March 2025 DDD

[ducati916]

True:

When extreme fear takes over, fundamentals don’t matter — sentiment does.

Gold moves higher when there are full moons but also, stocks tend to bottom.



The first firm I worked for was named after a bunch of rocks in Europe.



And let me tell you — some of the people there were just as stubborn as those rocks. Value guys. Fundamental purists. If it wasn’t a discounted cash flow model, they didn’t want to hear about it.



But the CEO? He wanted someone different. Someone who could think outside of that rigid framework. So he paired me with the one guy in the firm who was actually making money — year after year.



This guy was a mystery. He didn’t talk much. He used technicals, sure — but there was something else. Certain days, he’d get really excited about market bottoms, almost like he knew they were coming.



So one day, I asked him about it.



He smirked and said, "Markets bottom the same way, over and over again."



And then he laid it out:



A lot of market bottoms happen in March and October.
Stocks tend to V-bottom. Commodities? They consolidate, base, then turn.
And the last one is weird… full moons.



Seriously. Full moons.



At first, I thought he was joking. But then I started looking into it. Turns out, Paul Montgomery—a legit market analyst—had studied this for years. He found that major market bottoms often coincided with full moons. Not because of astrology or magic, but because of investor psychology.



See, when markets tank, it’s never about the numbers. It’s about sentiment.Panic selling. Extreme fear. The absolute peak of capitulation.



And weirdly enough, these emotional extremes tend to cluster around full moons. Montgomery’s research showed it, and history backs it up—some of the biggest market bottoms formed within a few days of a full moon.



Now, am I saying go out and trade based on moon cycles? No. But if you’re ignoring sentiment, you’re missing half the picture.



This guy I worked with — he didn’t trade off moons alone. He used sentiment, positioning, technicals, price action. The full picture. And he made money while others scratched their heads.



My Own Take:



Patterns like this? They only work when markets are at extremes.



Extreme fear.
Extreme offside positioning.
Everyone caught leaning the wrong way.



That’s when sentiment beats fundamentals. That’s when emotions drive price action.



And there’s data to back this up. The University of Basel ran a study on trading strategies using moon phases (yes, a real academic study). And guess what? It led to a 10.9% increase in returns in the S&P 500 over a decade.



Because the market isn’t just about numbers. It’s about human nature.

jog on
duc

 

[qldfrog]

Gold...the post..not the shiny metal

 

[divs4ever]

And finally: I really dislike the word “correction,” and particularly the notion that it means a 10% fall from peak to trough. That 10% number is arbitrary.

i prefer 'healthy retrace ' for 10% dips , after all a 10% drop in a day ( for individual stocks ) , is not that uncommon in recent years

and for 10% to 25% dips 'correction '

It's hard to have any kind of credit event out there with massive economies like China and Europe doing as well as they're doing.

which to me increases my wariness ( they are either gas-lighting us , or borrowing recklessly )

 

[ducati916]

Semiconductors rallied this week with Nvidia ripping almost 8%. This all comes as journalists on basic cable tell your parents that the Nasdaq is in a correction. You see how this works? Here's Nvidia finding support at the same key extension levels where the buyers stepped up in the Fall:

​

As I've said a whole bunch of times, if the Semiconductor Index completes this massive top relative to the S&P500, then chances are that the bull market is cancelled. With Semi's rallying this week, despite the selling pressure in other areas of the market, that alpha put the Semiconductor Index back above all that support, invalidating any bearish implications that may have occurred earlier in March:

​

If Semi's do actually break, then I believe there is a bigger structural problem in the market, particularly in U.S. equities. Global equities continue to act well, pointing more towards a rotation, rather than a full blown credit event. See here. Look at the second largest U.S. Semiconductor - Broadcom. Prices are back down to all that former resistance from 2024, and so far it's turning into support:

Look for a break in $AVGO to new lows, to confirm that any selling pressure in Semi's is still not over. Based on the weight-of-the-evidence, my suspicion is that these levels hold and the mean reversion is already underway. But whether that's the case or not, there are still plenty of opportunities to make money in this market. Gold stocks are hitting new highs. European stocks are hitting new highs. Chinese stocks are hitting new highs. And there are U.S. stocks that are bucking the trend and continuing to rally as well.

First, the good news: There's no solid evidence right now that the economy is in recession, or even particularly close to it.

• The bad news: Red flags are popping up every which way, Axios chief economic correspondent Neil Irwin writes.

The big picture: Warnings are piling up, including from surveys of consumers and businesses, corporate earnings and financial markets.

• It all suggests the economic ground may — emphasis may — be shifting beneath our feet.
• The evidence so far is all in the realm of anecdotes, or "soft data," not the kind of definitive, "hard data" evidence of a downturn that would make economists believe a recession is beginning.

Zoom out: A confluence of forces emanating from Washington is driving the vibe shift.

• The threat of new tariffs far larger than those enacted in the previous Trump term is part of it, as is the erratic implementation.
• Cuts to the federal workforce and government contracting may be leading some wary consumers to slow spending (as is already evident in credit card data for the D.C. area).
• It all adds a layer of uncertainty for companies trying to decide whether to engage in new capital spending or hiring.

Zoom in: Yesterday, the University of Michigan's preliminary survey of consumer sentiment for March plunged for the third straight month, showing sharply lower expectations for the future among Democrats and Republicans alike.

• Thursday, the S&P 500 fell into official correction territory — a 10% drop from its peak. (It rebounded sharply yesterday.)
• Leaders of businesses large and small are showing less confidence in the outlook.

Warnings have percolated from airlines and retailers, including Dollar General and Walmart, about underwhelming consumer demand.

• Announced layoffs reached their highest levels since the summer of 2020, when the pandemic was in full force — and highest for the month of February since 2009, per outplacement firm Challenger Gray & Christmas.

The bottom line: None of this means that a recession is underway, or inevitable. The U.S. economy is like a tanker ship that normally moves forward, and it takes a lot to stop that progress.

• But what's striking is how pervasive these warning signs have been lately.

The S&P 500 was headed for its worst week since 2020 yesterday. However, it bounced +2.1% on Friday, marking its best day since the election. It still fell -2.3% this week, but last week was worse (-3.1%). The weekly candle (not shown) printed its largest lower wick since July 2022, signifying a bullish reversal. Larry points out that the last few days could be a bear trap if $SPY reclaims former support at $565 next week. Sentiment and seasonality suggest a bottom is near. However, Larry notes that breadth and momentum are lacking. Less than 30% of stocks are above their 20-DMA, and RSI printed its most oversold reading since the 2022 bear market low, confirming yesterday's low rather than diverging. The Takeaway: The S&P 500 avoided its worst week since 2020, thanks to Friday's bounce. The bounce could have legs if $SPY reclaims $565 next week. However, trend, breadth, and momentum remain damaged.

Everyone and their granny is looking at what happens Monday.

As @peter2 has pointed out: Trump news could derail the whole thing.

But.

You need new selling. While it is true market crashes START from OVERSOLD levels, Friday just did not have that feel or volume.

So I don't believe that the selling is over, it is just over while this bounce takes us higher. I see $505 on QQQ, then we see what happens. To get to $505 will be a churn with higher volatility predominating.

Mean Reversion:

This is something that I will always trade.



Sometimes I am early, but mean reversion is one of those market truisms. Currently we are oversold. Whether it be short covering, trapped late shorts or speculative longs for the bounce, bounces happen and they are vicious if you are short.

We are also at Quad Witching (upcoming) Options Expiry



This is a strange one. The 'shakeout' phase starts about 30 days out. Where was that? At the highs, where price reverses at the pivot level and then 10 to 14 days out, where we are now, a pin move that traps both sides (refer chart above).

The Options market is actually multiple times larger now than the stock market (due to the leverage) and 0DTE crazies.

So Quad expiry is Friday 21 March. It's even in my diary.

So I definitely expect the bounce to continue into at least Wednesday, possibly Thursday before selling pressure comes back into the market. That pressure sits at $505 QQQ.

The fundamentals of the markets and economy are horrible. So the selloff and start of a bear market makes total sense to me. However, bear markets rarely go straight down.

