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.
This week investors will have one eye on the geopolitical landscape, and Trump’s relationships with Europe and other countries around the world, and the other on domestic data as it relates to the health of the U.S. economy.
The Retail sales report will reveal the temperature of the consumer – always a good indicator of the strength of the U.S. economy.
The Fed is widely expected to hold rates steady at its meeting this week.But it’s the post-meeting that will be interesting.Investors will be listening for any shifts in monetary policy because of the ongoing uncertainty stemming from the Trump administration, and the recent sluggishness in the economy.
Also, this week, Nvidia (NVDA) could get a kick along from the GPU Technology Conference (GTC).Investors are looking for Nvidia’s ability to keep delivering new chips at a faster pace than in the past.It’s a tall order!Investors will also be looking for details on Nvidia’s next chips called “Rubin”, named after Vera Rubin, the astronomer who discovered dark matter.
MARKET UPDATE
S&P500
After a tumultuous couple of weeks, the S&P500 has finally found some support around 5495/10.The market is very oversold, so there is potential for a bottom to form here for a few weeks.
Support = $5500/10 and $5435
Resistance = $5635/$5780
GOLD
Gold hit another new high, recently reaching $3005. If we look at the big picture, through an Elliott Wave lens, the rally from the Nov. low at $2537 is in its final upleg, which suggests a rising risk of an approaching multi-month top.So, even though we could get some more short-term upside in gold, investors need to be aware that a top is near.After a correction, gold will resume its bull market rally.Targets include $3,500, and $4000.
Support = $$2676/$2930/$2892
Resistance = $3005/$3030
BITCOIN
Bitcoin has been continuing its messy bottoming behaviour, reaching a recent low at 76.6k.In the big picture, Bitcoin’s movement is seen as a large correction with an eventual upside rally targeting new highs.Bitcoin could continue this ranging/basing for another week or two, and even touch lows below 76, though the extent and pace of the move will likely be limited. Bitcoin should not breach 60k, but if it does, it will most probably be a spike movement to test the Bitcoin bulls.
Support = $79.7 and $75.6 area
Resistance = $$87.6k/$88k
TRADES CORNER
AS I eventually expect bitcoin to rally in the short to medium term, I have been researching some options to play this rally.Many of you don’t own bitcoin, so the next best thing is to either own or do options on (IBIT) and (MSTR).
Below I have displayed a few alternatives option plays for (IBIT) and (MSTR).It’s up to you how many you do – you can place all of the trades, just one, or none of them, should you just want to observe the action.Also, the number of contracts is up to you – just choose a weighting that is comfortable for you, so you can sleep at night. Of course, by the time you enter any of these option trades, prices will probably have moved, so please trade accordingly.
Good inflation reports mean lower rates, right?The Fed may not see it that way.
Inflation reports, which showed better-than-expected slowdowns in consumer and wholesale prices last month, may be hiding an unpleasant surprise.Progress on the Fed’s favourite indicator has possibly stalled.
Bank of America economists said the monthly increase in core Personal Consumption Expenditure (PCE) may have picked slightly up to 0.4% in February, with the year-over-year changes also picking up slightly.
Economists Jeseo Park and Stephen Juneau from Bank of America have indicated to clients that their forecast for PCE inflation reinforces their view that inflation is “unlikely to fall enough for the Fed to cut this year, especially given policy changes that boost inflation.”Furthermore, they expressed the view that they expect “policy rates to stay on hold through year-end unless activity data really weakens.”
The Federal Reserve meets next Wednesday to decide on interest rates.
In contrast to BofA’s views on the economy, Comerica (CMA) expects that the PCE report will be benign for markets but added that the outlook for inflation now depends on tariffs, deportations, and the Department of Government Efficiency (DOGE)
Today’s benign PPI report wasn’t enough to support stocks after President Trump said he’d impose 200% tariffs on alcohol imported from the EU, escalating the trade war.
