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Hot Tips
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April 11, 2025
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The Financial Crisis Trade is Still On,
with 10-year US Treasury bonds hitting 4.6% yields, the US dollar plunging to 3-year lows, and gold at an all-time high. Foreign investors are abandoning the US at an unprecedented pace. It turns out that confidence in the US was worth a lot more than we thought. You don’t know what you had until you lost it.
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Initial Jobless Claims
increased 4,000 to a seasonally adjusted 223,000 for the week ended April 5, the Labor Department said on Thursday. Economists polled by Reuters had forecast 223,000 claims for the latest week. Expect much larger figures going forward.
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Producer Price Index Falls 0.4%,
much lower than expected, in further confirmation of the ongoing recession. There seems to be some panic dumping of inventories. More than 70% of the slide in final demand prices came from a 0.9% tumble in goods prices, a key measure as policymakers look for inflation drivers.
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Consumer Confidence is in Free Fall.
Friday brought a fresh signal that consumers were queasy even before Wednesday’s policy shift. US consumer sentiment tumbled to the second-lowest level on record in a University of Michigan survey, as inflation expectations soared to multi-decades highs. That result was based on interviews from March 25 through April 8, before the change in tack on tariffs.
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Prada Buys Versace for $1.4 Billion,
for you fashionistas out there with expensive wives or girlfriends. Prada is seeking to expand, having defied a slowdown in luxury demand, while Versace has been operating at a loss in recent quarters. Not a trade here but a nice talking point in a bar.
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April 10, 2025
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The Global Financial Crisis is Back On,
with a massive $2.50 decline in the bond market (TLT). Bank reserves are devaluing at an unprecedented rate and credit spreads are exploding. That is why the Dow Average is down $2,000 and the US dollar has collapsed 2%.
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The Volatility Index ($VIX) Spikes to $54 again,
against yesterday’s high of $62. It was at $12 in December. Panic is running rampant. Buy the (SVXY). Volatility always goes down….eventually.
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Consumer Price Index Falls to 2.4%
in March, a big drop from 2.8% in February. It’s further confirmation of an ongoing recession.
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Gold Hits New All-Time High,
as the only flight-to-safety asset that is really working. Keep buying (GLD) dips. My target is $500.
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Canadian Visitors to UP Fall 32%,
in line with other forecasts of a collapse in international travel. It’s why Delta Air Lines (DAL) has crashed by 50% in three months. Conditions will get worse before they can be better. A weak dollar has caused the price of my European trip this summer to rise by 20%.
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April 9, 2025
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Trumps Cracks,
announcing a 90-day delay in trade tariffs forced by the imminent collapse of global financial markets. The 10% tariffs remain. China’s tariffs were increased to 125%. Inflation is still on track to skyrocket. A Fed interest rate cut is now on the table for June to head off a recession. What is the long-term trend now? It’s anyone’s guess. But Christmas shopping is certainly going t be a lot more expensive this year.
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NFIB Business Optimism Index Plunges,
declining by 3.3 points in March to 97.4, falling just below the 51-year average of 98. The Uncertainty Index decreased by a stunning eight points from February’s second highest reading to 96. It’s yet another recession warning.
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JP Morgan Raises Recession Risk to 79%,
while credit investors remain sanguine even as funding stress threatens to build.The small-cap focused Russell 2000, which has been battered in the recent selloff, is now pricing in a 79% chance of an economic downturn, according to JPMorgan’s dashboard of market-based recession indicators. Other asset classes are also sounding alarms: the S&P 500 is pricing in a 62% chance of an economic downturn, while base metals show a 68% chance and five-year Treasuries indicate a 54% chance.
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Q1 Gold Inflows Hit Three Year High,
according to the World Gold Council. Gold ETFs saw an inflow of 226.5 metric tonnes worth $21.1 billion in the first quarter, the largest amount since the first quarter of 2022 when global markets were grappling with the immediate consequences of Russia's invasion of Ukraine. This raised their total holdings by 3% to 3,445.3 tonnes by the end of March, the largest since May 2023. Their record was 3,915 tonnes in October 2020.
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Deltas Pulls Guidance,
Citing the trade war’s impact on sales. The stock is down 50% in three months. No guidance from any company is possible or credible as Q1 earnings took place in an ancient, more business-friendly world.
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April 8, 2025
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Chinese Tariffs Raised to 104% Tonight,
in a US retaliation to the retaliation. Markets tanked again. Most of the goods and parts cannot be obtained elsewhere. Recession fears are now going mainstream, it’s not just me.
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Federal Reserve’s Powell Says Inflation to Rise,
as a result of the larger-than-expected tariffs, but don’t expect any interest rate cuts until year-end when the Fed has the benefit of 20/20 hindsight on inflation.
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All Capital Gains of the Last 13 months are Gone,
if you didn’t sell at the top. For many, taxes on realized gains from last year are due next week, even though the unrealized gains have vaporized.
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Volatility Hits 16-Year High at 60,
in overnight Asia trading. The ($VIX) peaked at 95 during the Financial Crisis in 2009. ($VIX) may not have peaked yet.
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Oil Crashes,
down an amazing $13, or down 18% in a week, from $72 to $59 in a week. High dividend paying (XOM) has collapsed by 18%. It is the sharpest fall in Texas tea prices since the 1991 Gulf War. Recession fears are running rampant, and no one wants to pay for storage until a recovery which may be years off. Sell all energy rallies.
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April 7, 2025
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China Imposes 34% Retaliatory Tariffs,
and Europe is yet to come. China’s biggest US imports are all agricultural, and many commodities hit multiyear lows on Friday, delivering a knockout blow to US farmers just as the planting season begins. Shiploads of American grain may be left to rot in the ports as Chinese importers refuse delivery due to the dramatic price increase. Also announced were antitrust investigations of US tech companies and export restrictions on rare earths needed for tech products. It’s 1930 all over again.
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Existing Home Prices May Rise
due to the Tariffs, as their replacement cost has just shot up enormously. Lumber comes from Canada, and drywall and labor come from Mexico. A recession will also drive interest rates lower.
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OPEC Raises Oil Production
by 411,000 barrels a day. Oil prices fell 6% on the news. Markets were therefore stunned when OPEC, which produces about 40% of the world’s crude oil — along with its non-OPEC allies that together comprise OPEC+ — chose not only to go ahead with its previously held plans to increase oil production. OPEC leadership wants to send a warning signal to Kazakhstan, Iraq, and even Russia about the cost of continued overproduction.
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Unemployment rises to 4.2%,
a multiyear high, says the March Nonfarm Payroll Report. Nonfarm payrolls in March increased by 228,000 for the month, up from the revised 117,000 in February. Healthcare was the leading growth area, consistent with prior months. The industry added 54,000 jobs, almost exactly in line with its 12-month average.
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Bond Credit Quality is Crashing,
as recessions lead to more defaults. Junk bonds have fallen by $6.00 in a month, a massive move for this market, no doubt partially due to margin calls across all asset classes. If you feel the need to buy (JNK), lie down and take a long nap first.
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