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WHILE YOU POUR THE JOE… ☕️
Honestly Never Mind

Before we unpack what we have set for today, I want to make you aware of the biggest driver fo the market right now:

• Trump exempted a bunch of Chinese products from being hit with tariffs

That will be good news for a few stocks this week, such as $AAPL, $NVDA, and $HPQ.

But get this, we are still not out of the woods yet when it comes to market sentiment, and there’s a very clear gauge you can follow for that.

Speaking of that gauge, let’s get on with today’s email 📧…

WHOLE BRAIN THINKING
Time for Logic

Hedge funds now think Trump is crazy, and that tariffs are going to destroy the world as we know it and our children won’t have food to eat. 🥹 

Right, and then Elon will reveal he’s actually an alien and take us to Mars, that’s Trump’s plan.

Look, if tariffs were doing the damage everyone thinks they’re doing, then why is PPI and CPI inflation BOTH down for the quarter? 📉 After all, Trump had warned of tariffs at least 4 months ago now.

Plenty of time for inflation to have shown up, which is why we’re so persistent on people reading the data rather than the news. All these economists are looking at the world with their right brain, not with the left.

So let’s use both here: 🧠 

What you see is the cyclical correlations between WTI Crude Oil and Gold Futures.

Notice that we are now at the cyclical low, starting to turn positive (on the 1yr correlations). This would mean one of two things:

• Gold flattens while oil rallies 📈 

• Gold sells off while oil flattens 📉 

I think the first one is more likely to happen here, as I believe oil is an asymmetrical bet today being made cheap for one simple reason.

That reason is everyone expects tariffs to slow down global trade, but that’s impossible. The agenda for bringing manufacturing back to the United States is going to take 5 years at least.

Today’s oil price has fallen to a level that prices in no trade, and gold has risen to a level that prices in an all-out trade war with the entire world.

I think both of them are wrong, here’s the evidence behind my thinking:

What you see now is the ratio of DXY / IEF to cover the dollar vs bonds.

So previous to the uncertainty in 2024, the ratio had been rising as we were falling into the inflation narratives of 2020-2022, meaning bond yields were rising to drop their prices away from dollars. 👀 

This time, however, you can see taht it is just the opposite os what’s starting to happen, as we did not continue this path higher but rather are at the brink of breaking on a downtrend.

That’s not inflation my friend, that’s recession.

So buckle up, becuase we might just see the market’s expectations for four rate cuts this year after all. 🫰 

TRADE OF THE WEEK
Not Far From the Tree

This one happened a bit faster than I expected, but Apple stock finally lost its darling status in the market. 🍎 

And that’s when you know whatever short-term pain point is in the market might be about to die off, becasue when people give up on Apple, the bottom is nearby.

That being said take a look at the market/volume profilles on the stock, particularly how we are now nearing a cutoff level that could catapult the stock into the $230s once again, if not higher.

With the news from President Trump exepmpting some of these products from tariffs coming out of China, I think that the path might be a bit clearer for Apple and other Mag 7 stocks to start making a comeback here soon.

After all, it seems that our friends on Wall Street agree with these targets (again). 🎯 

We’ll be back to regularly scheduled deep dives shortly, there’s no point in digging deep when the market hasn’t really given us a direction. 🤷‍♂️ 

On that note, I gotta go prepare for our remote trading floor morning meeting…

By the way, if you haven’t joined, how come? Here’s a link to the instructions ⬇️ 

GO AND MAKE IT HAPPEN
Emotional Self-Defense

This one’s an unrelated one to finance and investing, but it has remidned me of some of the nature in today’s tariff-crazed world.

Today’s book recommendation 📖 is more about human psychology than it is stocks, but it can help you read between the lines when world leaders are having a pissing contest in real-time.

To your success,

G. 🥃