Global Market Comments
April 7, 2025
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or TRUMP DECLARES WAR ON THE WORLD),
(SPY), (TLT), (META), (GOOGL), (MSFT), (CRM),
(COST), (NVDA), (NFLX), (NVDA), (TSLA), (GLD)
Global Market Comments
April 7, 2025
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or TRUMP DECLARES WAR ON THE WORLD),
(SPY), (TLT), (META), (GOOGL), (MSFT), (CRM),
(COST), (NVDA), (NFLX), (NVDA), (TSLA), (GLD)
Global Market Comments
March 24, 2025
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD or THE SPECIAL NO CONFIDENCE ISSUE)
(GM), (SH), (TSLA), (NVDA), (GLD), (TLT), (LMT), (BA), (NVDA), (GOOGL), (AAPL), (META), (AMZN), (PANW), (ZS), (CYBR), (FTNT), (COST)
(AMGN), (ABBV), (BMY), (TSLA), GM), (GLD), (BYDDF)
It’s official: Absolutely no one is confident in their long-term economic forecasts right now. I heard it from none other than the chairman of the Federal Reserve himself. The investment rule book has been run through the shredder.
It has in fact been deleted.
That explains a lot about how markets have been trading this year. It looks like it is going to be a reversion to the mean year. Forecasters, strategists, and gurus alike are rapidly paring down their stock performance targets for 2025 to zero.
When someone calls the fire department, it’s safe to assume that there is a fire out there somewhere. That’s what Fed governor Jay Powell did last week. It raises the question of what Jay Powell really knows that we don’t. Given the opportunity, markets will always assume the worst, that there’s not only a fire, but a major conflagration about to engulf us all. Jay Powell’s judicious comments last week certainly had the flavor of a president breathing down the back of his neck.
It's interesting that a government that ran on deficit reduction pressured the Fed to end quantitative tightening. That’s easing the money supply through the back door.
For those unfamiliar with the ins and outs of monetary policy, let me explain to you how this works.
Since the 2008 financial crisis, the Fed bought $9.1 trillion worth of debt securities from the US Treasury, a policy known as “quantitative easing”. This lowers interest rates and helps stimulate the economy when it needs it the most. “Quantitative easing” continued for 15 years through the 2020 pandemic, reaching a peak of $9.1 trillion by 2022. For beginners who want to know more about “quantitative easing” in simple terms, please watch this very funny video.
The problem is that an astronomically high Fed balance sheet like the one we have now is bad for the economy in the long term. They create bubbles in financial assets, inflation, and malinvestment in risky things like cryptocurrencies. That’s why the Fed has been trying to whittle down its enormous balance sheet since 2022.
By letting ten-year Treasury bonds it holds expire instead of rolling them over with new issues, the Fed is effectively shrinking the money supply. This is how the Fed has managed to reduce its balance sheet from $9.1 trillion three years ago to $6.7 trillion today and to near zero eventually. This is known as “quantitative tightening.” At its peak a year ago, the Fed was executing $120 billion a month quantitative tightening.
By cutting quantitative tightening, from $25 billion a month to only $5 billion a month, or effectively zero, the Fed has suddenly started supporting asset prices like stocks and increasing inflation. At least that is how the markets took it to mean by rallying last week.
Why did the Fed do this?
To head off a coming recession. Oops, there’s that politically incorrect “R” word again! This isn’t me smoking California’s largest export. Powell later provided the forecasts that back up this analysis. The Fed expects GDP growth to drop from 2.8% to 1.7% and inflation to rise from 2.5% to 2.8% by the end of this year. That’s called deflation. Private sector forecasts are much worse.
Just to be ultra clear here, the Fed is currently engaging in neither “quantitative easing nor “quantitative tightening,” it is only giving press conferences.
Bottom line: Keep selling stock rallies and buying bonds and gold on dips.
Another discussion you will hear a lot about is the debate over hard data versus soft data.
I’ll skip all the jokes about senior citizens and cut to the chase. Soft data are opinion polls, which are notoriously unreliable, fickle, and can flip back and forth between positive and negative. A good example is the University of Michigan Consumer Confidence, which last week posted its sharpest drop in its history. Consumers are panicking. The problem is that this is the first data series we get and is the only thing we forecasters can hang our hats on.
