This Week in Barrons: 3.30.2025

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• Who’s your customer?

  - “Nobody wants this” – is extremely unlikely.

  - “Somebody will like this” – is almost certainly true.

  - “Everyone will need this” – is an obvious trap.

  Per Seth Godin: Your work begins with: Finding the right Somebody’s, and Ignoring the imaginary Everyone’s.

• ‘When you realize what you want to do for the rest of your life, you want the rest of your life to start as soon as possible.’ … ‘When Harry met Sally’

• Does the soul of a company matter? There’s an old saying,“You are the company you keep.” I think the phrase is a head-scratcher for some, but an indicator for all. It matters who you trust, and respect. We are the sum of the people that we spend the most time with. That may be a scary thought, but comforting if you hang out with people who have good souls. But does the soul of a company even matter? Heck, companies can change their products, image, and personnel overnight. We’ve all said at some point:“I will never spend another dime with that company!” The keys are simple: over-communicate, be accessible, and maintain your sense of urgency. Now, that all comes with a price. Your secret sauce is always the sum of the people you communicate with.

• A relief rally doesn’t necessarily require good news … just some ambiguity dressed as moderation.

• Whether you call it chaos or a strategy … Pres. Trump’s tariffs are redrawing the map of the auto industry in real time. 

  o The 25% automobile tariffs (effective April 3) will most likely hit Germany the hardest as we imported ~$25B German cars in 2024.

  o ~25% of Porsche and Mercedes’ projected operating earnings will be eliminated.

  o On May 3, auto parts (including engines and transmissions) will also come under the tariff.

  o Tesla could emerge as a clear winner from the tariff update. They produce their cars in California and Texas, with relatively little reliance on imported components. And their Model Y product is competing in the midsize crossover niche where ~50% of their competition will be subject to tariffs.

  o In contrast, legacy automakers have long optimized for a global supply-chain.  Due to that mis-step, strategists estimate that consumers could see prices on their favorite cars climb an additional $15,000/vehicle.

  o Musk’s Made-In-America approach suddenly looks like a trade war blueprint.

  - Small Business Growth has stalled-out … and this is most-often a precursor to sluggishness in the broader economy.  For the first time since 2021, more business owners reported that their revenues decreased versus increased.

• The income needed to purchase a typical U.S. home … has increased by ~80% in just 5 years

• Consumer confidence in the economy plunged to a 12-year low.

• Copper prices surged to all-time highs this week.

• Meta would like people to pay $14 a month to use Instagram … on their phones without ads.

• 23andMe has filed for Chapter 11 bankruptcy. 

• South Korean AI chip start-up, FuriosaAI … rejected an $800M acquisition offer from Meta.  The two sides could not agree upon a post-acquisition business strategy and organizational structure.

• Apple watch will be getting a camera in 2027 … as part of Apple’s visual intelligence program.

• OpenAI expects to generate $12.7B in revenue this year … over 3X last year's number.

• Dollar Tree is selling its Family Dollar business … for ~$1B as the parent company attempts to steer the discount retailer back toward profitability.  [FYI: They originally paid $9B for the Family Dollar acquisition.  Buy High – Sell Low.]

• 96% of American adults have heard of Amazon … ranking it alongside McDonald’s and Pepsi.  80% would consider buying from Amazon when they’re in the market for something that it sells.

• The Sundance Film Festival is relocating to Boulder, Colorado … beginning in 2027 – after its 40-year run in Park City, Utah

• RFK Jr. is cutting 10,000 jobs inside the Health Department …  The layoffs are in addition to the ~10,000 employees who previously chose voluntary separation offers.

• Musk sold X to xAI in an all-stock transaction … and the ‘only’ question is whether the merger valuations make sense.  Musk’s backers probably don’t care right now, but he may have a tough time justifying the combo-valuation over time.

• GameStop would like to put some of its ~$5B in cash … into buying bitcoin.  GME is also raising money via convertible debt – to buy even more bitcoin.

• Since the election, Solana (SOL) has lost nearly half its value. … due to transaction fees and validator revenues collapsing.  [FYI: Even Trump’s meme coins couldn’t stop the selling in SOL.]

