Outlook for 2025: Tom McClellan's Market Analysis on Thoughtful Money (May 25, 2025)

Current Bear Market Rally To Bring "More Pain This Year" | Tom McClellan (YouTube link)

In this episode of "Thoughtful Money", host Adam Taggart invites technical analyst Tom McClellan to dissect Wall Street's recent volatility. They explore whether the March-April dip was a minor setback or if the subsequent May rebound signals a deceptive bear market rally. With conflicting economic indicators and the potential for a more significant downturn in 2025, McClellan offers his expert analysis and insights to guide investors through the uncertain financial landscape.

Bear Market Expectation

• Outlook for 2025: Tom McClellan predicts 2025 will be a bearish year for stocks, based on a 10-year leading indicator from crude oil prices, which dropped significantly in 2014, suggesting a stock market decline starting in 2024 and continuing through 2025, with a potential bottom in January 2026.
• Recent Rally: The strong market breadth (advance-decline line surge) and a Zweig Breadth Thrust signal post-April 8, 2025, low suggest a bullish liquidity surge. However, McClellan believes this is likely a bear market rally, not a return to a bull market, due to historical patterns and the crude oil indicator.

Key Points

Key Technical Indicators

• Advance-Decline Line: A bearish divergence in late 2024/early 2025 (higher S&P 500, lower advance-decline line) signaled liquidity issues, but recent strength (new high in advance-decline line) contradicts the bearish outlook, creating an interpretational conflict.
• Zweig Breadth Thrust: A rare signal of strong market breadth occurred after the April low, historically bullish since 1950, but exceptions (e.g., 2004, 2015, 2023) show lower lows can follow, suggesting this rally could be a trap.
• Corporate High Yield Bonds: Unlike the NYSE advance-decline line, the high yield bond advance-decline line hasn’t confirmed the rally, indicating potential liquidity constraints.
• M2/GDP Ratio: A declining M2/GDP ratio since 2020 suggests a “payback” period of market weakness, likely starting now and peaking around July-October 2025, with a one-year lag effect.
• Reverse Repos: Inverted reverse repo data (from the St. Louis Fed) shows liquidity trends, with recent increases suggesting stock price declines in the near term, as markets overshot due to emotional exuberance (low put-call ratio).

Macro and Seasonal Factors

• Political Chaos: The new administration’s unpredictability (e.g., tariff announcements) contributes to market volatility, likened to an “800lb gorilla” causing “sloshing” in liquidity.
• Seasonal Weakness: Historical July-August weakness aligns with potential declines, partly explained by psychological effects of shrinking daylight in autumn, impacting investor risk aversion.
• Bond Yields and Gold: Rising gold prices (above $3,300/oz) signal higher long-term bond yields starting late June 2025, potentially diverting capital from stocks. A brief yield drop in June could offer a refinancing opportunity.

Investment Strategy

• Cautious Approach: McClellan advises against buy-and-hold for 2025, recommending “T-bill and chill” to preserve capital. Investors should wait for a better entry in 2026-2028.
• Sector Focus: Grains (corn, wheat, rapeseed) and related stocks (e.g., fertilizer like Nutrien, or John Deere) are favored due to gold’s 12-month leading indicator for grain prices.
• Gold Outlook: Gold may correct short-term (midpoint of a 13.5-month cycle, bottoming in ~6 months), but long-term bullishness depends on central bank buying (e.g., China, India).
• Bonds: Avoid long-duration bonds post-June 2025 due to rising yields; June may offer a trading opportunity in bonds (e.g., TLT) or refinancing.

Parting Advice

Retail investors should prioritize capital preservation in 2025, avoiding major losses in a potentially stormy market. Active traders can explore grains or related sectors, but patience for a 2026 uptrend is key.

For more, visit McClellan’s website (mcoscillator.com) for newsletters and free resources, or check thoughtfulmoney.com for financial advisory consultations.

Navigating Crisis: Oil Markets, U.S. Policy Shifts, and the Rise of Bitcoin in a Multipolar World (May 2025)

Expert REVEALS Trumps Plan for the Middle East & Why Oil Price is about to EXPLODE (YouTube link)

Summary of the Podcast Episode

The podcast episode was from TFTC (Truth for the Commoner), a Bitcoin-focused media platform, featuring a discussion with Anas Alhajji, an energy market expert. The conversation, recorded on May 24, 2025, covers oil markets, U.S. foreign policy in the Middle East, the dollar's global role, and energy sector challenges, with brief mentions of Bitcoin's role in the geopolitical and economic landscape.

Key Points

Oil Market Dynamics:

• Current Prices: WTI crude is trading at $62.50, down 20% over the past year, despite market fundamentals supporting higher prices (in the $70s). The drop is attributed to China's economic slowdown and global uncertainty caused by U.S. trade policies under Trump.
• China's Role: China's economic stall since early 2024 has significantly impacted global oil demand. Real growth in China is estimated at 2.5–3%, far below the government's claimed 5%, and a recovery above 5% is needed to push oil prices back to the $80s.
• Trump's Trade Policies: The Trump administration's erratic tariff policies (e.g., 145% tariffs, 90-day delays) create confusion, stalling investments and economic growth (see also [1]). Unintended consequences include front-loading imports (e.g., Apple's iPhone shipments) and distorted trade data, contributing to fears of a recession.
• Recession Risks: A potential 2025 recession could lead to a massive inventory build, depressing oil demand in 2026 and keeping prices low unless OPEC+ cuts production.

U.S. Foreign Policy in the Middle East:

• Syria and Regional Shifts: Trump’s recognition of Syria’s new government marks a significant policy shift, aiming to counter Iran and Russia’s influence. Syria’s strategic location offers opportunities for U.S. companies to rebuild its infrastructure, with contracts like the UAE’s deal to revamp Syrian ports.
• Criticism of Nation-Building: Trump’s speech emphasized a departure from nation-building (e.g., Afghanistan, Iraq), criticizing past U.S. policies under George W. Bush and Clinton-era Democrats. He advocates for leaving nations to prosper independently, focusing on trade over military intervention.
• Investment Focus: Trump’s Middle East trip was primarily about investment (e.g., AI, energy, weapons deals with Saudi Arabia, UAE, Turkey), aiming to strengthen U.S. economic ties and counter China and Russia. Deals with Boeing and others pulled business away from China and Europe, extending Trump’s trade war strategy.
• Iran Nuclear Program: The U.S. views Iran’s nuclear program (even peaceful) as a stabilizing force for a regime it opposes, creating a “never-ending crisis.” Iran seeks domestic stability through nuclear energy to boost oil exports, but mistrust over uranium enrichment stalls negotiations. Iran is likely delaying talks until it can develop a nuclear bomb, believing it will shift regional dynamics.

Dollar and BRICS:

• BRICS as a Paper Tiger: The podcast dismisses the idea of BRICS (Brazil, Russia, India, China, South Africa) challenging the dollar, calling it a “paper tiger.” BRICS’ cohesion is undermined by conflicts like India-Pakistan tensions, and its influence is largely driven by China alone.
• Dollar Dominance: The dollar and petrodollar are seen as secure, with no viable alternative currency emerging (see also [2]). Europe took centuries to unify for the euro, making a BRICS currency unfeasible in the near term.

Energy Sector Challenges:

• U.S. Oil Production: Trump’s goal to boost U.S. oil production (e.g., by 3 million barrels/day as in his first term) is unrealistic. Shale production faces high decline rates, requiring 600,000+ barrels/day of new oil monthly just to stay flat. High interest rates and a shift from “drill baby drill” to “control baby control” by majors further limit growth.
• Energy Demand Surge: Global energy demand is rising due to urbanization, migration, AI, and data centers. Migrants’ energy consumption increases dramatically (e.g., 70x for Afghans moving to the U.S.), and AI/data center growth outpaces renewable energy expansion, ensuring continued reliance on oil, gas, and coal.
• Infrastructure Issues: Aging grids and insufficient manufacturing capacity for natural gas turbines threaten energy reliability. Blackouts are increasingly common (e.g., California, Texas, Kuwait), and renewables like wind are unreliable without backup.
• Trump’s Stance on Oil: Despite perceptions, Trump historically dislikes the oil industry, blaming it for past business failures (e.g., Trump Airlines bankruptcy). His Gulf visit is framed as extracting oil money due to disdain, not support.

