This Week in Barrons: 3.2.2025

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• In a world of anonymous phonies and tough-talkers …  We all know baseball doesn’t really matter until after the All-Star break.  Basketball doesn’t matter until the playoffs start and hockey didn’t matter until the U.S. played Canada.  In today’s world of partial attention spans and short-form video addiction – all that seems to matter is that we cut right to the chase.  I miss the depth, the back-story, the expertise, and the journey.  The idea that all actions come with consequences is often missing from my discussions with tough-talking phonies.  I love our financial markets because: there is no pre-season, every day is like a playoff game, and there’s no such thing as being ‘out-of-it’.

•  At least we can dream …  Per Fred Wilson: Oversized funds lead to overfunded companies, which lead to bad returns, and more importantly bad outcomes for founders & businesses.  Every one of those companies could be super lean and profitable – but instead will be pushed toward undisciplined and ruinous spending.  This has been the venture capital playbook for well over a decade.  Venture capital offers performing portfolio companies 10 TIMES as much money as they need, and most of them take it because VCs get them addicted to greed.  Naturally, this dilutes the founders, the seed investors, the early VC investors, and also continues the wasteful and unproductive spending.  This is happening at the same time that AI is making starting and building a company easier and less expensive than ever.  Some founders are opting out of this nonsense, and I hope to see more of them do so.  Heck, maybe it will even become fashionable again one day.  At least we can dream.

• The Mar-a-Lago Accord has 3 prongs:

  1. Tariffs == for Leverage & Revenue Generation

  a. “Step one = Done.” Tariffs have 2 objectives: Leverage (Mexico has put 10k troops on their side of the border), and Revenues.

  2. U.S. Sovereign Wealth Fund == to Create Equity

  a. “Step two = Being Done” A U.S. Sovereign Wealth Fund would allow the government to re-monetize the U.S. balance sheet.  It would also allow us to Revalue our Gold reserves.

  3. Century Bonds == for Debt Reduction

  a. Pay for Security via Non-Marketable 100-Year Bonds

  The Mar-a-Lago Accord hopes to spur economic growth via: increasing government revenues, decreasing government spending, weakening the U.S. dollar, and lowering the 10-year Treasury yield.  Per Anthony Pompliano: “Nations will wager trillions on the outcome of this new accord, and it’s not clear whether stock prices will benefit.”

• Citadel Securities is looking to become a market-maker … for cryptocurrencies.  They’re betting that Pres. Trump’s embrace of the industry will usher in a boom for the asset class.  The Citadel plans on setting up market-making teams outside the U.S. – showing how politics, innovation and tech-regulation can work together.  The key piece is regulation clarification. 

• Welcome to Stagflation … the forecast for Q1 GDP == a minus -1.5%.  [FYI: We can fight inflation, with a hot economy, but we can't do much with Stagflation = Rising Prices and a Fading Economy.]

• With Warren Buffett’s Berkshire Hathaway at an all-time high … their Class A stock is up over 1 million percent since Sept. 1976.  Berkshire just paid $26.8B in U.S. taxes – the largest amount ever paid by a company.

• U.S. consumer credit card debt just hit a record $1.2T.

• Is Grok 3 really telling the truth?  Recently, xAI’s (Musk’s) new Grok 3 model was discovered to never mention any negative details about Elon or Pres. Trump.  [FYI: Grok 2 had called Elon: “the biggest spreader of misinformation”.]

• EV sales hit a monthly record in the U.S. in January … accounting for 9.1% of new vehicle sales, even with the future of the EV tax credit being uncertain.

• U.S. consumer confidence fell for the 3^rd straight time … to its lowest level since August 2021. 

• TikTok became the first mobile app to hit $6B … in annual consumer spending – beating both YouTube and Disney+.

• China emits more CO2 than the entire developed world combined.

• The U.S. created its own “Gold Card” … which gives Green Card benefits for the small fee of $5m.  [FYI: Selling 200,000 ‘Gold Cards’ eliminates our annual deficit, and selling 7m of them eliminates our entire national debt.]

• Steve Cohen (famed investor / Mets owner) recently said …  “Economic growth will slow substantially.  Governmental waste propped up financial markets, and removing it will be a headwind for growth.”

• Nvidia crushed earnings last week … with EPS beating estimates by 6%, Q4 revenues besting expectations by +78% YoY, and its data center revenues +4.5% above expectations.

