Mid-Week Macro (1/29/2025)

Mid-Week Macro

1) The news this week was DeepSeek, an AI application from China that caused NVIDIA to crash on Monday but has since recovered to $123. The S&P 500 has recovered and closed today at 6039. Also, there was a Fed meeting, but everyone knew the outcome, which was non-cut and a more hawkish Fed. I remain bullish the S&P 500 in the near term and expect to see at least 6200 in February. Gold will follow then S&P, and silver will follow gold.

2) Gold and silver are up a bit on the week, with gold closing today at $2759 and silver at $30.83. The HUI is at 303, and continues to lag. I expect gold/silver/miners to all rally a bit from here as the S&P goes higher. But I think it is a fake-out and not a breakout. I expect lower lows for gold/silver/miners in 2025. My 2025 low targets remain $2350 to $2450 gold, $26 to $27 silver, and 245 to 265 HUI.

3) Trump will add tariffs in February, and we will see how the markets react in March. A trade war is never good, and that is what we are about to experience. Trump could add tariffs to Mexico, Canada, Europe, and more tariffs to China. It's going to be interesting. That could be the trigger that ends this melt-up in stocks.

4) If the tariffs don't end the bull market in stocks, then I expect exhaustion to do the trick once the S&P reaches a level that is no longer tenable. What is that level? It's hard to predict, but I don't expect to reach 6500. One thing is clear: the economy continues to weaken. New hiring has slowed significantly, and quits have also fallen. Both are a clear sign that the job market is weakening. And Trump just announced that he is offering an 8-month severance package to the largest workforce in the US (government employees) if they quit. Thus, the workforce is about to shrink.