Look at 2008 Bear:



Lots of denial and BS occurring, same as today. It was only the final phase, capitulation, that we went straight down. Markets = tax revenue. The Powers that be, hate bear markets and fight them tooth and nail. So for the moment I'm expecting a bounce.


jog on
duc

 

[ducati916]

Last week:

Friday



The week




For next week:



From JC;

I'm constantly on the lookout for opportunities where market participants are most vulnerable. If our data suggests that a market is too extended in one direction, I want to find ways to profit from an unwind in that positioning. You saw it recently with how well we've done in our China trades, where 8 out of 8 trades since the election have all at least doubled in value. Think about how much money we've made in these stocks, despite any selling pressure you've seen in the United States recently. It's not about the fundamentals. It's the positioning. No one owned Chinese stocks, and so the squeeze was on! Last summer when all the libs were upset with Elon becoming besties with President Trump, we saw a tremendous opportunity to fade their negativity. See: Long Tesla and Long Elon (June 14, 2024) Tesla and Elon immediately went on to create more shareholder value during the back half of last year than any other stock on the planet. Talk about one for the good guys! Now fast forward to mid-March of 2025, the present, and I think there's a similar opportunity brewing in shares of Tesla once again. I was on the phone with normies yesterday, and it shocked me just how upset they are with Elon Musk and Tesla. They were talking about boycotting twitter and how one of their college professors apologized for using Tesla as a case study in their masters program. I'm not the type of person who follows the "news". So it caught me a bit off guard just how upset they were with Elon. Coincidentally, this Friday I saw a Tesla commercial online and noticed that my friend's husband was actually featured right at the beginning of it. So I texted her and asked if that was in fact her husband in the Tesla commercial because I found that so funny, and random. Her response was that yes, it was him. But added, "It seemed a lot cooler before Elon went crazy". When I see emotions like this from civilians, especially when I didn't see it coming at all, that kind of sentiment stands out. And just look at the stock. Tesla has retraced exactly 61.8% of the entire rally off the late 2022 lows. Do you think just that's a coincidence? Also notice that key reversal this week, right at that key retracement level:

​

There are several ways to play this one from the long side. But keep in mind, that this isn't a political thing. So don't turn it into one. I don't care who your president is. I don't care who you voted for. I don't care what car you drive. And I definitely don't care about your conspiracy theories. When it comes to the market, I'm only interested in making money. None of that other stuff is relevant. Some people are just too mentally weak to overcome those things, and therefore can't think straight. Those are the exact types of people who we're trying to profit from in a squeeze like this. These are the same folks who helped us crush this exact same trade during the back half of last year. If it wasn't for their mental disabilities, those opportunities would not have been created. So we want to be grateful. Don't forget that part. Gratitude goes a long way. These folks we're describing are the vulnerable ones here. They're the ones who I believe are offsides. They can't think straight because of all the political poison rotting their brains. At least, that's the bet we're making anyway.

Check out the TSLA thread here on ASF. LOL.

President Trump's tariffs are rattling the economy and drawing attacks from Democrats. But some key party members are largely backing his approach — arguing that Democrats need their own pro-tariff agenda to win back working-class voters.

• Instead of warning about tariffs hiking prices, they say, Democrats should be talking about how they'd use tariffs more effectively — even if that means using them against allies, including Canada and Mexico, Axios' Alex Thompson reports.

Why it matters: It's the latest example of Democrats' soul-searching and agenda-tweaking after Trump made inroads among blue-collar workers with promises to use tariffs to boost American manufacturing.

Democrats across the Rust Belt and in several congressional swing districts, along with leaders of historically Democratic unions, have voiced support for many of Trump's tariffs — even if they believe he's haphazardly implementing them.

• Rep. Jared Golden of Maine introduced legislation to put a 10% tariff on all goods coming into the U.S. He told Axios: "The world is changing, and some Democrats haven't quite caught up to that fact."
• The United Auto Workers union, which endorsed then-President Biden last year, said this month: "We are glad to see an American president take aggressive action on ending the free trade disaster that has dropped like a bomb on the working class."

Faiz Shakir, a close adviser to Sen. Bernie Sanders (I-Vt.) who ran his 2020 presidential campaign, told Axios: "I disagree with the Democrats who live in the framework that we just need cheap goods from China and Mexico, and their message is: 'Washing machines and avocados are going to get more expensive.'"

• Shakir said he believed Trump was implementing tariffs poorly, but added: "There's a desire for tariffs for a reason. Voters hear that Trump is making these corporations pay a price for shipping jobs overseas."

jog on
duc

 

[TimeISmoney]

Check out the TSLA thread here on ASF. LOL.

jog on
duc

Nothing wrong with understanding the future position of a stock, this stock ain't going to rise past its best heights for a long time.

People said it wouldn't drop this far, but stocks are definitely affected by political movements, especially when it involves the CEOs.

 

[ducati916]

Nothing wrong with understanding the future position of a stock, this stock ain't going to rise past its best heights for a long time.

People said it wouldn't drop this far, but stocks are definitely affected by political movements, especially when it involves the CEOs.

Morning,

How about a trade to $340? That's +/- $100.

I'll have a look at the trade later and post it if I place it.

Jog on
duc

 

[ducati916]

So looking at some TSLA data:



So some heavy selling from Insiders.

Remember AMZN when Bezos was unloading $10 Billion odd? Although to be fair, they didn't tank like TSLA has.




I have a spread trade:



Now that is good pricing. May not execute.

jog on
duc

 

[Captain_Chaza]

I Love to Watch! and Sometimes Learn Something New!

 

[ducati916]

I Love to Watch! and Sometimes Learn Something New!
View attachment 195525

Capn, your XYZ sails are actually a stock ticker now, Square, which renamed.


Scott Bessent says he isn’t worried. In the last week, market overconfidence has been replaced by a drastic dose of nerves. When the S&P 500 drops by more than 10% from its peak, and gold passes a big landmark ($3,000 per ounce), then the perception of risks has changed radically. This is how gold and the S&P have performed since 2020:


That new awareness of risk has come at the same time as a startling grasp that other countries’ stock markets might just offer a good alternative to the US:



Speaking on NBC, Bessent made clear that he could live with market corrections, which can often be healthy. He’s clearly playing a long game (even if the administration’s more erratic shifts in position on tariffs tend to obscure this). The US is backing away from globalization, as is plainly the wish of voters. But the world system of the last 80 years has offered some big advantages to the US, including downward pressure on inflation (from untariffed imports) and lower interest rates, and higher asset prices (as foreigners recycle their trade profits by buying US bonds and stocks).

A stock market correction from a high level isn’t much of a price to pay if the US can indeed find its way to a more self-sufficient (or “autarkic” in the economic jargon) system that retains most of these benefits. And that, I increasingly grasp, will depend on the proposal to set up a US sovereign wealth fund. Here are the main points:

It’s Not as Far-fetched as It Seems

The biggest and most famous SWFs (like those of Norway or Saudi Arabia) take revenues generated by exports — generally from oil or other resources — and diversify them. America’s problem is that it has a trade deficit, not a surplus. It lacks a big supply of export receipts to recycle into anything.

However, roughly half of SWFs aren’t based on such revenues, according to the International Forum of Sovereign Wealth Funds, and the US has other potential sources of capital. Exciting options that have been canvassed include revaluing US gold reserves to their current market price and putting the massive paper profit to work in an SWF, or funding it with seized cryptocurrency. But Ian Harnett of Absolute Strategy Research suggests that it should be easier. The government owns a lot of land, valued 10 years ago at $1.8 trillion, and presumably worth far more now. It also owns a range of nationalized industries, from the Tennessee Valley Authority to Amtrak. Selling land or companies, at a discount to fair value to make sure there were buyers, would fund a SWF quite nicely. The UK’s radical privatization program under Margaret Thatcher provides a template.

It’s also not as much of a political challenge as first appears, since the Democrats under President Biden had already been exploring just such an idea. So while it can sound rather overblown, it’s far more feasible than many of the other policy actions that have been batted around.

It Could Be a Necessary Piece of the Trumpistas’ New System

The flip side of the trade deficit is that other countries are left with huge holdings of US assets. Freedom of capital flows has boosted demand, particularly for Treasuries (seen as risk-free) and Magnificent Seven stocks (which are now treated as though they’re almost risk-free). If countries are selling less stuff to the US because of tariffs, they will have less money to park in US assets — and may also want to take the money home in any case. The ownership of the US stock market shows the growing importance of foreign buyers:


Source: Absolute Strategy Research
A more autarkic world in which goods flow less freely will almost certainly mean that capital also flows less freely. The former would be good for the US. The latter, on the face of it, would be bad. This is the gaping flaw in the plan to restructure the world trading system — and whether the creation of a big, patient buyer funded by monetizing US natural resources might fill that gap and take over the role of foreign finance.

How It Will Actually Work Is a Huge Question

Sovereign wealth funds fall into two broad categories. Singapore’s pair are handy exemplars: GIC behaves like a massive macro hedge fund, trading in different asset classes around the world, while Temasek is more like a conglomerate, taking large active stakes in a few companies. GIC’s declared purpose is to manage Singapore’s reserves, while Temasek calls itself “a generational investor which seeks to do things today with tomorrow in mind.” Think of GIC as a Millennium, and Temasek as more of a Berkshire Hathaway. There are arguments for both, if done well. Trump appeared to have more of a Temasek model in mind when he called for a fund “to finance great national endeavors.” But that is up for grabs.

Torsten Slok of Apollo Management offers this handy schema of what Bessent and his colleagues are trying to engineer. He suggests that the need is for an entity that can behave like GIC, buying and selling currency reserves to ensure that the dollar doesn’t strengthen too much:


Yes, Plenty Could Possibly Go Wrong

It can be difficult to stop a large government-owned fund from slipping into an attempt to “pick winners.” British Leyland, the huge and ungainly nationalized roll-up of British carmakers in the 1970s, offers a painful memory. An American SWF that went about funding new steel mills or auto plants might fall victim to the same problem. There’s also a risk of more conscious malfeasance. Politicians mustn’t be able to use such a fund as a handy wallet to make useful transactions. The US SWF has been proposed as a place to hold TikTok if its Chinese owners are eventually forced to sell, or to park a crypto reserve. Both might be viewed as the start of a very slippery slope. The transparency and corporate governance of any such entity will be vital to maintain the necessary trust.