Hard data are actual reported numbers after the fact, like GDP growth, Unemployment Rates, and Consumer Price Indexes. The problem with hard data is that they can lag one to three months, and sometimes a whole year. This is why by the time a recession is confirmed by the hard data, it is usually over. Hard data often follows soft data, but not always, which is why both investors and politicians in Washington DC are freaking out now.
Bottom line: Keep selling stock rallies and buying bonds and gold (GLD) on dips.
A question I am getting a lot these days is what to buy at the next market bottom, whether that takes place in 2025 or 2026. It’s very simple. You dance with the guy who brought you to the dance. Those are:
Best Quality Big Tech: (NVDA), (GOOGL), (AAPL), (META), (AMZN)
Big tech is justified by Nvidia CEO Jensen Huang’s comment last week that there will be $1 trillion in Artificial Intelligence capital spending by the end of 2028. While we argue over trade wars, AI technology and earnings are accelerating.
Cybersecurity: (PANW), (ZS), (CYBR), (FTNT)
Never goes out of style, never sees customers cut spending, and is growing as fast as AI.
Best Retailer: (COST)
Costco is a permanent earnings compounder. You should have at least one of those.
Best Big Pharma: (AMGN), (ABBV), (BMY)
Big pharma acts as a safety play, is cheap, and acts as a hedge for the three sectors above.
March is now up +2.92% so far. That takes us to a year-to-date profit of +12.29% in 2025. That means Mad Hedge has been operating as a perfect -1X short S&P 500 ETF since the February top. My trailing one-year return stands at a spectacular +82.50%. That takes my average annualized return to +51.12% and my performance since inception to +764.28%.
It has been another busy week for trading. I had four March positions expire at their maximum profit points on the Friday options expiration, shorts in (GM), and longs in (GLD), (SH), and (NVDA). I added new longs in (TSLA) and (NVDA). This is in addition to my existing longs in the (TLT) and shorts in (TSLA), (NVDA), and (GM).
Some 63 of my 70 round trips, or 90%, were profitable in 2023. Some 74 of 94 trades have been profitable in 2024, and several of those losses were really break-even. That is a success rate of +78.72%.
UCLA Andersen School of Business announced a “Recession Watch,” the first ever issued. UCLA, which has been issuing forecasts since 1952, said the administration’s tariff and immigration policies and plans to reduce the federal workforce could combine to cause the economy to contract. Recessions occur when multiple sectors of the economy contract at the same time.
Retail Sales Fade, with consumers battening down the hatches for the approaching economic storm. Retail sales rose by less than forecast in February and the prior month was revised down to mark the biggest drop since July 2021.
This Has Been One of the Most Rapid Corrections in History, leaving no time to readjust portfolios and put on short positions.
The rapid descent in the S&P 500 is unusual, given that it was accomplished in just 22 calendar days, far shorter than the average of 80 days in 38 other examples of declines of 10% or more going back to World War II.
Home Builder Sentiment Craters to a seven-month low in March as tariffs on imported materials raised construction costs, a survey showed on Monday. The National Association of Home Builders/Wells Fargo Housing Market Index dropped three points to 39 this month, the lowest level since August 2024. Economists polled by Reuters had forecast the index at 42, well below the boom/bust level of 50.
BYD Motors (BYDDF) Shares Rocket, up 72% this year, on news of technology that it claims can charge electric vehicles almost as quickly as it takes to fill a gasoline car. BYD on Monday unveiled a new “Super e-Platform” technology, which it says will be capable of peak charging speeds of 1,000 kilowatts/hr. The EV giant and Tesla rival say this will allow cars that use the technology to achieve 400 kilometers (roughly 249 miles) of range with just 5 minutes of charging. Buy BYD on dips. It’s going up faster than Tesla is going down.
Weekly Jobless Claims Rise 2,000, to 223,000. The number of Americans filing new applications for unemployment benefits increased slightly last week, suggesting the labor market remained stable in March, though the outlook is darkening amid rising trade tensions and deep cuts in government spending.
Copper Hits New All-Time High, at $5.02 a pound. The red metal has outperformed gold by 25% to 15% YTD. It’s now a global economic recovery that is doing this, but flight to safety. Chinese savers are stockpiling copper ingots and storing them at home distrusting their own banks, currency, and government. I have been a long-term copper bull for years as you well know. New copper tariffs are also pushing prices up. Buy (FCX) on dips, the world’s largest producer of element 29 on the Periodic Table.
