This Week in Barrons: 4.27.2025

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• Like a lot of Tesla owners … I’ve been disappointed with Elon over the past year.  It continues to show that success, genius, and legacy are fragile.  Don't ever take any one of them for granted.

• In the absence of good data or useful experience … we are often left to act on our instincts.  But others have instincts too.  And, their instincts may prove to be as right as often as our own.  Your instinct does NOT make it the best instinct.  When in doubt, over-communicate, seek meaningful data, and find useful experiences instead.

• Korean startup Nari Labs released Dia … an open-source text-to-speech model that exceeds the capabilities of all leading commercial offerings.  It was developed by 2 undergraduate techies with ZERO funding. Dia is a living testament to: “Just do it”, “Get ‘er done”, and “Do something, even if it’s wrong.” There’s never been a better time to try and build stuff.  AI is unlocking new access to learning like never before, and honestly: “What do you have to lose?”

• Jason Citron is currently one of the most notable X-CEOs in tech … because he knew when to quit.  Jason, the co-founder of Discord – the social media messaging app, just resigned as the company’s CEO.  Discord is privately held, but has been making IPO preparations.  Jason’s decision is a sign that he did not want to be CEO of a public company.  Good for him.  Running a public company is different than managing a private startup.  Often founders hang on past the IPO, and get motivated to leave only by a crashing stock price.  Jason’s decision to quit and to entrust his company to someone better suited to guiding it forward - is a decision that more entrepreneurs should consider. If nothing else, his current investors should thank him for his humility. 

• “Interdependence is no longer a choice, but rather a condition.  Our only choice is whether we forge healthy interdependencies and rise together, or maintain unhealthy interdependencies and fall together.” … Thomas Friedman

• Our Dollar’s safe-haven status is eroding … and fears of financial recession are mounting.  Historically, the dollar strengthens during times of distress, cushioning losses for foreign equity holders - but that dynamic is breaking down. The good news is that equities often do well once foreign investors finish selling.

• Per S. Hakimian: Our Treasury Sec. held a closed-door meeting … of hedge funds, pension funds, and endowments – informing them that tariffs are going to be massively scaled back.  [FYI: It’s insane that it cost the U.S. over $10T of our collective wealth – just to raise $200B in tariffs.  As the saying goes: ‘We could’ve bought ‘em off for less.]

• There’s something happenin’ here…  Per B. Chapman:

  - Normally, bond and gold prices move in tandem.  If our FED were to cut interest rates and expand the money supply, gold and short-term bonds would rally.  Currently we’re seeing something extraordinary, our higher bond yields have failed to attract sufficient interest, and any increased bond selling – is being met with vigorous gold buying.

  - The price of gold hit another record, breaking $3,500/oz. before pulling back, and JPM predicts that gold will hit +$4k by EOY.  So, it should be no surprise that Costco keeps selling out of gold bars.

  - Bottom Line: The more U.S. Treasuries that are sold – the more gold that will be purchased, and therefore the higher gold’s price will rise.  

• The Euro / U.S. Dollar pair … hit a 3-year high this week.

• This week the price of Gold hit a record $3,500/oz.

• 70% of Illinois 4th Graders can NOT read at their grade level.

• Markets have NOT hit bottom as of yet … because Insiders are NOT yet buying their own stock.

• In any trade deal, Chinese tariffs will be cut “substantially” … however, a trade deal with China will take 2 to 3 years to negotiate.

• President Trump called FED Chair Powell a “major loser” … causing markets and the Dollar to fall 2%, and further igniting the global: “Sell America” trade.

• Huawei Tech will fill China's AI chip void … after U.S. trade restrictions barred Nvidia from selling to China.  Huawei’s new 910C AI processor is offering performance comparable to Nvidia's H100 chip.

• The DOJ would like to break up Google … potentially spinning-off its Chrome browser in order to eliminate its internet search monopoly.  OpenAI has said that it would purchase Chrome – if given the opportunity.

• Tesla’s Q1 numbers showed … a 20% miss on the top line, and a 71% drop in net income YoY.