• Amazon unveiled Alexa+ - powered by generative AI.  It enables more sophisticated interactions, personalized responses, and enhanced integration with Amazon's ecosystem.

• Blue Origin announced the first all-female flight crew going into space… since a 1963 Soviet mission.  It includes: Katy Perry, CBS News host Gayle King, civil rights activist Amanda Nguyen, and Jeff Bezos’ fiancée – Lauren Sanchez.

• The Bybit crypto heist of $1.5B of ETH … surpassed the previous record of $611m stolen from the Poly Network in 2021.  [FYI: It’s one of the single biggest jobs ever.]

• The SEC closed its investigation into OpenSea … as trying to classify all NFTs as securities would have been a step backward, and one that intentionally manipulated the law and slowed innovation.

• The SEC has also dropped its probe into Uniswap Labs … the company behind one of the largest decentralized cryptocurrency exchanges

• Bitcoin is trading around $86,000 … ~20% off of its January high and officially in correction territory.  It seems that the Trump Rally has reversed itself due to trade tariffs and inflation fears.  

• SEC says most meme coins are not securities … “more akin to collectibles.”

• Meta in Q2 will launch a dedicated Meta AI app … to challenge OpenAI’s ChatGPT.

• The CME Group wants to launch Solana futures in March …paving the way for a Solana (SOL) ETF.

• Tuesday:  Wall Street is being dragged down by the Mag-7 ahead of NVDA earnings and PCE inflation data on Friday.  With tariffs and inflation capturing headlines, investors are becoming more concerned about U.S. growth prospects.  Pres. Trump has once again threatened to impose 25% across-the-board tariffs on US neighbors Canada and Mexico, and duties on China went into effect in early February – with China retaliating.  AI related spending fears weighed on chips, data centers and power/nuclear companies.  Also, DeepSeek is accelerating its launch of the next iteration of its open-source AI model.  Today, Bitcoin is down over $7,000, and our FED is buying the heck out of the debt market – trying to get the 10-Year to free fall.  It's a mess out there. 

• Wednesday:  U.S. futures are higher, with the S&P reclaiming the 6,000 level ahead of key earnings results tonight from Nvidia (NVDA).  The dollar index (DXY) is edging higher along with Treasury yields.  Bitcoin prices have settled around $86,000.  Industrial metals are seeing a bounce after Pres. Trump signed an executive order to direct the Commerce Dept. to examine possible copper tariffs.

• Bullish on Commodities … due to our Monetary Policy. David Nadiq said it best: ‘We are having trouble: Finding Trust … in a Black Hat World’ … and without TRUST we only have 3 choices:

  1. Do NOT Invest (go-to-cash),

  2. Invest Poorly, or

  3. Learn to Invest by getting the best tools, setting-up the best filters, and NEVER being the final bag-holder.

  Per David: “We can regain TRUST by making friends with more ‘X-Hacker White Hats’.”

• High Volatility Trading The Butterfly Spread Low Risk / High Reward:

  1.  Map the Expected Move … know your upper and lower boundaries of where statistically your asset should move within a specific time limit.  This data is readily available inside virtually every trading package.

  2.  Trading an Options Butterfly Spread … which is an options trade where you buy one strike, sell two closer strikes, and then buy another strike further out. You’re betting on a specific range where you think your particular asset will land.  It’s a limited risk / high reward trade – that takes advantage of wild market swings.  For example,

  a. On Friday morning the S&Ps started to rally, so I calculated the Expected Move of the SPY to the upside and it landed me @ ~$590. 

  b. I opened a butterfly on the SPY targeting $590.  The trade cost me $0.55 cents per contract, and would be worth ~$20 per contract if the SPY ended the day near $590.

  c. These trades work ~30% of the time, but you don’t lose that much - and when they hit – they hit big.

  3.  The Trade Specifics:

  a. Ticker Symbol: SPY

  b. For (1) 28 FEB PUT Option Butterfly centered around $590:

   i. BUY (1) $592.5 PUT Option

   ii. SELL (2) $590 PUT Options 

   iii. BUY (1) $587.5 PUT Option

  c. BUY Price = $0.55 / contract

  4.  The Sale: Price was $3.00 per contract for a 500% profit.  This is an example of a low risk / high reward trade.

• Rule #1 == Know your Levels:  The precise boundaries of the SPX Volatility Box are from 5,911 to 6,111.  Plan what to do when markets break below the 5848 level. 

