This Week in Barrons: 1.19.2025

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• Learning is tough … because you first need to admit your incompetence.   Then you need to experience yourself getting better.  And finally, you get to figure it out and declare success.  As a teacher, the process is individually long, arduous, and terribly emotional.  Per Seth Godin, if it’s simply an exam that we’re trying to pass, it would be easier to have the students memorize the answers.  The measure of an educator is whether they can create the conditions that allow students to explore their own incompetence long enough – to learn something useful. 

• U.S. employee engagement:

  o Only 31% of employees are ‘engaged’ at work – a 10-year low.

  o 17% of employees are ‘actively dis-engaged’ at work – a 10-year high.

  o The people that are ‘Engaged the Least’ are also the most Expensive:

   1 = finance & insurance,

   2 = tech, and

   3 = professional services.

• “This is the worst governmental start to a year – EVER” … EJ Antoni

  o Spending is up ~11%,

  o Tax receipts are down 2.2%, and

  o The Federal YTD deficit is up ~40%.

• Last week the world’s Central Banks … injected their respective economies with liquidity, and temporarily quelled the panic over bond rates.  Stock markets went ballistic because stocks react to bonds, and NOT the other way around.  Stocks concluded their first 5 trading sessions of 2025 in the green – rising ~0.6%.  Data suggests that the S&Ps will be stronger for the rest of the year when they’re positive over the first 5 trading days of January.  But that’s just the S&Ps where only 27 stocks out of the entire 500 had any meaningful influence on individual portfolios – but at least they’re moving in the right direction right off-the-bat.

• Did the PPI & CPI really come down? … Nah, our government lied.  Energy went up 5.5% in Dec., but the BLS only included a 3.5% energy increase in the PPI (off by 2%), and a 2.3% energy increase in the CPI (off by 3.2%). 

• One Minute Park ( https://OneMinutePark.tv ) … transports visitors to different global parks – allowing each one-minute stream to calm the soul.

• ~40% of US adults over 55 will develop dementia.

• Better late than never … Biden’s group came out with guidelines on exporting AI chips, and Nvidia immediately denounced them as being: “misguided, uninformed, and unprecedented."

• A European recession would negatively impact US stocks … because 41% of our corporate revenues come from outside the U.S.

• No Latte = No Loo … Starbucks ended its policy that let people use its restrooms, Wi-Fi, and tables – without having to buy anything.

• Is Boxable the solution to affordable housing?  … Click and see.

• Does Big Booze == Big Tobacco?  Jack Daniel’s is laying off 12% of its staff after sales have fallen for 4 straight quarters.

• MBAs from all of the top schools … are having a tough time finding jobs, in part due to tech companies reducing their MBA recruiting.

• The Supreme Court upheld a federal law … that bans TikTok in the US unless ByteDance (its Chinese parent company) sells the video-sharing platform.

• Biden now holds the record … for the most individual pardons and commutations issued in one presidency.

• The following states have active legislation creating ‘Strategic Bitcoin Reserves’ … Pennsylvania, Texas, Ohio, New Hampshire, Wyoming, Oklahoma, North Dakota, and Massachusetts.

• Wyoming’s Senator Cynthia Lummis sent off a blistering letter … to the FDIC accusing it of trashing evidence tied to its digital asset activities.  [FYI, if you’ve never seen one of these types of letters, it’s the government’s version of: “I know what you did, who did it, who ordered it, and who wants to hide it. So, knock that shit off, or I’m coming, and hell’s coming with me.”]

• Scott Bessent, the nominee for Treasury Secretary … recently revealed that he owns ~$500,000 of Blackrock’s bitcoin (IBIT) ETF.  We are going from a crypto-abrasive administration to a supportive one in a matter of days.

• If you had put 60% of your portfolio in the S&P 500 … and 40% into bitcoin, your 5-year return would have been ~430%.  [Maybe the 60/40 portfolio = 60% domestic equities + 40% bitcoin + 0% bonds?]

• MoonPay just scooped up Solana-based Helio …  a crypto checkout startup that’s handled over $1.5B in transactions. They want to cram Helio’s payment wizardry into their own platform to turbocharge on-chain commerce. 

• HashKey thinks Bitcoin will surpass $300,000 … and ETH will top $8,000 when the U.S. sets-up a “Bitcoin Strategic Reserve”.  They also believe stablecoins will hit $300B in market cap, and a bunch of new crypto ETFs get approved on Ripple (XRP) and Solana (SOL).

• A Litecoin (LTC) ETF has cleared regulatory hurdles… and is primed for a 2025 debut. It’s a huge step for the entire altcoin market. 

