This Week in Barrons: 2.9.2025

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• ‘Done, is Better than Perfect’ … was once a sign that hung above Mark Zuckerberg’s desk at Facebook.  ‘Done, is Better than Perfect’ is why DeepSeek shocked the tech world last week.  DeepSeek did things that Nvidia and Open AI could not – because they didn’t have to be perfect.  A disruptive company has 2 advantages: Speed and Room-for-Error.  Established companies cannot risk failing – because the stakes are too high and their customers have no tolerance for error.  My advice to innovators / disruptors: ‘Fail all you want because: You Learn more from Failure, and Competition is Good for the consumer.’

• Only the hard-core surfers show up in the rain.  If you’re all about making things better, organizing the disorganized, connecting the disconnected, or building community – Do NOT Wait until conditions are ideal.  Per Seth Godin: Broken systems need your help – because they’re broken.  In fact, they need you the most – when it’s raining.

• Today’s game will have a 2-minute warning … but often by the time that warning arrives – it’s too late to win the game.  That’s because your opponent focused early and persistently. The best time to plant a tree is twenty years ago. The second-best time is today.

• Let’s talk Gold… Central Banks issue Fiat currency and set interest rates. Then they make you use the Fiat currency that they just created.  Isn’t it strange that they are main accumulators of all the gold and at the fastest pace in history?  Per Callum Thomas: Gold prices are at all-time-highs and rising due to: (a) (Geo)Political Risk – as the geopolitical norms of past decades give way to a new era in international relations.  (b) Central Bank Buying – With global reserve allocations to gold doubling over the past 10 years, this should continue given concerns around US fiscal sustainability.  (c) Rate Cuts & the expanding Money Supply – are giving off an overall monetary easing vibe. These are the kind of trends that tend to be multi-year in nature, so the major drivers of the gold bull market are likely to persist.

     Then ask yourself: (a) Is the bull-run over?  No, because most valuation indicators remain far away from levels where Gold peaked in recent decades.  (b) Is Gold a ‘crowded’ trade?  It’s hard to believe, but NO.  Gold ETFs are still showing outflows, the retail investor doesn’t like the trade, and the media is apathetic about Gold’s higher prices.  (c) Are the monetary tailwinds changing?  Nope, we’re still printing money and spending like drunken sailors.

     There seems to be nothing standing in the way of the bull market in gold running further. And If gold and silver are NOT excluded from the tariff discussions, then prices will jump by the amount of the tariff for both GLD and SLV.

• President Trump would like Ukraine’s rare earth minerals … in exchange for continued military aid.  That would be timely as China began to curb the export of five critical minerals to the US.

• Sen. Josh Hawley’s new anti-China bill … could make it illegal to download DeepSeek – the Chinese AI chatbot. 

• Google, Microsoft, Amazon and Meta will spend … ~$300B on AI in 2025.  The OpenAI-SoftBank Stargate data center venture hopes to spend $500B over the next 4 years.  No one questions whether Google, Microsoft, Amazon and Meta will pay their bills, but Stargate’s $500B is still up-in-the-air.

• Corporations are moving from Delaware to Nevada & Texas … due to lower litigation risk and stable legal/political rules.

• Cigarette maker Philip Morris is lighting-it-up after earnings … as shares hit record highs thanks to strong sales of Zyn – its line of nicotine pouches.

• Ford told investors that 2025’s profits will be worse than 2024’s.

• Hearing Aids – make room for … a new tech. that combines both hearing and vision solutions.  Nuance Audio Glasses just received FDA clearance to provide an open-ear hearing solution seamlessly integrated into a pair of smart glasses per manufacturer EssilorLuxottica.

• Anthony Scaramucci's Skybridge Capital … outperformed almost every fund on Wall Street including: Tiger Global, Citadel, and Pershing Square.  They produced a 43% return in 2024 by having over 57% of their assets in crypto.

• US lawmakers are pushing for stablecoins.  Senators are moving quickly to help President Trump develop clear regulation for digital assets – starting with a stablecoin bill.  Both political parties are on board to claim victory. 