QI CORNER
Recording of February 2025 Jacquie’s Post Zoom Meeting
(THE POSSIBILITY OF A U.S. RECESSION IS NOW BEING ACKNOWLEDGED)
March 12, 2025
Hello everyone
The shift is on from bull to bear as the “R” word becomes a discussion topic.
After a few months of me warning everyone about an impending down move/bear market, going against the grain of most professional analysts and all the “talking heads”, Ed Yardeni now comes out and says it is “possible a bear market has already started.”
As recently as February, he said the U.S. economy could go a decade without a recession.In January, he said investors are in a “roaring 2020” market.
The shift in his view comes after the whiplash of back-and-forth changes in trade policy from President Donald Trump, and early signs of economic weakness, and highlighted concerns of a recession, itself defined as two consecutive quarters of economic contraction.
Yardeni points out that Trump is testing the limits of the economy and the markets.His administration’s rapid-fire policy initiatives have been testing every limit imaginable, and so far, there has been a good measure of resiliency, but recession fears are definitely rising.
Trump has gone ahead and done it.
He has introduced 25% tariffs on Australian aluminium and steel. Our Prime Minister described the move as “unfriendly and unjustified” and an “act of economic self-harm.”Europe, also, did not escape similar tariffs.But Europe plans to retaliate with tariffs on U.S. goods.
Australia will not retaliate. But there could be implications down the track.Interestingly, economists say the tariffs have more “bark than bite.”
Trump’s tariffs could take the U.S. on a dangerous journey with unforeseen implications.
Ray Dalio has commented that a severe U.S. supply-demand problem could lead to ‘shocking developments.’He is focused on the debt issue and believes we could see unexpected developments in terms of how it’s going to be dealt with.
Where to hide and protect your portfolio while Trump wages a tariff trade war.
Within the fixed income market, you can find a source of stability with U.S. Treasury Inflation-Protected Securities (TIPS), which should outperform in both high-inflation and recession environments.
TIPS are sold by the U.S. Treasury with 5-, 10-, and 30-year terms.Unlike traditional government bonds, the principals on TIPS – the amount the government agrees to pay back to the bond holder – can move higher or lower over the maturity term of these instruments.At the end of the term, if the principal is higher than the original agreed rate, the holder gets the increased amount.If the principal is equal to or lower than the original rate, the TIPS holder is paid the original agreed principal.
Corporate credit markets are also an option.
Brian Mangwiro, managing director of global sovereign debt and currencies at Barings, has suggested Investors can focus on sectors less exposed to tariffs such as financials, construction, and defence, and avoid those in the line of fire such as autos and potentially technology.
By now, you should have insurance in place, such as (SDS) or (SH) to cover what you wish to keep in your portfolio.
MY CORNER OF THE WORLD IN PHOTOS AFTER CYCLONE ALFRED
Powerlines down across roads in multiple areas across Brisbane, Gold Coast, and Sunshine Coast and as far inland as Toowoomba (a two-hour drive from the Gold Coast).
This has been a common sight in every neighbourhood across the Gold Coast. Some people also lost their roofs.
A huge cliff has formed right along the coastline after Cyclone Alfred battered the coast and eroded our beautiful beaches.Millions of cubic metres of sand have been gauged from 500km of coastline.
Expiration of Congressional continuing budget resolution from December
Cyclone Alfred has given me a couple of sleepless nights here on the Gold Coast.In my area, there are huge branches and some trees down, powerlines down across roads, traffic lights out, people missing, presumed dead, in raging floodwaters, and major shopping centres closed due to power outages. If this had been a Category 4 or 5, the coast would have been wiped out.The buildings here are not built to withstand that type of ferocity.
It's Sunday morning as I am typing this, and we are still without power. (I’m relying on battery power.)Thursday evening, the power went out, and I have no idea when it will be reconnected.It could be up to a week before we have power again, so it is all about making do.