• The FDIC reaffirmed U.S. government regulators by saying … banks need not seek prior approval for crypto-related activities so long as they manage risk appropriately.  [FYI: What can go wrong with Banks self-managing risk?]

• Circle is Japan’s first globally approved, dollar-backed – stablecoin.

• Coinbase is closing in on buying Deribit … the exchange that dominates 80% of crypto options trading.  So, when regulators in Dubai give the thumbs-up, Coinbase will control the crypto-options market overnight – for $4.5B.

• Stripe (the payments processing firm) … doubled its free cash flow to $2.2B in 2024 on just $5.1B in revenue.  Their free cash flow margin (43%) is ridiculously high for a company growing its top line as quickly as Stripe.

• The DOJ just seized crypto linked to Hamas …  dismantling a network that was laundering millions in digital funds per year.  Investigators tracked funds via crypto wallets and encrypted chats == the power of a transparent blockchain.

• Paul Atkins' confirmation vote for SEC Chair was postponed …giving crypto critics more time to complain about his pro-crypto stance. Atkins’ regulatory approach caused Sen. Eliz. Warren to throw a hissy-fit over his potential conflicts-of-interest. 

• Tuesday: Stocks surged Monday … when the White House signaled that next week’s tariffs may not be as bad as investors feared. The S&Ps rose 1.8%, the Nasdaq gained 2.2%, and the Russell jumped 2.5%.  While most S&P stocks advanced, the Mag-7 were the upside drivers.

• Friday:  Stocks cratered Friday …

  • Canada’s Carney came out and said: “The 250-year partnership with the U.S. on military and economic matters – is over.”

  •  Our FED’s preferred inflation indicator for February came out, and was NOT rate cut friendly.  Core inflation was estimated to be up +0.3%, and the actual number was up +0.4%.  Spending (on the other hand) was estimated to be up +0.5% and the actual number was only up +0.4%. 

  • Gold futures hit new highs of over $3,100 an ounce as investors continued to grapple with a potential escalating trade war ahead of Pres. Trump’s April 2 reciprocal tariffs - especially the 25% auto tariffs.

  • Today’s University of Michigan’s Consumer Confidence outlook showed consumer sentiment deteriorating worse than anticipated – as worries over inflation intensified.  It was down 12% from February and 30% from November 2024.  Consumers are expecting 5% inflation this year, and 4.1% next year.

  • Markets finished the week on the downside, due to the continued Japanese carry-trade unwind. Japan’s market took a hit, and I believe that the carry-trade unwind is not over. 

• A funny moment:  For Canadians fretting over tariffs and annexation threats, Moosehead Breweries is now offering “The Presidential Pack”.  It is a massive crate of 1,461 beers – one for each day of the Trump presidency.  Moosehead has over 400 buyers on a waitlist who’ve given up the cash and space to store them.  [FYI: So, take one down, pass it around, 1,460 bottles of beer on the wall.] 

• Full-Self-Driving (FSD) Automobiles:

  - Google’s Waymo One … this self-driving taxi service, is logging +200,000 paid rides per week across San Francisco, Phoenix, Los Angeles, and Austin.

  - Mobileye … will help Volkswagen get its robo-fleet to “Level 2+” (“enhanced partially automated driving”).

  - Nvidia … will build GM’s self-driving car fleet after abandoning its former effort – Cruise.

  - The Tesla robotaxi fleet is “Coming Soon” (Musk promised … again).

• GameStop:

  - GameStop posted its largest operating profit since Q4 in 2017.

  - GME also announced its plans to add bitcoin to its balance sheet … echoing the step that turned MicroStrategy into crypto’s loudest corporate bull.  GME’s board: “Unanimously approved an update to its investment policy to add Bitcoin as a treasury reserve asset.”

  If nostalgia was GameStop’s first act, Bitcoin could be its second.

• Just the Facts:

  -       The S&Ps failed to retake their 200-day moving average.

  -       Whether the 5550 level on the SPX can act as support – is the next big test.

  -       Semiconductor sales and many market indicators are turning significantly lower.

  -       In general, market tides are moving out.