Bitcoin and AI:

• Bitcoin’s Role: The podcast briefly touches on Bitcoin, noting its market cap growth from $200 billion to $2 trillion over four years. Geopolitical uncertainty, sanctions, and potential money printing could drive Bitcoin demand, though its market is now more liquid for energy deals.
• AI and Energy: AI’s energy demands exacerbate grid strain, risking public backlash if data centers are prioritized over residential power. Bitcoin mining’s flexibility (e.g., selling power during shortages) is contrasted with AI’s rigidity, suggesting paired operations to balance grid demands.

Policy Recommendations:

• Align Time Horizons: Energy projects span decades, while political cycles are short (2–8 years). Policymakers must avoid flip-flopping policies (e.g., Biden’s climate push vs. Trump’s rollbacks) to reduce confusion and encourage long-term investment.
• Data Integrity: The Department of Energy’s capacity has deteriorated under Trump’s DOGE initiative, with staff cuts leading to canceled reports (e.g., International Energy Outlook). The EIA’s data quality has declined, forcing reliance on private firms for credible analysis.
• Bullish Sectors: The speaker is bullish on LNG (a growing global market) and the power sector (driven by AI and utilities), but cautious on U.S. natural gas and oil due to structural constraints.

Critical Insights:

• The podcast highlights systemic fragility in energy markets, exacerbated by policy inconsistency and geopolitical tensions. Trump’s trade war tactics, while strategically aimed at countering China, create economic uncertainty that could trigger a recession, further depressing oil prices.
• The shift in U.S. Middle East policy toward trade and investment, rather than military intervention, aligns with Trump’s “peace through trade” approach but faces challenges in execution (e.g., tariff confusion, Iran stalemate).
• Bitcoin’s growing liquidity positions it as a potential hedge in a multipolar world, though its energy-intensive nature ties it to broader grid challenges.

Conclusion

The episode paints a complex picture of global energy markets and geopolitics in May 2025, with oil prices suppressed by China’s slowdown and Trump’s unpredictable policies, despite fundamentals suggesting higher prices. U.S. Middle East diplomacy focuses on investment and countering China/Russia, but domestic energy challenges (e.g., grid reliability, shale constraints) and data deterioration hinder progress. Bitcoin and AI emerge as key players in the energy landscape, with LNG and utilities as bright spots for future growth. Aligning political and energy project timelines is critical to resolving these issues.

See Also

1. Trump’s New Tariff Threats Show Trade Uncertainty Here to Stay (Bloomberg)
2. Prague Finance Institute with Lyn Alden, Author of Broken Money

Susquehanna's Chris Murphy on Meme Stock Frenzy: Short-Term Trades Dominate Amid Volatility Shifts

Susquehanna's Chris Murphy on trading meme stocks: Remain very short term to avoid volatility (YouTube link)

On May 14, 2024, CNBC's The Exchange featured Chris Murphy from Susquehanna International Group, who discussed the "meme stock" spike and other stocks experiencing increased volatility at the time.

Here is a summary of the interview with Chris Murphy, Co-Head of Derivative Strategy at Susquehanna.

Key Points Include:

• Options Trading Activity:
• There’s significant buying of call options on certain stocks, with trade sizes indicating a mix of retail and institutional (hedge fund) participation. Small trades (1-5 options) suggest retail, while large blocks (2,500-5,000) point to institutional involvement.
• Comparison to Past Episodes:
• Unlike the 2021 meme stock frenzy, current activity is less intense. Short sellers are more cautious, having learned from 2021, and are not as aggressively short, reducing the likelihood of a massive short squeeze.
• Short Squeeze vs. Fundamentals:
• The trading is primarily driven by short-term momentum and short squeezes, not long-term fundamentals. Stocks like GME (24% short interest) and AMC (21%) are targeted due to high short interest, with traders chasing the next heavily shorted name. While strong fundamentals can support trades, the focus is on intraday momentum, not long-term investments.
• Identifying Next Candidates:
• Potential targets for this momentum-driven trading include stocks with spikes in call option volume and volatility, such as SPCE and ROKU (noted for decent short interest). Declining volatility in current names signals the momentum trade moving to new stocks.
• Broader Market Outlook:
• The market is at all-time highs, with investors awaiting CPI data to confirm if recent inflation upticks are temporary. S&P 500 options are currently inexpensive, suggesting a low-volatility environment. Murphy is cautiously optimistic, predicting the market may rise over the next six months, with options offering a way to gain exposure while hedging against downside risks.

Key Takeaway: 

The options trading surge is a mix of retail and institutional activity, driven by short-term momentum and short squeezes rather than fundamentals. Traders are targeting high short-interest stocks, with potential next candidates like SPCE and ROKU. In the broader market, low-cost S&P 500 options provide opportunities for bullish bets with downside protection, pending CPI clarity.

See Also:

1. Understanding Options Contracts

10-Year Yields: The Rate of Ascent, Not Just the Level, Threatens Stocks

One of the headlines on ZeroHedge.com states:

As 10Y Yields Surge, At What Rate Do Stocks Break?

Below is an analysis of the statement and its implications.

The statement highlights a critical dynamic:

Rapid increases in 10-year bond yields pose a greater threat to stock markets than the absolute yield level. 

Historical episodes (e.g., 1994, 2013, 2018) suggest that a 50–100 basis point rise over a few months can trigger equity corrections, particularly in high-valuation or rate-sensitive sectors. In the context of May 2025, a surge in U.S. 10-year yields (potentially to 5–5.5%) could pressure stocks, especially if driven by global factors like Japan’s bond market dynamics and/or reduced foreign demand for Treasuries.

Japan’s 30-Year and 40-Year Bonds Crater, Yields Spike (Source: WOLFSTREET.com)

Japan’s 40-Year Bond Yield Surge

In this article and other X posts (e.g., @onechancefreedm), multiple sources have discussed the recent surge in Japan’s 40-year government bond yield to an all-time high of 3.63% and its broader implications for global financial markets. Here is the summary of key points:

• The yield on Japan’s 40-year government bonds has reached 3.63%, an all-time high.
• This is significant because Japan, with a debt-to-GDP ratio above 260%, has historically relied on financial repression (artificially low interest rates) to manage its massive debt load.
• The rise in yields signals a potential loss of investor confidence in Japan’s ability to sustain low borrowing costs over the long term, challenging the Bank of Japan’s (BoJ) Yield Curve Control (YCC) policy.

Japan’s YCC policy, which caps 10-year bond yields near zero, has been a cornerstone of its strategy to keep borrowing costs low.  The surge in 40-year yields suggests that investors are demanding higher returns to lend to Japan for extended periods, indicating a crack in the BoJ’s control over long-term yields.

The Bond Market Has Lost Patience, Principal’s Shah Says (YouTube link)

Loss of Central Bank Credibility

Some X posts frame the yield spike as a “structural alarm bell,” implying that investors are losing faith in the BoJ’s ability to control the yield curve indefinitely. This is critical because central bank credibility underpins the low-yield environment that has defined global markets since 2008.

A loss of control in Japan could have a domino effect, as other central banks (e.g., the Federal Reserve, European Central Bank) rely on similar tools to manage yields. If markets begin to doubt central bank dominance, global bond yields could rise, increasing borrowing costs for governments and corporations.

Global Ripple Effects

Based on three historical parallels of past bond market disruptions:

• Japan’s 1998 VaR Shock: A sudden spike in bond yields due to market volatility.
• 1994 U.S. Bond Market Revolt: A rapid rise in U.S. Treasury yields following Federal Reserve rate hikes.
• 2022 U.K. Gilt Crisis: A sharp sell-off in U.K. bonds triggered by fiscal policy uncertainty.

These events suggest that a loss of central bank control over long-term yields in Japan could trigger a broader repricing of sovereign risk globally, affecting other major bond markets, particularly U.S. Treasuries.

Impact on U.S. Treasuries: Japanese institutions are major holders of U.S. Treasuries. If they sell these assets to rebalance portfolios or support the yen, it could reduce demand for U.S. bonds, pushing U.S. yields higher. This is particularly concerning for the long end of the yield curve (e.g., 30-year Treasuries), where demand is already sensitive to global flows.