It’s Monday morning, and at long last, it has stopped raining. 250,000 people are still without power, and I am one of them. In the last 24 hours, Brisbane had its wettest day in 51 years, with 275mm of rain falling.
Since Thursday evening last week, I have been working by torchlight and daylight.Reading books in my downtime. Listening to howling winds and rain belt the roof, windows, and doors, and hoping that the building structure can withstand all the punishment mother nature throws at it.
So, to the markets.And this week, investors will be looking for some reassurance and clarity about trade and economic growth.And that is going to be difficult to capture, when President Trump keeps changing his mind on the timing of trade tariffs and their extent, and Musk keeps executing his DOGE agenda.
But inflation data out on Wednesday may settle some nerves about the economy.According to economists polled by FactSet, the consumer price index is set to have risen 2.9% on an annual basis, down from 3.0% in the prior report.Core inflation, excluding food and energy prices, is expected to have risen 3.2%, down from 3.3% previously.
The Producer Price Index on Thursday is also expected to have eased to 3.1% year over year, according to FactSet consensus estimates.That’s down from 3.5% previously.Core inflation is expected to have fallen to 3.5% from 3.6%.
But these numbers could go pear-shaped if companies start to pass along higher costs to consumers and inflationary pressures from Trump’s tariffs eventually start to show up in the data.That could be like a big black storm cloud over the market/economy.At the moment, no one is thinking recession.Remember that data is a lagging indicator.
MARKET UPDATE
S&P500
The S&P500 failed to breach the 6000-mark last week. The index has fallen through the 5773 mark, which I marked as a bearish break/the base of a rising wedge. This significant break arguably confirms that the S&P500’s rally from the October 27, 2023, low of 4103.78 is finally over. It would be no surprise to me to see the S&P500 make a sustained break through 5700 this week.I am anticipating a break of 5400 by around mid-April, or even sooner.(That will depend on the whiplash we are getting from Trump’s “change of mind” notions, which seem to happen almost daily now). Investors should use all the rallies to exit equities or to buy put options or (SH) for hedging.S&P500 has multiple supports between 5693 and 5650, so if you want to take profits, do so in a pullback toward 5773 to 5850.
Support =$5655/75 and $5570/95
Resistance =$5775/85/ $5845/55 and $5895/10 areas
GOLD
Gold’s April futures made a new all-time high of 2968.5.Gold closed at 2908.09 on Friday. Most see gold’s movement from the Feb 24th high at $2956 as corrective and believe gold will show eventual new highs after some consolidation.Yes, that’s possible.But there is another point of view here.Gold could continue to show further weakness if it falls and holds below 2845 levels.And the bigger confirmation of a bearish move for gold would be if/when it closes below USD 2700 levels.This down move could continue for many months and may even take gold towards USD 2000-2250 levels.So, with this outlook, you should be looking to book profits in every rally and sell short once the sell signal confirms.The risk reward matrix may have moved away from the buyers.Trade carefully.
Support =$2887/92 and lower down $2857/62
Resistance = $2928/33
BITCOIN
Bitcoin remains lower from the Jan peak at 109.4k. In the big picture view, the downside is seen as corrective and with eventual new highs after. There is potential for further weakness below the Feb. 28th low at 78.2k, although that weakness would likely be short-lived and part of that larger correction. A break/close above the $95.0 area would argue that the large correction since January is complete.
It is important to note that once Bitcoin does reach its $128-$160 target, the coin may possibly fall into a bearish phase, where it could see a level of $32,000 or so.So, after this rally, I would be a seller.
And remember, keep a sell-stop in place at $70 or at a maximum low of $60k, as it could spike down to these levels before it rallies.If it breaks these levels, observe your sell-stops.
Last week, Trump signed an Executive Order relating to the establishment of a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile, as well as the first Crypto Summit at the White House.This marks the first time Bitcoin has been formally recognised as a reserve asset of the United States government and sets a powerful precedent – not just for sovereign entities but also for corporations, financial institutions, and institutional investors.