And then there are the left-wing and environmentalist critiques, which do have some merit. The complaint about Thatcher was that she was “selling the family silver,” and that assets that previously belonged to everyone had been sold to a few for less than they were worth. Selling land in the American West brings obvious risks to the environment, and to the nation’s natural heritage. Bessent and Commerce Secretary Howard Lutnick are due to report on how their SWF might work in May. Although below the radar for now, this is one of the biggest and most complicated decisions the Trump team will have to make.

​

​

A Skip to May’s Review​

The next meeting of the Federal Open Market Committee is due Wednesday, but there’s a degree of assurance of its final decision. Virtually nobody sees any chance that interest rates will move, and the market has steadily converged on this view for some months:



This confidence is primarily inspired by the committee’s pivot to transparency in monetary policy since the early 1990s. The Fed adopted a form of inflation target in the middle of that decade, but it wasn’t publicly disclosed until 2012 after the Great Financial Crisis. It took numerous tweaks, such as the addition of the maximum employment mandate, before the landmark announcement under Ben Bernanke.

It’s hard to make a case against transparency as far as business decision-making processes are concerned. But exactly how inflation targets are supposed to work is tricky. This International Monetary Fund article does a better job of chronicling the journey of the framework since New Zealand first adopted it 35 years ago.

Some central banks target a numerical point, others a range. Their horizon to achieve them varies. The question is about the framework’s constraints, whether it’s too restrictive or loose to attain price stability, and whether it’s consistent with other targets of employment and financial stability. This was the focus of recent research by the Bank for International Settlements of targets at 26 central banks. Claudio Borio and Matthieu Chavaz concluded that other objectives are starting to matter more than price stability:

Under the surface, such frameworks’ flexibility has evolved significantly. On the one hand, the explicit weight on objectives other than inflation — real economy objectives such as output and employment and, to a lesser extent, financial stability — has grown. On the other hand, the pursuit of those objectives has been facilitated through greater flexibility of the horizon over which the target is to be achieved, even as the target itself has become less flexible.

Put differently, central banks are giving themselves more wiggle room. Flexibility means simply the degree to which the framework tolerates fluctuations in headline inflation and allows the pursuit of other objectives. The BIS quantified this. As more central banks adopted stricter numerical-points inflation targets (shown in the red line in the chart below), they gave themselves far more time to achieve them (in blue), granting themselves the opportunity to do other things:



Source: Bank of International Settlements
The angst about tariffs, which has come when the effects of post-pandemic inflation were only just beginning to settle, could make it harder for central banks to make their targets more flexible. The latest survey of US consumers by the University of Michigan shows that mean inflation expectations are their highest since 1981:



Expectations like that would normally require an inflation-targeting central bank to ratchet up rates. So even if its course for this week is clear, the Fed faces some difficult decisions. In May, it will host a conference as part of a regular review of monetary policy strategy. It’s focused on the FOMC’s Statement on Longer-Run Goals and Monetary Policy Strategy — which in 2020 switched to targeting an average for inflation rather than a fixed level — and its communications tools. The 2% longer-run inflation goal is under consideration, and indeed may no longer be realistic. But with inflation expectations coming unanchored for the first time in a generation, this could be a dangerous time to admit to being flexible.


Some useful data:





From Cullen Roche:


Here are some things I think I am thinking about:

1) Why Does the Stock Market Hate Tariffs?
One of the predominant trends in Corporate America over the last 40 years has been an expansion in margins. It’s one of the primary drivers of the great valuation expansion over this time. As more of national income has flowed to corporations their valuations have expanded. And a big part of that was globalization and the ability to outsource labor and materials costs to less expensive regions of the world.

The recent stock market downturn reflects the concern that some of this is being unwound. And the reason for this is rather simple. Tariffs are a corporate fee paid by the importing company at the border. In order to maintain margins they have to pass that cost on OR eat it themselves. Here are the primary ways this occurs:

1) Raise prices for consumers.
2) Reduce investment and make labor eat the cost.
3) Increase investment in a timely and costly supply chain adjustment.
4) If none of the above then shareholders eat the cost via lower prices.

The problem today is US consumers are pulling back and firms aren’t ready to invest in a new supply chain. So firms want to pass on the cost to consumers, but consumers are looking like they’re not having it. And since firms aren’t ready to shift their supply chains just yet that means we’re looking at #2 and #4 with some mix of consumers eating higher prices. This hurts corporate margins, which feeds into lower valuations. So, it might not be the end of the world. Heck, this might not even cause a recession, but it definitely isn’t great for corporate margins and that’s why the stock market hates these tariffs.

2) Bear Markets Vs Bare Markets.
The S&P 500 officially entered “correction” territory today. That’s the arbitrary -10% level from its recent high. It’s the seventh fastest 10% decline since 1929. But let’s not overreact here. If the market moves down further and hits the -20% level then people will say we’re in an official “bear market”. But after 15+ years of mostly upwards markets it’s important to remember that there are bear markets and then there are BARE markets. A bear market is a scary market. But a bare market is when the tide goes out and we find out a bunch of people have been swimming naked. That usually involves some level of corporate fraud (think, Madoff, Enron), malinvest and excess leverage following a huge bull market and this isn’t just scary – it’s terrifying. The bare market is terrifying because it has a fundamental underlying driver where the excesses of the boom get exposed in a fundamentally driven bust. These are the really scary environments because we all look around at one another and say “holy cow, there’s a real fundamentally scary reason this is all happening and we don’t know if there are more shoes to drop”.

Anyhow, this obviously isn’t a bare market. Heck, it’s not even the -20% bear market yet. So let’s not get ahead of ourselves, but it’s always nice to remember that these things can and do happen. And here’s a nice overview from Jim O’Shaughnessy’s legendary book, “What Works on Wall Street” for the inflation adjusted drawdowns in the S&P 500:

The story is simple. -10% is nothing. Tis but a scratch as some might say. And while 30%+ declines are unlikely they can and do happen regularly throughout someone’s lifetime. So if this recent downturn has you frightened you might want to revisit that asset liability mismatch I talked about the other.

3) Big Drops in Inflation Coming?
Here’s something interesting from the Atlanta Fed’s Inflation Nowcast – March might be the first time since 2021 that we had a 2 handle on core CPI. Perhaps more importantly, March is also going to be a near exact 2% reading on the headline PCE and a dip to 2.47% on the core. That is inching very close to the Fed’s 2% target. So, for all the the talk about tariffs and rising inflation expectations it still looks like inflation is very much entrenched to the downside. And if anything, all the economic uncertainty of the last few weeks probably means there’s downside to these readings. This means that by the time these readings come out next month we should expect the media to be talking endlessly about how inflation is now nearing target which could open the door for rate cuts later in the year if the economy softens….

So, it’s not all bad news out there. Heck even egg prices are crashing this week. Of course, that’s terrible for me because I’ve been farming my own chickens for 10+ years now and I thought I had finally made the greatest trade of my life, but now it looks like the great egg bubble might be imploding. That’s what I get for trying to corner the egg market.





The stock market is a discounting mechanism, which means its price reflects expectations for the future, and its price fluctuations reflect the market’s attempt to factor in changes to those expectations.

Believe it or not, in a given moment, the stock market does not care too much about the present state of things. That’s because expectations for the present will have been priced into the market days, weeks, and months in the past.

That is to say, the stock market reacts to news to the degree the new information 1) is not in line with what the market expected for the present, and 2) changes what the market expects for the future.

There are some more factors that drive stock prices over time. But in the context of digesting major news headlines, these are the two relationships to watch.

Because the stock market is so heavily dependent on expectations for the future, we inevitably get moments when stock market behavior appears to conflict with information about the present. Specifically, we sometimes get stock prices falling amid good news and rising amid bad news.

These are some of the most misunderstood moments in stock market cycles.

One of the more dumbfounding instances of this counterintuitive dynamic came during the spring of 2020 when the economy was reeling from the COVID-19 pandemic lockdowns.

After a sharp 35% drop, the S&P 500 bottomed and inflected upward on March 23 that year.

But we continued to get disastrous economic reports for weeks as the stock market rallied.

This resulted in one of the defining screengrabs of the pandemic. It was from the April 9 episode of “Mad Money with Jim Cramer.” Cramer’s show highlighted how the stock market had its best week in decades while the chyron reported the cumulative three-week tally of unemployment insurance claims ballooned to 16 million.

People were confused.



Many on social media did not take kindly to the stock market’s rally in early 2020. (Source: @JustinAHorwitz)
Yes, the economy was in bad shape in April. But expectations were already extremely low, which meant the bar for developments that could cause stocks to go higher was also very low.

In retrospect, it seems the stock market got it right.

It wasn’t until June that we learned job creation resumed in May. And it wasn’t until July 2021 that we learned that the recession had ended in April 2020.

The stock market, for its part, recovered all of its pandemic losses and reached new record highs in August 2020. (So, if you had dumped stocks as the news was getting bad and you had waited for good news to get back in, then you might’ve actually missed out on considerable gains you could’ve earned by just holding through the crisis.)


This was not just a pandemic recession phenomenon. The stock market usually begins its recovery long before the economy. JPMorgan’s Michael Cembalest reviewed the history in an October 2022 research note.

