This Week in Barrons: 1.5.2025

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• “Most of us live our lives by accident – as they happen. Fulfillment comes when we live our lives on purpose.”  … Simon Sinek

• “In 2025, Money and AI will not sleep. … Their combo will create markets, re-define labor, and cause geographic chaos / opportunity for the deepest of pockets and the smallest of wallets.” … Howard Lindzon

• “How does this work? How can we make it better?” … per Seth Godin: Patiently repeating these 2 questions will lead to (a) incremental improvements and (b) a deeper understanding of your customer’s’ reality.

• Problems vs Situations … Problems have solutions and Situations have outcomes.  Our goal is to solve problems BEFORE they become situations.

• “Unforgettable TV moments.” … Earlier this year, Richard Goodall, a 55-year-old school janitor from Indiana, took center stage on America’s Got Talent.  After singing Don’t Stop Believin’ by Journey, Simon Cowell said: “Richard, that was genuinely special.  America is going to love you.”  Goodall later won the AGT’s 2024 top prize. 

• Is your engineering talent feeling the pressure of competition? 

  - OpenAI’s o4 model is coming for their coding jobs.  

  - Autonomy is coming for their trucking jobs.  

  - AI is coming for their Radiology jobs.

  - Humanoids are coming for their manufacturing jobs.

  - Healthcare still remains rewarding.

  - My advice, Build-A-Startup – it’s the cheaper-better-faster place to live.

• 2025 New Year’s Expectations:

  1. More AI hardware will hit the mainstream… [Because nobody wants another camera upgrade.]

  2. Lyft ‘n Uber go robo… with Alphabet-owned Waymo leading the pack.

  3. Welcome in the Quantum Computing Era … as Google recently teased us with a quantum chip that will solve problems in under 5 minutes that today’s computers would take 10 septillion years to figure out.

  4. Wall Street’s crypto makeover includes Goldman Sachs, Robinhood, and BlackRock … that are all intending to bringing securities to the blockchain ushering in 24/7 trading, faster settlement, and lower transaction costs. 

  5. On July 1, 2025 we should see the:

  a. SPY: between $523 and $667,

  b. QQQ: between $444 and $601,

  c. IWM: between $185 and $263,

  d. TLT: between $77 and $98, and

  e. VIX: should be above $10.00.

• Big Tech joins the Energy sector … as Microsoft, Google, and Amazon all sign big nuclear deals to power their upcoming data centers.  MSFT even plans on re-opening Three Mile Island – the site of the 1979 partial nuclear meltdown.

• GDP predictions show … the US falling from 2.8% in 2024 to 2.2% in 2025 – while Canada and Japan will move from 1.3% and 0.3% in 2024 to 2.4% and 1.1% respectively in 2025.

• Americans over 80 regret … not saving more, not spending more on themselves, and failing to plan for catastrophes like business closures.

• Credit Card defaults surge … "The bottom third of the US consumer is tapped out. Their savings rate is zero," said Mark Zandi.  U.S. lenders wrote off $46B in delinquent loans in 2024 – a 50% increase over 2023.

• The Philly FED is flagging another 653,000 fake jobs … on top of the 818,000 fake jobs that the Federal BLS revised away last year.

• ETFs secured their first trillion-dollar year in 2024 … largely thanks to bitcoin.

• 2024 was the first time in 14 years … that Apple failed to announce new hardware.

• The number of U.S. VCs has declined -25% … as the focus shifts toward sector (niche) knowledge and sustainability.

• U.S. stocks closed-out their best 2-year stretch since 1998.

• Gold (+26%) had its best year since 2010 … driven by demand for a safe-haven asset as well as global interest rate cuts. 

• Tesla sales declined YoY (for the first time) … they blamed: slowing demand, aging models, and discount deals that trimmed margins.  [I’m guessing that the days of unlimited hype and zero competition are over?]

• Samsung announced a major investment into Rainbow Robotics … expanding its presence in humanoid robotics development and positioning itself as a serious competitor in the sector.

• ~2,000 CEOs left their U.S. jobs in 2024 (an all-time-high) … so Nike, Boeing, Starbucks, and Peloton have one thing in common: a new, expensive CEO tasked with turning their company’s fortunes around.

• Decentralized exchange (DEX) volume … hit record levels in December.

• Standard Chartered, and BBVA … are among the banks planning stablecoins.

• The computing power of Amazon + Google + Microsoft …  does NOT equal 1% of the bitcoin network.  Miners and node operators have assembled a massive, decentralized computing network without any central planning or a primary capital source.

• Institutions hate being left behind by retail … so the total amount of bitcoin held by the US-traded ETFs doubled in 2024.

• Although the price of bitcoin has increased ~500% in the last 2 years … over 50% of the bitcoin in circulation has not moved.  This signals long-term holders with deep convictions – regardless of price.

• ~86% of all bitcoin in circulation are currently “in profit” … meaning that the coins last traded hands at a price lower than the price today.

• Ethereum ETFs drew in record inflows last month … as investors sought exposure without having to own the pure crypto.

• Morgan Stanley’s E-Trade (5.5m accounts and $360B in assets) … is asking for the FED’s blessing to offer Bitcoin spot trading.  If E-Trade gets the green light, they’ll join BlackRock and Fidelity in intensifying the race to win over the next-wave of crypto investors.