  - Picture a range in the market where all the risk is coiled up, like a spring.  Right now, the S&Ps are bouncing between 5,900 and 6,100. Chaos happens when we break out of that range.  When we drop below 5,900 The VIX will spike, the algorithms will go nuts, and markets could tumble fast. If we rally above 6,100, you could see a face-ripping rally that leaves shorts crying into their coffee.

  - Mark the SPX Expected Move levels (listed at the end of this blog post). 

• Rule #2 == Risk Management:  Volatility metrics show that we are nowhere near capitulation.  In the meantime:

  - Be Patient and Do NOT CHASE a Trade … because constantly canceling and replacing orders is a losing game. Patience pays off.

  - Understand and Limit your RISK … because you need to know exactly how much you’re willing to lose before you press the send button.  I like Option Spreads for this purpose, but having firm buy ‘n sell stops will work as well.

• Volatility … are we there yet?  Nope – not yet.  When you examine the Volatility Futures (/VX), you’ll see that we are NOT in Volatility Backwardation (aka the March /VX futures remain lower than the April /VX futures).  That means that although the pros are buying hedges, and the VVIX is over $110 – there is no real fear in this market.

• Bonds are displaying defensive posturing … and with them continuing to move higher during Fridays rally – they’re giving us a warning signal that’s hiding in plain sight.  Traders are tired defending S&P levels and are rotating into bonds and notes (TLT or /ZB).  

• Financials are hitting all-time-highs … while tech stocks are struggling to remain relevant.  The reason that the financials are rising with the S&Ps and interest rates falling – is that they’re being used as a temporary lifeboat. 

• The S&P (SPX = $5954) Expected Move (EM):

  - Last Week’s EM = $112 and we only moved about $50.

  - Next Week’s EM = +/- $122 and that tells me to fade any rallies.

• The Bitcoin (IBIT = ~$48.00) Expected Move (EM):

  - Next Week’s EM = +/- $3

• There are many short-term indicators that will make it easy for the market to bounce, but an ever-increasing body of more longer-term/cyclical bearish evidence is sitting on the horizon.  We’re at a dangerous point in the cycle – especially with an uncharted policy backdrop.  Per Callum Thomas: (a) The S&P declined -1.4% in Feb., but is still up 1.2% YTD.  (b) Consumer + Wall Street expectations are coming off their highs, and this spike in bearishness may help the market bounce.  And (c) foreign money-flows have helped maintain the “U.S. Exceptionalism Bubble”.

• HODL’s: (Hold-On for Dear Life)

  - (+) ICSH == PUBLIC.com Bond Portfolio (6.9% yield)

  - (+) IBIT – Blackrock’s Spot Bitcoin ETF ($47.9 / in at $24)

  -  (+) Physical Commodities = Gold @ $2,849/oz. & Silver @ $31.8/oz.

  - Bitcoin (BTC = $86,000 / in at $4,310)

  - Ethereum (ETH = 2,230 / in at $310)

  - ETHA – Blackrock’s Spot Ethereum ETF ($16.8 / in at $20)

  - GLD – Gold ETF ($263 / in at $212)

   

  Options for Income: **IBIT

  - BUY the IBIT ETF: Bi-Weekly

  - BUY PUTs: 1 Std. Dev. Lower, Expiring = 3-weeks away, OTM (out-of-the-money) for protection.

  - SELL Covered CALLs: 0.75 Std. Dev. Higher, Expiring = 2-weeks away, OTM for income and to finance the PUTs.

   

  Crypto Alts:

  - Aave (AAVE = $245 / in at $155)

  - ChainLink (LINK = $14.7 / in at $11.15)

  - Doge (DOGE = $0.20 / in at $0.22)

   

  ‘De-Gen’ Economy:

  - Apple (AAPL = $195 / in at $220)

  - Robinhood (HOOD = $50.1 / in at $42)

  - Singapore (SE = $127.2 / in at $107)

   

  I’m Placing Seed-Bets on Cash-Cows like:

  - Vice Machines: MO, PM, & DASH, and

  - Exchanges: CME & ICE

   

  Please be safe out there!

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