Peter Berezin of BCA Research was a Wall Street bear coming into 2025.He believes the U.S. is probably already in a recession.
Coming into 2025, most Wall Street strategists were predicting further gains, however, Berezin was holding a firm bear view of the market.
His year-end S&P500 (SPX) target is 4,450. His worst case is 4,200.That is compared to the 6,500 analysts’ average, and Oppenheimer’s 7,100 top.
Berezin said his research house was among the few that boosted recession probabilities following the U.S. election.He argued that “we did so because we thought that Trump would be disruptive in some positive ways, but also very disruptive in some negative ways, most of which is trade.”
Berezin also negated the argument that tariffs were just a negotiating tool.Instead, he was convinced Trump wanted tariffs because he is “a protectionist at heart” and needs the money because of the sizable budget deficit.
How should investors approach the market right now?
Berezin’s advice is to largely step away from stocks.But if you need to be invested, move your portfolio toward the more defensive sectors, such as “consumer staples, healthcare, utilities to some extent.”He goes on to say that investors should avoid tech, consumer discretionary, industrials, materials, financials, high-yield credit, and crypto.
He comments that you need to own bonds, own more cash, and own more gold.In addition, he mentions buying puts for the protection of your overall portfolio.
What could change Berezin’s downbeat view?
Trump does a complete pivot away from his tariff agenda.But in declaring this, Berezin still believes that stocks would have to go down a lot for Trump to change his position on tariffs.
I have been bearish on the market for quite a while now and indicated bearish targets on S&P 500 charts during my February Zoom meeting.I was also bearish in January.I have recommended selling down a lot of your positions in the stock market or selling some stocks completely.In a scenario such as this environment, it is better to be cashed up, so you can go shopping when there is “blood in the streets.” In other words, have cash at the ready after stocks have been hammered and are in great territory for LEAPS. Warren Buffett has built an enormous store of cash over the last few months, so he is ready to scoop up bargains when the time is right.Heed Buffett’s actions and Berezin’s advice.
For insurance to protect your portfolio, you can buy (SH) Pro Shares Short S&P500 exchange-traded fund (ETF).If the market rallies again, an option trade on SH is another insurance vehicle.
SOUTH-EAST QUEENSLAND WILL TAKE THE FULL BRUNT OF CYCLONE ALFRED
Cyclone Alfred is around 225 kilometres off the Gold Coast and is expected to cross the coast on Friday or early Saturday morning. It is a rare event for this part of Queensland to have a cyclone.It is about 50 years since the last one travelled across our coastline in this southeast Queensland area.Around 655 state schools (1000 schools in all) have been closed in the southeast corner, together with the Brisbane & Gold Coast airports, many businesses as well as some supermarkets.Central Brisbane is almost like a ghost city. Despite the government advising everyone to stay indoors, some surfboard riders have been making the most of the huge swells. Board riders have been towed out past the breaks by jet ski vehicles.
There have been some wave heights of 12 metres and over.And, of course, plenty of broken surfboards.
Supermarket shelves have been stripped bare in preparation for this weather event.
400,000 sandbags have been collected by residents in an effort to protect their homes and businesses.
I have now lost power, so I will submit this while I still have battery power on my laptop.
(EUROPE FORMS A COALITION WHILE TRUMP WAGES WAR WITH TARIFFS)
March 5, 2025
Hello everyone
GEOPOLITICS CORNER
President Zelensky meets the King at Sandringham in the U.K.
EUROPE TAKES THE REINS
British Prime Minister Keir Starmer says the UK, France, and Ukraine will devise a peace plan to end the conflict. Many European nations have vowed to join a coalition willing to help Ukraine.Member states also promised to continue supplying arms to Ukraine during the war and to provide military equipment afterward to ensure the country can defend itself in the event of further Russian aggression.