• Monday:  Today we could see more downside follow through to last week’s ugliness.  If we do, then tomorrow has a good chance to be turn-around-Tuesday, but only if Tuesday’s PPI release (wholesale inflation indicator) comes in tame.  On Wednesday we get both the CPI (consumer inflation indicator) and the start of earnings season with the big banks reporting.  This will be a long drawn out earnings season, as the fourth quarter and year end reports take time.  There is fairly high short interest in many of the big-name stocks, and if the 10-Year behaves itself today – we could see investors get brave ahead of the inflation reports and buy-the-dip. 

• Tuesday:  The U.S. dollar index (DXY) fell -0.3% on the report that the Trump team is mulling gradual tariffs.  Treasury yields are edging higher as U.S. inflation is expected to remain elevated.  December's producer price index (PPI) inflation rose only .2% - half of estimates and core PPI inflation was 3.3% YoY vs the 3.5% expected.  Consumer (CPI) inflation is due Wednesday, with a forecast of a small acceleration in the 12-month figure to 2.9% from 2.7% and the core reading repeating November's 3.3% pace.  Right now, markets are higher on the news.

• The Launch of ‘TRUMP’:  Around 10 p.m. ET on Friday, DJT launched a memecoin bearing his own name, “TRUMP.”  It rose over 4,000% within 4 hours of its debut – opening at just a few pennies and moving to $30 by midday Saturday == a 17,000% return.  Per Phil Rosen: many traders were posting screenshots of their portfolios on social media showing how “TRUMP” had turned them into millionaires.  The market capitalization of the available tokens is ~$6B, which represents a total market cap for all of the tokens of ~$31B.  The TRUMP token was launched while DJT hosted an invite-only, black-tie event for the crypto industry in Washington DC.  Attendees ranged from executives to Snoop Dogg to Trump’s Treasury Sec. nominee Scott Bessent.  This is untested legal territory for both the political and investing world; however, it aligns with DJT’s ambitions to make the US the “crypto capital of the planet”.  Whether the TRUMP memecoin gains momentum or crashes, it pushes the broader crypto industry deeper into mainstream consciousness – on the eve of what will be the first of many pro-crypto announcements.

• Bonds and the U.S. Dollar do not confirm a Trump Rally 2.0 … If this week’s rally in bonds (/ZB) holds, then we will see more upside to the S&Ps.  If, however Monday’s executive orders are NOT bond-market friendly – then bonds and the S&Ps will sell-off again.

• Volatility does not confirm a Trump Rally reboot … therefore, be careful as traders experience FOMO on Tuesday morning.  After all, we are only 4 trading sessions away from our markets being over 200 S&P points lower. 

• S&Ps need to remain above 6,000 for continuation … This market’s price action is somewhat manic in its behavior pattern, and the 6,000 level in the S&Ps is becoming both psychologically and technically significant. 

• Defensive Trades: “Instead of finding a Needle in a Haystack … find the Haystack with the most Needles.”

  o  Tip #1:       Sell AAPL down to $220.

  o  Tip #2:       Buy XLU & XLE … when the XLU outperforms the SPY over a 4-week range.

  § XLU moving to prior highs = $82.

  § NEE moving from $71 to $85.

  § SO moving from $82 to $95.

  § D moving from $55 to $61.

  o Tip #3:       Buy GLD … at least until $252

   

• SPX Expected Move (EM):

  • Last Week: We exceeded the upper edge of the EM by ~$60.  We moved +180 S&P points in one week = yeouza – that’s volatility.

  • Next Week: The EM is ~$88 for a 4-day trading week. With volatility being this high, we will see every bit (and more) of that expected $88 move.

• (1) Defensives = Utilities, Consumer Staples, + Healthcare

  (2) Traditional Cyclicals = Industrials, Financials, Materials, + Energy

  (3) Tech = Info. Technology, Comm. Services, + Consumer Discretionary

• Per Callum Thomas: (1) Markets rebounded off oversold conditions, but sentiment has also shifted from bullish to neutral/bearish.  (2) Retail flows have moved from doubt to hype – further fueling the ‘degenerative economy’ trade.  However, earnings per share for Defensivestocks has reached a decade+ low.  (3) Finally, Tech will not go quietly into this good night, and an interesting play is to: Replace Bonds (in the 60/40 portfolio) with Bitcoin + Defensives.

• HODL’s: (Hold-On for Dear Life)

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

  - IBIT – Blackrock’s Spot Bitcoin ETF ($59.7 / in at $24)

  - Physical Commodities = Gold @ $2,740/oz. & Silver @ $31/oz.

  - Bitcoin (BTC = $104,900 / in at $4,310)

  - Ethereum (ETH = 3,274 / in at $310)

  - ETHA – Blackrock’s Spot Ethereum ETF ($26.5 / in at $20)

  - GLD – Gold ETF ($249 / 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:

  - Aave (AAVE = $309 / in at $155)

  - ChainLink (LINK = $23 / in at $11.15)

  - Uniswap (UNI = $13.9 / in at $9.10)

  - Doge (DOGE = $0.39 / in at $0.22)

   

  Please be safe out there!

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