(NVIDIA IS THE HEADLINE ACT THIS WEEK)

February 24, 2025

Hello everyone

WEEK AHEAD CALENDAR

MONDAY FEB. 24

5:00 a.m. Euro Area Inflation Rate

Previous: 2.4%

Forecast: 2.5%

8:30 a.m. Chicago Fed National Activity Index (January)

10:30 a.m. Dallas Fed Index (February)

Earnings:  Public Storage, Diamondback Energy, Domino’s Pizza

TUESDAY FEB. 25

9:00 a.m. FHFA Home Price Index (December)

9:00 a.m. S&P/Case Shiller comp. 20 HPI M/M December

10:00 a.m. Consumer Confidence (February)

10:00 a.m. Richmond Fed Index (February)

7:30 p.m. Australia CPI Indicator

Previous: 2.5%

Forecast: 2.5%

Earnings:  Extra Space Storage, Workday, Axon Enterprise, First Solar, Caesars Entertainment, Public Service Enterprise Group, Keurig Dr Pepper, Home Depot

WEDNESDAY FEB. 26

8:00 a.m. Building Permits final (January)

10:00 a.m. New Home Sales (January)

Previous: 3.6%

Forecast: -2.6%

Earnings: Nvidia, eBay, Salesforce, Universal Health Services, Paramount Global, Invitation Homes, TJX Companies, Lowe’s Companies

THURSDAY FEB. 27

8:30 a.m. Continuing Jobless Claims (02/15)

8:30 a.m. Durable Orders preliminary (January)

8:30 a.m. GDP second preliminary (Q4)

Previous: 3.1%

Forecast: 2.3%

8:30 a.m. Initial Claims (02/22)

10:00 a.m. Pending Home Sales Index (January)

10:00 a.m. Pending Home Sales (January)

11:00 a.m. Kansas City Fed Manufacturing Index (February)

Earnings:  HP, Dell Technologies, NetApp, Autodesk, Warner Bros. Discovery, J.M. Smucker Co., Norwegian Cruise Line Holdings, Hormel Foods

FRIDAY FEB. 28

8:30 a.m. Core PCE Deflator (January)

8:30 a.m. Personal Consumption Expenditure (January)

8:30 a.m. Personal Income (January)

8:30 a.m. Wholesale Inventories preliminary (January)

9:45 a.m. Chicago PMI (February)

A weak response to Chinese warships off our coastline

I considered our Prime Minister’s, Anthony Albanese, response to the Chinese warships performing live-firing drills in the Tasman Sea to be weak, and less than robust. Most alarming is the fact that Beijing did not formally warn the Australian Defence Force (ADF) about its warships’ live fire testing. Authorities were only aware on Friday, just before the drill took place.  Can you imagine if our Australian warships did the same to China and sat off their coastline and informed China – or did not inform them - that they were just performing live-firing drills, what the response would be?? I very much doubt the response would have been weak.

Earlier in February, a Chinese fighter jet released flares in front of an Australian military aircraft, which was condemned as “unsafe and unprofessional.”

China is flexing their muscle and showing their might, whilst trade relations between Australia and China rest on shaky ground.

This week Nvidia earnings and PCE could embolden the market - or not

On Wednesday, Nvidia reports earnings, and this event could be potentially market-moving.  It’s the first earnings report since Deep Seek disturbed the outlook for artificial intelligence companies.  Nvidia shares are up 4% so far this year after rallying some 170% in 2024 and 200% in 2023.  And these moves accounted for much of the S&P500’s bull run for those two years. Wealth is concentrated in a basket of stocks, and the story does not usually end well when you see that inequitable distribution.   Some analysts are advising to buy Nvidia ahead of earnings, however, I would prefer to stand aside.  Even if the chipmaker beats expectations for the quarter, investors are going to need a lot of reassurance that the chipmaker can deal with the concerns raised by Deep Seek earlier this year, as well as any tariff uncertainty.  Great earnings results are all very well, but if investors are not confident that Nvidia can navigate the many challenges dotting the economic landscape, then sentiment could turn against it. 