• The U.S. launched its first sovereign wealth fund … and early reports suggest that bitcoin and other crypto assets are on the short-list.  If/When that happens, we will see a tidal wave of institutional money pour into BTC, crypto ETFs, and crypto-linked stocks.

• Doge eat Doge world … Grayscale files for a Doge ETF as the meme coin ETF race heats up.  Others are scrambling to file their applications, hoping for a fast SEC approval process under Trump.

• MicroStrategy is rebranding itself as ‘Strategy’ … just as it released bitcoin-branded merch – that you could NOT pay for with bitcoin.

• Bitcoin is still in a bullish channel …  all the way down to its major support zone of $91,500.

• Kentucky, Missouri, and Iowa are the newest states to say … “Why not stockpile BTC?”  With all the states jumping on board, maybe we’ll be paying our local taxes in satoshis next year.

• Monday … President Trump signed an executive order directing the US Treasury and Commerce Departments to create a sovereign wealth fund.  He went so far as to suggest a target for the new wealth fund == TikTok and maybe Bitcoin.  The main reason the U.S. lacks a sovereign wealth fund is that ‘forever’ we have had no money to put into a fund.  We’re still trying to figure out how to cover our existing financial obligations – including servicing our $36T debt load.

• Wednesday …  U.S. equity futures declined amid concerns over the trade war with China as tensions ramp up.  Also, China's antitrust regulator is preparing for a possible investigation into Apple's policies and App Store fees.  The development comes a day after China announced other measures targeting U.S. businesses.

• Friday:  Big money is betting on an explosive move on/around V-Day:

  - Critical Gamma setup: Feb. 14^th will be the largest options open interest buildup since March 2023. ~$2T is trapped between 5900-6100 SPX levels.

  -  Tip #1: Broad Institutional Rotation: Funds are dumping MSFT and buying NVDA and Regional Banks – a classic pre-volatility pattern.

  - Tip #2: Break-Point Levels: The SPX moving below 5900 will force selling, and breaking above 6100 will spark a short squeeze – due to institutional hedging.

• A different take on Tariffs: Trump learned how to use tariffs to decrease income tax, increase domestic manufacturing, and create jobs without causing inflation.  The U.S has historically gone from over 90% to under 1% of the U.S. Govt’s spending being paid-for via tariffs.  Critics say:

  - Tariffs lead to higher prices for American consumers.

  - Tariff-induced higher prices lead to inflation.

  - Tariffs do not create American jobs.

     Factually, Trump (8 years ago) put tariffs on solar panels (30%) and on washing machines (20-50%), and both cost less and are made in the U.S. now.  Consumers will pay higher prices for tariffed goods in the first 3-6 months while markets change over to domestically produced goods.  Tariffs are a part of an economic machine that includes a drastic reduction in government spending.

  - Elon Musk / DOGE plans on: “Reducing the federal deficit from $2T to $1T in FY2026 by cutting an average of ~$4B/day in projected 2026 spending.  That $4B/day would still result in a ~$1T deficit, but economic growth should match that number; therefore, no inflation in 2026.”

  - Musk on Saturday said: “I am cautiously optimistic that we will reach the $4B/day FY2026 spending reduction this month.”  As the DOGE team slashes bureaucratic waste, inflation is beginning to come off the table.

    A recent survey shows that ~50% of Canadian companies “plan to shift more of their investments and operations to the U.S. to mitigate potential tariffs and maintain market access.” If framed correctly, our tariffs should create a black hole that will suck investment dollars and business operations into the U.S. If a business does not want to pay the tariffs, they can come build their products in America. 

• Wild start to a week – again!  Factually, the rolling count of daily drops of -1% or worse has turned up from multi-year lows.  The best case is that markets keep going up but with more volatility, range, and rotation.  The worst case is that it’s predicting a top in the marketplace.  I’m leaning toward more caution and care.