• Jeff Bezos is building a competitor to Tesla.  The Slate SUV (a $25,000 EV truck) is going to hit Tesla hard in the areas of: price & product fit.

• The EU has fined Apple €500m and Meta €200m … for its Digital Markets Act non-compliance.

• OpenAI is projecting $125B in 2029 revenues.  [FYI: “I had a dream…”]

• Google reminded the world that it still knows how to print cash … beating it’s Q1 earnings per share estimates by ~40%.

• Nintendo opened pre-orders for their Switch 2 console … and Target, Best Buy, and Walmart sold out in 6 hours.  GameStop waited, but still sold out in hours. 

• Coinbase and Circle are pursuing traditional U.S. banking licenses … signaling a massive shift in the crypto-banking landscape.  The licenses would allow them to: accept direct deposits, offer lending & bridging crypto, along with traditional finance.  [FYI: Regulators are feeling both: excited & existential fear.]

• This week Bitcoin recaptured the $94,000 mark.   The dual rally of gold and bitcoin backs up the idea that investors are treating bitcoin as digital gold, buying up the crypto with the belief that it’ll maintain its value through tough times. 

• Bitcoin is decoupling from tech stocks and other cryptos … setting itself up as a less risky asset.  Analysts expect bitcoin’s value to rise – depending upon the trade deals and interest-rate adjustments.

• Cantor Fitzgerald just dropped a $3B crypto power move … backed by Tether ($1.5B), SoftBank ($900m), and Bitfinex ($600m).  They’re planning to go public under the name "21 Capital."  And some think Softbank is soon about to drop $900m themselves on Bitcoin.  [FYI: Buy more Bitcoin.]

• Tuesday: Trump’s tariffs are just the bait … This isn’t about politics - it’s about profit.  Banks like Citi and BoA just booked some of their most profitable quarters ever, and the next wave has the potential to be even more lucrative.  This market is like watching a horror flick you’ve seen a dozen times.  You know where the scary parts are, but you flinch anyway.  Volatility remains high, but it’s not screaming panic.  Price action is grinding through with light volume, low liquidity, and even less conviction.  But don’t let this period fool you: When the real selling hits, it’ll hit everything.

• Wednesday:  FedEx/DHL and others will be stopping all shipments from China to the US on April 24th.  This action is related to the: Termination of the De Minimis Exemption.  Effective May 2, 2025, the U.S. Gov’t will end the "de minimis exemption" for goods originating from China and Hong Kong.  Previously, this exemption allowed imports valued under $800 to enter the U.S. duty-free.   With its removal, all shipments from these regions (regardless of value) are now subject to duties and taxes.  [FYI: Say goodbye to Temu.]

• Bitcoin hit $95,000 and with a market cap of $1.86T … swapped positions with Silver as the seventh largest asset (by market cap) in the world.  The Top 10 are: 

  1. Gold           - $22.2T

  2. Apple         - $3.11T

  3. Microsoft    - $2.81T

  4. Nvidia        - $2.54T

  5. Amazon     - $1.96T

  6. Google       - $1.92T

  7. Bitcoin - $1.87T

  8. Silver         - $1.84T

  9. Vanguard Total Stock Market ETF - $1.32T

  10. Saudi Aramco - $1.66T

• Morgan’s 3 Tips:

  1. Become fluent in the use of AI because if you’re not, the person using AI will replace you.

  2. Your career is always a rifle shot.  Narrow your selection of industry, sector etc. as soon as possible.  Optimize your selection on: WHO you want to work for, and responsibility.  Don’t worry about salary or title – if you’re right on WHO, the rest will follow.

  3. Learn how to choose between:‘finite and infinite games’ – because it dictates what decision-making tactics you’ll use when you engage. Here is an excellent 5-minute exchange between Bill Gurley and Brad Gerstner discussing the topic (make sure you stay until the end of the clip). https://x.com/JosephJacks_/status/1916179775317831840

• This Market: In a nutshell:

  o Short-term technicals look okay, but resistance looms overhead.

  o The Negative economic noise is deafening.

  o Cash piles are building.

  o Investor sentiment remains deeply pessimistic.

  o Economic sentiment is moving lower to equal investor sentiment.

  o  

  o Treasuries are cheap w/ bearish sentiment.  Bonds like recessions.

  o Emerging Market Fixed Income is cheap w/ bullish sentiment and a tailwind – with a weaker USD and friendlier FED.

