This Week in Barrons: 5.4.2025

In partnership with

• Elon Musk’s xAI Holdings … (created by merging his social media platform - X with his AI start-up - xAI) is in talks to raise $20B in funding.  Musk will use the money to pay off the debt he created via his Twitter acquisition.  [FYI: After all, why should Elon be the ‘bag-holder’ if others actively WANT the position?]

• When a committee is unanimous about an investment … it’s unlikely that the investment is a great one, and very likely that it’s just another ‘crowded trade’.  Honest divisiveness, strong opinions, and widespread skepticism – often precede great investment ideas.

• Strategy comes first – then tactics …  It’s easy to have some fun with the latest: ‘tactic-du-jour’.  You can play a game where you tell people your tactic, and let them guess what you’re trying to accomplish.  Honestly, it saves time and resources, and improves quality if you announce the strategy – and then invite others to choose the tactics that will help it succeed.

• Moving Forward is an asset, a skill, and should be a job title ... Remember when elevators had Operators.  Elevators used to not go anywhere until the people that got on, told the Operator where they wanted to go, and the ‘Operator’ made it happen.  Per Seth Godin: Initiative, desire, and taking responsibility have become powerful tools – because most of us don’t care enough to bring them to the table.  Moving Forward requires a separate set of skills, attitudes, and beliefs – a rare combo in today’s corporate America.

• Trump will collapse the U.S. Dollar … as it is on track for its largest 2-month decline (7.7%) in over 20+ years.  Per Nellie Bowles, “The U.S. Economy is now contracting at a 0.3% per year rate.  Normally, there’s a logical reason for it: a pandemic, a housing crisis, and/or the AI bubble popping.  But, this time a group of gin-drunk, sunburnt-from-golf economists and one stone-cold sober President who has decided to give chaos a try – are taking tariff ownership.  One day, big tariffs are on – the next they’re off.  The day after, there are special exceptions for Republican donors.”  My only question is: “Mr. President, after you’re finished gutting departments, cancelling academic and non-profit contractual obligations, and waging a Trade War with China that you can’t possibly win – can you TRY to put the U.S. Economy back together?”  The jury is still out on that outcome.

• OpenAI will soon challenge Google Shopping … When a user asks a shopping-related query (‘Find me the best espresso machine for under $200’), ChatGPT will display product cards, images, prices, star ratings, and links to websites for purchase.  It’s also integrating its ChatGPT memory feature so it can reference previous chats and provide a more personalized shopping experience.

• Goldman Sachs, Morgan Stanley, UBS and others… have raised their odds of a U.S. Recession while cutting their GDP forecasts.  Prediction markets came to that same conclusion – seeing the odds for a U.S. recession in 2025 spike to ~65% (up from ~18% on Inauguration Day). A broker’s note to clients said: “Trump’s first 100 days reeked of stagflation and tech bust. He has distorted supply chains and inflated costs, all the while paralyzing a company’s ability to issue earnings guidance or make hiring plans. If other countries do not give Trump the ability to backtrack on his tariff demands in the short run, then global financial markets and the economy will crash.” 

• The Jobs Report told us we added 177k jobs in April … They lied.  They used their own birth/death (fake jobs) model to ADD 393k ‘fake’ jobs to the basket – so we actually: LOST 216,000 jobs in April.

• In May, Huawei will receive its first batch of the Ascend 910D chips … that will be more powerful than Nvidia’s H100 chips.  This innovation was made necessary because Trump restricted Chinese access to NVIDIA’s H20 chips.

• Shein raised U.S. prices 377% ahead of tariff increases.  In contrast, Shein kept U.K. prices virtually unchanged.

• China-to-U.S. cargo shipments have plunged ~60% … after Trump’s tariffs moved to 145%.

• Trump’s approval rating after 100 days …. Is lower than any other President in at least 70 years.

•  Ivy League Colleges and other elite Universities … have formed a private collective to resist Trump’s challenges.

• According to the Texas Manufacturing Survey:

  o April’s manufacturing labor market softened, with both the Employment Index and Hours Worked slipping into negative territory.

  o “We have refused shipments because customers cannot afford the tariffs.  That delays our ability to build, which will lead to job losses.  The risks today are greater than those seen during the pandemic.

• UPS is laying off 20K people … and Amazon is slowing its expansion.

• Meta unveiled a ChatGPT rival and a new cloud API … for its Llama models.  These moves are designed to grow its AI ecosystem and undercut OpenAI.

• Apple will shift the assembly for all U.S.-sold iPhones … from China to India.  India could end up the inadvertent winner in this global trade war.