“There is a remarkable consistency to the patterns shown below: equities tend to bottom several months (at least) before the rest of the victims of a recession,” he wrote.

As you can see in Cembalest’s charts, stock prices (dotted blue line) tend to inflect upwards before we see improvements in earnings (red line), GDP (yellow line), and employment (purple line).





Stocks usually recover before the economy. (Source: JPMorgan)
Historically, the stock market bottomed about five months before the economy. Sometimes the lead time is longer. Sometimes its shorter. On one extremely rare occasion — the Dotcom bubble — the market bottomed after the economy.

The economic news has been getting gloomier
​

The U.S. economy has been cooling for a while as the major tailwinds early in the recovery normalized.

The good news had been that the economy was nevertheless still growing bolstered by consumers’ ability to spend and businesses’ willingness to invest.

While we might not necessarily be heading for recession, we could be in the midst of a “growth scare,” which has historically come with big stock market sell-offs followed by rapid rallies.


Growth scare-y anecdotes have been accumulating recently. Since the beginning of March:

• Delta Airlines warned that their “outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty.“
• According to the NFIB’s February Small Business Optimism survey, capital spending plans tumbled to their lowest level since 2020.
• From the NY Fed’s February Survey of Consumer Expectations: “Households expressed more pessimism about their year-ahead financial situations in February, while unemployment, delinquency, and credit access expectations deteriorated notably.“
• From the University of Michigan’s March Survey of Consumers: “Consumer sentiment slid another 11% this month, with declines seen consistently across all groups by age, education, income, wealth, political affiliations, and geographic regions. …expectations for the future deteriorated across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions, and stock markets.“
• Wall Street firms, including Goldman Sachs, Morgan Stanley, and JPMorgan cut their GDP growth forecasts.
• Even President Trump euphemistically warned that Americans could face “some disturbance” and a “period of transition” as his administration moves forward with costly tariffs. Treasury Secretary Bessent echoed the sentiment, warning of an economic “detox period.”

Because the stock market is a discounting mechanism, you could argue that the current drawdown that began on Feb. 19 was the market pricing in the bad news we’re getting now.

This again speaks to the quandary investors face as they think about making adjustments to their portfolios. The stock market does not price in what’s going on today. It’s pricing in what’s expected in the weeks, months, and years ahead.

And that future is uncertain. It could be worse than what we currently expect. It could be better.

No one can say for sure that the stock market hit its low for the year. However, we also shouldn’t be surprised if we soon experience a sustained rally as incoming news just confirm gloomy expectations that have already been priced into the market.

In hindsight, divergences in the stock market and the economy make sense. But in the moment, it often feels wrong.

What feels right is when the stock market falls as you get information that indicates the present and near future are deteriorating, and vice versa.

However, there is likely to be a moment where the stock market moves higher as it resumes pricing in a better future. And that moment is likely to happen when the economic headlines are bad.

It all speaks to the perils of trying to time the market.

Is it possible we learn that the economic situation proves far worse than what’s priced into the market today? Absolutely.

Can we guarantee that? Absolutely not.

-

jog on
duc

 

[ducati916]

From JC;

​ ​ Monday, March 17, 2025 ​ ​ ​ Gold Just Hit $3,000. Copper’s Up Next. Gold and Copper move together. Right now, one is leading. The other is lagging. History says that won’t last. Markets don’t move in straight lines, but they do move together. Copper futures have so many tailwinds right now that ignoring them feels like trying to argue gravity doesn’t exist. It’s primed for a breakout to new all-time highs. We’ve talked about its tight correlation with Chinese stocks. That hasn’t changed. We’ve also seen base and industrial metals ripping — just look at Aluminum futures. When an entire group starts moving, leadership tends to emerge. And if history is any guide, Dr. Copper should be the one to take charge. This playbook isn’t new. It’s already happening in precious metals. Gold has been leading the charge, dragging silver along with it. Now, Silver futures are just inches away from multi-decade highs. And to make things even more interesting, Gold just crossed $3,000 for the first time. A big round number, the kind that makes people pay attention. Because when prices move, so do emotions. Animal spirits don’t wake up slowly — they get jolted into action. And here’s where it gets fun. Look at Copper and Gold side by side. The charts are nearly identical. The only difference? One is at new all-time highs. The other isn’t… yet. ​ It would make a ton of sense to see the red line follow the golden line. That’s the bet we’re making.

March Quarterly Options Expiration Week: S&P 500 and NASDAQ Up 12 of Last 17​

March Quarterly Option Expiration Weeks have historically leaned bullish. S&P 500 has been up 27 times in the last 42 years while NASDAQ has advanced 25 times. More recently, S&P 500 and NASDAQ have both advanced 12 times in the last 17 weeks. But the week after is the exact opposite, S&P down 27 of the last 42 years—and frequently down sharply. In 2018, S&P fell –5.95% and NASDAQ dropped 6.54%. Notable gains during the week after for S&P of 4.30% in 2000, 3.54% in 2007, 6.17% in 2009, and 10.26% in 2020 appear to be rare exceptions to this historically poorly performing week.






jog on
duc

 

[ducati916]

Earlier this month, Fed chair Jerome Powell made a sneakily profound comment, important for understanding how the central bank will approach policy in its meeting this week and beyond.

The big picture: "However fat you think the tails are, they're fatter than you think," Powell said, referring to the outer edges of a probability distribution.

• Translation: The odds of some seemingly unlikely, extreme scenario occurring are higher than most people comprehend.
• Powell made the comment in discussing the pandemic-era economy, but it could apply just as well in thinking about the Trump 2.0 economy, where an onslaught of policy change is creating a wider range of possibilities than usual for how the economy will evolve.

State of play: Projecting the future is never easy. With trade, fiscal, immigration and regulatory policies all in extreme flux, charting how the economy will fare over the next couple of years is a fool's errand.

• Fed officials have to do it anyway. They have the unlucky task of penciling in their projections for growth, inflation, unemployment and interest rates at this meeting, to be released tomorrow afternoon.
• Look for an even wider dispersion than usual in these projections.

Zoom in: Fed officials are reluctant to react to the kinds of financial market moves and soft, survey data that have been the main developments of the last two months.

• To the extent the data does matter, it's sending signals with conflicting policy implications.
• The latest University of Michigan sentiment survey for March, for example, pointed to higher long-term inflation expectations — which tilts toward keeping rates high — but also worsening expectations for the job market, which points toward rate cuts being needed.

Between the lines: The Fed's quarterly projections are always of dubious value, but right now, they're worth additional grains of salt.

• Powell will face a balancing act in his news conference tomorrow, looking to present the Fed as a source of stability in a turbulent time while also signaling it will be nimble in adapting policy to a changing economy.

What they're saying: "Most likely the FOMC will stress the uncertainty of policy and outcomes and their potential impact on activity and inflation," wrote Steve Englander of Standard Chartered Bank in a note.

• "The view will likely be that the economy is firm enough and there is no need for the FOMC to do anything until outcomes are clear," he added.

The bottom line: The tails are fat, with possibilities for extreme results on either growth or inflation. But they're fat on both sides of the Fed's mandate, which will make the case for caution.

​ ​ Tuesday, March 18, 2025 ​ ​ ​ ​ ​ When the CEO and CFO start buying with their own cash, I pay close attention. These are the purchases that really matter. These are the people who know the business inside and out. This isn’t about stock options or compensation—these are open-market buys. Let’s get into it: John F. Barry, CEO of Prospect Capital Corp $PSEC, made a bold move with a $2,028,024 purchase. Andrew Casey, CFO of Amplitude Inc $AMPL, revealed a purchase of $239,765 in his own company’s stock. Here’s The Hot Corner, with data from March 17, 2025: ​ Click the table to enlarge it. Phillip Frost, the Chairman and CEO of Opko Health Inc $OPK, filed a Form 4 showing a 200,000-share purchase. Last but not least, RA Capital Management, in its latest Form 4, revealed a purchase of 1,296,296 shares, equivalent to $17.5 million, in Mineralys Therapeutics Inc $MLYS.

Oil News:

Beijing has unveiled a $41 billion government subsidy program to prompt buyers to replace old consumer goods with new products, boosting retail sales, as well as allocating $27 billion to subsidize equipment upgrades.

- Chinese refiners managed to keep run rates high despite a 26-month import low in January, with seaborne flows poised to rebound strongly in March after Beijing adapted to US sanctions on Russia and Iran, rising by 700,000 b/d month-over-month to 10.6 million b/d.

- Industrial output has risen by 5.9% year-over-year in January-February, exceeding consensus expectations, however the health of manufacturing in 2025 to date might also stem from front-loading of shipments before Trump tariffs take effect.

- As opposed to most Western countries, prices in China have been deflating recently with February seeing core inflation drop by 0.1%, only the second monthly contraction in more than 15 years.

Market Movers

- Brazil’s national oil producer Petrobras (NYSEBR) reported an oil discovery in the frontier Aram block in the pre-salt Santos basin, the first offshore discovery of this year in Brazil.

- US oil major Chevron (NYSE:CVX) has bought almost 5% of Hess Corp’s (NYSE:HES) floating stock on the open market in Q1, a total of 15.38 million shares worth some $2.3 billion, in anticipation of its all-stock takeover.