Boeing (BA) Beats Lockheed for Next Gen Fighter Contract for the F-47, beating out rival Lockheed Martin (LMT) for the multibillion-dollar program. Unusually, Trump announced the decision Friday morning at the White House alongside Defense Secretary Pete Hegseth. Boeing shares rose 5.7% while Lockheed erased earlier gains to fall 6.8%. The deal raises more questions than answers, in the wake of (BA) stranding astronauts in space, their 737 MAX crashes, and a new Air Force One that is years late. Was politics involved? You have to ask this question about every deal from now on.
Carnival Cruise Lines (CCL) Raises Forecasts, on burgeoning demand from vacationers, including me. The company’s published cruises are now 80% booked. Cruise lines continue to hammer away at the value travel proposition they are offering. However, the threat of heavy port taxes from the administration looms over the sector.
My Ten-Year View – A Reassessment
We have to substantially downsize our expectations of equity returns in view of the election outcome. My new American Golden Age, or the next Roaring Twenties is now looking at multiple gale-force headwinds. The economy will completely stop decarbonizing. Technology innovation will slow. Trade wars will exact a high price. Inflation will return. The Dow Average will rise by 600% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old. My Dow 240,000 target has been pushed back to 2035.
On Monday, March 24, at 8:30 AM EST, the S&P Global Flash PMI is announced.
On Tuesday, March 25, at 8:30 AM, the S&P Case Shiller National Home Price Index is released.
On Wednesday, March 26, at 1:00 PM, the Durable Goods are published.
On Thursday, March 27, at 8:30 AM, the Weekly Jobless Claims are disclosed. We also get the final report for Q1 GDP.
On Friday, March 28, the Core PCE is released, and important inflation indicator. At 2:00 PM, the Baker Hughes Rig Count is printed.
As for me, I received calls from six readers last week saying I remind them of Ernest Hemingway. This, no doubt, was the result of Ken Burns’ excellent documentary about the Nobel Prize-winning writer on PBS last week.
It is no accident.
My grandfather drove for the Italian Red Cross on the Alpine front during WWI, where Hemingway got his start, so we had a connection right there.
Since I read Hemingway’s books in my mid-teens I decided I wanted to be him and became a war correspondent. In those days, you traveled by ship a lot, leaving ample time to finish off his complete work.
I visited his homes in Key West, Cuba, and Ketchum Idaho.
I used to stay in the Hemingway Suite at the Ritz Hotel on Place Vendome in Paris where he lived during WWII. I had drinks at the Hemingway Bar downstairs where war correspondent Ernest shot a German colonel in the face at point-blank range. I still have the ashtrays.
Harry’s Bar in Venice, a Hemingway favorite, was a regular stopping-off point for me. I have those ashtrays too.
I even dated his granddaughter from his first wife, Hadley, the movie star Mariel Hemingway, before she got married, and when she was also being pursued by Robert de Niro and Woody Allen. Some genes skip generations and she was a dead ringer for her grandfather. She was the only Playboy centerfold I ever went out with. We still keep in touch.
So, I’ll spend the weekend watching Farewell to Arms….again, after I finish my writing.
Oh, and if you visit the Ritz Hotel today, you’ll find the ashtrays are now glued to the tables.
As for last summer, I stayed in the Hemingway Suite at the Hotel Post in Cortina d’Ampezzo Italy where he stayed in the late 1940’s to finish a book. Maybe some inspiration will run off on me.
Good Luck and Good Trading
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Mad Hedge Technology Letter
March 17, 2025
Fiat Lux
Featured Trade:
(WE HAVE CROSSED THE RUBICON IN THE SHORT-TERM)
(META), ($COMPQ), (NVDA)
The pain trade for tech stocks just recently was up and that has now been broken.
It has been a tough fall and the Nasdaq ($COMPQ) has gone from up handsomely for the year to down 8%.
The tough point in this was that it was hard to go bearish until we finally crossed the Rubicon.
That moment is here and I think we are in a clear “sell the tech rally” mode for the short-term.
I don’t believe that investors are willing to bid up tech stocks in the short-term considering there is nothing coming down the pipeline from the business models that suggest we are in for some outsized growth.
I do believe that surprises will be to the downsides with many tech companies rerating their stocks negatively.
