Mid-Week Macro (3/26/2025)
1) This is a quiet week as we wait for tariffs to go into effect next week on April 2nd. Trump announced 25% tariffs on all car imports today. As I have said, Trump is not bluffing on tariffs or using them to negotiate better trade deals. He wants to raise revenue to cut the budget. He’s playing with fire and is likely to cause a recession. The Atlanta Fed has GDP negative for Q1. We might already be in a recession. I don’t see any green shoots or any economic sectors that are healthy. The MAG7 are the LAG7 so far in 2025. Wall St is pretending that this is a healthy rotation, but it is actually foreign money leaving the MAG7 and not coming back.
2) The S&P dropped 10% to around 5535, and now has bounced 5% to 5712. I always thought this was a dead-cat bounce and then we would get a lower low in early April. Wall St was able to remain bullish with the S&P above 5500, but it won’t be so easy when we go below that level. I expect April to set the tone for the rest of the year on Wall St, and it won’t be pretty. It won’t be long now before we are at 5000 and down 20% (bear market).
3) As I have repeatedly said, the only data point that matters is the S&P 500. It is the elephant that will impact everything. Gold has been able to remain above $3000, but I don’t think that will hold for much longer. I expect a 5% to 8% correction in April, as the S&P pulls it down. My target is $2800 gold, $28 silver, and 280 HUI. It’s possible these levels are too low, and the key will be gold. If gold holds $2850 or $2900, then silver and the HUI will be higher. This will be a short-lived correction for gold. I expect a gold rally once gold finds a bottom and heads back above $3000, reaching new ATHs and likely blasting off.
4) March was the first shoe to drop, with the S&P correcting 10% from its ATH. April will be the second shoe to drop, and then May will be the final nail in the coffin for the 15-year bull market on Wall St. We have been waiting for the fear trade to ignite, and I expect it to arrive in early April. We have not had a fear trade in over a decade. Along with this fear trade will likely come a financial crisis larger than 2008. What will be the first Lehman-like event? Got Popcorn?