2/27/25 Live Trading Room Market Recap & Trades
"Good stuff Sam. I already punched out and counted my money." Client Brian
A Do Nothing Morning - Just Let It Fall
Literally what I said this morning as I reiterated my lower price targets for NVDA, QQQ, SPY/SPX etc …
“Just let it fall into EOD/EOM”
While most are focused on the Epstein Files getting released, which I expect to be a big nothing-burger of redacted pages to protect the innocent & guilty (I HOPE I’M WRONG), few are focused on the Trump, China & NVDA relationship (which bears watching).
8:46 AM EET: Trump proclaims “China will likewise be charged an additional 10% Tariff on that date” - meaning in addition to the 25% tariffs effective March 4th (next Tuesday) on Canada and Mexico.
I reviewed this Trump post live in my room: USD mini bounces with Oil. Gold dumps - a recent new rec'd trade for clients. And yields continue into my 4.2% PT as equities digest NVDA earnings before moving lower into stated targets by EOD Friday. “You’ll know because VIX will get/stay > 19.29.”
And then, at 1:06 PM today, Trump doubled down:
And by 2PM, VIX woke up.
Let’s talk about the timing…
Was The Trump backlash in response to the pushback by China last night?
China warns that U.S. proposal to levy port fees on Chinese ships could backfire
“If the United States insists on imposing port fees, He said, it will drive up global shipping costs and disrupt the stability of global supply chains.
Such measures would also increase domestic inflationary pressures in the United States, weaken the global competitiveness of U.S. goods, and harm U.S. consumers and businesses”
Nah, I have another idea…
Let’s Talk About That Gold Short
1. As I warned clients last week, in the short-term, Gold is extended & due a retest lower - ESPECIALLY on the "Trump Trade: Peace" theme.
2. Bigger picture, my GOLD:CPI ratio intonates stagflation: entrenched inflation - even with expected slowing economic growth. This indicator, on a monthly, is also extended and due a retest lower. Translation: we are in the throes of a deflationary impulse from falling oil, yields, and equities, that can spill over to more commodities.
3. Problem is: as commodities roll over, so too will credit.
That doesn’t mean gold is a trend short, just a trade short. From the macro perspective: GOLD IS STILL A TREND LONG
The debt to GDP will increase under the new budget - as per the oxymoron that is the Committee for a Responsible Federal Budget.
China & other BRICS nations will continue to discharge their USDs for Gold.
Similarly, the petrol-dollar has peaked, and this is before global ground transportation, which accounts for 50% of oil consumption, migrates to EVs. This will further move countries away from holding USD.
Last resort stuff also applies: When credit freezes, and trade deficits cease to serve as way to balance trade, that leaves Gold.
Oil’s Intervention Collar
As WTIC was pushing $73 last Thursday, clients know I expected a dump in crude oil to accompany a dump in yields & equities. As it approached $68.50 support this morning, Trump intervened by threatening to cut off Maduro of Venezuela. Bob under #bobs-oil-and-gas refers to this kind of policy intervention just before oil is about to crash lower as the ‘INTERVENTION COLLAR’. In that way, it stays range-bound for both US players & ‘friendlies’ abroad.
Still, I believe these talk-tough tactics will show diminishing rate of return moving forward. I will explain in a bigger deep-dive in another post. Long story short, I still see WTIC breaking $65.65 with overshoot to $62 on the next deflation impulse.
Commodities Lead Credit & Credit Leads Equities
I went from gold to oil to now credit spreads? Yup, because they are related.
Geoffrey highlighted a Gundlach interview of late where he reminded:
CAPE at mid 30s very very high on Stocks
Credit Spreads very very low.