Another possible market-moving event this week is the personal consumption expenditure price data.  This is the Fed’s preferred measure of inflation, and this data could decide the short-term path of monetary policy.

If the data comes in line the markets could run higher, however, if we get a hotter data print, markets could sell off, especially with the rising concerns over the potential inflationary impact of higher tariffs.

MARKET UPDATE

S&P500

Even though the S&P did turn lower on Friday, it is possible that we see more wide-ranging movement as part of the topping process.  A decisive break of $5773 should indicate the bears have taken over control of the market.

Resistance:  ~$6065

Support: ~$5995/$5930

GOLD

This market has been surging since December, but it looks like momentum might be slowing and a recent peak may have been formed (for a month or so).  This is yet to be confirmed, but a failure to build on recent gains would give weight to this observation.

Resistance: ~$2955/60

Support:  ~$2800

BITCOIN

Wide-ranging behaviour to continue as there are no firm signs that the crypto will break out in the near term. 

Resistance: $109.5/$110.5k area

Support: $91/$92k)

QI CORNER

WORD OF THE WEEK

Hygge

Noun: Danish [hou-geh]

Cozy blankets, warming candles, relaxing with friends.  All your worries melting away.  These are all considered ‘hygge’.

‘Hygge’ is when you take pleasure from and can appreciate gentle and soothing things.  It’s being surrounded by things that make you feel cozy and comfortable, which then engender feelings of contentment.

Something that we all need in these tumultuous times.

WHAT IS…?

Cockroach Theory

You are aware of the notion – for every cockroach you see, there’s 100 more you don’t.  Cockroach theory applies that thinking to the world of investing – when a piece of bad news relating to the markets is released to the public, there’s likely more lurking in the wings.

HISTORY CORNER

On February 24

SOMETHING TO THINK ABOUT

Cheers

Jacquie

(THE SCORCHED EARTH POLICY OF DOGE)

February 19, 2025

Hello everyone

Donald Trump is pushing boundaries.

And how will it all look when he’s finished?

We know he recently fired people from the National Nuclear Security Administration (NNSA), which is the agency tasked with maintaining the country’s nuclear weapons.

But, within a day, there was a quick about-face when he contacted many of the affected employees, informing them their termination notices had been rescinded.

The layoffs were part of a massive cost-cutting program led by Elon Musk and his Department of Government Efficiency (DOGE).

Thousands of workers across the federal government have been fired.

And on top of that number, there are about 75,000 people who have accepted the “buyout” option, which promises pay and benefits until September in exchange for their resignations.

The Trump administration has charged forward with its mission to cut spending by freezing government spending and closing agencies, including the US Agency for International Development (USAID).

Trump’s actions seem to be treading on toes. Legal challenges have been enacted against many of his executive orders, which have slowed some aspects of the President’s agenda.     Trump cannot abolish USAID, for example, without congressional approval.   Congress holds, as one of its many powers, decisions around spending and tax.  Trump is stepping beyond that boundary by undermining Congress’s authority.

There are three divisions of government in the US.  The executive is run by the President, the legislative is run by Congress, and the judiciary is run by the courts.  This setup is designed to prevent any one branch from becoming too powerful.  In other words, it ensures a balance of power, ensuring no one branch oversteps its boundary.

It will be very interesting to see how history views Mr Trump in future years.

TRADE ALERT

Veritex Holdings (VBTX) provides various commercial banking products and services to small and medium-sized businesses and professionals.  The company accepts deposit products, including demand, savings, money market, and time accounts.  Its loan products include commercial real estate and general commercial, mortgage warehouse loans, residential real estate, construction and land, farmland, paycheck protection program, 1-4 family residential, agricultural, multi-family residential, and consumer loans as well as purchased receivables financing.  The company operates full-time service branches located in the Dallas-Fort Worth metroplex and the Houston metropolitan area. 