Moody's Downgrade Fuels US Default Concerns

The X post by Richard Bernstein Advisors highlights a graph showing the credit default swap (CDS) spreads for US Treasuries compared to AAA-rated sovereign debt from nations like Singapore (9.400 bps), Denmark (4.035 bps), and Sweden (2.820 bps), indicating a significant market concern about US fiscal health as of May 22, 2025.

The CDS spread for the US spiked to 60.150 basis points, far exceeding other AAA-rated countries, reflecting investor fears of potential default risk following Moody’s downgrade of the US credit rating on May 16, 2025, due to ballooning debt and deficits, as reported by Bloomberg.

Federal Reserve Bank of Chicago data on the 2023 debt ceiling episode shows that elevated CDS spreads can stem from low valuations of long-term Treasury securities, a trend likely exacerbated in 2025 by rising yields (10-year Treasury at 4.5%) and fiscal irresponsibility concerns noted by the US GAO.

Conclusion

Investors should monitor the speed of yield changes, Fed policy signals, and equity valuations while preparing for potential volatility. Diversifying into defensive sectors, hedging with safe-haven assets (e.g., gold and Swiss franc), and tracking yield curve dynamics can help mitigate risks. 

Market Reality Check: Why a V-Shaped Rebound Is Unlikely, Per @bravosresearch (May 20, 2025)

An X thread shared by @bravosresearch argues that while some investors expect a V-shaped recovery in the stock market similar to previous instances (e.g., 2020 post-COVID crash), the current economic environment lacks the conditions that drove those recoveries, particularly massive liquidity injections. 

Key points include:

• Absence of Massive Liquidity: Unlike the 2020 recovery, which was fueled by significant central bank interventions and government stimulus, the current market lacks similar support, reducing the likelihood of a sharp, V-shaped rebound.
• In 2025, no comparable liquidity injections are occurring. The Federal Reserve's rate cuts over the past year seem insufficient to mimic the 2020 stimulus-driven recovery. A US debt downgrade by Moody’s and rising bond yields signal tighter financial conditions, with higher yields increasing borrowing costs and lowering bond prices.
• Conditions for a V-Shaped Recovery: For a V-shaped recovery to occur, the economic outlook would need a dramatic improvement, with fears from earlier in 2025 (e.g., trade war concerns, market volatility) dissipating quickly. This is seen as a "big ask" but not impossible.
• The market’s path depends on whether positive developments (e.g., trade deal, continued earnings strength) can outweigh negative pressures. The high consumer inflation expectations (7.3% per the University of Michigan, as noted in Ben Reppond’s broadcast) suggest persistent economic unease, making a rapid shift in outlook difficult.
• Optimism from US-China Trade Deal: Some investors are hopeful due to a potential US-China trade deal, which could alleviate tariff-related pressures and boost market sentiment.
• Historical Precedent: The 2020 market crash saw a 35% drop in stocks due to COVID, followed by a rapid recovery to all-time highs, driven by liquidity and policy support. The author uses this as a benchmark for what a V-shaped recovery entails.
• Corporate Earnings Resilience: Despite a 20% market drop in 2025, S&P 500 earnings estimates are higher than in January, supported by:
• A weaker US dollar, boosting international revenues for US companies.
• Lower gas prices, supporting consumer spending.
• The lagged effect of Federal Reserve rate cuts over the past year, which may now be stimulating economic activity.
• Tariff Concerns: The author identifies tariffs as a significant risk, overshadowing positive factors and lowering the odds of a V-shaped recovery due to their potential to disrupt supply chains, increase costs, and dampen economic growth.

Conclusion

The X thread argues that a V-shaped recovery in 2025 is unlikely due to the absence of massive liquidity injections, persistent tariff risks, and high market valuations, despite supportive factors like strong corporate earnings, a weaker dollar, lower gas prices, and Fed rate cuts. While a US-China trade deal could spark optimism, the conditions differ significantly from the 2020 recovery, which benefited from unprecedented stimulus. The analysis aligns with cautious perspectives from Grantham, Oakley, and Rogers, who highlight risks from overvaluation, tariffs, and rising yields, suggesting investors should temper expectations for a rapid rebound and prepare for volatility.

The Flawed Forecast: Unpacking the "Perfect Predictor's" Recession Miss

This Recession Indicator Has a 100% Track Record, Heres What It Just Did | Jeff Snider (YouTube link)

In the above video, the discussion between the host and Jeff Snyder focuses on the bond market, particularly the "perfect predictor" indicator, which historically signaled a recession within 12 months when triggered. This indicator, based on forward spreads derived from term spreads, was activated in August 2023 but failed to predict a recession by August 2024, challenging its reliability. They explore reasons for this failure, questioning whether the indicator itself is flawed or if the National Bureau of Economic Research (NBER) recession definition is outdated. 

Key points include:

• Perfect Predictor Indicator: Developed using 654 million data points, it relies on longer-dated forward spreads (e.g., Eurodollar or SOFR futures) that signal recessions when they invert and persist. Historically, it had no false positives or negatives since 1960, but its recent failure prompts scrutiny.
• Potential Distortions: The host suggests that Federal Reserve actions, like quantitative easing (QE), might distort term spreads by affecting collateral availability, potentially skewing forward spreads. However, Snyder argues that QE doesn’t significantly lower long-term rates, as seen in higher 10-year Treasury yields after QE rounds.
• Economic Context: Snyder posits that the economy may still be in a prolonged recession from the 2020 pandemic, with weak labor market recovery (e.g., 5.5 million jobs short of pre-pandemic levels) and other recession-like signals (e.g., real income excluding transfers). This suggests the indicator may not be wrong but reflects ongoing economic weakness not captured by NBER’s traditional metrics.
• NBER’s Recession Definition: The NBER’s reliance on metrics like non-farm payrolls and GDP may miss broader economic weakness, as recessions today differ from post-World War II patterns. Snyder argues that market signals, like forward spreads, reflect real economic conditions better than NBER declarations.
• Supply and Demand in Bond Markets: The host and Snyder debunk the idea that Treasury supply or Fed buying drives interest rates. Instead, banks and financial institutions act as an equilibrating force, buying or selling based on growth and inflation expectations, not just supply. For example, banks arbitrage spreads (e.g., 2% funding cost vs. 4% Treasury yield) regardless of inflation, prioritizing risk-adjusted returns.
• Global vs. U.S. Signals: The host suggests the indicator might reflect global economic weakness rather than U.S.-specific conditions, as Treasury markets serve the global economy. Snyder agrees, noting persistent global and U.S. economic issues.
• Market Implications: Despite the indicator’s signals, market participants may focus on NBER recession declarations for trading decisions, creating a disconnect between market signals and economic reality.

In summary, the failure of the "perfect predictor" may stem from an outdated recession definition or unique economic conditions in the 2020s, not a flaw in the indicator itself. The discussion emphasizes the importance of understanding financial institutions’ actions and the limitations of traditional economic metrics.

Perfect Predictor Indicator

Core Component

The core component of the Perfect Predictor Indicator is forward spreads, which are derived from term spreads in bond markets. Here’s a breakdown of these concepts:

• Term Spreads: These represent the difference in yields between bonds of different maturities, such as the 10-year Treasury note minus the 2-year Treasury note. A widely watched term spread is the 10-year/2-year Treasury yield spread, which often inverts (turns negative) before recessions, signaling that investors expect lower yields (and weaker economic conditions) in the future.
• Forward Spreads: These are a more complex derivative of term spreads, calculated from forward rates, which represent the expected future interest rates implied by current bond yields. Forward spreads measure the difference between forward rates for different time horizons. For example, a forward spread might compare the implied 3-month interest rate starting 5 years from now to the 3-month rate starting 6 years from now.
• Eurodollar and SOFR Futures: The indicator specifically uses forward spreads derived from Eurodollar futures (contracts based on short-term U.S. dollar interest rates in the offshore market) or SOFR futures (based on the Secured Overnight Financing Rate, a benchmark for U.S. dollar borrowing costs). These futures contracts reflect market expectations of future interest rates and are traded in large volumes, making them a reliable gauge of investor sentiment. The indicator focuses on longer-dated contracts (e.g., those maturing 4+ years out), as these are less influenced by short-term Federal Reserve policies and more reflective of independent market expectations about economic growth and inflation.

