Mid-Week Macro (3/12/2025)
Mid-Week Macro
1) The S&P 500 has been selling off. It is down almost 10% from its ATH, closing today at 5599. The reason for the sell-off is obvious. Tariffs were implemented against Canada and Mexico, and Trump is planning to roll out additional tariffs against both countries on April 2nd. Additionally, he is supposed to impose reciprocal tariffs against Europe, Asia, and the rest of the world on April 2nd. Some think he is bluffing or using this as a negotiation tactic. I disagree and think he will use them to shore up the massive budget deficit and to reverse globalism using aggressive unilateral tactics (with no patience for drawn-out negotiations). I think he is playing with fire, and April will bring a second leg down to this sell-off on Wall St.
2) I’ve been very pessimistic regarding the potential for a soft landing. My thesis is that we will get a recession, and it will be severe, lasting several years. I think the recession has already begun, and the tariffs triggered it. I do not expect another ATH on the S&P. We will get a dead cat bounce, perhaps above 5800, but not much more. This bounce will likely be followed by a lower low, and then we will begin a rinse and repeat cycle of lower highs and lower lows as the recession appears.
3) Gold has been stronger than I anticipated, closing today at $2936 (spot). Silver ($33.20) and the HUI (330) decided to follow gold this week and have been fairly strong. The S&P is down nearly 10% from its ATH, and gold is not down nearly that much. Thus, gold is leading. Why? It’s clearly not inflation, and I never thought inflation was driving this gold bull market. Gold is sniffing out a recession and knows that the everything bubble is about to pop. I do expect gold to get sucked down at some point, but perhaps $2800 could hold. I doubt that we will see $2600, but $2700 is in play, which is less than a 10% correction.
4) I’m uber bullish gold (and silver) for 2025. Once the fear trade appears (Wall St currently remains bullish), gold is going to be the go-to asset. It’s likely going to rip to at least $3200 and potentially $3400 by year-end. Silver should rip to $45, and then potentially all the way $65 this year. That may seem too bullish, but once above $50, it could get a bit crazy. $68 is the inflation-adjusted high for 2011.