In summary, the company provides accounting & taxation services, bookkeeping, business advisory, and business start-up services to small businesses and professionals.

Veritex Holdings was incorporated in 2009 and is headquartered in Dallas. 

We are looking to hold this stock only for a short to medium-term trade here.

Buy (VBTX) at $26.44.  Place a GTC (Good till Cancelled) Sell Stop at $18.10.

SOMETHING TO THINK ABOUT

Cheers

Jacquie

(SUMMARY OF JOHN’S FEBRUARY 12, 2025 WEBINAR)

February 14, 2025

Hello everyone

TITLE: Trade Wars

PERFORMANCE

MTD: 0.48%

Trailing One Year Return:  83.45%

Average Annualised Return: 49.92%

Since inception: 758.24%

PORTFOLIO

Risk On

(TESLA)2/$300-$310 call spread (closed)

(GS) 3/$580-$590 call spread

(NVDA)2/$90-$95 call spread

(VST)2/$100-$110 call spread

Risk Off

(TSLA) 2/$540-$550 spread

THE METHOD TO MY MADNESS

The market has stalled because of continued uncertainty about everything.

Financials are still leading on deregulation party, but M&A has yet to start.

John says all interest rate plays remain dead in the water, including gold, silver, homebuilders, bonds & REITS.

US dollar remains bid on trade war.

Big technology stalling

Energy sells off on trade wars.

John says financials are the only sure thing this year.

Keep your discipline – don’t look for trades that aren’t there.

THE GLOBAL ECONOMY – CONFUSED

Fed leaves interest rates unchanged at 4.25%, and they might remain there for the rest of 2025.

Nonfarm payroll plunges to 145,000 in January.

The headline unemployment rate came in at 4.0%.

US Job Openings hit 14-month low.

Consumer sentiment falls, according to The University of Michigan.

China counters attacks in trade war.

US Factory Orders fall.

Consumer Inflation Expectations come in soft.

STOCKS – DOWNTREND

Wall Street is souring on Magnificent 7, except for Meta.

Goldman Sachs sees a correction coming in the face of deteriorating global macro conditions, trade wars, and sky-high valuations.

Technology stocks destroyed on news of China’s Deep Seek.

Tariffs to cut US earnings by 5%.

The exemption race is on with many industries pleading for special treatment in the new trade wars.

Palantir soars 25% on the prospect of a surge in government contracts.

Chevron post first loss in four years.

U.S. business activity slowed to a nine-month low.

BONDS – RALLYING

Foreign investors continue to soak up US debt, seeking higher interest.

Americans own 55% of the outstanding $36 trillion in US debt, while foreign investors own 24%, and the federal reserve 13%.

The market is giving up on any interest rate cuts this year, as the prospect of rising inflation from trade wars weighs on the market.

All fixed-income plays have gone dead.

Higher rates for longer don’t fit in here anywhere.

Possible target for (TLT) = $82

FOREIGN CURRENCIES – TRADE WAR BOOST

Trade wars are pushing up the US dollar, making American exports more expensive.

High import duties will shrink US imports dramatically and impoverish our foreign customers, creating dollar strength.

Ten-year US Treasuries have risen from 4.40% to 4.50%.

The mere fact that rates have stalled has allowed currencies to rally.

Higher for longer interest rates mean higher for longer US dollar.

Avoid (FXA), (FXE), (FXB), (FXC), and (FXY).

ENERGY & COMMODITIES

US global economic disruption sink oil prices.

Oil & Gas dealmaking hits $105 billion in 2024.

Government to stop minting new pennies.

Nuclear plays like (VST) and (CCJ) rebound sharply.

The EIA said it expects Brent Crude oil prices to fall 8% to average $74 a barrel in 2025 and then fall further to $66 in 2026.

