This Week in Barrons: 1.12.2025

• “If you don’t own gold, you know neither history nor economics.”… Ray Dalio

• "In those moments when you don't think you're smart enough, … good enough, skinny enough, successful enough, or basically just not enough.  Someone once told me: ‘You may never be enough, but you’ll never know until you put down the measuring stick.’” … Demi Moore

• There’s a fine line between Hurry and Rush … Per Seth Godin: Almost all car crashes could be avoided if the driver would have simply slowed down.  That doesn’t mean we shouldn’t have bold plans.  Passion and unbridled belief are 100% essential to the success of any opportunity.  Unfortunately, it’s those last-second shortcuts that get us into trouble.  Learn to HURRY, not to RUSH.

• Is your engineering talent feeling the pressure of competition? 

  - Factually:

  o Only 26 stocks now account for half the total value of the S&P 500.

  o Only 25% of stocks are above their 50-day moving average.

  o The average household earns $60,000/yr. … and spends $77,000/yr.

  o Bootstrapped, 1-Founder startups … rose to 38% of all 2024 startups.

  o Series A (or less) startups … were ~HALF of all 2024 U.S. M&A deals.

• The JOBS REPORT …. In Q4 2024, we added 1.27 million FAKE JOBS.  How anyone can make decisions based upon the numbers that our BLS is using to prop-up politicallymotivated headline numbers – is beyond me.

• Follow-the-Leader Investing … Warren Buffet, David Tepper, Stanley Druckenmiller, Paul Tudor Jones, and Jim Rodgers are worried about a recession in the next 6 months, and are asking you to invest in the following while our government gets its financial act together:

  o (a) Cash (USD) – have a 6-month supply within reach,

  o (b) Gold (GLD or physical),

  o (c) Bitcoin (BTC) – purchase IBIT and surround it with an OTM (out-of-the-money)collar (sell OTM calls to buy OTM puts as protection),

  o and (d) other touchable Commodities (Silver, Copper, etc.).

• US Steel and Japan's Nippon Steel are suing the Biden administration … over their decision to block Nippon's proposed $15B acquisition of US Steel.

• 2025 marks the start of: Generation Beta.

• NVDA leap-frogged Apple to become the #1 company in the world … “From now on, machine learning will change how applications are built.” 

• Meta has decided to stop fact-checking posts … and will let users decide on the accuracy of its user-generated content.

• JPMorgan execs are planning … to bring its 300,000 employees back to the office 5-days a week.

• The US government’s monthly auction of 10-year notes … drew the highest yield since 2007.

• If ever there was a moment for Alphabet to spin off Waymo …  it would be now.  Waymo’s successful robotaxi service in San Francisco + Musk’s robotaxi plan – is a recipe for a sector catalyst.

• The business of selling booze is under pressure … as the surgeon general wants Americans to drink less alcohol.

• Tesla just launched a new Model Y … in China.

• According to the biggest U.S. prediction market … there are 55% odds that inflation will be 4% or higher in 2025.

• Global banks will cut as many as 200,000 jobs over 3 yrs. … as AI replaces middle-office and operations staffers.

• Grok AI (from xAI) just launched its Grok 2 assistant: xAI’s standalone mobile app and a soon to be Grok 3 release are positioning themselves for serious moves up the AI ladder.

• L.A. wildfires will cost homeowners $60B … and only ~$20B is insured.

• Britain grapples with exploding borrowing costs … as their 10-year rose to 17-year highs, and their 30-year hit levels last seen in 1998.

• IBIT has become the seventh most-traded options contract … In less than 2 months, it has established an options market with institutional-level liquidity.

• Unsealed letters prove the FDIC pressured banks after 2022 … to freeze or curtail a wide range of crypto offerings.  Coinbase and others are labeling it unconstitutional regulatory overreach.  Critics are demanding congressional hearings, as these elements threaten free-market principles and hamper the entire US crypto industry.

• BTC’s 2024 settlement volume more than doubled 2023’s … and is proof Bitcoin can serve as both a store of value and a robust medium of exchange.

• Bitcoin’s supply on exchanges just hit 1.5m … less than half of the 3.5m supply 5 years ago.  Everybody is buying bitcoin.  By definition, if nobody’s selling and demand stays steady – the price must move higher.

• Hasta la vista - baby… as some of crypto’s top critics are saying bye-bye ahead of this month’s inauguration.  Fed Vice Chair Michael Barr and CFTC head Rostin Behnam tendered their resignations – along with SEC Chair Gary Gensler and SEC Commissioner Jaime Lizárraga.

• Ripple (XRP) announced that their RLUSD stablecoin … will soon be listed on additional exchanges.  They also announced that an XRP spot ETF may receive approval soon.

• Tuesday:  We are red across the board for two reasons. (1) The Job Openings Report came in healthy, and more job openings mean fewer rate cuts = less free money.  (2) The 10-Year is over 4.6%.  Our debt market will derail equities.  If the 10-Year doesn't come down, we're going to see more soggy trading.  Bonds are putting pressure on stocks right now, and the energy sector is going to have to roll-over to bring some relief to interest rate fears.  Even crypto is under momentary pressure, but here we have too many traders chasing too few coins. 