European Commission president Ursula von der Leyen said she planned to inform EU member states of her plans to strengthen the continent’s defence industry and military capabilities.
The European Commission president has stated that “lasting peace can only be built on strength, and strength begins with strengthening ourselves.”
Following the crisis summit on Sunday, French President Emmanuel Macron said that France and Britain were proposing a one-month truce in Ukraine “in the air, at sea and on energy infrastructure”, although not, initially at least, covering ground fighting.
Even our Australian Prime Minister, Anthony Albanese, has stated that he is open to Australian troops joining a Ukrainian peacekeeping coalition.
Mr Zelensky told journalists shortly before departing Britain that “it will be a failure for everyone if Ukraine is forced into a ceasefire without serious security guarantees.”
TARIFF TRADE WAR
The Trump tariffs will create victims across the world if he continues to escalate the trade war with China.
Mark Carney, the Bank of England’s governor, has warned that a trade war could cut US growth by as much as five percent, twice that of the rest of the world.But Trump does not seem to care about the disproportionate damage that the tariffs are expected to do to the US or that there could be severe unforeseen consequences.
Trump’s electoral success was partially a result of his “America First” rhetoric: Sticking up for the workers who lost their jobs when industries such as manufacturing or mining either moved abroad or became obsolete.
Globalization hasn’t been fair:it has delivered prosperity to an increasingly small few rather than to everybody.But tariffs on imports will mean higher prices for everybody, consumers and businesses alike.
The International Monetary Fund (IMF) stated on Monday that if Trump escalates the trade war with China, the US will be “especially vulnerable.”Americans will lose jobs and have to pay more for items ranging from food to electronics, and international businesses that have positioned themselves as vital cogs in the global supply will be put at risk.
To pursue policies that hurt communities that have already suffered is simply perverse.Everyone gets hurt in trade wars, but ordinary citizens get hurt more than most.
Today, China has retaliated with additional tariffs of up to 15% on some U.S. goods, from March 10.
Canada has also fired back with potential tariffs on US imports.The Canadian Prime Minister, Trudeau, has indicated that should American tariffs come into effect on Tuesday, Canada will, effective 12.01 a.m. EST tomorrow, respond with 25 percent tariffs against $155 billion of American goods.In addition, Trudeau stated that there would be a discussion with the provinces and territories to pursue several non-tariff measures.
I wonder if Mr Trump considered how these sweeping levies will affect supply chains for key sectors like cars and construction materials.Supply chains could be effectively choked, risking a hike in consumer prices.
This fact could indeed mess with Mr Trump’s effort to fulfil his campaign promises of lowering the cost of living for households.
It’s also recently come to light that tariffs on agricultural imports would come into effect on April 2.
While U.S. stocks declined yesterday, Europe’s defence stocks surged in the wake of renewed talks over the fate of the Russia Ukraine war, with BAE Systems, Thales, and Rheinmetall rallying as leaders met for crisis talks about the conflict.
10:45 a.m. New York Federal Reserve Bank President and CEO John Williams discusses at UD Monetary Policy Forum Report “Monetary Policy Transmission Post-Covid,” NY.
Welcome to the month of March.Investors may be hoping for some sort of relief from the volatility of late, but that may not arrive this month. There are many challenges ahead this month. President Trump’s tariffs on Mexico and Canada are expected to go into effect on Tuesday, March 4, along with an additional 10% on China.
With earnings season behind us, investors will be looking ahead to the Federal Reserve meeting on the 18th and 19th.There is hope that weak price data may pave the way to support a central bank rate-cutting path.Of course, investors are expecting that the weak data will be balanced by an economy strong enough to avoid concerns about growth and profits.However, I believe that any rate cuts will be a long shot and advise not to place your hopes on this outcome.Rather, investors should be prepared for the strong possibility of no rate cuts and eventual rate hikes later this year.
The February jobs report on Friday is expected to show that the labour market is easing, with fewer jobs being created and businesses shutting the door on new hires.