PRECIOUS METALS – BID AGAIN

Government may revalue gold holdings from the current 1932 price of $42 an ounce to $2936.

It is just a bookkeeping move, but it has put the yellow metal back in the spotlight.

As of January 2025, the United States government owned 133.45 tons of gold worth $39.9 billion at current market prices.  This makes the US the country with the largest gold reserves in the world.

Gold has become the only way the average Chinese can save as they can no longer speculate in real estate or copper, and the population doesn’t trust the Chinese Yuan, so there is support lower down.

Central banks in emerging market countries are continuing to buy gold.

REAL ESTATE – STAY AWAY

Homebuyer Mortgage demand is collapsing, with the 30-year fixed at a buzzkill 7.0%.

Demand is 35% lower YOY, with housing demand at a 30-year low.

Homes are sitting on the market much longer.  Avoid all real estate plays.

US Home Sales hit a 30-year low in 2024, the second year in a row of weak sales.

High costs related to homeownership sapped sales again.

The average rate for a 30-year fixed mortgage has hovered between 6% and 8% since late 2022.

Avoid real estate plays.

TRADE SHEET

Stocks – buy the next big dip, sell rallies.

Bonds – sell rallies

Commodities – stand aside.

Currencies – stand aside.

Precious metals – buy dips.

Energy – buy nuclear dips.

Volatility – sell over $30.

Real estate – stand aside.

NEXT STRATEGY WEBINAR
12:00 EST Wednesday, February 26, 2025, from Incline Village, NV.

Cheers

Jacquie

(SCAMMERS ARE MAKING A MINT OUT OF THE REAL ESTATE MARKET)

February 10, 2025

Hello everyone

WEEK AHEAD CALENDAR

MONDAY FEB. 10

9:00 a.m. Euro Area ECB Speech

Earnings: ON Semiconductor, Rockwell Automation, McDonalds.

TUESDAY FEB. 11

6:00 a.m. NFIB Small Business Index (January)

3:30 p.m. New York Federal Reserve Bank President and CEO John Williams gives keynote remarks at Pace University, New York.

Earnings: Gilead Sciences, Coco-Cola, Fidelity National Information Services, Ecolab, Marriott International, Humana.

WEDNESDAY FEB. 12

8:30 a.m. Consumer Price Index (January)

8:30 a.m. Hourly Earnings (January)

8:30 a.m. Average Workweek (January)

2:00 p.m. Treasury Budget (January)

Earnings:  Paramount Global, MGM Resorts International, Global Payments, Cisco Systems, Tyler Technologies, Dominion Energy, Albemarle, Kraft Heinz, CME Group, Martin Marietta Materials, Westinghouse Air Brake Technologies, CVS Health, Generac Holdings, Exelon, Biogen.

THURSDAY FEB. 13

2:00 a.m. UK GDP Growth

Previous: 0%

Forecast: -0.1%

8:30 a.m. Continuing Jobless Claims (02/01)

8:30 a.m. Initial Claims (02/08)

12:20 p.m. New York Federal Reserve Bank Director of Research Kartik Athreya speaks at the University of Bridgeport, Ernest C. Trefz School of Business.

1:00 p.m. New York Federal Reserve Bank Interim Head of the Markets Group Anna Nordstrom gives opening remarks in “Women in Fixed Income Conference”, New York Fed.

4:00 p.m. New York Federal Reserve Bank Director of Research Kartik Athreya speaks on “Economic Outlook with a Focus on Regional Business Conditions”, Connecticut

5:15 p.m. New York Federal Reserve Bank Deputy SOMA Manager Julie Remache gives closing remarks in “Women in Fixed Income Conference”, New York Fed.

Earnings: Motorola Solutions, Airbnb, Wynn Resorts, Applied Materials, Ingersoll Rand, GoDaddy, DexCom, PPL, Howmet Aerospace, Duke Energy, Molson Coors Beverage, GE Healthcare Technologies, West Pharmaceutical Services, PG&E, Deere & co.