• Tweets are keeping a floor under volatility … in fact volatility (VIX) is turning into the gift that keeps on giving.  Tip #3: BUY in-the-money Calls on the VIX – i.e. BUY the April $15 Call(s) for $3.80.  Then sell them when they move higher, and buy ‘em again when they come back down.

• We are trapped inside of a Volatility Box … and this 200-point range (from 5911 to 6111 on the /ES) is grinding traders to dust.  There is almost a catastrophic amount of option activity – within this range – all centered on various monthly option expiration dates.  We have a massive amount of risk, and once we break-through the range (with high degrees of correlation) – we will move violently higher or lower. 

• What is Gold seeing?  Gold is trading at all-time-highs because of: inflation, risk aversion, or something bigger?  Gold has ripped higher before, but this time is different because it is ‘well-thought-out’ and with a true ‘sense-of-urgency’.  Gold has breached its Expected Move three consecutive weeks – which often calls for a pull-back.  Tip #4: If/when we get that pull-back in Gold, I will be ‘buying-the-dip’.

• Microsoft, Apple, and Tesla are all flashing warning signs … so what does that mean for the broader market? When looking at MSFT, if it were to break through the $410 and then $400 level to the downside – that would cause market devastation.  Apple’s downside level is $220, Google’s is $190, Tesla’s is $350, and NVDA south of $120 scares me.  [FYI: NVDA has earnings coming up on Feb. 26.]   Tip #5: If the marketplace breaks … short the financials (XLF) and J.P. Morgan (JPM).

• The Jobs Report … The Jobs Report was mediocre-to-soft, and showed slowing growth.  It re-started the ‘money-printing’ / ‘cut-interest-rate’ chant; however, average hourly earnings jumped substantially.  We also need to figure out how many layoffs our government and the Mag-7 will produce in Feb / Mar.

• Tip 6: Trade this market using Options … (a) Use In-the-Money/Out-of-the-Money Option Spreads, (b) Rinse ‘n Repeat buying and selling VIX Call Spreads, and (c) Buy inexpensive Butterfly Options on the S&P Expected Moves.

• SPX Expected Move (EM):

  - Last Week: $104 was the EM, and we ended down $17 (unchanged).

  - Next Week: $100 == EM

   

  The persistence in stocks making new highs, while new lows stay tame is a sign of strong trends with follow-through. Follow-through leads to new highs.  Currently both new highs and new lows are muted – which suggests: Rotation.

• This week’s trading vibe had a distinctly cautionary flavor – as our bull market showed its age and the risk flags began to wave. (a) Sentiment shifted from bull to bear.  (b) Mag-7 stocks sounded warnings on volumes, price, and inflows. And (c) US equity risk premiums remained at multi-decade lows.  Below the surface, sentiment has moved from extreme optimism to murmuring pessimism, and portfolio allocations are starting to reflect that. 

• HODL’s: (Hold-On for Dear Life)

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

  - IBIT – Blackrock’s Spot Bitcoin ETF ($55 / in at $24)

  - Physical Commodities = Gold @ $2,886/oz. & Silver @ $32.2/oz.

  - Bitcoin (BTC = $96,200 / in at $4,310)

  - Ethereum (ETH = 2,640 / in at $310)

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

  - GLD – Gold ETF ($264 / 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, and to finance the PUTs.

• Crypto Alts:

  - Aave (AAVE = $241 / in at $155)

  - ChainLink (LINK = $18.3 / in at $11.15)

  - Doge (DOGE = $0.25 / in at $0.22)

• ‘De-Gen’ Economy:

  - Apple (AAPL = $228 / in at $220)

  - Google (GOOG = $187 / in at $197)

  - Robinhood (HOOD = $56 / in at $42)

  - Roblox (RBLX = $66 / in at $61)

  - Singapore (SE = $123 / in at $107)

• Gold Trades:

  - Miners are beginning to break out.  Watch AEM, FCX, RIO (move fr: $62 to $72) and ERO (move fr: $13 to $22).

  - GLD … March upside Call Spread … Delta 40: +$270 / -$272.

   

  Please be safe out there!

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