Economists expect that the U.S. economy added 160,000 jobs last month, up from 143,000 jobs in January, with the unemployment rate holding at 4.0%, according to FactSet.
Investors are wary of weakness in the months to come.However, many are confident that the stock indexes will see good advances this year despite their concerns around Trump’s trade policies.
Cryptocurrencies rallied on Sunday after President Trump announced the creation of a strategic crypto reserve for the United States that sill include Bitcoin and Ether, as well as XRP, Solana’s SOL token, and Carano’s ADA.
Trump posted on Truth Social that he wants to “make sure the U.S. is the Crypto Capital of the World.”
XRP surged 33%, Cardano’s coin soared more than 60%, Ether gained 13%, and Bitcoin rose 10% to $94,343.82 after dipping to a three-month low under $80,000 last Friday.
Cyclone Alfred is on track to strike the Southeast Qld coast later this week (very close to Brisbane). It is about 50 years since this part of Queensland has experienced a cyclone.Cars have formed mile-long lines to fill up sandbags to protect their properties and businesses.Some shelves in supermarkets are empty - bread, toilet paper, and water have been the most popular items. Generators, batteries, and torches have also been flying off the shelves in camping stores.Beaches along the Queensland coast are already feeling the effects of Alfred, with severe erosion seen in some areas, while out on the water, surfers have been enjoying three metres waves. By Wednesday and Thursday, cyclonic force winds are expected, and 20 inches of rain may fall.Batten down the hatches!Stay safe.
Taken Monday, this picture shows our beautiful sandy beaches have almost disappeared from the effects of Cyclone Alfred.We are waiting for it to cross the coast on Thursday.
Thank you to those who attended the February Jacquie’s Post Zoom Meeting over the weekend. Everybody was able to share their thoughts about world events, so a great meeting overall.A recording will be sent out shortly.
MARKET UPDATE
S&P500
The index bounced last Friday from the base of the rising wedge (5825/50). There is scope for more ranging and potentially even gains back toward the Feb peak at 6147, or even between 6150 -6300, before we turn sharply lower.Please keep sell-stops in place on all your stock holdings.The next 3-5 years could be the most volatile since the Great Recession.
Resistance = 5955/65 and 5990/00
Support = recent low at rising wedge support ~ 5850
GOLD
WE have seen a correction in gold, which should be a precursor to new highs.(maybe within a month or so).Volatility is high, so if you are long gold in any vehicle, make sure you have sell-stops in place.
Resistance = $2865/70 and $2892
Support = $2829/$2790 area
BITCOIN
Bitcoin bounced off the $78.2k low.We could continue this range-like price movement for another couple of months.The odds remain high that Bitcoin will reach $150 in the next 12 months. (If you bought Bitcoin at the recent low, make sure you have a stop in place at $70k). However, if Bitcoin breaks $64,000 at any time in 2025, it will suggest a (b) wave has concluded.If that occurs, a 1–2-year decline is underway with a downside target below $32,000. Make sure your sell-stops are in place.
Economic growth will slow in 2025, and risks rise.
Inflation is about to rear its ugly head once again.
Interest rate cuts are over, and the next Fed move may be a rise.
Stock valuations are at a 26-year high, and uncertainty is exploding …a toxic combination.
We may have a few more months of the bull left.After that, look out below.
Even bear markets can produce winners.Let Mad Hedge show you where they are.
WINNERS & LOSERS
Winners
Energy
Financials – Banks & Brokers
Domestic Manufacturing
Crypto
Tesla
Losers
All interest rate plays
All bonds
Housing
Real Estate
Construction
Importers
Precious Metals
US automakers
Pharmaceuticals
Agriculture
Restaurants
Cruise lines
Retailers
TRADE ALERT PERFORMANCE
February MTD = +0.96%
Since inception = +758.65%
Trailing One Year Return = +83.45%
Average Annualized Return = +49.92%
PORTFOLIO REVIEW
Risk On
(GS) 3/$580-$590 call spreads
(JPM) 3/$235-$245 call spread
Risk Off
NO POSITIONS
THE METHOD TO MY MADNESS
2025 has lost all gains.