FRIDAY FEB. 14

8:30 a.m. Export Price Index (January)

8:30 a.m. Import Price Index (January)

9:15 a.m. Capacity Utilization (January)

9:15 a.m. Industrial Production (January)

9:15 a.m. Manufacturing Production (January)

10:00 a.m. Business Inventories (January)

Earnings: Moderna

It will be a quieter week on the economic data front, but that doesn’t mean markets will be calm.  The CPI and PPI are on deck this week, so investors will be paying close attention to the numbers here after Friday’s economic data revived concerns around inflation.  The January jobs report showed strong wage growth, an inflationary signal.  But it was the drop in consumer sentiment that represented growing concerns about rising price pressures from tariffs that turned the market off.  The angst was felt in the bond markets as we saw yields spike higher.  US Retail Sales data will show whether the health of the American consumer is humming along nicely.

Take the long way round when dealing with real estate financial transactions.

I have heard of this tale so many times, it is heartbreaking.  Singles or couples who have saved up a deposit to buy a property. They transfer it to the bank account indicated by the real estate agent/and associated bank and then find it has evaporated.

Australians lost more than $318m to scammers last year.  When it comes to real estate scams, buyers, sellers, and renters are all at risk. 

So, it is wise to keep up with the latest scams and know what to look out for.  This will help you minimise the threat and keep your money as safe as possible.

Payment redirection scams are one of the biggest ways consumers are getting fleeced in the property market.  This is where a scammer will impersonate a real estate agent to convince the unsuspecting client to deposit funds into a different bank account.

Ray White warns consumers that scammers will create a very similar email address and start emailing the client pretending to be the agent.  Furthermore, the real estate company goes on to point out that the scammers provide updated banking details, trying to get the client to deposit funds into the scammer’s account.

The rental market is not safe either.  Scammers are imitating offices and trying to redirect rental payments into scam accounts.  There are new scams coming out daily – and these messages can be sent via post and not email.

REIA (Real Estate Institute of Australia) President Leanne Pilkington says it is crucial to pick up the phone and speak with the real estate agent before transferring funds if you have received a payment request with new account details.

Buyers are losing their deposits.

Another common scam operating in the market now is when fraudsters use the photos and information from a legitimate rental listing and create a fake private listing on a consumer trading site.

Posing as the landlord of the property, they give excuses about not being able to run inspections while offering deals that seem too good to be true.

They request a deposit and indicate that once that is received, the place will be yours.  When it comes time to collect the keys, there are no keys – no owners.

Many people who are feeling vulnerable due to the rental crisis in Australia have found themselves easy targets for such scammers.  Depositing money without physically walking through the premises is not safe – better to take the long route and check things out thoroughly.  It could save you a mint in the end.

RED FLAGS

A change of account request.

Do not reply to the email.  Instead, call the agent directly and ask them for confirmation.  Even better, make an appointment and physically visit the branch.

Avoid clicking links.

It is possible that this link could take you to an unsecured website where you are tricked into entering sensitive information.

Choose secure payment platforms.

Many agencies offer BPAY or DEFT for making rental payments or PEXA for buying and selling rather than transferring funds into a bank account.

Private rentals – be careful.

Request documentation from the landlord.

Check if the owner is registered with Bonds Online.

Contact your bank.

If you think you have been scammed, contact your bank straight away and follow the instructions given.

The goal is prevention.

Even better than a phone call, walk into your agency/bank and verify bank details and emails you have received.  It is worth the effort and the time.

MARKET UPDATE

S&P500

The bull market is looking shaky; the market is showing wide-ranging swings, which can be representative of tops forming.  Most are expecting the bull market to continue making new highs in its third year; however, I am being more cautious than the consensus.

Support: $5900/$5775/$5750

Resistance: $6110/$6100.