• For the month of December, the S&Ps fell -2.5%, the Nasdaq moved higher by 0.5%, and the Dow fell -5.3%.  

• For the quarter, the S&P 500 gained 2.1%, the Nasdaq climbed 6.2%, and the Dow gained 0.5%. 

• For the year, the S&P 500 gained 23.3% (up 53.2% over past 2 years), the Nasdaq climbed 28.6%, and the Dow moved higher by 12.9%.  

• For 2024 S&P sectors:

  o Communication Services (XLC) and Tech (XLK) led the way higher with surges of 33% and 28%, and Consumer Discretionary (XLY) gained 25.4%.

  o Financials (XLF) were the best outside of tech, rising 28.5% on the year.

  o Materials (XLB) were down -1.8% and were the only losing sector on the year.

• The 10-year Treasury yield rose 72 basis points for year.

• The 10-year yield has surged 98 bps from its low of 3.6% - just prior to our FED’s first rate cut.

• The U.S. dollar index rose to 108.80 – its highest level since Nov. 2022. norms.

• 1. I’m Moving: from Tesla (TSLA) back into Nvidia (NVDA).

• 2. I’m Liking: BTC, ETH, AAVE and HYPE.

  o Congrats: to the participants in the Hyperliquid (HYPE) token drop.

• 3.  I will be Creating: my own AI-character’s profile on META … that will coexist alongside real-human accounts on both FB and Instagram.

• Bkgd:  In 2024, the S&Ps closed up 23% (25% = including dividends). U.S. large caps finished #1 (vs other asset groups).  Markets averaged lower volatility + higher earnings.  Investor sentiment notched new bullish all-time-highs.  End-of-year equity valuations became even more expensive – after all, what’s not to like?

• Correlation works to the upside and to the downside … Even though Friday’s bounce moved markets significantly higher, there was no size or conviction to the move.  Remember, what started these most recent market mood swings (high degrees of correlation) was J. Powell’s press conference following him cutting rates on December 18.  High correlation often ignores sector rotation, and emphasizes a return to 2-sided trading. Tip #1: If this market continues its move to the upside - get ready for the fade.

• It was a less than Happy New Year … as the SPX began the year on the lower edge of it’s weekly expected move.  But one week or one month (even if its January) does not make or set the tone for a year. 

• Volatility is here; therefore, learn how to shift gears.  If the reason you’re not into crypto is due to its level of volatility, then welcome to 2025 – the Volatility Year.  The days of ‘set it – forget it’ and ‘buying-the-dip’ appear to be over.  They died out on December 18, and ushered in a new level of semi-violent, 2-sided trading.  Tip #2: Learn how to use the SELL BUTTON & Option Spreads to protect your portfolio and define your risk. 

• Tip #3: Be careful around the 5911 S&P (/ES) Level … as a break below that on the /ES’s – could trigger a much more dramatic fall.

• AAPL, GLD, BA and Bonds …

  o Last week we said to SHORT AAPL… and AAPL fell from $260 to $243.

  o Tip #4: Short Boeing (BA): Buy the Jan $170 / $165 PUT spread.

  o Tip #5: Own Gold (GLD) because the Dollar will pull back: Buy the Feb 7: $243 / $246 CALL spread.

  o Tip #6: Bonds may move lower, but you want to be long bonds.

• Tip #7: With increased correlation coming to equities, and ubiquity coming to crypto … welcome to a world of 24/7/365 trading, lower fees, and faster on-chain settlements. 

• SPX Expected Move:

  o Last Week’s move = $83 and we hit it on Thursday to the downside.  But we also moved that much on Tues, Thur, and Friday.  So, why is the EM so low?

  Next Week’s move = $85 … it makes no sense.

• Per Callum Thomas: 2024 was a year that featured all the hallmarks of a raging bull market.  Heading into 2025, expectations are running hot, and the hurdles for a third calendar year in a row of 20%+ gains are high.  It’s possible that the bull market keeps moving higher-for-longer, but probabilities do not favor that outcome.

• HODL’s: (Hold-On for Dear Life)

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

  - Physical Commodities = Gold @ $2,652/oz. & Silver @ $30/oz.

  - Bitcoin (BTC = $97,800 / in at $4,310)

  - Ethereum (ETH = 3,617 / in at $310)

  - IBIT – Blackrock’s Spot Bitcoin ETF ($56 / in at $24)

  - ETHA – Blackrock’s Spot Ethereum ETF ($27.4 / in at $20)

  - GLD – Gold ETF ($243 / in at $212)

   

  Options for Income: **RIOT / MARA – Bitcoin Mining

  - Bi-Weekly:  BUY the Stock

  - BUY Puts 1 Std. Dev. OTM for protection

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

   

  Crypto Alts: (Results for last 30-days)

  -  Aave (AAVE = $344 / in at $155)

  - ChainLink (LINK = $23.1 / in at $11.15)

  - Uniswap (UNI = $15 / in at $9.10)

  - Doge (DOGE = $0.38 / in at $0.22)

   

  Please be safe out there!

• _{Expressed thoughts offered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews.  You can subscribe by visiting: https://rfsfinanicalnews.beehiiv.com/subscribe.}

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