Archive

US Trade Deficit Hits 15-Year Low.

Tariffs have made imports so expensive that nobody can afford to buy anything anymore. It’s another sign of shrinking standards of living. The US dollar finally caught a bid on the news.

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ADP Comes in Sluggish.

Private sector job creation turned positive in December, though at a bit softer pace than expected, payrolls processing firm ADP reported Wednesday. Companies added 41,000 hires for the month, a reversal from the loss of 29,000 in November, providing a positive sign for a labor market that otherwise struggled as 2025 came to a close. Private company payrolls had declined in three of the four months before the December release. It’s further confirmation of a slowing economy.

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Margin Requirements Rise for Gold and Silver,

after the ballistic December performance. Gold is up more than 64% year-to-date, on track for its best annual performance since 1979 and its third straight positive year. The rally has been supported by a multitude of factors, including the impact of US interest rate cuts, tariff tensions, and robust demand from exchange-traded funds and central banks.  Silver has far outpaced gold in 2025. The metal, which has endured wild price swings in recent days, is on course for annual gains of nearly 150%. Like gold, this would be silver's best yearly performance since 1979. Silver's price boom has stemmed from a mix of low supply and high demand from India, as well as industrial needs and tariffs. The long-awaited consolidation is here. Avoid (GLD) and (SLV) for the short term.

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California to Raise Taxes on Billionaires,

to offset a billion in funding cuts from Washington. The Billionaire Tax Act, which could be added to the state's general election ballot in November, would impose a one-time tax of 5% on the total wealth of California tax residents whose net worth is $1 billion or more. These people come into the Golden State and leave rich, and this has been going on for decades.

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Weekly Jobless Claims rise 8,000 to 208,000.

Continuing claims rose 56,000 to 1.914 million. Worker productivity grew at its fastest pace in two years in the third quarter, according to other data from the Labor Department released on Thursday, suggesting a boost from increased artificial intelligence investment was underway. The surge in productivity, which depressed unit labor costs, underscored what economists have termed a jobless economic expansion. It followed on the heels of robust economic growth in the third quarter.

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Stock Market Rockets on Venezuela Attack,

removing uncertainty from the investors.  The same thing happened in 1991 when the onset of the first Gulf War ignited stocks but crashed oil. I know a hedge fund that went bust betting the wrong way on oil. Still ahead, an imminent Supreme Court decision on tariffs and a market-destroying impending government shutdown on January 30.

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Gasoline Prices Hit 4-Year Low,

thanks to collapsing crude, which hit $55 a barrel. The average price of unleaded gasoline in the U.S. has fallen to its lowest level since 2021, according to AAA. I saw $2.70 a gallon in Nevada. Some early 110 million Americans are expected to make road trips this holiday season.

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Ford Reports Best Sales in Six Years.

Ford Motor on Tuesday said its U.S. vehicle sales last year increased 6%, marking the company’s best annual sales since 2019. The Detroit automaker reported sales of 2.2 million vehicles in 2025, including a 2.7% uptick to more than 545,200 units during the fourth quarter. Avoid (F) as the run is done.

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Gold to Hit $4,800 an Ounce by End 2026,

says Morgan Stanley. In a note dated January 5, it also said the attack on Venezuela over the weekend was likely to attract buyers to gold as a safe haven, but did not specify this as a reason for its $4,800/oz forecast. Traders view gold as a safe store of value during times of economic and geopolitical turmoil that also performs well in low-interest-rate environments when its non-yielding nature is less of a disadvantage financially. For silver, the bank said 2025 marked a peak deficit, adding China's export license requirements, which have taken effect from the start of this year, added to the "upside risk for silver".

Silver recorded its strongest annual gain in 2025, surging 147%, on rising industrial and investor appetite and a structural market deficit. Buy (GLD) and (SLV) on dips.

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Tesla EV Sales Drop 9% in 2025,

and 29% in the UK in December, as Chinese brands take over the global market. Tesla has become a lagging No.2 in the EV scene. BYD UK registrations surged nearly 5-fold last month, according to New AutoMotive. Sell (TSLA).

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The Jobs Market is in Freefall.

The U.S. economy added only 64,000 jobs in November.  But the unemployment rate ticked higher to a five-year high at 4.6%. On top of that, the Nonfarm Payroll Report fell by 105,000 in October. The government is mixing up the data so comparisons can’t be made. The stock market is confused.

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Inflation Cools with a 2.7% CPI,

for October and November combined. Core 2.6% came in at 2.6%. Many data points were missing thanks to the longest government shutdown in history, where data was just not collected by laid-off government workers. It is a real apples-and-oranges comparison, almost useless. Tariffs left a big footprint.