GOLD

Gold can continue this rally for some time, but I am expecting the metal to eventually sell off in the medium term down to at least the $2,500 area.

Support: $2830/$2732

Resistance:  $2900/$3000

BITCOIN

We can expect some more ranging behaviour for Bitcoin this week. 

Support = ~ 91,000/89,000/85,000/80,000.  Resistance = $108,000/$105,000

QI CORNER

HISTORY CORNER

On February 10

QUIZ CORNER

1/ In what decade was the internet created?

2/ What was the name of the first computer virus?

3/ What company was initially known as “Blue Ribbon Sports”?

4/ Who created the first credit card?

SOMETHING TO THINK ABOUT

“The decline of literature indicates the decline of a nation.”

(Johann Wolfgang von Goethe)

Cheers

Jacquie

(WHERE DOES AUSTRALIA STAND IN RELATION TO THE U.S. AND TRUMP 2.0)

February 5, 2025

Hello everyone

The United States makes more from Australia than Australia makes from the United States in terms of trade and investment. The United States is Australia’s largest economic partner.

TRADE

In 2023, Australia exported $12.59 billion to the United States.

The United States has a trade surplus with Australia, with the surplus in goods and services favouring the United States.

The United States is Australia’s third largest trading partner for goods.

The United States is the third most popular tourist destination for Australian residents.

INVESTMENT

The United States is Australia’s largest foreign investment destination.

At the end of 2023, the United States had invested $1.17 trillion in Australia.

Below is a list of the top twenty exports to the United States.

This is by no means everything on the list. 

The prospect of an international trade war with the U.S. now must be factored into the realm regarding inflation and interest rates in Australia.  The likely downward trajectory of inflation and interest rates has been complicated by Trump’s “bull at a gate” mentality over tariffs on goods from many countries. 

Vowing to stick to his election promise, Trump wants the U.S. to return to a “golden age” of U.S. manufacturing.  China has been loud and clear that countermeasures are coming.  And Canada has already responded by slapping a 25% tariff on a range of U.S. imports.  Certain provinces have indicated that they will no longer buy American goods, so public influence will spin the tables against Trump’s actions.

Mexico, too, has indicated that it will also levy retaliatory duties on American goods.

It was initially understood that Trump’s rationale for threatening tariffs on Canada and Mexico was to force these countries to stem the flow of fentanyl and illegal immigrants across the border into the U.S.  But it seems they have become more than a bargaining chip and look certain to be locked into place to protect America and make it great again, even though it may be a painful journey.

Trump has also drawn attention to his intention to impose tariffs as early as mid-February on imports from all countries of computer chips, pharmaceuticals, steel, aluminum, copper, oil, and gas into the U.S.

The implications for Australia’s open and export-oriented economy, which greatly benefits from free trade, are two-fold.

Australia risks importing higher inflation. And, secondly, Australian exports to the U.S. risk getting caught up in the trade war.  For instance, blood plasma made by biotech giant, CSL, is among the $1.7 billion a year pharmaceutical exports that are at risk of being hit by Trump’s tariffs if they are imposed on Australia.

The potential hit to costs and sales for Australian companies that do business in the U.S. is significant.  The Albanese government will need to act swiftly to negotiate an agreement with the U.S. to minimize the potential damage from Trump’s trade war.

There are many other effects too.  Disruptions to international trade that slow the world economy would drag on Australia’s 0.3 annual rate of GDP.  Effects could include the acceleration of the economic slowdown in China, which is Australia’s main trading partner.

The looming trade war has consequences not only for inflation and interest rates but also for economic growth.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Trump’s latest expansionist tendency includes wanting to take over the Gaza Strip. He wants to transform it into the “Riviera of the Middle East.” This is on top of wanting Greenland, and the Panama Canal.   

Instability on the geopolitical front could go from amber to red.

Cheers

Jacquie