Recession Signals

The Perfect Predictor Indicator signals a recession when specific longer-dated forward spreads invert and persist in that inverted state:

• Inversion: A forward spread inverts when the yield on a longer-dated future contract (e.g., a 5-year forward rate) falls below that of a shorter-dated one (e.g., a 4-year forward rate). This inversion suggests that markets anticipate weaker economic conditions or lower interest rates in the future, often associated with a recession. For example, an inverted yield curve (a related concept) occurs when short-term yields exceed long-term yields, signaling investor pessimism about near-term growth.
• Persistence: The indicator doesn’t trigger on fleeting inversions. Instead, it requires the inversion to "stick" for a sustained period, typically measured using a moving average to smooth out short-term volatility. This persistence ensures that the signal is robust and not triggered by temporary market noise. 

Jeff Snyder notes that when longer-dated forward contracts (e.g., Eurodollar futures beyond 4 years) remain inverted for an extended time, it has historically been a reliable recession warning.

Ted Oakley's Bond and Stock Market Strategies (May 19, 20250

U.S. Debt Downgrade: Is Bond Crisis Unfolding Now? | Ted Oakley (YouTube link)

Here's a simplified, bullet-pointed summary of Ted Oakley's bond and stock market strategies in the above video:

Bond Market Strategy:

• Avoids long-term Treasuries: Believes the yield (4.5-4.75% on 30-year bonds) is too low compared to expected inflation (3.5-5% over the next decade).
• Holds short-term Treasuries: Uses them as a safe place for money (safe haven).
• Expects higher yields: Predicts this could happen if Congress doesn't pass a spending bill, leading to more government debt and Treasury sales during debt ceiling talks.

Stock Market Strategy:

• Focuses on undervalued companies: This is his main investment approach.
• Favors energy stocks: Holds Chevron (5% dividend), Matador (3.5% dividend), and oil tanker companies (TK, Frontline), expecting oil demand to recover.
• Invests in precious metals: Holds silver (Pan-American Silver) and gold miners, which are doing well because of strong cash flow at current gold prices ($2800-$3000).
• Avoids small-cap stocks: Concerned about the difficulty of buying and selling them quickly (illiquidity).
• Avoids junior mining companies: Prefers established (senior) miners with low price compared to their cash flow.

Who Has the Upper Hand in US-China Relations?

Who Has the Upper Hand in US-China Relations? (YouTube link)

In the above video, Larry Summers, a Harvard economist, and Elizabeth Economy, a China expert, focus on the U.S.-China trade relationship, analyzing a tentative 90-day tariff reduction agreement and its implications for both economies. 

Key points include:

Trade Agreement and U.S. Retreat:

• Larry Summers views the agreement as a positive step, primarily because the U.S. backed off from "imprudent" high tariffs that risked economic damage. The U.S. stock market rose, particularly import-dependent sectors (e.g., retailers, toy companies), indicating relief rather than Chinese concessions.
• Summers praises Secretary Bessant’s leadership but frames the move as a retreat from an overly aggressive U.S. stance, salvaging pride while avoiding economic harm.

Pressure Points and Vulnerabilities:

• President Trump believes China faces more pressure due to its manufacturing-heavy economy and quiet factories. However, Summers argues the U.S. faces greater pressure as a democratic, inflation-sensitive nation where tariffs raise prices.
• Elizabeth Economy highlights mutual vulnerabilities: China’s economy has been slowing for three years and relies on U.S. exports, but the U.S. depends heavily on China for critical goods (e.g., rare earths, pharmaceuticals). The Trump administration underestimated this U.S. reliance, miscalculating the tariff war’s impact.

Dealing with China’s Centrally Planned Economy:

• Summers suggests focusing on U.S. core interests, such as national security and protecting intellectual property, rather than minor issues like toy imports or iPhone assembly. He views Chinese subsidies as potentially beneficial to U.S. consumers and producers if strategically managed.
• Broad, indiscriminate tariffs are criticized as inflationary and harmful, making the recent U.S. adjustment a step forward.

Global Dynamics:

• Economy notes that China expected to rally global support against Trump’s tariffs by positioning itself as a stabilizing force. However, advanced market democracies have not aligned with China, favoring the existing rules-based order without fully including either the U.S. or China.
• This global reluctance limits China’s ability to counter U.S. pressure through international alliances.

China’s Domestic Consumption Shift:

• Chinese economists advocate for boosting domestic consumption by investing in healthcare, education, and pensions to reduce high savings rates. However, Xi Jinping resists “social welfareism,” wary of reducing work incentives.
• Recent measures include raising civil servant wages (possibly reversing prior cuts), encouraging bank loans to small enterprises, and platforms like Alibaba lowering costs for exporters. These steps fall short of the significant consumer stimulus needed.

Mutual Goals and Challenges:

• Both nations aim to rebalance their economies: the U.S. toward high-precision manufacturing, China toward consumption. A cooperative approach could benefit both, but vulnerabilities and strategic missteps complicate negotiations.
• The tentative agreement leaves significant work for a long-term solution, with both sides needing to address economic dependencies and global positioning.

Key Takeaway: 

The U.S.-China trade truce reflects a U.S. retreat from aggressive tariffs, driven by domestic inflationary pressures and mutual economic vulnerabilities. While both nations have rebalancing goals, miscalculations, China’s resistance to consumer stimulus, and a lack of global support for China complicate a lasting resolution. Strategic focus on core interests, particularly U.S. national security, is critical to navigating this rivalry.

Navigating the End of a Super Cycle: Market Bust, Depression, and Post-Bust Opportunities

The BUST Is Coming - Don't Panic, Profit Instead | David Hunter (YouTube link)

In the above video, David Hunter outlines a dire economic forecast, predicting a significant market bust and eventual depression within a "super cycle" framework, defined as the period between major depressions (1930s to mid-2030s). 

Key Points

Here’s a concise summary:

Super Cycle and Imminent Bust:

• The speaker defines a super cycle as the ~100-year period between depressions, with the next depression expected in the mid-2030s. The current decade marks the end of this cycle, leading to heightened economic extremes.
• A bust, distinct from a depression, is anticipated by late 2025 or early 2026, lasting 12–18 months. This bust will feel severe but won’t qualify as a depression unless prolonged.

Market Dynamics and Catalysts:

• Despite economic fragility, the speaker is bullish on the stock market in the near term, predicting the S&P 500 could reach 8,000, NASDAQ 27,000, and Russell 3,300. This rally is driven by:
• Expected sharp declines in bond yields and Fed easing.
• A narrative of intact earnings and a new market cycle, prompting repositioning as sentiment shifts from negative to FOMO-driven.

Catalysts for the bust include:

• Economic inequality (haves vs. have-nots), with even the wealthy showing spending strain.
• Rising delinquencies, declining big-ticket purchases, and regional real estate rollovers (e.g., Florida, Texas).
• Tariffs potentially disrupting global trade, though not yet causing significant inflation.
• Systemic fragility and leverage amplifying downturns.

Economic Outlook:

• The economy is trending toward recession, not stagflation, with deflation expected during the bust (negative 2–5% inflation, GDP down >5%). True inflation is already near the Fed’s 2% target (1.3% by some measures).
• The Fed’s response (rate cuts, balance sheet expansion) will be too slow and insufficient due to a cautious mindset shaped by past crises (2008, 2020). This delay will exacerbate the bust, as the scale of intervention needed to stabilize the economy will take months to implement.

Market Impact and Recovery:

• The stock market may peak between August and November 2025, followed by an 80% bear market decline over 8–10 months, with multiple legs down and interim rallies.
• A cyclical bull market could begin by summer 2026, offering significant opportunities (e.g., S&P tripling from 1,600 to 4,800–6,000). However, buy-and-hold strategies will underperform post-bust due to changing market leadership.

Investment Opportunities and Structural Shifts:

• Post-bust, leadership will shift from tech/growth to industrials and commodities (e.g., oil, gold, silver) due to rising inflation and interest rates in the next cycle (2027–2032).
• Commodity forecasts:
• Gold: $4,000 pre-bust, $20,000 post-bust by early 2030s.
• Silver: $75 pre-bust, $500 post-bust.
• Oil: $30 in bust, $500 post-bust.
• Natural gas: $3–4 now, $50 by early 2030s.
• Investors should focus on commodity producers (e.g., miners, oil companies) and avoid buy-and-hold index strategies. Treasuries and FDIC-insured savings are recommended for capital preservation during the bust.

