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Hot Tips
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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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May 19, 2025
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Moody’s Downgrades United States Credit,
citing the budgetary burden the government faces amid high interest rates. The U.S. is running a massive budget deficit as interest costs for Treasury debt continued to rise due to a combination of higher interest rates and more debt to finance. The fiscal deficit totaled $1.05 trillion year to date, 13% higher than a year ago. The influx of tariffs helped shave some of the imbalance last month, however. The benchmark 10-year Treasury yield shot 3 basis points higher in after-hours trading, trading at 4.48%. Expect more downgrades to come.
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Netflix (NFLX) Tops $500 Billion in Market Cap,
up 23% since the April 2 market bottom. Bulls foresee further profit through its flywheel, ad-supported tiers, live sports, gaming, and expansion into physical locations. Despite a high valuation, Netflix’s potential for rapid earnings growth could make it a worthwhile investment. Buy (NFLX) on dips.
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US Import Prices Rise as Tariffs Kick In.
Import prices gained 0.1% last month after dropping 0.4% in March, the Labor Department's Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast import prices, which exclude tariffs, would decrease 0.4%. In the 12 months through April, import prices edged up 0.1%.
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German Car Importers Taking the Biggest Trade War Hits,
because they have the fewest US factories. New car imports face a 25% tariff and reduced tariffs on parts that are not compliant with the United States-Mexico-Canada Agreement. About half of the new cars sold in the U.S. are imported. For the other half of cars that are assembled domestically, half of their parts are imported, with most of the foreign parts coming from Canada and Mexico. An average car price increase of between $3,000 and $4,000, or about 7% of the average price of a new vehicle. You should have bought that Mercedes last year.
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How the House Budget Robs from the Poor to Give to the Rich.
Medicaid, Medicare, and Social Security are under scrutiny for cost savings by the Trump administration and Republicans in Congress. If some of the Republican proposals go through, critics say, they would undermine core government programs that provide health and financial security to much of the country. Medicaid, covering one in five Americans—or more than 70 million people—is the largest near-term target. On Sunday night, House Republicans unveiled $880 billion of proposed cuts, primarily from energy and health programs over the next decade, mostly coming from Medicaid. Local hospitals are panicking that they are about to get hit with an onslaught of ill, uninsured patients.
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May 16, 2025
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Consumer Sentiment Crashes,
with the second-lowest reading in 73 years at 50.8. One-year inflation expectations are at 7.3%. The majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs between the two countries.
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Meta Delays Flagship Behemoth AI Product,
taking the shares down 6%, as concerns about its capabilities rise. Company engineers are struggling to significantly improve the capabilities of their Behemoth large-language model, resulting in staff questions about whether improvements over earlier versions are significant enough to justify public release. Incremental improvements are shrinking, despite a planned $72 billion capital investment this year.
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Coinbase Hit with SEC Investigation,
taking the stock down 6%. The inquiry focuses on the number of “verified users” reported by the company, which it has claimed is more than 100 million in various securities filings and marketing materials. The investigation began during the Biden administration, which was famously hostile toward the crypto industry, and has continued under the Trump administration’s more crypto-friendly SEC.
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Existing Home Sales Plummet.
In April, sales dropped unexpectedly, despite increases in available inventory. Sales decreased 17.8% from the previous month, reaching 4.330 million (annually adjusted). The median price of an existing home sold in April was $407,600, a 5.7% increase compared to the previous year. While inventory rose 9% month-over-month, it was still only a 3.5-month supply at the current sales pace.
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Building Permits Dive in April,
falling 4.7% to a seasonally adjusted annualized rate of 1.412 million, the lowest in eleven months. This decline, which was below market expectations, was influenced by factors such as rising mortgage rates and tariffs on imported building materials.
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