- UK-based energy major Shell (LON:SHEL) has officially shut its 147,000 b/d Wesseling refinery in western Germany, the first downstream asset to be decommissioned this year as it plans to retrofit it to a biofuels production unit.

Tuesday, March 18, 2025

The resumption of US-Houthi hostilities and the almost immediate restart of Israeli strikes on Gaza has brought geopolitical risk premia back to the limelight, even if this week’s upside has so far been capped at $72 per barrel for ICE Brent. China’s 180 billion package to stimulate domestic consumption has added to the slightly bullish sentiment of this week, regaining some of the territory lost in early March.

King Coal Is Back, At Least in the US. US President Donald Trump has authorized his administration to boost US coal power generation, currently accounting for 16% of total electricity output, seeking to restart recently shut plants operating on ‘beautiful clean coal’ and stop others from closing.

EU Mulls Aluminium Import Curbs To Counter Trump. Wary that Donald Trump’s metal tariffs could divert a wave of previously US-bound supply to Europe, the European Commission is currently considering potential curbs on EU imports, particularly against Chinese steel production.

Return of Red Sea Attacks Chokes Shipping. The Trump administration’s attack on Houthi rebels in Yemen is ratcheting up insurance rates for cargoes brave enough to transit the Red Sea, with insurers now asking for 0.7% of the value of the ship, back to pre-ceasefire levels of shipping costs.

Drawing From Stocks, China’s Refining Rises Again. Marking the first time in 18 months that refining rates exceeded crude imports, China processed 14.74 million b/d in the first two months of 2025, a 2% increase year-over-year as new refining capacity in Yulong and elsewhere came online.

China Locks In Term Australian LNG. Australia’s leading gas producer Woodside Energy (ASX:WDS) signed a 15-year supply and purchase deal with China Resources Gas Intl to supply 0.6 mtpa of LNG on a delivered basis from 2027 onwards, its first-ever term contract with a Chinese buyer.

Venezuela Vows to Keep Chevron’s Legacy. Venezuela’s state oil company PDVSA announced that it would operate its joint ventures with Chevron alone after the US oil firm halts all activities on April 3, intending to produce 105,000-138,000 b/d of heavy Hamaca crude and refining it domestically.

Beijing Cozies Up to Kuwait with Solar Deal. Beijing scored another geopolitical victory in the Middle East as it clinched a deal to develop two solar projects in Kuwait, less than a month after China’s state-controlled CSCC agreed to build and operate a new port in Mubarak al Kabeer.

Copper Prices React to China Promise. Copper prices shot up to their highest since early October 2024, with the 3-month LME price reaching $9,800 per metric tonne, thanks to the Chinese government announcing a $180 billion bond issuance plan to boost domestic consumption.

Chevron Sees Great Potential in Bangladesh. Having appraised Bangladesh’s offshore territorial waters since 2019, the US oil major Chevron (NYSE:CVX) has submitted a proposal to national oil firm Petrobangla to jointly develop Block 11, offering a gas price pegged at 10% of Brent futures.

Overflowing Texas Cools Henry Hub Rally. US natural gas futures dipped to a two-week low of $4.07 per mmBtu on forecasts of milder weather coming in April and spot prices at Texas’ Waha hub turning negative for the first time since November 2024, despite healthy feedgas demand.

Return of Iranian Gas Eases Iraq’s Power Woes. Whilst Iraq has doubled its electricity imports from Turkey to 600 MW, Iran has resumed gas exports to its western neighbor after an almost four-month-long hiatus as Tehran routinely runs into electricity shortages over the winter period.

Russia Sets Eyes on Lithium Expansion. Joining the lithium mining craze, Russia announced plans to produce at least 60,000 tonnes of lithium carbonate by 2030 as Moscow continues to import lithium for its own consumption, eyeing Arctic mines to be operated by miner Nornickel and nuclear firm Rosatom.

BYD Signals EV Charging Revolution. China’s leading EV carmaker BYD (SHE:002594) unveiled a new super-charging platform for EVs that is allegedly capable of peak charging speeds of 1,000 kW, double Tesla’s charging capacity, enabling cars to travel 250 miles on a 5-minute charge.

​

When investors think about risk, it’s the extremes that immediately come to mind…​

1929 (Great Depression) 1974 (Energy Crisis) 1987 (Black Monday Crash) 2000 (Dot-Com Bubble) 2008 (Financial Crisis) 2020 (Pandemic Crash)

The commonality: fear, panic, and catastrophic losses.​

While these periods are all front and center in our minds, the reality is that risk is always present, even if you can’t always see it.​

It’s now been 16 years since the March 2009 low, and the S&P 500 has gained over 1,000%. That’s an annualized total return of over 16% per year.​

This is what a chart of that incredible growth looks like over time…​

​ ​

Looks like an easy ride, but any investor living through the last 16 years will tell you otherwise.​

There have been 30 corrections since the March 2009 low of more than 5%. Of these, 10 were larger than 10%, 4 exceeded 20%, and 1 was more than 30%.​

​ ​

​

Before investing, many will tell you that they can stomach a 20% decline – they can “tolerate” such a risk.​

But when it actually happens, and real dollars are at stake, the true test begins.​

This is what a 20% decline looks like in real time…​

​ ​

Not pretty. And not easy to sit through while many were prophesizing that the losses would continue.​

These were a few of the headlines on the day of the low in 2011…​

​

​ ​

​

​

Notice the fear-inducing language…​

“worst quarter since the 2008 financial crisis, and the swoon is hardly over”​

“eerily reminiscent of the months leading up to the Lehman Brothers’ bankruptcy in 2008”​

If you held your position through 2011, you would be tested again seven years later. In 2018, we saw a similar decline over a shorter period of time.​

​ ​

Once again, the headlines were not good…​

“worst week since Great Recession“​

“The last time the market fell this much in December was 1931, during the Great Depression”​

​ ​

If you held on through 2018, the biggest test since the financial crisis would come in early 2020.​

The pandemic crash would take stocks down 35% in a little over a month, the fastest bear market in history.​

​ ​

On the day of the low (March 23), the outlook was bleak…​

“many fear the worst has yet to come” with experts predicting the “biggest economic downturn since the Great Depression.”​

​ ​

All news was bad news at the time, wreaking havoc on investor psychology…​

​ ​

If you held on through the 2020 Covid crash, it wouldn’t be long before another challenging period arose. In 2022, as the US was experiencing its highest inflation rate in 40 years, the S&P 500 fell 28% from peak to trough.​

​ ​

A few days before the October low, there was nearly a unanimous consensus among economists, CEOs, and famous hedge fund managers: the US was either in or headed for a recession and the stock market had further to fall.​

​ ​

And on the day of the low (October 13), the world’s largest asset manager (BlackRock) announced a hiring freeze after disclosing a more than $2 trillion decline in its assets.​

​ ​

At the same time, Barron’s was reporting that it was “hard to find anyone who feels good about owning stocks,” and that someone was buying a massive amount of VIX call options, “betting that the market will collapse.”​

​ ​

​

In hindsight, it’s tempting to believe you could’ve sidestepped the losses in 2011, 2018, 2020, and 2022, receiving all of the upside since March 2009 with none of the downside. But no one has shown an ability to do so in a repeatable fashion.​

Which means that large declines and the fear-inducing narratives associated with them are the price of admission for long-term investors.​

What does that mean?​

In simplest terms: risk is the price you pay for the possibility of higher long-term reward.​

​

The bull case for buy and hold. Hmmm. Not so sure about that.

jog on
duc

 

[divs4ever]

Earlier this month, Fed chair Jerome Powell made a sneakily profound comment, important for understanding how the central bank will approach policy in its meeting this week and beyond.

The big picture: "However fat you think the tails are, they're fatter than you think," Powell said, referring to the outer edges of a probability distribution.

• Translation: The odds of some seemingly unlikely, extreme scenario occurring are higher than most people comprehend.
• Powell made the comment in discussing the pandemic-era economy, but it could apply just as well in thinking about the Trump 2.0 economy, where an onslaught of policy change is creating a wider range of possibilities than usual for how the economy will evolve.

State of play: Projecting the future is never easy. With trade, fiscal, immigration and regulatory policies all in extreme flux, charting how the economy will fare over the next couple of years is a fool's errand.

• Fed officials have to do it anyway. They have the unlucky task of penciling in their projections for growth, inflation, unemployment and interest rates at this meeting, to be released tomorrow afternoon.
• Look for an even wider dispersion than usual in these projections.

Zoom in: Fed officials are reluctant to react to the kinds of financial market moves and soft, survey data that have been the main developments of the last two months.

• To the extent the data does matter, it's sending signals with conflicting policy implications.
• The latest University of Michigan sentiment survey for March, for example, pointed to higher long-term inflation expectations — which tilts toward keeping rates high — but also worsening expectations for the job market, which points toward rate cuts being needed.

Between the lines: The Fed's quarterly projections are always of dubious value, but right now, they're worth additional grains of salt.

• Powell will face a balancing act in his news conference tomorrow, looking to present the Fed as a source of stability in a turbulent time while also signaling it will be nimble in adapting policy to a changing economy.