Long-Term Collapse (Mid-2030s):

• By the mid-2030s, a depression is expected due to unsustainable debt, deficits, and high interest rates (20%+). The Fed’s ability to print money will become “inoperable” as inflation outpaces printing, rendering modern monetary theory ineffective.
• This will lead to a collapse as governments lose access to capital markets, forcing them to live within tax revenues, an unsolvable equation given current debt levels.

Crypto and Solutions:

• Crypto (e.g., Bitcoin) is not seen as a macro solution to the debt crisis or a dollar replacement. It may benefit those outside the system but won’t address systemic excesses.
• The speaker doubts Trump’s policies or disruptive technologies (e.g., AI) can avert the bust or depression, as the macro environment outweighs policy efforts, especially given the late stage of the super cycle.

Investment Strategy:

• Investors should preserve capital during the bust (e.g., treasuries, money markets) and avoid corporate bonds due to default risks.
• Post-bust, invest in commodities and related stocks for a 5–7-year recovery cycle (2027–2032), but remain vigilant for the mid-2030s collapse.

Key Takeaway: 

The economy faces a severe bust by late 2025/early 2026, driven by fragility and policy missteps, within the final years of a super cycle culminating in a mid-2030s depression. While near-term market rallies offer opportunities, investors must shift to commodities post-bust and prepare for a structural change, as buy-and-hold strategies and debt-driven growth become obsolete.

Stephanie Pomboy's Market Outlook (May 14, 2025): We're Not Out Of The Woods Yet

Stephanie Pomboy: We're Not Out Of The Woods Yet (YouTube link)

In the above video, Stephanie Pomboy talks with Adam Taggart about current economic conditions, focusing on trade developments, interest rates, and broader market dynamics. The conversation covers several key points:

Trade Developments and Optimism:

• Recent positive headlines about trade deals, particularly a 90-day ceasefire with China, have led to a sense of relief in global markets. Pomboy acknowledges this as a positive step but cautions that it’s not a final deal, just a temporary pause.
• Adam highlights a list of achievements by the Trump administration, including trade agreements with the UK, talks with China, and deals with Saudi Arabia for chip and Boeing purchases. Over $10 trillion in reshoring commitments and a budget surplus in April 2025 are also noted, suggesting economic momentum.
• Pomboy agrees that if these initiatives succeed, they could significantly improve the U.S. economy’s long-term trajectory by reshoring production and reducing reliance on unsustainable borrowing. However, she warns of short-term disruptions, including higher labor costs and margin pressures.

Interest Rates as the Core Concern:

• Pomboy emphasizes that stubbornly high interest rates (e.g., 10-year Treasury yield at 4.5%) are the biggest threat to the U.S. economy, overshadowing trade progress. With $37 trillion in national debt and $8 trillion in debt maturing soon, high rates increase borrowing costs for the government and private sector.
• She argues that the bond market’s supply-demand imbalance—exacerbated by reduced foreign demand for Treasuries and constrained domestic bank buying—keeps rates elevated. This could force the Federal Reserve to resume quantitative easing (QE) to manage the debt burden.
• Pomboy notes that high rates are already stressing corporate borrowers, with $1 trillion in corporate debt maturing in 2025 and another $1.2 trillion in 2026. Persistent high rates could lead to more bankruptcies, especially in private credit and equity markets.

Consumer and Banking Sector Stress:

• Consumers face increasing pressure from rising delinquencies in credit card, auto, and student loans, with student loan repayments resuming post-COVID moratoria. Pomboy cites estimates of a $60-70 billion annual consumption hit due to these payments.
• The banking sector remains vulnerable, holding $500 billion in unrealized losses on Treasuries and mortgages. Exposure to opaque private credit markets adds further risk, potentially amplifying any shocks like those seen in the 2023 Silicon Valley Bank crisis.
• Adam references concerns from other economists about a potential “cascade” of defaults starting with student loans, compounded by inflated credit scores that may have led lenders to misprice risk.

Market Dynamics and Risks:

• The S&P 500’s recovery and market optimism are driven by trade deal excitement, but Pomboy warns of overvaluation. Corporate earnings expectations have dropped from 12.5% to 7.5% growth for 2025, and high rates could further erode margins.
• Corporate capital expenditure (capex) is frozen due to trade policy uncertainty, though some front-running of tariffs has boosted short-term spending. This could lead to an economic “air pocket” later in 2025 if activity slows.
• Pomboy sees political risks, particularly losing Republican control of Congress in the 2026 midterms, as a major threat to sustaining the administration’s agenda. A Democratic resurgence in 2028 could undo progress.

Pro and Con Scenarios:

• Pro Case: If the administration’s policies succeed, Pomboy believes they could reverse the U.S.’s unsustainable economic model, fostering a production-based economy with long-term prosperity. Deregulation and tax cuts could offset higher labor costs, but the transition will be bumpy.
• Con Case: Failure could result from congressional gridlock or trade talks collapsing. A loss of momentum might shift global alliances toward China or reduce Treasury demand, exacerbating debt issues. However, Pomboy doubts a “clown show” outcome, seeing urgency in the administration’s actions as a mitigating factor.

Investment Positioning:

• Pomboy maintains a portfolio heavy in T-bills and gold, recently adding to gold miners on price dips. She remains cautious, avoiding short positions in the equity market due to potential for further optimism-driven rallies.

Key Takeaway:

Pomboy is cautiously optimistic about the administration’s economic policies but stresses that high interest rates and debt burdens pose immediate risks. While successful trade deals and reshoring could transform the U.S. economy for the better, the path will be volatile, with consumer, corporate, and banking stresses likely to intensify. Investors should weigh market optimism against underlying risks, particularly around rates and valuations.

Chris Vermeulen’s May 9, 2025: Markets, Gold Super Cycle & Real Estate Collapse

New Gold Forecast & More! (YouTube link)

In a May 9, 2025, video, Chris Vermeulen provides a market update, expressing a bearish outlook while emphasizing trading based on price action. 

Key points:

• Market Overview: Equities (S&P 500, Nasdaq 100) are slightly up, with potential for a short squeeze if resistance levels (March highs) are broken. Recent FOMO and late-day selling suggest institutions are distributing shares. Chris sees a "dead cat bounce" and anticipates a major financial reset, akin to 2000 or 2008, due to strong bearish data.
• Covered Call ETFs: Criticized as ineffective hedges, underperforming the Nasdaq (e.g., Nasdaq up 159% since 2018, while a covered call ETF fell 35%). They offer 11-14% dividends but don’t protect against market drops, making cash or inverse ETFs better options.
• Real Estate: Predicts a sharp 10%+ drop in housing prices this spring/summer, citing stalled sales (e.g., in Florida and California) and a topping pattern in single-family home prices ($400,000-$455,000 range).
• 2008 Comparison: Compares current markets to 2008, where gold surged before a 34% drop as stocks crashed 57%. The US dollar, currently undervalued, rallied in 2008’s chaos, likely to repeat. Bonds (TLT) hold value but spike only when rates are cut near market bottoms. Inverse ETFs rise with falling markets, offering tradable opportunities.
• Gold Outlook: 
• Super Cycle (Long-Term): Bullish, with gold in a new cycle since 2019, targeting $5,100 after a potential pullback to $2,600, mirroring 2008-2011.  
• Short-Term: Chris expects a near-term decline due to stock market selling pressure and a rising dollar.  After that, gold flags for a potential rise to $3,750-$3,775.
• Other Assets: Oil is overbought after a double bottom, Bitcoin and uranium hit targets (half positions sold), and the dollar is down slightly but poised for gains in chaos.

Chris remains cautiously bearish, preparing for a financial reset but trading price action, not sentiment, and sees gold as a long-term opportunity despite near-term concerns.

Cumberland Advisors' Market Outlook (May 9, 2025): A Pause in Volatility or More to Come?

"A Break in Volatility?" — Week in Review (YouTube link)

Matthew C. McAleer, President of Cumberland Advisors, provided a market update on May 9, 2025, noting a reduction in market volatility after a turbulent period. 

