Planning Mass Layoffs,
some 1,500 jobs, as demanded by the high prices brought by the trade war. Walmart is the largest U.S. private employer with about 1.6 million employees. It employs about 2.1 million employees worldwide, according to its website. It is also the country's biggest importer with about 60% of its imports, mainly items such as clothing, electronics, and toys, from China.
The company had last week said it would raise prices for some products by the end of May as President Donald Trump's trade war hits its supply chain and increases expenses.
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Existing Homes Sales Hit 16-Year Low,
down 0.5% to 4 million units. Inventory jumped 9% MOM and 21% YOY. That is a 4.4-month supply, a five-year high. The median home price is at $414,000, up 1.8% YOY. First-time buyers accounted for 30% of the sales. Homes over $1 million are doing better, up 6% YOY. The cancellation rate doubled, due to the stock market crash.
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Weekly Jobless are Unchanged,
down only 2,000 to a seasonally adjusted 227,000 for the week ended May 17. They expect claims in the coming weeks to drift into the upper end of their 205,000-243,000 range for this year, mostly driven by difficulties adjusting the data for seasonal fluctuations. Economists, however, see layoffs picking up in the second half of 2025 as the administration's tariffs dampen demand, snarl supply chains, and stoke inflation.
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Sushi Deflation is Here!
New York City is a global capital for high-end sushi, home to some of the most sought-after omakase experiences outside of Japan at $1,000 a plate, with chefs like Keiji Nakazawa of Sushi Sho and Tadashi Yoshida of Yoshino. Now, there is a new consciousness that comes amid uncertainty around the tariff-related price of imported Japanese fish. Japanese seafood vendors have recently increased prices from 10% to 15%. One restaurant has responded with smaller discount meals, where $58 gets you 13 courses. That’s about what it costs in Tokyo. The owners are hoping to make up the profit loss with higher volume.
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May 21, 2025
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Stocks Crash on Treasury Bond Yield Spike,
with ten-year yields hitting 4.6%. Wall Street’s worries about a ballooning deficit that threatens America’s status as a safe haven were reflected in a $16 billion Treasury sale of 20-year bonds that bombed, with stocks, bonds, and the dollar falling. A Foreign boycott was a major issue. The prospect of a House bill that could add up to $16 trillion to the national debt over the next 4-10 years has sent all asset classes into free fall, except for gold.
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Home Inventories Rise 18% YOY,
to the highest levels since pre-pandemic. As a result, cities like Phoenix, Denver, Dallas, and Las Vegas are seeing substantial price drops. New York City is holding up because of return-to-work orders.
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Investors Flock to Non-US Equity Funds.
Investors poured $2.5 billion into ex-US mutual funds and ETFs. It’s the highest inflow on record and reverses a three-year trend. Confidence in the US is falling as long as it is demolishing the economies of foreign trading partners.
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Here is a Trade War Proof Stock for You,
and I even like their products. Netherlands-based Heineken (HEINY) is the world’s second-largest brewer after Anheuser-Busch Inbev. It has operations in more than 70 countries and, along with its eponymous beer, owns popular brands like Amstel, Dos Equis, Lagunitas, Red Stripe, and Tiger. It also gets less than a third of its business from the U.S.—good news at a time when Americans are drinking less and a potential trade war has clouded the picture.
All of that adds up to a recipe for broad-based, ongoing earnings strength, even in the face of an economic downturn.
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Tesla Sales Aren’t Recovering,
for forecasts ranging from zero growth to down 10%. The first three months of the year didn’t go as planned. Tesla delivered about 337,000 cars in the first quarter, down 13% from a year earlier and far below what Wall Street expected. At the start of 2025, the first-quarter delivery estimate was about 455,000 vehicles, according to FactSet. The miss even had Chief Financial Officer Vaibhav Taneja citing brand image “challenges”. Sell all (TSLA) rallies.
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May 20, 2025
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Expect Tough Sledding for Stocks,
until the next trade war deadline is reached on July 9, says money manager Canaccord Genuity. A range trade until then is likely, which really began last week. The market has recovered quickly to roughly the same P/E as post-inauguration highs, but the volatility has introduced new variables, putting pressure on the short-term risk/reward balance. Don’t chase this rally on pain of death.
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CBS Fires Key News Official,
after Trump blocked a merger by owner Paramount with Skydance Media, run by Larry Ellison’s son, a big Trump donor. A $20 billion lawsuit from Trump is the issue, who views flagship programs like CBS's Sixty Minutes as too liberal. Trump's assault on the media continues. Avoid the sector.
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Gold Jumps 1% on US Bond Downgrade.
Credit downgrades and eventual default have been the dream of gold bugs for the last 50 years. Gold is the last flight to safety asset. Buy gold (GLD) on dips.
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MicroStrategy Buys More Bitcoin,
some 7,390 coins worth $77.8 million. That brings their total to 576,230 coins worth $61.7 billion. Buying at the top like they did last time? (MSTR)’s market capitalization is now $114 billion.
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Some 20% of Apple’s Earnings are at Legal Threat.
Apple faces two major risks—the first is the end of the arrangement where it receives billions of dollars annually from Google-parent Alphabet for placement of its search engine on iPhones. The second is litigation with videogame developer Epic Games that threatens its ability to charge a fee on transactions in Apple’s App Store. The payment from Google—estimated at $20 billion to $24 billion—is the bigger deal, representing around 6% of Apple’s annual revenue but 16% of its earnings per share. Sell (AAPL) on rallies.
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