This Week in Barrons: 8.31.2025

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• Can you trust the Supreme Court at their word?  Factually, in May the Supreme Court signaled that it would shield the FED Board from Trump’s at-will removals.  Last week Pres. Trump announced the ‘with cause’ firing of Fed Governor Cook.  Gov. Cook fired back that Pres. Trump has no authority to do any FED firing, and she won’t quit.  She said: “I will continue to carry out my duties to help the American economy as I have been doing since 2022.  I plan on taking whatever actions are needed to prevent Trump’s illegal action.” 

• Janet Yellen doesn’t trust Trump vs Lisa Cook … “Trumps actions threaten to end the independence of the Federal Reserve – and with it, the credibility of the US’s monetary policy.”  It also risks backfiring onto higher long-term yields (not controlled by the FED) and a weaker dollar – boosting public borrowing costs and increasing the pressure on imported prices.

• Do NOT trust Crypto in September?  September is statistically the graveyard for Bitcoin.  Compared to August, it’s more consistent in its misery, with less volatility and more steady losses.  If August warns you, September buries you.  History’s verdict: just step aside and wait for October’s resurrection.  Factually, if you had dumped every September since 2010 and bought back in October, your overall returns would be more than double (+112%).

• The S&Ps love when our FED cuts rates within 2% of ATHs … In the last 20 times this has occurred, the S&Ps have ALWAYS risen over the following 12 months – at an average of ~14%.  However, as inflation returns, those who do NOT own assets will see a similar situation to the post-COVID era.  Price increases will come before any wage growth, and the wealth gap will continue to grow.

• AI startup Higgsfield just launched an AI record label … with an AI-generated K-pop idol named Kion.  They’re aiming at helping anyone become a global music icon – no conventional singing or dancing talent required.  As AI floods platforms with content at little marginal cost, breaking through as a human artist just became significantly harder.

• Puuu-shawww – of course the FED plays politics … Our Fed played politics last year for the incumbent Democrats by slashing rates to stimulate the economy heading into the election.  Then our FED suddenly got stingy as soon as Trump was elected -- halting rate cuts for almost a year.  Since our FED was launched in 1913, the value of the U.S. Dollar has plunged 99%.  When there was no FED, inflation was non-existent as the dollar was defined as a particular weight of gold and silver. Our FED is going to cut rates, and that will bring in a period of steeply negative real interest rates – where the true inflation rate is higher than the interest rate.  [FYI: That's rocket fuel for gold and bitcoin.]

• Global Central Banks now own more Gold than U.S. Treasuries … it’s like they all sat back and said: “Wait! You mean I was holding an asset that could be created out of thin air, confiscated by the US government at any time, and was essentially guaranteed to lose me money?”

• Samsung is making strides in winning over US smartphone users … as its U.S. market share is up to 31% from 23% YoY.  That has come directly at the expense of Apple, which now holds less than half of the US market.  The specific Samsung phone that is of interest – is the foldable phone.

• The U.S. is seeing a surge in household electricity costs … as data centers soak up energy to power AI models.  The average annual power bill has increased 6% – with regions in the Northeast seeing hikes of over 13%.

• Apple is STILL weighing whether to buy Perplexity or Mistral … as pressure mounts over its Google Search deal, and Apple’s internal rifts deepen between those who want to build it in-house vs buying their way into AI.

• 8 Meta employees have quit the Meta Super AI team … because they (existing employees) did not receive their 9-figure compensation packages that the new hires were given.  [FYI: This can’t come as a surprise to the Zuck.]

• Google broke the internet with its new 'Nano-Banana' image editor … Gemini 2.5 Flash Image, allows users to make finer edits to their images using simple text prompts. You can also tweak facial expressions, change outfits, or insert objects with ease, while retaining the original identity of the image.

• Hyundai Motor Group will invest $26B in the U.S through 2028…  with $5B of that earmarked for a robotics manufacturing plant.  As Hyundai owns an 80% stake in Boston Dynamics, the U.S. robotics plant will accelerate the commercialization and scaling of BD’s Spot and Atlas robots.

• TransUnion disclosed a July breach that exposed … names, birth dates, and Social Security numbers of 4.4 million U.S. customers

• Nvidia’s concerns lie with China … that’s tripling their AI chip capacity next year with new fabrication plants that will support Huawei and other domestic players.

• Uganda claims it has discovered gold reserves…  that are 56% larger than the total amount of gold ever mined.  [FYI: Sound suspicious at all?]

• CEOs are bullish on gold …  but believe that there’s even more upside in silver and platinum.

• Hyperliquid (HYPE) recorded $330.8B in trading volume in July …  surpassing U.S. brokerage giant Robinhood.  They’re doing 36% of all crypto revenues while their market cap is 1.2% of total crypto market cap ($3.7T).  It’s trading 30x lower than its proportion of revenue generated in the space.

• Trump Media and Crypto.com are partnering on a $6.4B CRO treasury firm.

• A whale dropped ~$16m USDC into Hyperliquid (HYPE) … causing their price to triple from $0.60 to about $1.80 in minutes. HYPE’s open interest cratered from $160m to $30m as shorts were forced to cover en masse.  One wallet bagged a $16m profit inside of a minute – while another 4 whales netted a total of ~$47.5m.

• Tuesday:  Gold is up, but silver is flat.  Over the weekend Saudi Arabia decided that it believed in silver so much that they bought ~1m shares of SLV.  NVDA doesn't report until after-the-bell Wednesday but keep an eye on the chip ETF == SMH.  The small caps (IWM) are also attracting some attention; therefore, watch if that holds up past NVDA’s earnings tomorrow.

• Wednesday:  On the trade front, the European Union is looking to fast-track the removal of tariffs on all US industrial goods, clearing the way for an easing of duties on EU auto imports in return.  GDP data is coming Thursday and PCE inflation data on Friday.