Key points include:

• Equities: The S&P 500, down about 4% year-to-date, experienced a sharp drop and rally but is now at a resistance level around 5,700. Matt anticipates higher volatility in 2025 compared to recent years, citing historical patterns where markets down through April tend to be volatile. His firm traded proactively, selling into January’s rally to build a cash cushion (10-13%) and redeploying it during dips in February-April. They are nearly fully invested but may reduce equity exposure if markets rise further, expecting volatility to persist.
• Bonds: Yields rose slightly, with the 10-year Treasury at 4.38% and the 30-year at 4.87%, as markets brace for upcoming CPI and PPI data, which will reflect new tariffs. The Fed maintained rates at 4.25-4.5%, adopting a wait-and-see approach amid economic slowdowns. Municipal bonds are seen as undervalued, with strong demand indicating reduced fear in the bond market. T-Bonds at 114-115 are critical; a drop to the mid-111s could signal a breakdown of their multi-year basing pattern.
• Market Outlook: Matt sees markets pricing in less severe scenarios, but economic challenges like tariffs and slower growth persist. Volatility offers opportunities, and his firm is selectively deploying cash into specific sectors and industries. The bond market’s reaction to upcoming inflation data will be pivotal.

The update emphasizes cautious optimism, with a focus on navigating volatility and monitoring key economic indicators like inflation and Fed policy.

Blackstone's Gray on Global Trade, Tariffs, and Investment Opportunities

Blackstone's Gray on Trade Deals, Real Estate, Inflation (YouTube link)

The discussion of Blackstone's Jon Gray outlines a global trade and economic outlook with potential impacts on investments, particularly for U.S. investors with ties to China, and highlights opportunities amid uncertainty. 

Key points:

• Trade Deals and Tariffs: A 10% tariff framework is anticipated for global trade deals, with countries like the U.K., India, Japan, or Korea likely to strike agreements soon, boosting investor confidence. Non-tariff barriers may be removed, though exceptions could lower the effective rate. The China situation is more complex, with high tariffs (145%) and prolonged tensions expected to take longer to resolve, posing risks of economic slowdown if uncertainty persists.
• Impact on U.S. Investors with China Ties: Companies with supply chains linked to China face significant challenges, reevaluating cost structures, relocating operations, or passing costs to consumers/suppliers. The high tariffs create pressure, but the speaker’s firm has limited direct exposure.
• Economic Indicators and Inflation: Economic data is noisy due to recent tariff actions, with anecdotal evidence showing caution in retail and manufacturing sectors. Large expenditures like leases and capex are slowing as CEOs adopt a wait-and-see approach. However, employment remains strong, and inflation data is positive—shelter and energy costs are down, and labor markets are softening (hiring difficulty dropped from 93% to 30% over three years). This could ease non-goods inflation, though tariffs may counter this on the goods side.
• Economic Slowdown and Employment: A slowdown in GDP and employment growth is expected, but not a severe “falling off a cliff” scenario. The economy has shown resilience (e.g., 6% revenue growth in private equity portfolios in Q1), and a quicker resolution of trade issues could minimize the downturn. Prolonged uncertainty, however, increases risks.
• Investment Opportunities: Despite uncertainty, asset price corrections create opportunities. The speaker’s firm, with $177 billion in dry powder, sees potential in:
• Secondaries Market: Limited partners are selling stakes due to liquidity needs, driven by reduced IPOs and M&A activity.
• Energy and Power: The technology revolution, especially AI, drives demand for electrification, creating investment prospects.
• Commercial Real Estate: Reduced new supply makes it a good entry point.
• Global Markets: Japan (economic restructuring) and India (long-term growth) are attractive.
• U.S. Exceptionalism and Global Diversification: Despite recent challenges, the U.S. retains advantages like liquid capital markets, rule of law, and innovation. The dollar’s 10% decline over the past month is seen as logical, but the U.S. remains a strong investment destination. Diversification into global markets is still recommended.
• Best Opportunities: The speaker highlights electrification (tied to AI and productivity gains) and life sciences as the most compelling investment areas, driven by technological advancements.

In summary, while trade tensions (especially with China) and tariffs create uncertainty, they also present opportunities in sectors like energy, real estate, and global markets. A quicker resolution of trade deals could mitigate economic slowdown risks, and investors are encouraged to capitalize on current market corrections.

Bear Market Rally, Recession Risks, and Hard Asset Opportunities: David Hay’s 2025 Outlook

Massive Shortages, Empty Shelves In A Few Weeks? 'Bear Market Rally’ Won’t Last | David Hay (YouTube link)

Introduction and Context:

• Host David welcomes David Hay, former co-CIO of Evergreen Gavekal (46 years in finance, 23 with the firm), now founder of Haymaker Publications, to discuss the economic landscape, recent GDP data, and market outlook as of April 30, 2025. The video highlights a rare three-standard-deviation market event in April, signaling a bear market rally, and introduces Hay’s new venture.

Economic Landscape and GDP Data:

• Negative GDP Growth:
• Q1 2025 real GDP declined by 0.3%, the first negative reading since 2022, worse than the consensus expectation of -0.2% (vs. 3% average growth in prior years).
• PCE price index rose 1.8%, with core PCE (ex-food) up 3.5%, indicating persistent inflation pressures.
• Hay views the decline as unsurprising but concerning, given artificial Q1 boosts from pre-tariff import surges. The negative growth despite this “sugar high” suggests underlying weakness.
• Tariff-Induced Supply Chain Issues:
• Pre-tariff buying (anticipating “Liberation Day” in April) drove import surges, inflating inventories but creating future risks. Container bookings from China to the U.S. fell 45% year-on-year, with ships leaving China 50-60% empty.
• An Apollo economist (quoted by CNBC) warns of “COVID-like shortages” and empty shelves in weeks, impacting consumers and firms reliant on Chinese intermediates. Hay deems this realistic, not alarmist, due to sharp export declines from China, a critical global supplier.
• Even if tariffs ease (e.g., Trump-Xi reconciliation), supply chain disruptions will persist, exacerbating shortages and inflation.
• Consumer and Economic Weakness:
• Credit card delinquencies and consumer loan charge-offs have broken out to multi-year highs (12-year range), signaling consumer stress predating tariffs. These macroeconomic breakouts mirror stock patterns, indicating significant deterioration.
• Manufacturing new orders vs. inventories show high inventories relative to declining orders, a bearish signal historically correlated with S&P 500 declines. The current rally hasn’t priced in a recession, only a “growth pause.”
• The ratio of leading to coincident indicators has fallen to levels seen only during major recessions (e.g., 1990, 2000, Great Recession, early 1980s), reinforcing recession risks.
• Recession Probability:
• Goldman Sachs raised its recession probability to 45%. Hay leans toward recession over slower growth, citing pre-tariff economic weakness and heightened uncertainty from Trump’s tariff flip-flopping (e.g., April 9-10 pivot).
• Uncertainty reduces business investment and consumer spending, amplifying recession risks. Hay estimates 80-90% recession odds before the tariff pivot, now slightly lower but still favoring contraction.

Market Outlook and Bear Market Rally:

• Bear Market Rally Characteristics:
• April’s three-standard-deviation volatility (occurring <1% of the time) is typical of bear markets, not bull markets. The current rally is a powerful but fleeting bear market rally, luring investors into thinking the downturn is over.
• Historical bear market rallies (e.g., 2000-2001, when the NASDAQ fell 78%) featured sharp gains (e.g., 7%+ daily moves), but declines resumed. The S&P 500’s current rally hasn’t factored in recession risks.
• Bull Case: Zweig Breadth Thrust:
• The Super Zweig Breadth Thrust Indicator (triggered last week, 7th since 1962) historically led to 20%+ S&P 500 returns within a year. However, some occurred in bear markets with further declines before rebounds, and today’s market is expensive (20x forward earnings) with optimistic estimates (+7-12% growth, likely flat).
• Hay suspects a 10-15% decline before any sustained rally, viewing downside risks as dominant.
• Market Sentiment:
• Early April’s Fear and Greed Index (extreme fear) and elevated VIX signaled a rally setup, which materialized. However, bear market rallies are deceptive, and Wall Street’s optimism (or desire to believe the bear market is over) is misguided.