• Money flows downhill…  as YTD: China has gained +13.8%, Europe is up +6.8%, and the US is down -5.1%.  The media will say that it’s due to tariffs, but that could not be further from the truth.  China is pumping stimulus into its economy.  Europe is expanding its monetary supply, and looking for ways to stimulate and boost defense spending.  They are the "Fiscal Expansionists.”  The U.S. is reducing its stimulus, and keeping interest rates high.  We are a “Fiscal Contractionist”.  It’s simple.  Money flows downhill – chasing places where it can compound, and leverage can be used.  Last week (according to BofA) was the third-largest selling of U.S. stocks on record by foreign investors. That money is heading home … for now.

• “Play Ball” – You can’t tell the players without a program.  Stephen Miran is an American economist and in November of ‘24, he published a 41 page white paper titled: A User’s Guide to Restructuring the Global Trading System.  In December of ‘24, President-elect Trump named Mr. Miran as his nominee for Chairman of the Council of Economic Advisers.  He was confirmed for the office on March 12, 2025.  Mr. Miran is big on tariffs.  In his paper (hi-lighted above), he outlines a narrow path by which the Trump Administration can reconfigure the global trading and financial systems to America’s benefit.  It includes 3 elements that are already in-the-works: (a) Revaluing our gold holdings to current market pricing, (b) Tokenizing our nation's natural resources, and (c) Employing DOGE to make our government more efficient.  The grand scheme is to impact global currency valuation, but the short version ==

  TIP #1: Buy (more) GOLD (GLD)!

• Volatility is in backwardation … which means that volatility (/VX) is higher today, than in the future.  Normally, we’re more uncertain about pricing and timing further into the future than we are next week, but presently that is not the case. 

  TIP#2: Investors are SELLING faster and BUYING slower.

• If you think that this is all about Tariffs … think again.  Tariffs are nothing more than the beginning / a talking-point – and to some degree: a distraction.  The real story is commodities and the Bond Market. 

  TIP #3: Watch TLT – if it moves higher = Duck-n-Cover. 

• If markets break down below the SPX 5550 level … get ready for some fireworks.  A move in the SPX below 5550 could trigger a ‘shockwave’ of risk that would be felt the hardest in the financials and in the Mag-7. 

  TIP #4: If the SPX closes below 5550, BUY a Put Spread on the Financials (XLF) and on the Semi’s (SMH).

• Next Steps:

  1. Read Stephen Miran’s paper: A User’s Guide to Restructuring the Global Trading System – so that you know the playbook our administration is following.

  2. TIP #5: Buy (more) GOLD (GLD)!

• The S&P (SPX = $5580) Expected Move (EM):

  -       Last Week’s EM = $109, and we moved 200 points: from the top of the EM on Tuesday - all the way down to the bottom boundary of the EM on Friday.

  -       Next Week’s EM = +/- $144.  Next week is for TRADERS, and not necessarily for INVESTORS.

• Bitcoin (IBIT = ~$47.6) Expected Move (EM):

  -       Next Week’s EM = +/- $3 … a +6% EM.

• Tariff Day is coming … but longer-term market cycle indicators are tracking significantly lower.  Per Callum Thomas: “Learn to love the cycle; to be a victor not a victim, and learn to keep things in perspective.”

• HODL’s: (Hold-On for Dear Life)

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

  - (+) IBIT – Blackrock’s Spot Bitcoin ETF ($47.6 / in at $24)

  - (+) Physical Commodities = Gold @ $3118/oz. & Silver @ $34.8/oz.

  - Bitcoin (BTC = $83,300 / in at $4,310)

  - Ethereum (ETH = 2,000 / in at $310)

  - (+) GLD – Gold ETF ($284 / in at $212)

  - (+) SLV – Silver ETF ($31 / in at $29)

• Options for Income:  The act of De-Risking a Portfolio… (using IBIT for example)

  - BUY-n-HOLD the IBIT ETF

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

  - SELL Covered CALLs: 0.75 to 1 Std. Dev. Higher, Expiring = 2-weeks away, OTM for income and to finance the PUTs.

• ‘De-Gen’ Economy:

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

  - Singapore (SE = $130 / in at $107)

  - CME Exchange (CME = $262 / in at $238)

  - CBOE Exchange (CBOE = $222.6 / in at $197)

• Watching:

  - CPER: The United States Copper Index Fund, and

  - ICOP: The iShares Copper and Metals Mining ETF.

   

  Please be safe out there!

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