Mid-Week Macro (2/5/2025)

Mid-Week Macro

1) Trump put tariffs on Canada, Mexico, and China over the weekend, then paused them for 30 days for Canada and Mexico after a phone call. Markets were down until the tariff pause went into effect. I don't think Trump is done with tariffs. He wants to use them to generate revenue to offset the massive budget deficit. The S&P 500 closed today above 6000. I remain bullish for the S&P 500 for February and expect to see 6200 or 6300 by the end of the month. However, this bullishness is only because of the Trump honeymoon. Once it ends, I'm expecting a crash on Wall St.

2) Gold hit an ATH today, closing at 2869 for spot. Rumors are that the LBMA is out of gold, and lease rates spiked to 5% today. Normally, lease rates are close to 0%. Gold appears to be heading for $3000 in February. Will silver (currently at $32.33) and the HUI (currently at 330) join the party? I doubt it. I think this is a fake-out and not a breakout, but I want to be wrong. I'm expecting a stock market crash, and when that happens, it won't be easy for gold/silver/miners to fade that crash completely. Best case, they will have a small correction.

3) I could be wrong, but I think the macro picture for the US economy is awful. What sector is growing? Tech? Five of the MAG7 are down for the year. Without MAG7 leadership, how does the stock market get much higher than 6300 or 6500 before crashing? Other than Tech, you can't name a sector that is healthy. Most sectors feel like a recession. How does that get fixed with lingering inflation and high interest rates? The economy needs some type of reset, and that can only happen with a recession, which I think is inevitable. We have weeks or months before the selling begins. I expect it to be worse than 2008 because the Fed is out of moves. If they try rate cuts or QE, that will just create more inflation, expand the debt bubble, and weaken the bond market. Got Gold?