Then there is the issue that the American consumer is tapped out, and the ex-America rich countries are doing even worse.
For right now, I don’t believe traders should aggressively buy the dips.
My META (META) trade went horribly wrong and that shows that even the best of class got clobbered by the market.
Our bellwether barometer Nvidia (NVDA) is also demonstrably down from its highs of $150 per share and I don’t believe it will reach that level for the rest of the foreseeable future.
Don’t get me wrong, I do believe we can stage a bear market rally just from the very fact that we are in extremely oversold conditions.
It’s also clear that the problem in American politics is now rearing its ugly head and stocks will need to stomach a lot of headline risk in the short-term.
When countries’ politics devolve into 3rd world level type of politics then markets will tell investors to get ready to bear risk and America is no exception.
In response, investors have retreated from risk assets and taken profits on their holdings of the tech giants, which have been the biggest winners, by far, during the bull market in US stocks that began in October 2022.
Over the past decade, investors have been taught time and time again that it pays off handsomely to buy Big Tech stocks when they are down. Even prolonged slumps like the one that sent the Nasdaq 100 down 33% in 2022 proved to be a great buying opportunity as beaten-down stocks like Meta soared to new heights in the two years that followed.
There’s the near-universal belief that tech giants are still the highest quality companies in the world, thanks to their market dominance, immense profitability, and balance sheets loaded with cash. The question is whether these advantages are already baked into the share prices, and may now be under threat if the economy slows and big bets on artificial intelligence don’t pay off as expected.
Since closing at a record high 17 trading sessions ago, the Nasdaq 100 has bounced back on six days. But so far, none of the advances have lasted long.
Instead of catching a falling knife, traders should wait to get confirmation that we have support.
It is easier said than done, but the headline risk has shot to the forefront as the biggest risk to tech stocks when we wake up.
It is also clear that the federal government wants the market to digest as much political risk as possible at the beginning of the new term to smoothen its policy targets for the rest of the 4 years.
Whether it will work is up to debate and I don’t believe tech stocks are able to just shrug off these imminent risks as of yet.
It could be until the summer or fall when tech stocks start to become immune to belligerent politics and until then, we will most likely to see lower lows.
The market has rolled over and we have to shake and bake with it.
Mad Hedge Technology Letter
March 14, 2025
Fiat Lux
Featured Trade:
(TECH SECTOR HEADING TO A NEW SPACE)
(DBX), (MCHP), (META), (MSFT)
Anyone out there who has children in high school or college, the best piece of advice to give them to prepare for a highly lucrative career in technology is that their path will most likely start outside of the United States.
Why?
In one fell swoop, Big Tech and other smaller tech firms have decided that American salaries are not worth the money and have accelerated a full-on position migration to the rest of the world.
The salary arbitrage is something that gets missed in corporate America but is also a reason why these American tech companies keep beating earnings results.
Everyone knows the biggest expensive line item to a tech firm isn’t the software, but the salaries.
Every executive I talk to has widespread plans to cut jobs, whether it be in Seattle, Washington, or Los Angeles, California, and install them in places like India, Moldova, or even notorious Ukraine.
This is happening quietly, but the trend has picked up pace in 2025.
The early numbers in the United States are portending poorly for US employment and many good tech jobs will be reinstalled in cheaper countries and paid 5X lower than what it once was.
Since 2017, the United States has created 0 jobs for native born Americans, and this is part of the reason why.
Compounding the situation, in a global survey, some 61% of tech companies worldwide said they expected to reduce their workforces over the next five years because of the rise of artificial intelligence.
Tech firms such as Dropbox and IBM have previously announced job cuts related to AI. Tech jobs in big data, fintech, and AI are meanwhile expected to double by 2030.
The digital-financial-services company Ally is firing roughly 500 employees, or 7% of staff.
Ally made a similar level of cuts in October 2023, the Charlotte Observer reported.
Jeff Bezos's rocket company, Blue Origin, is sacking about 10% of its workforce, a move that could affect more than 1,000 employees.
Meta CEO Mark Zuckerberg told staff he "decided to raise the bar on performance management" and will act quickly to "move out low-performers." On just recently, the company had laid off more than 21,000 workers since 2022.
Microchip Technology is cutting its head count across the company by around 2,000 employees, the semiconductor company said a few days ago.