• 75% of graduating college seniors … have not yet secured a job, and 34% have not even started to apply.  Of the 34%, one-quarter of them say that they feel “too overwhelmed” to even begin to search.  [FYI: Poor babies.  Guess we know where they’re livin’ next year.]

•  Ford will extend ‘Employee Pricing’ 1 more month … before raising prices.  Trump issued some slight tariff relief, but not enough to stop automakers from raising prices.

•  Meta’s CEO Mark Zuckerberg believes that: “The average American has fewer than three friends, but has demand for 15 friends.  This connectivity gap is an opportunity for Meta's AI chatbots to fulfill a complementary role.”  [FYI: Mark really expects our next 12 friends to all be chat-bots and not humans?  Wow.]

• The U.S. will think about easing Nvidia chip curbs on UAE … prior to Trump’s in-person arrival.  This should provide a framework for Trump’s AI policy for countries other than China.

• Gold is up more than 20% since January 1st …  Both gold and bitcoin embody the sound money principles that investors are seeking during times of uncertainty.  Cudo’s to Jack Green for the above chart.  It seems that the harder gold runs without bitcoin, the more violent the move in bitcoin should be 3-4 months later.  A big reason for this is that bitcoin is much more sensitive to global liquidity than gold.  The digital version of sound money is always going to be the better performer because of the smaller market cap and larger addressable investor base that has yet to allocate to the asset.

• April 2025 showed me that Bitcoin could play badly and still win … as BTC closed April up ~14% which beats April’s average performance of +9%.

• May is historically a wild ride for Bitcoin … but it’s not going to be a slow, grind higher – but rather huge explosive moves (higher and lower).  If you like volatility, you’re going to like crypto in May.

• Litecoin and Solana ETFs have the best chance of approval … even as the SEC delayed decisions on some crypto ETFs this week – the odds are that LITE and SOL will eventually be approved.

• Ethereum will get a major upgrade on May 7 … It will be its largest protocol upgrade – with 11 Ethereum Improvement Proposals.  In a nutshell, the network will become more user-friendly, scalable, and efficient.

• Wednesday:  The GDP number is out and it's negative for Q1 of 2025 – which is scaring the markets.  Consumer spending held up – but only because consumers pushed big expenses forward (into Q1) in order to avoid the T-Tariffs.  Overall, this report / economy sucks.

• Thursday:  U.S. stocks staged a rally in the final 30 minutes of trading on Wednesday, that pushed the S&P 500 and Dow Jones Industrials into positive territory and extended the S&P win streak to 7-days.  US stocks finished at their highs, overcoming early-session declines that followed a weak GDP report. But despite the late day push, the S&P 500 Index ended April down for a third consecutive month after rising in January. The rally could have been a confluence of: (a) end of month “window-dressing”, and/or (b) an easing of concerns after our FED's preferred inflation gauge offered some encouraging signs that raised hopes for Fed rate cuts by the summer.  Stock prices got a boost overnight following stronger results and guidance from MSFT and META in the tech space.  Microsoft beat expectations on both the top and bottom lines thanks to strength in its cloud and AI businesses, while META’s forecast eased fears tariffs would impact ad spending.  Overall, these are two successful money machines continuing to do exactly what they say that they will do – which is to turn advertising and software subscriptions into big, chunky earnings per share.

      In trade news, the US and Ukraine signed an “economic partnership” that will allow Ukraine not to pay us back the billions in military aid that we sent them, and it gives the U.S. the right to strip mine their entire country in order to access critical minerals. Oil futures fell for a third day, hit by an unexpected drop in U.S. economic activity.  The yield on the benchmark 10-year note settled at 4.173% - down from 4.245% MoM.  For April, the S&P 500 fell ~1%, the Nasdaq gained ~1%, the Dow fell ~3%, and Bitcoin gained ~14%. 

• Chinese President Xi just declared AI self-sufficiency.  Xi outlined a ‘national system approach’ aiming to develop high-end chips and software while increasing AI education and talent development.  Rumors are also spreading that the upcoming release of DeepSeek R2, will cut prices and training costs dramatically, and use their own Huawei chips over NVIDIA. With a second ‘DeepSeek moment’ right around the corner, Chinese AI chip alternatives will make U.S. export controls ineffective, and quickly close the gap in AI models.   China is putting its foot on the gas with a country-wide effort to grab hold of the AI lead while proving it doesn’t need U.S. software or chips to succeed.  [FYI: Pres. Trump – did you just cost Nvidia a very large customer?]

• Citadel founder Ken Griffin criticized our current trade policy … saying that tariffs won’t bring back American manufacturing jobs the way that the President anticipates.  "The President dreams of giving people their dignity back, but the dream is not going to come true.  These manufacturing jobs are not coming back to America, and (to be clear) with an unemployment rate of 4% - America has moved on."

