This Week in Barrons: 4.13.2025

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• Learn: How-To-Sell … Since Web 2.0 and ZIRP (Zero Interest Rate Policy) began, engineering and coding your way to growth have dominated startup land.  Now that AI and ‘vibe coding’ control the landscape: (a) customer acquisition costs are exploding, (b) markets and profit margins are shrinking (tariffs and trade wars), and (c) there is a void in sales and marketing at small and medium-sized businesses.  Learning How-To-Sell puts you ahead of the curve.  If you can CREATE marketing materials and CLOSE SALES – you can name your own price. 

• AI engines need love too … It can take seven years to get a PhD, one year to write a book, and one month to write a business plan.  And yet, we mistakenly believe that if an AI engine can’t find brilliance in a simple prompt – it’s broken.  AI is contributing to illustrations, narratives, and research – distilling decades of focused work – all based upon hours of human prompting and massaging.  If all an AI engine needed was someone to type one prompt and ‘push a button’’, there are others cheaper-faster-n-better than you at that task.  Learn to appreciate the AI journey.

• The 3 Basics for Downward Momentum Trading:

  1. Cash is my friend.

  2. Use Option Spreads.

  3. Learn Implied Volatility Rank (IVR) … (Buy Option Spreads when IVR < 25%, otherwise Sell Option Spreads).

• Quotes from the week:

  - JPMorgan’s Jamie Dimon: “The potential of a global trade war is threatening the economy with considerable turbulance. The tariffs will increase inflation and are creating a greater probability of recession. America First is fine, America Alone is not.”

  - BlackRock’s Larry Fink: “Most CEOs say we are probably in a recession, but one thing for certain – our economy is weakening. The airline industry is the ‘canary in the coal mine’, and they’re telling me that the canary is really sick.”

  - Pershing Square’s Bill Ackman: "The President has an opportunity to call a time out and execute on fixing an unfair tariff system.  Otherwise, we are heading for a self-induced, economic nuclear winter, and we should start hunkering down.”

  - Stocktwit’s Howard Lindzon: “This crash is different, because Trump (the serial bankrupter) made it happen all by himself.  He’s playing chicken with global markets.”

   

  My own feelings surrounding our attempts at a tariff policy start with: (a) an incredibly stupid tariff calculation, (b) that has been poorly executed, and is (c) patently indefensible.  The latest country specific tariff percentages, are a combination of incompetent economic engineering and amateur AI searches.  Then add a helping of everyone’s lazy inability to articulate the strategy.  And you get our current administration driving golf carts around creating even more public embarrassment.  [FYI: I remember James Cayne (the CEO of Bear Stearns) who played golf as Bear Stearns was collapsing, and further accelerated the 2008 financial crisis.]
     The good news is that markets and mega-donors will force our leaders to capitulate.  The issue is, when the markets eventually rally, nobody will be better off for it – because in a Trade War – everybody loses.  This Trade War fiasco is a masterclass in greed, incompetence, and the destruction of wealth on an unimaginable scale.  Remember: Money is Reversible - Goodwill is NOT.

  The smartest money in America sees reason to change the direction of the Trump Tariffs – at minimum for the stability of the world’s economic order.

• OpenAI is in talks to acquire io Products for $500m … which is an AI hardware startup led by former Apple design chief Jony Ive and backed by OpenAI’s CEO Sam Altman.  io Products is developing AI-powered personal devices and household products.

• “The U.S. tariff escalation on China is a mistake on top of a mistake,” … said the Chinese Commerce Minister.  The Minister also called for continued dialog to resolve disputes.

• Apple will source more iPhones from India … to offset China tariffs.

• Pres. Trump believes the U.S. has the resources to make iPhones ...  Unfortunately, ALL of the current smartphone makers believe otherwise.

• Meta’s former Dir. of Global Public Policy testified before Congress … that Meta undermined US security by collaborating with China’s AI initiatives since 2015.  Meta’s goal was to help China “outcompete American companies and to build an $18B ad business in China."

• Bond spike:  Over the past few days, the 10-year Note rose from 3.9% to +4.5% before backing to 4.3%.  Larry Summers said: “This is an aversion to US assets by global financial markets.  We are the new, problematic, emerging market.”

• Prada will buy rival fashion house Versace for roughly $1.4B … [FYI: That’s one heck of a trade war deal.]

• China manufactures 1/3 of everything made on Earth.

• China’s PPI is -2.5% YoY and CPI is -0.1% … which is deflationary to China & inflationary to the U.S. – even without tariffs.

• Elon has slashed his governmental / DOGE savings forecast by 93% … from $2T to $150B – which is probably closer to reality, but still too high.

• The U.S. budget deficit surged past $1T … less than halfway through the fiscal year.  [FYI: When is the Ponzi scheme of issuing new Treasuries and re-purchasing them from ourselves going to collapse?]

• CryptoPunk #3100 just sold for $6m … which is a loss of $10m since its last sale in 2024.  [So, buying hyped JPEGs isn’t always a genius financial move.]

• CryptoPunks’ floor price has crashed 84% since 2021 highs … [So, NFTs age about as well as milk left on your car’s dashboard in July.]

• BlackRock ETFs crushed Q1 with $107B in net inflows… including a surprising $3B into crypto-focused funds. [So, if you're going to lose money in crypto – you might as well do it with a reputable brand.]

• Monday:  Over 70 countries have initiated trade negotiations with the United States following recent tariff announcements by President Trump. Vietnam and Taiwan have already offered to remove all tariffs on U.S. imports as part of their strategy to adapt to the new U.S. trade policies.  If the S&P closes down 4% today, Trump will have created 3 consecutive down-days of over 4%, and that has only happened during the Great Depression of the 1930’s. 