Last year, Microchip announced it was closing its Tempe, Arizona facility because of slower-than-anticipated orders. The closure begins in May 2025 and is expected to affect 500 jobs.
Microsoft cut an unspecified number of jobs in January based on employees' performance.
If anyone thinks this is a blip on the radar, then check your head again.
Once the WFH (work from home) movement started during 2020, there was no going back from there.
Tech companies don’t need warm bodies in offices anymore, so physical location doesn’t matter for lower-level employees.
95% of Silicon Valley will now be outsourced, and all “entry-level” jobs will originate in low-cost-of-living countries.
This is the new American tech sector. Ownership will still be mostly American, but workers will be offshore.
What is the result of this?
Tech stocks will stay higher for longer because of the massive cost savings in wages, which will allow management to beat earnings quarter after quarter.
It gives the balance sheet a reprieve allowing tech to hire more workers elsewhere for less money even if they aren’t an equal replacement.
It also opens the opportunities to deliver more value back to shareholder in the form of dividends or stock splits.
Tech firms won’t die off, but balance sheets will be financially engineered to the max to the benefit of executive management and to the chagrin of the American tech worker.
Once the macroeconomic backdrop calms, it will be time again to jump into tech stocks.
Mad Hedge Technology Letter
March 12, 2025
Fiat Lux
Featured Trade:
(SHOULD I CARE ABOUT ORACLE?)
(ORCL), (AAPL), (META), (AMZN)
If readers want to know if the Oracle AI story is dead or not, then listen here.
The story is still alive, so don’t give up on a good thing.
Oracle is getting swept up with the wider macroeconomic scare that has been triggered by geopolitics.
The fear porn has reached fever pitch and is causing tech stocks to detour from their usual self.
The question now is if the sabre-rattling will result in the economic recession we have been waiting 6 years for.
The flood of government money for at least 4 of those years carried spending habits even if those jobs were unproductive or fraudulent.
As it relates to Oracle’s business model, there is no recession in the sub-sector they are in, but I believe they chose to tank the earnings result since all equities were getting dragged down.
The truth is that Oracle’s business is experiencing great growth in the cloud, and AI demand is accelerating sales growth.
The macroeconomic volatility gave Oracle’s management the perfect excuse to guide down since a high forecast would have resulted in a selloff anyway.
Oracle's leadership encouraged investors to focus on the potential for its cloud business to benefit from enterprise AI spending.
A growing backlog for cloud services is giving the company clear visibility for beating growth metrics.
Meanwhile, sales of Oracle's closely watched cloud-infrastructure business increased 49%, compared with 52% growth for the segment in Oracle's November-ended quarter. Oracle's guidance for the May-ending quarter of 9% revenue growth missed previous forecasts of 9.5% growth.
Oracle's cloud infrastructure business is racing to build out computing capacity for AI startups and other users of the cloud. The Oracle Cloud Infrastructure business rents computing power to other companies, competing against much larger hyperscalers Amazon.com (AMZN), Microsoft (MSFT), and Alphabet's (GOOGL) Google.
Chairman and Chief Technology Officer Larry Ellison said that Oracle is on track to double its data-center capacity during the calendar year. The company now expects capital expenditures to grow to $16 billion for its May-ending fiscal 2025, roughly doubling from a year earlier.
Ellison appeared at the White House in late January with President Donald Trump, OpenAI leader Sam Altman, and SoftBank Chief Executive Masayoshi Son to announce an AI infrastructure effort costing $100 billion called Stargate.
While tight data center capacity has demanded some patience from investors, I believe that we move past some of the capacity constraints in the second half of this calendar year.
The deep selloff from $190 per share to $140 has to hurt.
It was just only a short time ago when Oracle was a deadbeat tech stock left behind by the likes of Apple and Facebook.
They have reinvented themselves as an AI infrastructure company, and that has done wonders for their stock.
When they were down in the dumps, ORCL stock was trading below $50, so we are a far cry from that.
Once the tech market gets its mojo back, ORCL will definitely return back in form to that buy the dip stock that did so well in 2023 and 2024.
Just bide your time until we can jump back into ORCL.
Mad Hedge Technology Letter
February 28, 2025
Fiat Lux
Featured Trade:
(BITCOIN PRICE A SCARE)
(MSFT), (META), ($BTCUSD)
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