• Last week’s recovery hit both edges of its Expected Move (EM) … and moving over 350 S&P points in 3-trading sessions – is a critical warning sign.  This market is running on tweets and innuendos.  We are one ‘tweet & dream’ away from unleashing unbearable amounts of volatility. 

• The volatility futures (/VX) are screaming ‘prolonged risk’ … and they’re telling us what to expect in the months ahead.  Nobody is investing on facts and what happened yesterday, we’re presently focused on what happens NEXT – and what ‘tweets & dreams’ our leaders are leaking. 

• Currently, stocks are highly correlated … which means that every chart looks virtually identical, and it makes individual stock-picking a gambling minefield.  But it also means that RISK is virtually the same across all asset classes … except for Gold and Bitcoin.

• This “recovery” feels like I’m walking into a trap … and that’s because this market is far-from-calm – despite last week’s rally.  We have a Jobs Report coming out next Friday, but 40% of all goods that previously came into the Port of Los Angeles are gone.  So, nobody will care about Friday’s data, but they will care a lot about what our leaders’ ‘tweet & dream’ will happen in May and June. 

• In a Manic-Market, only trade with defined-risk.  Between our FED, tariffs, earnings, the lack of outlook, Return OF Assets vs Return ON Assets … only trade with what you feel comfortable in losing.  Because: Today’s ‘Dip-Buyer’ could be Tomorrow’s ‘Knife-Catcher’. 

• The S&P (SPX = $5525) Expected Move (EM):

  - Last Week’s EM = +/- $164 … and we moved ~$370 from low to high.

  - Next Week’s EM = +/- $149 … keeping our VIX in the mid 20’s with Liquidity and Volume being low and non-existent respectively.

• Bitcoin (IBIT = ~$54.2) Expected Move (EM):

  - Next Week’s EM = +/- $29 … an ~5% EM for the trading week.

• Spec-Plays that I’m in / seeing:

  - BOT SLV & SILJ: Buy when above 20-dma … sell when below.

  - BABA = May 9 +$120 / -$118    Put Spread = $0.93 (in @ $0.90)

  - WFC = May 23 +$70 / -$68        Put Spread = $0.84 (in @ $0.85) 

  - NVDA = May 23 +$110 / -$105 Put Spread = $1.98 (in @ $1.90)

  - NFLX = July 18 +$1000 / -$990  Put Spread = $2.98 (in @ $2.75)

  - EEM = a shorting opportunity is coming

  - /ZB (Bonds) = a shorting opportunity is coming

  - Let https://www.optionsprofitcalculator.com/ helps you calculate the spread …

  - https://www.optionsprofitcalculator.com/calculator/put-spread.html

• Investor sentiment is bearishly one-sided … but the pros know that this is an eye-of-the-storm type of moment.  The lack of new bad news, some less bad news, and the rebound in stocks is giving everyone a sense of calm and relief.  However, there is a gnawing sense that whether you call it a bull trap, a bear market rally, or an eye-of-the-storm moment – there is another shoe to drop.

• HODL’s: (Hold-On for Dear Life)

  - (+) PUBLIC.com Bond Portfolio (7.74% yield) / TLT (10-year T-Bills)

  -  (+) IBIT – Blackrock’s Spot Bitcoin ETF ($54.2 / in at $24)

  - (+) Physical Commodities = Gold @ $3330/oz. & Silver @ $33/oz.

  - Bitcoin (BTC = $95,900 / in at $4,310)

  - Ethereum (ETH = 1,800 / in at $310)

  - (+) GLD – Gold ETF ($304 / 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 = $127.7 / in at $107)

   

  Please be safe out there!

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