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GDP Grows at an Annualized 4.3%,

in Q3, a two-year high. The figure received a huge one-time only boost from the collapse of imports triggered by tariffs, which are subtracted from the GDP calculation. The government is going to have to find another source of growth in 2026. You only get an import collapse once. An impending government shutdown on January 30 won’t help.

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S&P Case Shiller Gains Modestly in October,

up a weak 1.4%. Gains were seen in Chicago (+5.8%), Cleveland (+4.1%), and New York City (+5.0%). Losses were seen in eight cities, with Tampa (-4.2%), Phoenix (-1.5%0, and Dallas (-1.5%) posting the worst numbers. Real Estate was the worst-performing sector in the S&P 500 in 2025. With rates at these levels, first-time buyers have to save for seven years to make the down payment.

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Fed Minutes Promise More Fed Rate Cuts.

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Wednesday, January 14, 2026 Sarasota, Florida Strategy Luncheon

Come join me for lunch at the Mad Hedge Fund Trader’s Global Strategy Luncheon, which I will be conducting in Sarasota, Florida, on Wednesday, January 14, 2026. The cost of the luncheon will be $277.

An excellent meal will be followed by a wide-ranging discussion and an extended question-and-answer period.

I’ll be arriving early and leaving late in case anyone wants to have a one-on-one discussion or just sit around and chew the fat about the financial markets.

The lunch will be held at an exclusive Sarasota hotel. The precise location will be emailed with your purchase confirmation. Mad Hedge guests will be assigned their own dedicated table in a ballroom with 200 other participants.

I look forward to meeting you, and thank you for supporting my research.

To purchase tickets for this luncheon, please click here.

A Christmas Story

When I was growing up in Los Angeles during the fifties, the most exciting day of the year was when my dad took me to buy a Christmas tree.

With its semi-desert climate, Southern California offered pine trees that were thin and scraggly at best, and we didn’t want to chop down the view that we had.

So, the Southern Pacific Railroad made a big deal out of bringing trees down from much better endowed Oregon to supply local holiday revelers.

You had to go down to the freight yard at Union Station on Alameda Street in downtown LA to pick them up.

I remember a jolly Santa standing in a boxcar with trees piled high to the ceiling, pungent with seasonal evergreen smells, handing them out to crowds of eager, smiling buyers for a buck a piece.

Watching great lumbering steam engines as big as houses whistling and belching smoke was enthralling. We took our prize home to be decorated by seven kids hyped on adrenaline, chugging eggnog.

A half-century later, the Southern Pacific is gone, the steam engines are in museums, anyone going near a rail yard would be mugged or arrested for vagrancy, and Dad long ago passed away. Dried out trees at Target for $60 didn’t strike the right chord.

So, I bundled the kids into the SUV and drove to the Eastern shore of Lake Tahoe, on the Nevada side, a $10 US Forest Service tree-cutting permit in hand.

Deep in the forest at 8,000 feet, the kidsmade the decision about which perfect 12-footer to take home. I personally chopped it down and dragged it along the ridge, huffing and puffing all the way. I then tied it to the roof and drove us home. Lifting a 200-pound tree gets tougher every year. Thank goodness the kids are getting bigger.

I netted three trees that day, one for each home, and one for my oldest daughter. I figure I saved myself $600.

With any luck, these memories will last until the next century, long outlasting me.

Now the story really comes full circle. I was in Portland, Oregon, a few years ago, and had some free time to kill. So, I wandered across the river to the Oregon Rail Heritage Center.

What do I see but Southern Pacific engine no. 4449, the exact same locomotive I marveled at in LA 65 years ago, all decked out in its glorious orange and red paint.

It was like discovering a long-lost family member. The 435-ton, 72-year-old behemoth was recently rebuilt from the ground up by a dedicated team of similarly aged volunteers to serve as the city’s Polar Express train in 2014.

For the link to the museum, please click here.

Union Pacific still maintains in running condition some of the largest steam engines ever built, for historical and public relations purposes.

One, the “Old 844” once steamed its way over the High Sierras to San Francisco on a nostalgia tour. The 120-ton monster was built during WWII to haul heavy loads of steel, ammunition, and armaments to California ports to fight the war against Japan. The 4-8-4-class engine could pull 26 passenger cars at 100 mph.

When the engine passed, I felt the blast of heat from the boiler singe my face. No wonder people love these things! To watch the video, please click here and hit the “PLAY” arrow in the lower left-hand corner.

Please excuse the shaky picture. I shot this with one hand, while using my other hand to restrain my overexcited kids from running onto the tracks to touch the laboring beast.

Merry Christmas,
John Thomas

Long Time No See, Old Friend