Mid-Week Macro (7/30/2025)
The S&P 500 remains near an ATH, closing today at 6362. Gold has outperformed the S&P 500 this year, but they remain somewhat tied at the hip. Gold was down today ($3293) because the dollar jumped to 99.7. That is a big jump from its recent cycle low 96.3. Silver also got clobbered today, down to $37.01. The miners (HUI) closed at 424. That is down 6% from a recent high at 452. It should be mentioned that Trump made refined copper exempt from the 50% copper tariff. That is the biggest copper import. Copper crashed more than $1,which will impact the miners. Ouch. We import 50% of our copper. The recent $1 price jump clearly got someone's attention.
The economy continues to weaken. Starbucks is a clear indicator of consumer cost-of-living pressure. Their sales are down. Retail and restaurants continue to complain about lackluster business. College graduates are having a hard time landing a job. Professionals are also having a hard time replacing their jobs after layoffs. The jobs market is getting weaker. GDP growth is misleading and only positive because of a $2T budget deficit that is counted as part of GDP. That high government spending is acting as QE and creating liquidity. Meanwhile, high interest rates are impacting industries such as housing and autos. Those high rates are also creating delinquency rates on car loans, credit cards, and apartment rents at recession levels.
Wall Street is pretending that all is well and only focuses on data that makes their industry look positive (GDP, unemployment, and overall earnings). Meanwhile, the US economy is playing a game of Jenga, with one block after another being pulled out. It won’t be long now before it all comes tumbling down. And when it falls, the Fed will have a mess on their hands. The US economy has already hit the iceberg. All we are doing now is rearranging the chairs and pretending that all is well. Trump's tariffs are much higher (an average of around 15%) than Wall Street wants, but everyone is in denial that they will impact the economy. The tariffs are the pin that will pop the everything bubble.
If you study economic history, then you will know that empires end and global reserve currencies end. You will also know the signs when those outcomes occur. The biggest sign is debt, and the second is economic decline. The third is perhaps the most important, which is foreign policy failures. Not only are all three apparent today for the US, but the third is highly apparent. With Trump’s tariff tirade, he is putting the US into the crosshairs of a global rebellion. The rest of the world is not happy and is ready to hurt the US. If you are paying attention, you realize this will not end well for the US. We have ostracized all of our allies. We have set ourselves up to fail.