Market has gone from low risk to high risk overnight, with the leading names like (NVDA) and Tesla (TSLA) taking the biggest hits.
All interest rate plays remain dead in the water – homebuilders, bonds, and REITS.
Deregulation plays will continue to be bought, including banks, brokers, and money managers.
US dollar finally takes a break on falling rates.
Big technology stocks get crushed by Deep Seek and trade wars.
Energy sells off on Deep Seek as well – no power needed.
Buy financial as the only sure thing this year.
THE GLOBAL ECONOMY – ROLLING OVER
Government shutdown on March 14
Economic data has flipped from mixed to universally bad.
Core Inflation rate comes in red hot at 0.50%.
PPI comes in hot.
Consumer sentiment nosedives to a 30-year low.
Early recession indicators are collapsing, like FedEx, down 7% today.
Washington DC's economy is in recession.Unemployment claims are up 400%
U.S. Retail Sales dropped sharply.
U.S. Manufacturing Production unexpectedly fell.
STOCKS – NEW JITTERS
Technology stocks destroyed on rapidly deteriorating economic data.NASDAQ is now down in 2025.
Market confidence is eroding by the day.
Momentum has died, and the market has been over-rewarding momentum stocks.
Biggest de-grossing in two years has started, cutting back of total positions – longs and shorts.
Nvidia tells all with earnings on Wednesday – watch for selloff on great earnings.
Morgan Stanley warns customers to cut stock exposure.
The Cruise business gets crushed on warnings of new taxes.
Lockheed Martin (LMT) dives 8% on a cautious outlook spurred by our new government, with defence spending to be cut in half.
EV and hybrid sales reach a record 20% of US vehicle sales in 2024, but subsidies are about to disappear.
Tesla is currently adrift amidst falling sales with no leader.
John suggests cleaning out your portfolio and build cash.
Walmart is a good economic indicator. Watch this stock.
THE ULTIMATE HEDGE – Defensive stocks only go down at a slower rate
90-day US T-bills (Warren Buffet owns $300 billion)
Government guaranteed principal
Endless liquidity, trade like water
100% collateral value for margin
Lock in guaranteed income
Can be sold at any time to earn full interest
Will survive any bear market
Ask your broker how to buy
JOHN’S S&P 500 DOWNSIDE TARGETS
$595 = -5.0% 1st support
$565 = -8.8% 2nd support
$535 = -17.1% 3rd support
THE BENEFITS OF DEREGULATION
Cuts Costs
Increases profits
Opens up new markets
Grows the industry
Increases innovation
Drives stock prices high
However, deregulation has costs:
It increases misrepresentations and fraud
Increases theft
Increases bankruptcies
Consumers are left holding the bag
Don’t forget to sit down when the music stops playing – it’s every man for himself.
BONDS – TOAST
The deficit is the big election loser – all government actions so far will increase the deficit.
The National debt is about to explode, from $35 trillion to $45 trillion.
Interest payments on the national debt already top $1 trillion per year and will become the largest budget item, topping Social Security at $1.2 trillion.
Government borrowing will become much more difficult than the last time Trump was President, when the deficit was only $20 trillion.
It all depends on inflation, which is likely to rise sharply in response to increased spending, tax cuts, labour shortages, and trade wars.
So the best case for bonds is that the (TLT) chops around here.
The worst case is that we retest new multiyear lows at $79.
Avoid (TLT), (JNK), (NLY), (SLRN), and REITS
FOREIGN CURRENCIES – TAKING A VACATION
Dollar backs off two year- high, on falling US interest rates. Ten-year US Treasuries have dropped from 4.88% to 4.40%.
But the greenback is coming back.
Higher for longer interest rates mean higher for longer US dollar.