• Thursday:  GDP was just revised a bit higher, and initial jobless came in under the estimates.  I think the IWM will see more advances today.  I’m also liking the XLE as of late.

• Friday:  MRVL’s disappointing data center revenues, soft next-quarter guidance and discussions of lumpiness has pushed the stock lower by almost 15%.  It revived data center concerns and is contributing to today’s indexes being red.  After all, satisfaction equals performance minus expectations, and performance did not meet or exceed expectations – satisfaction declined.

• Investors continue to overlook various warnings of a slowdown … (a) The NASDAQ market cap relative to US GDP has hit an ATH of 127%.  (b) That ratio has risen ~50 pct. since its 2022 bear market low, and it’s ~TWICE the peak level seen during the 2000 Dot-Com Bubble.  (c) Also, equity SELL SIGNALS have sounded for the 2nd straight month.

• The book: “6 Employment Effects of AI” … analyzed payroll and jobs data since 2022 – dividing it into the jobs least and most exposed to AI.  High exposure jobs included: software developers, customer service agents, clerical roles, writing and social media, and business analysts.  Per economist Mike Bird: Since the widespread adoption of generative AI, early-career workers (ages 22 – 25) in the most AI-exposed occupations have experienced a 13% relative decline in employment.”  A 13% relative decline in employment is catastrophic for a group of workers who are just starting out on their professional careers.  The growth rate of hiring has slowed by 27% in jobs exposed to AI.  76% of large companies are planning on using AI to replace employees within the next year.  Heck, in the last 24 months Meta has laid off 21,000 workers, Amazon: 27,000, Google: 13,000, and Microsoft: 16,000.  The companies shaping our technological future are systematically dismantling their human workforce(s).  This is occurring during an era when the number of jobs are increasing.  What happens as AI improves from where it is today, and the number of available jobs decline?

• The copper-to-gold ratio … sits near its lowest levels in decades.  During the 2020 lockdowns, this ratio spiked to 2.2 as stimulus drove copper demand.  Now, it's collapsing toward 2008 crisis levels.  Copper measures real demand. Gold measures inflation fear. When copper trades at just 13 cents for every dollar of gold, you have inflation without growth == ‘Stagflation’.   Consumer sentiment is confirming what the copper-gold ratio shows: people feel inflation reality despite good headlines.  [FYI: Energy deflation since 2022 has masked the underlying stagflation picture.]

• The great rotation reality check - Money keeps flooding out of mega-cap tech and into forgotten sectors like energy and financials.  It’s not healthy market breadth when the NASDAQ bleeds while the Russell 2000 goes from flat on the year to being up 5% in two days.  It always feels like desperation when traders start rotating out of an underlying weakness in the market's foundation.

• Volatility futures are screaming a warning - While everyone's celebrating low VIX, the futures market shows a $2 spread between October and November contracts. Translation: the smart money is quietly buying protection for the exact timeframe when seasonal volatility historically explodes after Labor Day.  A 15 level on the VIX signals investor optimism bleeding into ignoring risk.

• Banking breakouts signal major shift - Bank of America, JP Morgan, and Morgan Stanley are all testing or breaking multi-year highs simultaneously. Historically, major market transitions occur when institutional money flees growth and seeks refuge in value.

• Here’s the Math… When the dollar loses 1% purchasing power (coming in September), equities historically move 2.5% higher from currency debasement.  Your purchasing power will evaporate while your assets go up in price.  Jerome Powell's Jackson Hole nervousness about labor markets tells me that next Friday's jobs data will be ugly.  Bad jobs + our FED being forced to cut rates into inflation == Stagflation.  Either copper spikes dramatically (showing real demand growth), or we're heading deeper into Stagflation than most realize.

• Tip #1: The 6450 level on the /ES is critical.  If we close below that, BUY a SPY PUT Spread because we’re revisiting 6250.

• Tip #2:  Gold is targeting $3,750/oz.  If Gold breaks above $3,533, BUY it because recent patterns tell us it will test $3,750.

• Tip #3:  Buy metals miners (GDX / GDXJ) = their margins expand with gold prices, and some even pay dividends.

• Tip #4:  Kroger pays a 3% dividend, and in ‘Stagflation’ – people still need groceries.

• Tip #5:  Buy the VIX Call Spread because Volatility will revert to its mean == ~17.5.

Factually: (a) The S&P500 closed up +1.9% in August (+9.8% YTD). (b) Future FED rate cuts are likely to be bullish for the markets.  (c) We are due for a seasonal uptick in volatility.  And (d) The bullish broadening theme continues to play through.  Overall, per Callum Thomas: This week’s 3 Key Themes are: (1) Future rate cuts will be bullish for markets and for rotational broadening of the market itself.  (2) There is a real tendency for volatility to spike around Sep/Oct.  (3) There is an abundance of bullish breakouts across sectors and regions which increases the odds for bull-market longevity and the bullish broadening of markets themselves.

• HODL’s: (Hold-On for Dear Life)

-  (+) IBIT – Blackrock’s Spot Bitcoin ETF ($61.49 / in at $24)

- (+) ETHA – Ethereum ETF ($32.95 / in at $13.5)

- (+) Physical Commodities = Gold @ $3516/oz. & Silver @ $40.7/oz.

- Bitcoin (BTC = $108,200 / in at $4,310)

- Ethereum (ETH = 4,330 / in at $310)

- (+) GLD – Gold ETF ($318 / 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:

-  Chainlink (crypto) == LINK: ($23.8 / in at $19.4)

- Aave (crypto) == AAVE: ($323 / in at $254)

- Emerging Markets ETF == EEM: ($49.8 / in at $50)

Please be safe out there!

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