• Friday:  Treasury levels are a continued issue as investors overnight sold the 30-Year Treasury pushing yields to ~5%.  Meanwhile, the 10-Year rate rose to 4.79% - its highest close since April 25, 2024.  The Jobs Report hit and OOPS – it’s stronger than our market wanted with 256k being created and unemployment falling to 4.1%.  [FYI: In 2024’s Q4, we created 1.27m fake jobs via our BLS’s birth/death model; therefore, the validity of the Jobs data is definitely in question.]  Gold (GLD) and Copper are moving higher along with FCX and NEM.  Global debt markets are groaning, LA fires are still raging, and So-Cal just fired off yet another earthquake warning.  I’m betting that the FED’s NY trading desk will start buying debt soon.  If you’re itching to purchase something, the only thing that feels even a bit safe are commodities. 

• Coming Soon == Bitcoin ETFs that offer 100% downside protection … According to an SEC filing, Calamos Investments is set to launch “structured-protection” ETFs that track Bitcoin performance, while protecting investors against as much as 100% of the losses.  That means (in theory) that it could be risk-free to invest in Bitcoin.

• 2025 == Bitcoin (BTC) + Gold (GLD) +

  Freeport-McMoRan (FCX) + Newmont Mining (NEM)

• Bkgd:  As retail traders are going all-in on stocks, the indexes are becoming more concentrated and uncertainty surrounding our new fiscal / monetary policies is growing.  We desperately need Mag-7 earnings to out-perform.  But a bit of stock market indigestion is to be expected at this stage of the election cycle.  Q1 volatility is an understatement with: expensive valuations, stretched investor / consumer sentiment, and policy uncertainty.

• The S&P futures (/ES) broke under 5911 … and that puts the S&Ps into a bearish trading position.

• Margin Expansion:  Per Callum Thomas: One of the key drivers of U.S. outperformance has been earnings, and sales is the biggest part of that story. However, the other key element in the earnings equation has been much larger profit margins over past decades. But our increasing profitability is mostly a result of financial manipulation (tax cuts / lower interest rates) – NOT technical innovation.  This is great historically, but hard to repeat.

• Volatility is scaring me at these levels … only because after dropping +90 S&P points on Friday alone, the VIX is only sitting at 19 and yawning. Tip #1: Volatility levels need to be a lot higher, before we see this selling stop.  This could just be the tip of the SELLING iceberg. 

• Bonds are in a feedback loop … as they continue to sell off, long-term interest rates continue to rise.  This will drive investors to sell the S&Ps, and park their money into a 5% bond for the next 10 years.  The last time you could get 5%, 10-Year, risk-free money was in 2006; therefore, this is quite a bond investable time.  Our bond market has had it with our government’s fiscal situation, and this is their way of hand-cuffing government spending.  

• Tip #2: Get ready to BUY BONDS.

• Tip #3: Watch ‘stores of value’ like GLD & Bitcoin versus The Mag-7. As Gold marches toward all-time-highs of $2,800, be very aware of where a crypto-friendly, incoming administration will take a digital asset like BTC / IBIT.

• Correlation is everything right now … As stocks become heavily correlated (which they are right now), it takes much bigger news to move an individual stock.  Watch next Wednesday, when the CPI is released along with some Q4 earnings results of the major financial institutions. 

• In Correlation, SELL the strong and BUY the weak or nothing … Tip #4: An example trade in META: BUY the Jan 24 $615 / $612.5 Put Spread. 

• CPI and Earnings start next Wednesday. 

• SPX Expected Move (EM):

  o Last Week = $83 EM … which we hit on Monday … as we moved +$140.

  o Next Week = $120 EM (5-day trading week) … and last Friday we moved $100 in one day. 

  Tip #5: If we get a ‘hot’ CPI and/or disappointing financial earnings on Wednesday, look for a volatility explosion causing people to SELL the S&Ps and BUY Bonds. 

• Remember Feb. 2018: Volatility spiked to all-time-highs, and the S&Ps lost over 4%.  At the time, our FED was shutting-down their reverse repo activities.  Our FED is currently doing the same thing.  Markets can smell inflation.  Gold is rising – despite a very strong dollar and a 10-Year nearing 5%.  Equity markets can feel the debt market groaning.  If our FED doesn't start printing money and buying debt soon – all heck could break loose.

• I am Watching:

  -       NIO … They're selling solid state batteries with a 670-mile range.

  -       GSAT … AAPL bought 20% of the company, and committed another $1B.

• HODL’s: (Hold-On for Dear Life)

  -       ICSH == iShares Ultra Short-Term Bond Active ETF (6% yield)

  -       Physical Commodities = Gold @ $2,717/oz. & Silver @ $31/oz.

  -       Bitcoin (BTC = $94,100 / in at $4,310)

  -       Ethereum (ETH = 3,317 / in at $310)

  -       IBIT – Blackrock’s Spot Bitcoin ETF ($53.8 / in at $24)

  -       ETHA – Blackrock’s Spot Ethereum ETF ($24.6 / in at $20)

  -       GLD – Gold ETF ($248 / in at $212)

   

  Options for Income: **IBIT

  -       Bi-Weekly:  BUY the IBIT ETF

  -       BUY Puts 1 Std. Dev. OTM (out-of-the-money) for protection

  -       SELL Covered Calls ½ Std. Dev. OTM for income

   

  Crypto Alts: (Results for last 30-days)

  -       Aave (AAVE = $283 / in at $155)

  -       ChainLink (LINK = $20 / in at $11.15)

  -       Uniswap (UNI = $13 / in at $9.10)

  -       Doge (DOGE = $0.34 / in at $0.22)

   

  Please be safe out there!

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