Investment Strategies and Safe Havens:

• Safe Haven Assets:
• Treasuries: Disappointing in April (yields rose, dollar fell during stock declines), defying their safe-haven status. Hay prefers short-to-mid-term treasuries (3-7 years) over long-term, as recession fears could push long rates higher, a view shared by Jeff Gundlach and Neil Howe.
• Gold and Silver: Preferred anti-fragile assets. Gold broke out in 2024 (inflation-adjusted), but is extended and correcting. Gold miners lag but show 12-year breakout potential, with strong Q1 earnings expected (e.g., Newmont, Barrick, Eldorado, Alamos). Silver’s high short interest (SLV ETF) and recent breakout suggest catch-up potential, driven by military and solar demand (less recession-sensitive). Platinum and palladium are also attractive at low valuations.
• Uranium: A top pick, non-cyclical with strong demand (new nuclear facilities in Poland, China) and constrained supply. The SPRT Uranium ETF (SRUUF) trades at a 9% discount, offering a “layup” opportunity.
• Yen: Up 10% in 2025, expected to appreciate further (143 to 120 or 100 vs. dollar), a non-fragile asset correcting but with upside.
• Foreign Equities:
• U.S. equities lag global markets by the widest margin since 1993, supporting a “great rotation” from U.S. mega-cap tech (Magnificent 7) to cheaper foreign markets. Foreigners own $18 trillion in U.S. equities, but U.S. policies (trade deficit reduction, anti-foreign sentiment) may drive capital outflows, hurting the S&P and NASDAQ.
• Lower valuations and stimulus in other countries (e.g., military spending boom) make foreign equities attractive. Hay cites Canada’s election shift as evidence of global unease with U.S. policies.
• Infrastructure Play:
• Hay recommends CRH (aggregates company, listed in the U.S., 16x earnings vs. peers at 25-30x), citing Neil Howe’s infrastructure spending thesis. CRH’s 450% earnings growth over a decade and North American focus make it a compelling, under-the-radar pick.

Fourth Turning and Long-Term Outlook:

• Referencing Neil Howe’s Fourth Turning, Hay sees the U.S. in a crisis phase (cycles every 80 years), with economic and social turmoil consistent with bear markets, not bull markets. The U.S. faces risks from high deficits ($2 trillion, federal salaries up 14% y/y), trade policies, and declining global confidence in the dollar and rule of law.
• Debt-to-GDP (high, post-WWII levels) resolution likely requires inflation, as post-WWII (120% to 70% in seven years). This supports hard assets (gold, silver, uranium) over stocks.
• The Fourth Turning may last until the 2030s, with pain (recession, debt reduction) before a potential boom (First Turning). Spending cuts are needed, but political will is lacking (Doge movement stalled), making inflation more likely.

Fed Response and Stagflation Risks:

• Q1 GDP data reflects stagflation (negative growth, persistent inflation). Tariffs exacerbate this by raising prices and hurting margins, complicating Fed policy.
• The Fed is reluctant to ease due to inflation fears (2021 surge memory), Trump tensions, and soft data (e.g., consumer confidence) not yet matched by hard data (e.g., GDP). Significant easing requires stronger recession signals.
• Supply chain disruptions (COVID-like shortages) could reignite inflation, limiting Fed stimulus.

Haymaker Publications Announcement:

• Hay’s new venture offers four portfolios: two model ETF portfolios (Growth, Income) with specific buy recommendations, and two securities attract portfolios (individual stocks like CRH, for consideration). Free from Evergreen’s compliance constraints, Hay provides candid recommendations.
• The newsletter includes daily updates, Monday trade ideas, Friday macro pieces (often with guests), and focuses on income investments (e.g., Simplify MBS ETF, MTBA, 6% yield, low volatility). Subscription is affordable, with one good idea covering costs.

Conclusion and Takeaways:

• Q1’s negative GDP (-0.3%) and tariff-driven import surges mask deeper economic weakness, with recession risks rising (45% per Goldman, higher per Hay). The April bear market rally is deceptive, with downside risks dominant (10-15% S&P decline likely).
• Hard assets (gold, silver, uranium, platinum, palladium) and the yen are preferred over treasuries and U.S. equities, which face foreign capital outflows. Foreign equities and infrastructure (CRH) offer opportunities.
• The Fourth Turning frames a challenging decade, with inflation needed to address debt, supporting hard assets. Haymaker Publications provides actionable guidance for navigating this environment.

Tariffs, Taxes, and Tightening: Navigating Recession Risks and Asset Price Impacts in 2025

Trump’s Tariffs Just Buried the Silver Squeeze—Now the Real Shortage Begins | Lyn Alden (YouTube link)

Summary of Video: Economic Impacts of Tariffs, Tax Policy, and Monetary Dynamics on Recession Risks and Asset Prices

Introduction and Context:

• The video analyzes the economic implications of large-scale tariffs, counter-tariffs, and their interaction with tax policies, focusing on potential recession risks, business planning challenges, and inflationary pressures. It also discusses monetary policy, liquidity, and asset price correlations, with additional insights into Bitcoin and precious metals markets.

Key Points on Tariffs and Economic Risks:

• Tariffs as a Global Tax Increase:
• Large tariffs, especially if met with counter-tariffs, act as a significant global tax increase, raising costs for consumers and businesses.
• Without substantial tax reductions (e.g., income or corporate tax cuts proposed by the Trump administration), tariffs could dominate, increasing recession risks by reducing economic activity.
• Current uncertainty stems from tariffs being implemented before clarity on tax legislation, leaving businesses in limbo.
• Business Planning Challenges:
• Tariffs create frictions and inefficiencies by complicating international contracts and supply chain planning, countering the administration’s goal of reducing regulatory burdens.
• A broad 20%+ tariff on all imports would be a “meaningful tax increase,” significantly disrupting economic activity and increasing planning complexity.
• Supply Chain Relocation and Costs:
• Reshoring production (e.g., electronics from China) due to tariffs involves moving to higher-cost jurisdictions like the U.S., where healthcare and other costs (e.g., for manufacturing workers) are among the highest globally.
• Many industries (e.g., rare earth metals, energy-intensive or toxic production) are offshore due to cost advantages, and relocating them incurs significant time, cost, and complexity, potentially raising prices.
• Inflation vs. Administration Goals:
• Tariffs and reshoring conflict with the goal of reducing inflation, as they either tax foreign goods (raising prices) or shift production to higher-cost areas (also raising prices).
• Other anti-inflation measures (e.g., reducing regulations, ensuring energy supply) may help, but their effectiveness is limited by tariff-driven cost increases.
• Small, targeted tariffs are less inflationary, but large-scale tariffs (e.g., affecting trillions in industrial base) could have significant inflationary effects if implemented broadly.
• Globalization and Structural Disinflation:
• The past 30 years of globalization (post-NAFTA, China’s opening, Soviet Union collapse) connected cheap labor with Western capital, creating a structural disinflationary force by producing goods in low-cost regions.
• This benefited consumers, Wall Street, and governments but hurt U.S. industrial workers. Unwinding globalization through tariffs reverses this, introducing frictions and higher costs.
• Wage and Profit Margin Dynamics:
• Globalization increased corporate margins while suppressing wages due to global labor competition.
• Tariffs and reshoring could boost wages (a positive for workers), but costs are borne by consumers (higher prices) or companies (lower margins), depending on tariff specifics and substitution options.

Monetary Policy and Liquidity:

• Money Supply and Asset Prices:
• Broad money supply (M2) growth correlates with asset prices in the current environment. In 2022, both Fed quantitative tightening (QT) and Treasury actions drained liquidity, causing a poor year for assets.
• Post-2022, Treasury actions offset some Fed tightening, but ongoing QT suppresses M2 growth. Other factors (e.g., bank lending, fiscal deficits, buyer types) also influence M2.
• The 2010s saw steady M2 growth with market bumps (e.g., 2017 rate hikes), while the 1990s had low M2 growth but strong equities due to high monetary velocity and demographics.
• Fed Policy Outlook:
• The Fed has slowed QT (reduced Treasury runoff rates) and may pause or stop it by late 2025, as the $2 trillion reverse repo facility (down to $100 billion) can no longer offset tightening.
• Aggressive QT could strain the Treasury market, impacting other assets, likely prompting Fed backpedaling.
• Fiscal and Monetary Interplay:
• Loose fiscal policy (high deficits) is stimulatory, but tight Fed policy (QT, rate hikes) counters it. Their relative shifts significantly affect liquidity and asset prices.
• Without new liquidity sources, tighter policy would likely be negative for assets.