What they're saying: "Most likely the FOMC will stress the uncertainty of policy and outcomes and their potential impact on activity and inflation," wrote Steve Englander of Standard Chartered Bank in a note.

• "The view will likely be that the economy is firm enough and there is no need for the FOMC to do anything until outcomes are clear," he added.

The bottom line: The tails are fat, with possibilities for extreme results on either growth or inflation. But they're fat on both sides of the Fed's mandate, which will make the case for caution.

​ ​ Tuesday, March 18, 2025 ​ ​ ​ ​ ​ When the CEO and CFO start buying with their own cash, I pay close attention. These are the purchases that really matter. These are the people who know the business inside and out. This isn’t about stock options or compensation—these are open-market buys. Let’s get into it: View attachment 195656 John F. Barry, CEO of Prospect Capital Corp $PSEC, made a bold move with a $2,028,024 purchase. View attachment 195657 Andrew Casey, CFO of Amplitude Inc $AMPL, revealed a purchase of $239,765 in his own company’s stock. Here’s The Hot Corner, with data from March 17, 2025: ​ Click the table to enlarge it. View attachment 195658 Phillip Frost, the Chairman and CEO of Opko Health Inc $OPK, filed a Form 4 showing a 200,000-share purchase. View attachment 195659 Last but not least, RA Capital Management, in its latest Form 4, revealed a purchase of 1,296,296 shares, equivalent to $17.5 million, in Mineralys Therapeutics Inc $MLYS.

Oil News:

Beijing has unveiled a $41 billion government subsidy program to prompt buyers to replace old consumer goods with new products, boosting retail sales, as well as allocating $27 billion to subsidize equipment upgrades.

- Chinese refiners managed to keep run rates high despite a 26-month import low in January, with seaborne flows poised to rebound strongly in March after Beijing adapted to US sanctions on Russia and Iran, rising by 700,000 b/d month-over-month to 10.6 million b/d.

- Industrial output has risen by 5.9% year-over-year in January-February, exceeding consensus expectations, however the health of manufacturing in 2025 to date might also stem from front-loading of shipments before Trump tariffs take effect.

- As opposed to most Western countries, prices in China have been deflating recently with February seeing core inflation drop by 0.1%, only the second monthly contraction in more than 15 years.

Market Movers

- Brazil’s national oil producer Petrobras (NYSEBR) reported an oil discovery in the frontier Aram block in the pre-salt Santos basin, the first offshore discovery of this year in Brazil.

- US oil major Chevron (NYSE:CVX) has bought almost 5% of Hess Corp’s (NYSE:HES) floating stock on the open market in Q1, a total of 15.38 million shares worth some $2.3 billion, in anticipation of its all-stock takeover.

- UK-based energy major Shell (LON:SHEL) has officially shut its 147,000 b/d Wesseling refinery in western Germany, the first downstream asset to be decommissioned this year as it plans to retrofit it to a biofuels production unit.

Tuesday, March 18, 2025

The resumption of US-Houthi hostilities and the almost immediate restart of Israeli strikes on Gaza has brought geopolitical risk premia back to the limelight, even if this week’s upside has so far been capped at $72 per barrel for ICE Brent. China’s 180 billion package to stimulate domestic consumption has added to the slightly bullish sentiment of this week, regaining some of the territory lost in early March.

King Coal Is Back, At Least in the US. US President Donald Trump has authorized his administration to boost US coal power generation, currently accounting for 16% of total electricity output, seeking to restart recently shut plants operating on ‘beautiful clean coal’ and stop others from closing.

EU Mulls Aluminium Import Curbs To Counter Trump. Wary that Donald Trump’s metal tariffs could divert a wave of previously US-bound supply to Europe, the European Commission is currently considering potential curbs on EU imports, particularly against Chinese steel production.

Return of Red Sea Attacks Chokes Shipping. The Trump administration’s attack on Houthi rebels in Yemen is ratcheting up insurance rates for cargoes brave enough to transit the Red Sea, with insurers now asking for 0.7% of the value of the ship, back to pre-ceasefire levels of shipping costs.

Drawing From Stocks, China’s Refining Rises Again. Marking the first time in 18 months that refining rates exceeded crude imports, China processed 14.74 million b/d in the first two months of 2025, a 2% increase year-over-year as new refining capacity in Yulong and elsewhere came online.

China Locks In Term Australian LNG. Australia’s leading gas producer Woodside Energy (ASX:WDS) signed a 15-year supply and purchase deal with China Resources Gas Intl to supply 0.6 mtpa of LNG on a delivered basis from 2027 onwards, its first-ever term contract with a Chinese buyer.

Venezuela Vows to Keep Chevron’s Legacy. Venezuela’s state oil company PDVSA announced that it would operate its joint ventures with Chevron alone after the US oil firm halts all activities on April 3, intending to produce 105,000-138,000 b/d of heavy Hamaca crude and refining it domestically.

Beijing Cozies Up to Kuwait with Solar Deal. Beijing scored another geopolitical victory in the Middle East as it clinched a deal to develop two solar projects in Kuwait, less than a month after China’s state-controlled CSCC agreed to build and operate a new port in Mubarak al Kabeer.

Copper Prices React to China Promise. Copper prices shot up to their highest since early October 2024, with the 3-month LME price reaching $9,800 per metric tonne, thanks to the Chinese government announcing a $180 billion bond issuance plan to boost domestic consumption.

Chevron Sees Great Potential in Bangladesh. Having appraised Bangladesh’s offshore territorial waters since 2019, the US oil major Chevron (NYSE:CVX) has submitted a proposal to national oil firm Petrobangla to jointly develop Block 11, offering a gas price pegged at 10% of Brent futures.

Overflowing Texas Cools Henry Hub Rally. US natural gas futures dipped to a two-week low of $4.07 per mmBtu on forecasts of milder weather coming in April and spot prices at Texas’ Waha hub turning negative for the first time since November 2024, despite healthy feedgas demand.

Return of Iranian Gas Eases Iraq’s Power Woes. Whilst Iraq has doubled its electricity imports from Turkey to 600 MW, Iran has resumed gas exports to its western neighbor after an almost four-month-long hiatus as Tehran routinely runs into electricity shortages over the winter period.

Russia Sets Eyes on Lithium Expansion. Joining the lithium mining craze, Russia announced plans to produce at least 60,000 tonnes of lithium carbonate by 2030 as Moscow continues to import lithium for its own consumption, eyeing Arctic mines to be operated by miner Nornickel and nuclear firm Rosatom.

BYD Signals EV Charging Revolution. China’s leading EV carmaker BYD (SHE:002594) unveiled a new super-charging platform for EVs that is allegedly capable of peak charging speeds of 1,000 kW, double Tesla’s charging capacity, enabling cars to travel 250 miles on a 5-minute charge.

​

When investors think about risk, it’s the extremes that immediately come to mind…​

1929 (Great Depression) 1974 (Energy Crisis) 1987 (Black Monday Crash) 2000 (Dot-Com Bubble) 2008 (Financial Crisis) 2020 (Pandemic Crash)

The commonality: fear, panic, and catastrophic losses.​

While these periods are all front and center in our minds, the reality is that risk is always present, even if you can’t always see it.​

It’s now been 16 years since the March 2009 low, and the S&P 500 has gained over 1,000%. That’s an annualized total return of over 16% per year.​

This is what a chart of that incredible growth looks like over time…​

​ View attachment 195660​

Looks like an easy ride, but any investor living through the last 16 years will tell you otherwise.​

There have been 30 corrections since the March 2009 low of more than 5%. Of these, 10 were larger than 10%, 4 exceeded 20%, and 1 was more than 30%.​

​ View attachment 195661​

​

Before investing, many will tell you that they can stomach a 20% decline – they can “tolerate” such a risk.​

But when it actually happens, and real dollars are at stake, the true test begins.​

This is what a 20% decline looks like in real time…​

​ View attachment 195662​

Not pretty. And not easy to sit through while many were prophesizing that the losses would continue.​

These were a few of the headlines on the day of the low in 2011…​

​

​ ​

​

​

Notice the fear-inducing language…​

“worst quarter since the 2008 financial crisis, and the swoon is hardly over”​

“eerily reminiscent of the months leading up to the Lehman Brothers’ bankruptcy in 2008”​

If you held your position through 2011, you would be tested again seven years later. In 2018, we saw a similar decline over a shorter period of time.​

​ View attachment 195663​

Once again, the headlines were not good…​

“worst week since Great Recession“​

“The last time the market fell this much in December was 1931, during the Great Depression”​

​ View attachment 195664​

If you held on through 2018, the biggest test since the financial crisis would come in early 2020.​

The pandemic crash would take stocks down 35% in a little over a month, the fastest bear market in history.​

​ View attachment 195665​

On the day of the low (March 23), the outlook was bleak…​

“many fear the worst has yet to come” with experts predicting the “biggest economic downturn since the Great Depression.”​

​ View attachment 195666​

All news was bad news at the time, wreaking havoc on investor psychology…​

​ View attachment 195667​

If you held on through the 2020 Covid crash, it wouldn’t be long before another challenging period arose. In 2022, as the US was experiencing its highest inflation rate in 40 years, the S&P 500 fell 28% from peak to trough.​