Don’t sell the UD dollar until the next recession is on the horizon.
Avoid (FXA), (FXE), (FXB), (FXC), and (FXY)
ENERGY & COMMODITIES
Deep Seek shock trashes all nuclear energy plays on fears that the new orders will be cancelled, as the extra power will no longer be needed.
New AI programming uses 1% of the chips and, therefore, 1% of the power.
Nothing could be further from the truth. Buy all nuclear plays on this dip.
Bank lifted on new natural gas export facilities in four years, reversing a Biden-era climate initiative.
Many analysts expect an oversupplied oil market this year after demand growth slowed sharply in 2024 in the top-consuming nations: the U.S. and China.
The EIA said it expects Brent crude oil prices to fall 8% to an average $74 a barrel in 2025, then fall further to $66 a barrel in 2026.
PRECIOUS METALS – A NEW LEG
Falling interest rates have given gold a new lease on life.
The opportunity cost of owning gold has fallen sharply.
Central bank buying never stopped.
Now, silver is starting to play catch-up.
Gold is still the favoured saving means by Chinese who don’t trust their own currency, banks, or government.
That’s why the metals have outperformed the miners, which the Chinese don’t buy.
Buy (GLD), (SLV), (AGQ), and (WPM) on dips.
REAL ESTATE – STAY AWAY
Existing Home Sales crater, on a closing contract basis, was down 4.9% in January to 4.09 million units.
Terrible weather was a factor.
Inventories are up 17% YOY and 3.5% on the month.
All cash sales hit 29%.
The average price of a home is at an all-time high at $396,800, up 4.5% YOY.
Worldwide criticism for his role in the U.S. DOGE service cancelling contracts and slashing staff in the U.S. government.And the way he has gone about this - slash and burn approach – has raised the ire of the population. Furthermore, his activity on X has been disturbing to say the least.Championing polarizing far-right world figures has raised some eyebrows, and that’s putting it mildly.
Leading up to Germany’s election last Sunday, Musk magnified the far-right, anti-immigrant Alternative for Germany party on X, post about the party and its leader more than 70 times to his 218 million followers.
Musk has also published opinion columns praising the party, and has spoken at party rallies, where he reportedly told Germans to move beyond “past guilt” over Nazi history.
The country’s conservative Christian Democrats won Sunday’s election.
But are Musk’s ideas and actions the only reason for Tesla’s slide?
We can actually point to a confluence of factors.There is rising competition in the electric vehicle market, and we are also seeing a slowdown in the rate at which electric vehicle sales are rising.
Chinese automaker SAIC Motor sold 22, 994 cars last month in the E.U., U.K, and EFTA, compared with Tesla’s 9,945.
Will the decline in Tesla be permanent?It is too early to tell, but Musk’s political involvement and his blatant association with the far right is unlikely to be considered a positive for Tesla.
Has Musk damaged the Tesla brand?
Maybe.
Some of his Tesla employees and investors have indicated that the company would be better off if Musk resigned.
David Bailey, a business economics professor at the University of Birmingham in the United Kingdom, said Musk is now seen by some consumers as “toxic.”
Palantir has collapsed after a huge rally.
Palantir had a very strong rally in 2024 that stretched in early February 2025.But after that momentous climb, the stock has crashed down to earth, losing 30% in less than two weeks.
At its peak on February 18, Palantir shares had surged 65% in 2025 alone, with a 23% single-day jump following the company’s blockbuster earnings report on February 3.However, a confluence of events changed the mood.News that the company’s chief executive sold $1 billion worth of stock and warnings about cutbacks in government spending (on which the firm heavily relies), sent shares sharply lower.
After its big decline the stock is trading in fairly valued territory, however it would be advisable to tread with caution around Palantir, as the stock could continue to be subject to wide swings as investors continue to assess the market for Palantir’s analytical software products.
Palantir may find a floor around $73 before its volatility retreats.
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