• Visa, Mastercard, Amazon, and PayPal have all launched programs … aimed at ‘agentic commerce’.  These programs are designed to enable AI agents to find and buy products on behalf of customers – in order to enhance and personalize their shopping experiences.  Their partners are: Anthropic, IBM, Microsoft, Mistral, OpenAI, Perplexity, Samsung, and Stripe.  Via ‘agentic commerce’, your personal AI agent will shop at any time, in every currency – making shopping more personal, secure, and convenient than ever before.

• Overall:  Global monetary policy settings are increasingly shifting from headwind to tailwind as inflation falls and economic cycle data remain soft.  The big risks are recession and deflation on one end vs inflation resurgence on the other end – yes, a bifurcated outlook.  It’s highly probably that the U.S. economy faces a recession or at least a short, sharp slowdown.  Meanwhile, Japan is going strong, and both Europe and China are turning up out of a slowdown with the help of stimulus + an increase in non-US multilateral trade.

  o At risk are: U.S. tech stocks, U.S. housing, the U.S. dollar, and U.S. credit (spreads).  There are clear signs that the U.S. stock market has turned the corner into a cyclical downturn – which will likely take months and a further de-valuation adjustment to run its course.

  o I’m looking at rewards in: government bonds, commodities (PMs), emerging markets, and defensives.

• The S&Ps (for the first time in 20 years) … put together 10 consecutive up-days – touching each week’s upper edge of the Expected Move.  Unfortunately, we are one-tweet away from a 200-300 point move in the S&Ps – in either direction.  What is priced into these S&Ps right now – is a lot of hopium.  I believe that negotiating with China will NOT be the smooth path the market has priced-in.

• Red Flag #1 = Volatility Backwardation … tells me that although volatility is down – these markets are displaying far from normal market behavior. 

• Red Flag #2 = The disconnect between our Markets & our FED … The better-than-expected JOBS number on Friday combined with inflation not going away – all but guarantees that our FED will not cut interest rates any time soon.  So, the fact that the S&Ps are moving higher on the news that: ‘Rates will remain higher for longer’ – is another red flag.

•  Red Flag #3 = Our Bond Market has started selling off again … meaning that interest rates are moving higher.  In my world, combining higher interest rates with 145% China tariffs – is a recipe for an economic disaster.

•  Red Flag #4 = Retail investors are buying this market like crazy … and that’s OK – my advice would be to use: Defined-Risk Spreads because I do NOT see an easy way out of: big egos + higher interest rates + 145% tariffs.

• The key to trading this market is NOT getting blindsided … and using Defined-Risk Spreads will help you mitigate those risks.

•  The S&P (SPX = $5668) Expected Move (EM):

  - Last Week’s EM = +/- $149 … and we moved to the upper edge of the EM.

  - Next Week’s EM = +/- $127 … and we have a FED meeting, and China to handicap.

• With the negative Q1 GDP print of last week and the soft CPI reports … the prospect of a disinflationary recession is being raised. Per Callum Thomas: One school of thought is that tariffs will drive inflation higher – while the other school thinks that tariffs will drive costs higher, squeeze profit margins and discretionary incomes, and result in being deflationary to demand.   The possibility of a disinflationary recession would certainly be bond bullish, and it just so happens that we’re getting into the part of the year which has historically been good for bonds (from May through to October).  So just as the seasons are turning bad for stocks (“Sell in May”), it may finally be the season for bonds.

• 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 ($55.19 / in at $24)

  - (+) Physical Commodities = Gold @ $3240/oz. & Silver @ $32/oz.

  - Bitcoin (BTC = $95,500 / in at $4,310)

  - Ethereum (ETH = 1,830 / 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 = $141.7 / in at $107)

   

  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.}

• _{Please write to Mr. Culbertson at: <[email protected]> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <http://rfcfinancialnews.blogspot.com/> and/or https://rfsfinanicalnews.beehiiv.com}

• If you'd like to see R.F. in action - please feel free to view the TED talk that he gave on Fearless Investing.

• Creativity = https://youtu.be/n2QiPSe_dKk 

• Sales = https://youtu.be/blKw0zb6SZk

• Startup Incinerator = https://youtu.be/ieR6vzCFldI

• To unsubscribe please refer to the bottom of the email.

• Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Please make sure to review important disclosures at the end of each article.

• Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

• PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

• Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

• All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

To Subscribe: https://rfsfinanicalnews.beehiiv.com/subscribe

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>  and/or
https://rfsfinanicalnews.beehiiv.com.

Until next week – be safe.

R.F. Culbertson

<mailto:[email protected]>

http://rfcfinancialnews.blogspot.com

https://rfsfinanicalnews.beehiiv.com