​ View attachment 195668​

A few days before the October low, there was nearly a unanimous consensus among economists, CEOs, and famous hedge fund managers: the US was either in or headed for a recession and the stock market had further to fall.​

​ View attachment 195669​

And on the day of the low (October 13), the world’s largest asset manager (BlackRock) announced a hiring freeze after disclosing a more than $2 trillion decline in its assets.​

​ View attachment 195670​

At the same time, Barron’s was reporting that it was “hard to find anyone who feels good about owning stocks,” and that someone was buying a massive amount of VIX call options, “betting that the market will collapse.”​

​ View attachment 195671​

​

In hindsight, it’s tempting to believe you could’ve sidestepped the losses in 2011, 2018, 2020, and 2022, receiving all of the upside since March 2009 with none of the downside. But no one has shown an ability to do so in a repeatable fashion.​

Which means that large declines and the fear-inducing narratives associated with them are the price of admission for long-term investors.​

What does that mean?​

In simplest terms: risk is the price you pay for the possibility of higher long-term reward.​

​

The bull case for buy and hold. Hmmm. Not so sure about that.

jog on
duc

well lucky for me , i started my investing adventure at the beginning of 2011 , and quickly realized ' buy and hold ' wasn't the correct strategy for me at that time , and selectively averaged down ' so that ended up very well .. tough lessons learned quickly ( including how to scan for goods stocks in a deteriorating market )

2018 at a quick look back .. i might have made some better choices not tragic , but say 6 out of 10 , but did have some success with 'reverse index ETFs , which had me all educated for 2020 ( in that area ) .. that said i dodged the AMP bullet ( sold shortly before the royal commission ) and took some cash off the table , on stocks nicely in profit )

2020 , i was all ready for 'something bad ' i got the trigger wrong , but was ( relatively for me ) cashed up and heavy ( for me ) in reverse index ETFs , sure in hindsight i could have done better , but i did way better than 2018 ,

this time ? ( if we have a 20%+ drop )

well i have some very cosy positions ( so am unlikely to liquidate them ) , reverse index ETFs i have already liquidated the small holding i had this time , i MIGHT sit tight this time , with very selective nibbling at tasty morsels

 

[ducati916]

jog on
duc

 

[ducati916]

This is a disconnecting world. Events of the last 24 hours have made ever clearer a trend that has been taking shape for years: Germany has decided to go ahead with massive borrowing to fund rearmament, and the DAX surged while US stocks fell; China’s BYD Co. announced a new battery for its electric vehicles that prompted a big US selloff for Tesla Inc.; and Bank of America’s latest survey of fund managers found the biggest switch away from US stocks on record.

All of these are consistent with a move away from US exceptionalism, the popular name for the dominance of the dollar and the Magnificent Seven group of tech platforms that has been a feature of the last decade. But it goes further. Rather than the globalized free markets that have held sway since the end of the Cold War, the world is reallocating itself into independent groups or spheres of interest. This is a new form of mercantilism, or autarky — the economic term for national self-sufficiency. If the US has turned away from globalization, some autarkic direction is inevitable. But there’s still huge uncertainty over how the new economic power blocs will be configured.

The turn in markets has been startlingly sudden. This chart shows the Magnificent Seven’s performance compared to the DAX since the start of last year. Anyone who shorted the Mag 7 and put the proceeds into the German benchmark before the Christmas break is now sitting on a 56% profit:


The BofA survey shows the biggest switch on record by fund managers out of the US over the last four weeks. As with market prices themselves, the turn, when it came, was sudden and dramatic:


Viewing the same information in a different way, this is how fund managers shifted their allocations just in the past month. The exodus into Europe and emerging markets (but not to Japan to the same extent) is extraordinary:


Earlier this month, the quarterly survey of asset allocators conducted by Absolute Strategy Research, which asks them to put a probability on market moves, foreshadowed this with a dramatic drop in those expecting the US to outperform everyone else:


Some of this is merely the unwinding of a market trend that was already overdone before its final dose of euphoria by Donald Trump’s election victory. The US was priced for something close to perfection, which set it up to start lagging other markets at some point. The price/earnings ratio of the S&P 500 had parted company with the rest of the world, and some narrowing of the gap was inevitable:


Other metrics suggest that the S&P is wildly overvalued. It trades at a higher multiple of sales than at the top of the dot-com bubble in 2000. As Points of Return noted, there is no telling whether that multiple is justified, but it’s hard to say that the overvaluation has been corrected:

​

Around the world, economic policymakers are adapting to the reality that President Trump could upend their plans at a moment's notice. Why it matters: Some global central bankers all but admit they are at the whim of Trump, with hesitancy to adjust their policy dials until they know the degree to which they will be a tariff target. The data officials in the U.S., Europe and Japan rely on to assess their respective economies is backward-looking and can't possibly reflect fallout from opaque trade policy. The intrigue: Central banks are no longer able "to be either the frontmen or rhythm-keepers of macro policy," Thierry Wizman, a currency and rates strategist at Macquarie, wrote in a note today. "They're now 'followers,' who are ceding their dynamism to events in federal legislatures, executive mansions, and diplomatic halls," Wizman added, noting that the Federal Reserve is among the central banks that will "defer to future events outside its scope of power." Driving the news: The Bank of Japan kept interest rates on hold overnight, buying more time for clarity on Trump's plan for reciprocal tariffs that might target Japanese imports. The White House says it will release details about the reciprocal tariffs — including country-specific and sector-specific rates — in early April, with the tariffs taking effect soon thereafter. What they're saying: "In the past month or so, there have been rapid changes in the scope and speed of U.S. tariffs," Bank of Japan governor Kazuo Ueda said at a press conference this morning, according to a translation by Reuters. "However, there are aspects we may not know even beyond April, so uncertainty remains high," Ueda said, adding that Trump trade threats make it hard to make a judgment about its inflation goals. The big picture: Japan, unlike the other major central banks, has raised rates three times over the past year as the economy's deflationary era looked firmly in the past. On the one hand, Ueda said that wage and price growth could be stronger than expected — conditions that would support further rate hikes. But that outlook could shift if forthcoming tariffs result in lower demand for Japanese products — particularly autos. Japan's top trade official left Washington, D.C., earlier this month without assurance that the nation would be exempt from future tariffs. What's next: The Bank of England, too, is likely to keep interest rates on hold tomorrow, despite recent evidence that the U.K. economy is on weaker footing. "[P]olicymakers also expected to sit on their hands and wait for more data amid turmoil for the global economy before cutting interest rates," Susannah Streeter, head of money and markets at Hargreaves Lansdown, wrote in a note. "There are concerns about the growth weakening further given the tariffs upending global trade."

President Trump has accelerated a multipronged, methodically planned strategy to push the Supreme Court to bless his power to deport vastly more people with vastly fewer judicial restraints, Axios' Marc Caputo reports.

• Trump officials see at least five questions, detailed below, that they hope the Supreme Court will answer.

Why it matters: Trump's plan revolves around two cases and obscure laws that have ignited lawsuits and sent shockwaves through the immigration system over successive weekends:

• Invoking the Alien Enemies Act of 1798 to deport accused Venezuelan gang members without immigration hearings. Nearly 140 were flown out of the U.S. on Saturday in a controversial operation that left a federal district judge fuming that his order to turn the plane around had been ignored.
• Using the Immigration and Nationality Act of 1952 to detain pro-Palestinian activist Mahmoud Khalil, who helped lead protests at Columbia University. The administration says the courts have little say over Secretary of State Marco Rubio's determination that Khalil should be deported as a national security risk for protesting against U.S. foreign policy.

Zoom in: Between the two cases, Trump administration officials and their allies see five major questions they'd like to put before the Supreme Court.

1. Does a peacetime president have the right to deport noncitizens under the war-time Alien Enemies Act — even if there's no declared war against a foreign adversary?
2. Should a single federal judge in a district court have the power to block a president's deportation program nationwide?
3. Can that federal judge's order extend to international waters and demand that a plane full of deportees turn around mid-flight?
4. Does a green card holder like Khalil have speech rights that protect him from deportation? Or can the secretary of state unilaterally declare his speech "adverse" to U.S. foreign policy interests because the government alleges it aligns with the terror group Hamas?
5. Can the secretary of state's power to deport immigrants based on foreign-policy concerns extend to so many student visa holders that some colleges won't be able to admit foreign-exchange students?

Zoom out: "When you broaden that concept," a senior Justice Department official told Axios, "every single noncitizen who actively supports Hamas is subject to a determination by Secretary Rubio that they lose their status — and become exactly like Khalil and are immediately deportable."

• "Our end game is all hands on deck, trying everything," the official said. "Everything we're doing, we're gaming out how the Supreme Court gets to decide."

The DOJ official summarized the Trump administration's legal attack plan this way:

• "We really do want to push the court — ultimately the Supreme Court — to take a stand. ... We're trying to get clarity. And we're not putting all eggs in one basket. It's why we're seeing all efforts to remove people."
• And, the official said, "We have other plans."

One of those other plans could be a doozy: stripping U.S. citizenship from naturalized Americans.