Bitcoin and Precious Metals Insights:

• Bitcoin:
• Regulatory certainty (e.g., spot Bitcoin ETF approval, Trump victory) has boosted corporate confidence in holding Bitcoin, reducing tail risks and supporting price increases.
• Liquidity hasn’t improved significantly post-election, but a better regulatory outlook drives rational price gains.
• A large U.S. Bitcoin purchase (or other central banks/sovereign funds accumulating) could significantly boost prices, while corporate adoption trends also matter.
• On-chain metrics (e.g., market cap vs. cost basis) are “middling,” not signaling euphoria or major tops, suggesting confidence for the next 18 months.
• Gold and Silver:
• Gold buying has shifted from foreign central banks and Chinese buyers to North American investors, supporting prices.
• Gold is the low-volatility precious metal for large entities (e.g., central banks), while silver, platinum, and miners attract high-volatility hard-money enthusiasts.
• Bitcoin competes more with silver and gold miners (high-volatility assets) than gold, as their buyer bases differ.

Recession and Economic Outlook:

• Large-scale tariffs without significant tax cuts increase recession odds by acting as a global tax hike, raising costs, and disrupting planning.
• Reshoring at scale introduces frictions and higher costs, potentially offsetting anti-inflation measures and challenging corporate margins or consumer prices.
• Monetary tightening (QT) and limited liquidity sources could pressure asset prices, though Fed easing (e.g., pausing QT) may mitigate this.
• The economy faces a delicate balance: tariffs aim to boost domestic wages and industry but risk inflation and inefficiency, while monetary and fiscal dynamics will shape asset market outcomes.

Dr. Hunt's 2025 Economic Outlook: Navigating Recession Risks Amid Tariffs, Debt, and Demographic Shifts

Dr. Lacy Hunt: The Five Recessionary Forces Creating an Economic Interregnum (YouTube link)

Summary of Dr. Hunt’s Interview on Economic Outlook and Five Convergent Forces in the above video.

Context and Introduction:

• The interview, recorded on May 2, 2025, coincides with the release of significant economic data, including jobs numbers and Dr. Hunt’s Q1 letter, which has garnered attention for its analysis of five economic forces impacting growth.
• Dr. Hunt, a macroeconomist, discusses the current economic "interregnum," a period of uncertainty and transition marked by multiple economic challenges.

Macroeconomic Overview:

Interregnum Explanation: The economy is in a state of limbo due to recent tariffs and a significant decline in federal spending for FY 2025.

Tariffs’ Impact:

• U.S. tariffs have prompted retaliatory actions globally, reminiscent of the 1920s-1930s trade wars.
• Tariff announcements led to a temporary economic boost as firms and consumers preemptively increased imports and purchases (e.g., automobiles, iPhones), causing a surge in Q1 imports and inventory accumulation.
• This demand surge temporarily supported global GDP and employment but is expected to fade, leaving the U.S. with excess inventory and a weakened consumer base.

Federal Spending Decline:

• FY 2025 federal spending is flat, a sharp contrast to the stimulus from October to January, effectively reducing real-term fiscal support.
• No significant tax policy offset is anticipated, complicating economic recovery.

Economic Frailty:

• The economy is weaker than perceived, with consumers in “wretched” financial shape.
• Beveridge Ratio: Job openings to unemployed ratio has fallen below pre-pandemic levels, signaling labor market tightening.
• Average Hourly Earnings: Wage growth slowed to 3.75% year-over-year in April 2025 from a 6% peak in 2022, indicating weak economic demand.
• Seasonal Adjustment Issues: Late Easter timing and gradual federal employment cuts (e.g., 200,000 jobs) add noise to economic data, obscuring true conditions.

Recession Prediction: Dr. Hunt forecasts a recession due to these combined pressures, with the economy appearing weaker once data noise clears.

Five Convergent Economic Factors Depressing Growth:

Tariffs:

• Microeconomic analysis: Tariffs shift the supply curve inward, raising prices but reducing quantity demanded and total revenues, particularly for price-elastic international goods.
• Historical parallel: 1920s-1930s trade wars (e.g., Smoot-Hawley Tariff, French devaluation) reduced global demand and triggered deflationary pressures.
• Tariffs are ultimately deflationary, not inflationary, as they reduce demand and revenues, impacting labor and capital demand.

Monetary Policy:

• M2 Trend: Real, trend-adjusted M2 growth over four years is negative, a rare signal (9th instance since 1914) of impending recession, exacerbated by the Fed’s failure to reverse money supply declines (as criticized by Friedman and Bernanke for the 1930s).
• Other Deposit Liabilities (ODL): Real ODL growth is negative, indicating restrictive monetary policy with a 3-4 year lead time to recession.
• Fed Critique: The Fed’s “data dependency” is flawed due to revisions and distortions (e.g., payroll data, birth-death model). Dr. Hunt recommends easing monetary policy to support recovery in 2026, but the Fed remains on hold due to inflation concerns.
• Forward Guidance Issues: Fed policies have shifted resources from real to financial assets, undermining long-term growth (per Spence and Walsh’s research).

Fiscal Policy:

• Declining federal spending and limited tax cut potency (due to high debt at 124% of GDP vs. 30% in 1981) restrict fiscal stimulus.
• Tax changes (e.g., making 2017 cuts permanent, tip exemptions) are unlikely to have quick or significant impacts.

Debt Overhang:

• U.S. gross debt is nearly 125% of GDP, surpassing WWII levels (120%) and the Reinhardt-Rogoff threshold (90%) for deleterious economic impact.
• Interest expenses are approaching defense spending levels, acting as a dead weight loss (30% paid to foreign debt holders).
• Historical economists (Hume, Smith, Ricardo, Fisher, Minsky) and modern research (Reinhardt-Rogoff, Hendrickson-Berg) confirm over-indebtedness depresses growth via diminishing returns and rising interest burdens.
• Without deficit reduction, debt could reach 150% of GDP in 25-30 years, per OMB and CBO projections.

Demographics:

• Declining birth rates (2023-2024 at historic lows) reflect economic pessimism among younger households, who delay family formation and major purchases due to financial insecurity.
• Low real per capita growth (1.2% vs. 2.3% historically) burdens modest-income households, reducing savings and aspirations.
• Immigration: Legal, opportunity-driven immigration is needed to offset demographic decline, but illegal immigration has strained public funds and added social costs (e.g., crime, trafficking).

Recession Outlook:

• Dr. Hunt confirms a recession is likely, describing it as a “long, difficult slog” due to slow-acting tax changes, persistent debt burdens, and unresolved tariff disputes.
• The focus on short-term data over long-term fundamentals exacerbates the challenges.

Potential Growth Engines:

• High-Tech Sector: Q1 2025 saw 69% annualized growth in AI and data centers, contributing significantly to GDP (2.4% ex-inventories/exports), but this pace is unsustainable.
• Aircraft Sector: Q1 growth (22%) was boosted by post-strike deliveries, but this is expected to reverse.
• Federal Spending: Likely to decline further in Q2-Q4 2025, with uncertain budgetary outcomes for 2026.
• No broad “panacea” exists, but resolving tariff disputes quickly and adopting expansionary monetary policy are critical for 2026 recovery.

Additional Points:

• Treasury Yields: Dr. Hunt predicts declining long-duration Treasury yields (10- and 30-year) in 2025-2026, driven by lower inflation (1.4% ex-shelter) and expected federal funds rate cuts, per the Fisher equation. Current yields (4.75-4.8%) exceed historical norms (3.5-3.9% based on inflation).
• Tariff Resolution: Dr. Hunt advocates resolving tariff disputes swiftly, ideally country-by-country, to reduce economic instability.
• Debt Focus: Emphasizes gross debt (not net) due to unfunded Social Security/Medicare liabilities, noting Europe’s even worse position.
• Policy Recommendations: Raise top tax rates to bend the deficit curve, reorient policy to support modest-income households, and shift Fed focus to long-term inflation over dual mandates.

Parting Thoughts:

• Rapid resolution of tariff disputes is critical to stabilize the economy.
• The Fed must adopt a more expansionary stance to enable recovery in 2026.
• Long-term focus is essential to address debt, demographics, and growth challenges, rather than short-term data fixation.

This summary captures Dr. Hunt’s detailed economic analysis, emphasizing the interplay of tariffs, monetary/fiscal policy, debt, and demographics in driving a likely recession, with specific recommendations for policy adjustments and cautious optimism for high-tech growth.