May 16, 2025
(SUMMARY OF JOHN’S MAY 14, 2025, WEBINAR)
May 16, 2025
Hello everyone
TITLE – “Rocketing Back to Zero”
PERFORMANCE
MTD = – 4.21%
Year to Date = +24.19%
Since Inception = +776.08%
Trailing One Year Return = +90.95%
Average Annualized Return = +50.84%
PORTFOLIO
Risk Off
(GLD) 5/$275 – $285 call spread
(GLD) 6/$275 – $285 call spread
(SPY) 6/$610 – $620 call spread
(MSTR) 6/$500-$510 put spread
(NVDA) 6/$140-$145 put spread (Stop Loss hit – trade closed)
(AAPL) 6/$220-$230 put spread
(QQQ) 6/$540-$550 put spread
(TLT) 6/$80-$83 call spread
Total Gross Position = 80.00%
THE METHOD TO MY MADNESS
Stocks are expensive again, back at century highs in valuations, as the administration gives up on the trade war with China, but punitive tariffs remain with Mexico and Canada.
After retirement funds saw a 20% – 30% meltdown in two months, enormous pressure was put on the present to talk stocks back up, which they have been doing every day since.
New money isn’t coming into market, as investors are still scared to death. It’s mostly short covering.
That means a recession is still on, but it may take another month to show up in the data.
May 7 is leading the rally as it always would.
Safety assets like gold, bonds, and foreign currency get dumped.
Oil rallies big on recovery hopes.
US Dollar bounces on recovery hopes.
THE GLOBAL ECONOMY – CONFUSION
US Q1 GDP crashes in Q1, down 0.3%, the first instalment of a recession.
Inflation comes in cool at 2.3% for April, indicating that the recession is still on.
Fed leaves Interest rates unchanged, at 4.25% – 4.50%, supported by a consistently rising inflation rate.
Trump has been negotiating with himself, and the stock market, first demanding 145%, then 80%, and 30% by Monday, nearly where they were during the Biden administration.
Used Car Prices are Soaring, as tariff-fleeing consumers shun expensive new cars.
Nearly all US Exports are in Free Fall.
ISM Manufacturing Index says the recession is here.
Consumer Confidence collapses, hitting a 15-year low.
UPS lays off 20,000.
STOCKS – CHINA SHOCK
Trump whipsaws the market again after folding on most China demands, PE multiple now at 23.
Shorts rush to cover, with most institutions just sitting and watching with their mouths hanging open.
Volatility Index ($VIX) craters from $30 to $17.
Warren Buffett retires, handing over day-to-day management of Berkshire Hathaway (BRK/B) to Grey Abel.
Microsoft goes ballistic, with the second 10% move in a month, indications are that AI spending is continuing unabated.
General Motors to take $5 billion hit on Tariffs.
McDonald’s reports worse same-store sales in five years.
Bitcoin recovers $100,000, for the first time since early February.
Disney pops 10% on surprise revenue beat.
Palantir (PLTR) crashes 14% on fears of collapsing international business.
BONDS – RECOVERY SELLOFF
Trump caves on China, puts recovery hopes back on, along with inflation.
Bonds recover sharply to a 4.50% yield.
Foreign investors panic sell abates, but they still own $38 trillion in US assets.
Confidence and the US brand are still permanently damaged.
Even just a 10% sell-off generates $3.8 trillion of selling.
Why own the US when Germany is doing so much better with no currency risk?
US Budget deficit is set to double this year to $5 trillion.
Avoid (TLT), (JNK), (NLY), (SLRN), and REITS
FOREIGN CURRENCIES – TRADE WAR RELIEF
Trump cave in trade war brings US dollar rally.
Profit taking hits foreign currencies, which have had massive runs this year.
Interest rate differentials are back as the driver of currencies, with the U.S. at a high 4.25% at least for this week.
Next dollar weakness will come with evidence of a recession in weeks.
Flight to safety takes a vacation, but it will be back.
Buy (FXA), (FXE), (FXB), (FXC), and (FXY)
ENERGY & COMMODITIES – BOUNCE
Trade war relief gives oil a bounce.
Oil Production has peaked, thanks to the collapse in prices triggered by recession fears.
Saudi Arabiais playing a market share game, and increasing production is another factor.
We’re headed for $30 a barrel.
The U.S. – China trade war is dominating investor sentiment in moving of prices, superseding nuclear talks between the U.S. and Iran, and discord within the OPEC+ coalition.
Markets have been rocked by conflicting signals from the U.S. over what progress was being made to de-escalate a trade war that threatens to sap global growth.
PRECIOUS METALS – PROFIT TAKING
Gold takes a break after a massive 35% rally since the election.
My target is still $5,000.
Rising US interest rates have also delivered a hit.
Q1 Gold inflows hit three yar high, according to the World Gold Council.
Gold ETF’s saw an inflow of 226.5 metric tonnes worth $21.1 billion in the first quarter.
Central bank buying and Chinese savings demand continue unabated with China devaluing its currency.
Keep buying all (GLD) metal dips.
REAL ESTATE – DEAD IN THE WATER
New Homes are now cheaper than existing homes, for the first time.
A 30% rise in existing inventories has made the difference.
New home builders can more easily discount with free upgrades and offer loan buy-downs.
Some 40% of homes on the market have seen price drops, and time on the market is growing.
Existing home sales hit 16-year low.
Sales of previously owned U.S. homes fell 5.9% in March to an annualized rate of 4.02 million, the weakest March since 2009.
Trade war has demolished all confidence in a housing recovery.
TRADE SHEET – THE RECESSION TRADE
Stocks – sell rallies
Bonds – buy dips
Commodities – stand aside
Currencies – buy dips
Precious Metals – buy dips
Energy – stand aside
Volatility – sell over $50
Real Estate – stand aside
NEXT STRATEGY WEBINAR
12:00 EST Wednesday, May 28, 2025
From Incline Village, NV.
Cheers
Jacquie