• "What's going to be on the horizon are denaturalization cases," said Mike Davis, a close White House ally and founder of the conservative Article III Project.
• "You're going to have Hamas supporters who have been naturalized within the last 10 years, and they are eligible to lose their status as citizens and get deported," Davis said. "It's worth it."

The other side: Civil libertarians are horrified by what they see as a large-scale assault on free speech and due process by an administration that's bent on granting authoritarian-like powers to Trump.

• "The government's action constitutes a profound threat to free speech on university campuses and beyond," law professors Ahilan Arulanantham and Adam Cox wrote last week in Just Security, a law and policy journal.
• They wrote that freedom of speech on campuses was "already on life support after aggressive measures universities had taken to discipline and discourage pro-Palestine protest activity since shortly after October 7, 2023."

Behind the scenes: Trump's effort is spearheaded by deputy chief of staff Stephen Miller, the president's top domestic policy adviser.

• Unlike Trump's first administration, there's close coordination on immigration policy among the White House and the departments of Homeland Security, Justice and State.

Between the lines: Trump's administration is counting on a Supreme Court on which six of the nine members were appointed by Republicans — three by Trump.

• This high court typically has tried to avoid immigration disputes, but Trump's team aims to force its hand. "We have the law, and we have the numbers on the court," a Trump adviser said. "We've always known this is where all this ends up."

• China is looking much more 'investable' these days after being called the opposite by many pundits last year. The China Tech ETF ($CQQQ) has gained +26% YTD, while its American equivalent, $QQQ, is down -7.2%.
  
• $CQQQ hasn't even broken out in absolute terms, but it's getting close. Aaron points out it's approaching resistance at $51 for the fourth time.
  
• $CQQQ has carved out a potential bottom over the past three years. Investors will find it much harder to ignore China if $CQQQ resolves higher. The largest holdings in $CQQQ are Tencent, Meituan, PDD Holdings, Kuaishou Technology, and Baidu.

The Takeaway: China Tech has notably outperformed US Tech this year. However, $CQQQ hasn't even broken out yet. If this three-year base resolves higher, it will confirm a multi-year bottom in Chinese stocks.



The Fed:

Key Headlines:​

As expected, no change in rates:

• *FED HOLDS BENCHMARK RATE IN 4.25%-4.50% TARGET RANGE

But, the economic projections are not pretty:

• *FED SHARPLY REDUCES 2025 GROWTH PROJECTION, MARKS UP INFLATION
• Fed cuts year-end GDP forecast from 2.1% to 1.7%
• Fed raises year-end core PCE forecast from 2.5% to 2.8%
• Fed raises year-end unemployment forecast from 4.3% to 4.4%

Perhaps of most note:

Fed removes language that "risks to inflation and employment are roughly in balance"

Trump's fault:

• *FED SAYS UNCERTAINTY AROUND ECONOMIC OUTLOOK HAS INCREASED

The median of the rate cut forecasts are unchanged from December (still at a two cut median), but the dovish tails all shifted hawkishly...



And finally, the QT Taper is on...

• *FED TO SLOW BALANCE-SHEET RUNOFF STARTING APRIL 1

Notably Fed's Waller dissents because while he supported no change for the federal funds target range but preferred to continue the current pace of decline in securities holdings.

Read the full redline of the FOMC statement below:



Obviously liquidity is an issue. Hence the end of QT.



Markets trading higher, not sure if I'd trust that. No cuts were expected, but, ...




We've been hearing 'cuts' for how long now?


jog on
duc

 

[qldfrog]

For the Australian market players here, the asx200 p/e ratio is currently at 18 (17.99)

Australia Stock Market: current P/E Ratio

Which is the current P/E Ratio of the Australia Stock Market? Is it a reasonable value, or is it foretelling the bursting of a bubble?

worldperatio.com

Which makes us not as crazy high as the US but nevertheless far higher than the world ex US markets.
It could be justified by our exceptionalism in term of strong economy current and prospective
Irony intended...

 

[divs4ever]

For the Australian market players here, the asx200 p/e ratio is currently at 18 (17.99)

Australia Stock Market: current P/E Ratio

Which is the current P/E Ratio of the Australia Stock Market? Is it a reasonable value, or is it foretelling the bursting of a bubble?

worldperatio.com

Which makes us not as crazy high as the US but nevertheless far higher than the world ex US markets.
It could be justified by our exceptionalism in term of strong economy current and prospective
Irony intended...

i rarely find a P/E attractive ( or acceptable ) when buying into a stock

obviously other investors are willing to take on more risk than me ( and if THAT scares you .. it probably should , since i have a willingness to catch 'falling knives ' )

 

[ducati916]

Uranium correction over?

Not sure, but I have an order in for the miners.

jog on
duc

 

[peter2]

Uranium miners have perked up the past few days. I'm unaware of any significant news. Both U-miners and LI-miners have moved off their lows. Possibly an early indication of risk-on purchases in beaten up commodities. Trump hasn't threatened tariffs on U or Li yet.

 

[ducati916]

• Copper futures are testing all-time highs after closing above $5.00 per pound for the first time in nearly a year yesterday.
  
  
• Copper corrected -22% last year after a Failed Breakout above $5.00 last May. However, it built a 10-month base during the recovery process.
  
• That 10-month base represents the 'right shoulder' of a bullish Head & Shoulders Pattern. $5.00 has been a brick wall since 2021, but a decisive breakout could lead to a sustainable uptrend.
  

The Takeaway: Copper is flirting with all-time highs after building a bullish Head & Shoulders over the past four years. To read more on Copper and other Commodities,



Stocks are higher today ahead of the FOMC's interest rate announcement, Summary of Economic Projections (SEP), and the Powell press conference. Gains are good, but the S&P 500 is still down 8.1% from its 52-week high in February. While a decline of 8% sounds relatively modest, individual stocks in the index, especially the ten largest, have seen much larger declines. The chart below shows how far each of the ten largest stocks in the S&P 500 were trading from their closing 52-week high as of this morning. Of the ten, nine have seen pullbacks of at least 10%, and six of those have shed a fifth of their value. That's a bear market! The only stock bucking the trend has been Berkshire Hathaway (BRK/b), which was trading at 52-week highs this morning. When stocks representing more than a third of the entire S&P 500 are down a median of more than 20% from their respective 52-week highs, you can understand why some investors have been feeling more pain in their portfolios than the decline in the S&P 500 would suggest.



Of the ten largest stocks in the S&P 500, most still have rising 200-day moving averages (DMA), which would suggest their longer-term uptrends remain intact. The two exceptions are Microsoft (MSFT) and Alphabet (GOOGL). Both stocks have just recently seen their 200-DMA peak and start to roll over in the last few weeks.





Along with MSFT and GOOGL, Nvidia (NVDA) and Tesla (TSLA) are two stocks among the top ten where the 200-DMA is still rising, but it's coming really close to rolling over. Unless these stocks see a pretty big bounce in the days and weeks ahead, a rollover in their respective 200-DMAs is inevitable. That doesn't mean the stocks will continue to decline, but if the 200-DMA tends to act as resistance and it's also falling in the process, it doesn't present a good technical setup.







Entering into an extended period of high inflation, I like commodities going forward. Missed the copper trade, but like the uranium trade. Filled at $16.

The Fed has been in the driver's seat of America's economic cycles for the last couple of decades. Now it is decidedly in the back seat. Why it matters: That was clear from yesterday's Fed communications, which showed the central bank has no special visibility into how a slew of policy changes from the Trump administration will reshape the economy. The result yesterday was policy stasis — the median Fed official still expects two rate cuts this year, just like in December — but with weak conviction that this is where policy is heading. "When it comes to changing something in this highly uncertain environment, I think there is a level of inertia where you just say, 'Maybe I'll stay where I am,'" Powell told reporters. "I don't know anyone who has a lot of confidence in their forecast," he said. Flashback: The Fed was the first responder during the 2008 financial crisis and was the only game in town in trying to keep economic growth steady during the long, gradual expansion that followed. In the last three years, the central macroeconomic question has been whether Fed interest rate hikes would succeed in bringing down inflation, and how much collateral damage the hikes would cause along the way. State of play: Now, the core drivers of the economy are emanating from other parts of the government — the Trump administration's trade policy, spending cutbacks, immigration restrictionism, and deregulation. Fed officials have no unique insight into what exactly the administration will do or how it will ripple through the economy. Trade wars and deportations amount to negative supply shocks, which the Fed's interest rate policy is ill-suited to counteract, because they imply both slower growth and higher inflation. By the numbers: Fed officials recorded their formal projections, as they do quarterly, and they contained a whiff of stagflation. The median Fed official now anticipates 1.7% GDP growth this year, down from the projected 2.1% in December. The unemployment rate is expected to be 0.4 percentage point higher by year-end — a tick worse than December projections. Inflation was marked up to 2.7% this year, compared to the previous forecast of 2.5%. The projections show "modest growth and meaningfully higher inflation, which call for different responses, right? So they cancel each other out. And people just said, 'OK, I'm going to stay here,'" Powell said. "What would you write down?" Powell said at one point, almost daring reporters to create their own forecasts. "I mean, it's really hard to know how this is going to work out," he said.

Squid Game:

The Squid Game stock market | Acadian Asset Management

www.acadian-asset.com

jog on
duc