• Wednesday: Walmart and other companies are pulling their forward financial guidance citing Trump's tariff uncertainties.  Any hint of a thaw with China could have us up 2,000 points in an hour.  And there it is.  Some will call it the “Art of the Deal” and others will say ‘Trump blinked’.  Trump came out and said: “Any country that didn't reciprocate on tariffs – will see a 90-day grace period on tariffs going into effect immediately”.  Over 75 nations have called us for discussions, and then there’s China.  The market is referring to this as a ‘cooling off period’ for most of the world to work out the best deal for both sides.  Unfortunately, if we can't come to terms with China, you're going to see the results the next time you need something.

• Thursday: The latest headline inflation number fell from 2.8% in February to 2.4% in March.  Core CPI inflation fell below 3.0% for the first time since March 2021.  And even Supercore CPI (a specific measure of inflation that zooms in on the prices of services, excluding food, energy, and housing) dropped a -0.24% MoM – a number not seen since May 2020.  [FYI: A negative Supercore CPI reading is a clean signal of demand-side weakness across sticky, inflation-priced services.]  So, the good news is inflation is falling. The risk is that our FED won’t act in a timely manner, and will leave us exposed to a potential economic slowdown.  Let’s hope that a rate-cut is on the way.

• Friday:  Let Earnings Season begin! 

• Howard Marks’ Opinions:  What happened on April 2nd wasn’t just another policy move, but rather marked a break from the post-WWII economic consensus.  For 80 years, globalization was the dominant force shaping the world’s economy:

  - Countries opened up,

  - Trade expanded,

  - Supply chains optimized for efficiency,

  - Goods became cheaper, and

  - Inflation was subdued.

  Now, the U.S. is signaling a new direction – a new structural transition to protectionism.   To quote Marks: “This is the biggest change in the investment environment that I’ve seen in my career.  The U.S. is probably the best place to invest, but it’s LESS-BEST than it used to be.”   The U.S. was so attractive as an investment climate due to: (a) its predictable legal systems, (b) fiscal responsibility, and (c) investor trust – which is now under pressure.  For the last several decades, the U.S. has acted like someone with a golden credit card, unlimited spending, without ever receiving a bill to pay.  Nowadays, the bill is closer to arriving than ever.  Howard believes: “This isn’t a call to abandon U.S. assets, but rather a nudge to be selective and non-complacent.”

• Overall: stocks came back from the brink of ‘tariff tinkering’ and ‘worst-fear dreaming’.  The move higher came exactly as the market was ‘technically ready’ for a rebound.  i.e. We had reached: strong levels of support, extremes in investor sentiment, and severely oversold conditions.  Per Callum Thomas: Markets remain unresolved, recession risks are still rising, and it will be tough for bulls to keep control of this market.  With volatility this prevalent, bull traps and bear market rallies must remain front of mind.  A lot of market damage has been done, but U.S. markets are clearly ‘squaring-off’ against the prospect of a Great Restructuring.

• The Volatility Head-Fake:  If you're only looking at the VIX, you're doing yourself a disservice. The Volatility Futures (/VX) are actually HIGHER while this market is rallying.  [FYI: That never happens in healthy markets.]  This tells me that the professionals are NOT backing-away from their hedges. 

• Bond Volatility is at a 15-Year high … excluding the Great Financial Crisis.  But, eventually investors will start buying the 10-Year @ 4.5% to 5% - simply because of trader fatigue.  Consistent high levels of volatility and low liquidity will take its toll on the trading community.

• The U.S. Dollar’s collapse … is bleeding more volatility back into markets and helping Gold make one of the largest breaches of its expected move (EM) in the past 10-years.  This fear / ‘wall-of-worry’ translates directly into the increased price of Gold.

• We are having a liquidity crisis … as any big volume is remaining on the sidelines.  As the picture shows, we’re seeing 3-20 contracts on the SPX’s bid/offer table – when there should be HUNDREDS.  Nobody’s trading any size for fear of being whip-sawed; therefore, there is no depth to our markets.  So trades with any real-size, could take control of this market in seconds.

• The S&P (SPX = $5363) Expected Move (EM):

  - Last Week’s EM = +/- $346 … and we ended up higher and within the EM.

  - Next Week’s (4-Day) EM = +/- $237 – even on a 4-Day trading week. That translates to an average VIX of +43.  We’ll need to cut that volatility in half before the liquidity in this marketplace will come back.

• Bitcoin (IBIT = ~$47.7) Expected Move (EM):

  • Next Week’s EM = +/- $3.4 … an ~7% EM for a 4-day week.

• Factually:

  - The US economy faces a high chance of recession this year.

  - The stock/bond ratio is rolling over as recession risks weigh and momentum shifts from bullish to bearish.

  - Per Callum Thomas: I remain bearish on the US dollar due to: recession/political risk, deteriorating technicals, longer-term cycles, expensive valuations; and a real chance of a larger breakdown.

  - I’m bullish on gold due to: the prospect of a weaker dollar, U.S. recession, money flow reversal, and gold is cheap relative to equity valuations.

• HODL’s: (Hold-On for Dear Life)

  - (+) PUBLIC.com Bond Portfolio (6.9% yield) / TLT (10-year T-Bills)

  -  (+) IBIT – Blackrock’s Spot Bitcoin ETF ($47.7 / in at $24)

  - (+) Physical Commodities = Gold @ $3254/oz. & Silver @ $32.2/oz.

  - Bitcoin (BTC = $84,400 / in at $4,310)

  - Ethereum (ETH = 1,600 / in at $310)

  - (+) GLD – Gold ETF ($298 / in at $212)

• Options for Income:  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:

  - Singapore (SE = $117 / in at $107)

• Watching:

  - SPY: Remember, we’re in a downward, momentum-sensitive market.

   

  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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