The content creators whose work is summarized below continue to evaluate market, investor, national, and consumer reactions to Trump Administration policies. Things are moving very fast, and Trump policies vary from day to day, so long-term predictions are difficult. However, stress in the markets and in the minds of consumers are real. Recession is possible. So are either partial or nearly complete success of Trump’s economic reset. You won’t find any crystal ball predictions here, but you will find deep and pertinent analysis of economics and markets.
Key Takeaways:
- A highly regarded friend for individual investors
- How long can typical reactions occur in atypical times?
- American’s economy teeters on the edge, but hasn’t fallen
- The dollar channels Hamlet: to be strong or not to be strong
The McAlvany Weekly Commentary: Eliminating Emotional Investment Mistakes with Process
This week’s program is a key one for independent investors. McAlvany Precious Metals has partnered with Hedgeye Risk Management, a unique investment advisory service that not only gives wealth-enhancing advice on when to buy equities, but crucially (and unusually) tells you when to get out of those investments. David interviews Hedgeye’s founder and CEO, Keith McCullough, and emphasizes the reasons he feels strongly about partnering with Hedgeye. “Your process begins with hard work and discipline. It’s driven by a team of capable analysts, and it’s really a risk management protocol. [It strongly emphasizes] the importance of a repeatable process and the significance of humility.” In short, Hedgeye employs “top-down macro analysis combined with bottom-up fundamental research, with an overlay of proprietary risk management signals.” Keith describes how he came to develop Hedgeye and what makes it different. He uses a system that likens investment cycles to a sine curve that has four quadrants, or quads. Knowing where an investment is in its cycle is key to both making money and not losing money. The interview is unique in the shared commitment of both CEOs to objectivity and process in an attempt to avoid emotional or herd-based investment decisions.
Credit Bubble Bulletin: The Typical and Atypical
Doug describes the recent ebb and flow in the markets in some detail, noting that everything has proceeded in a somewhat normal way. But he notes that the situation is too unusual to extrapolate normal dynamics very far into the future. He describes the Trump administration’s current mode as “crisis,” with often contradictory decisions coming fast and furious depending on what the markets are doing. And he also notes several challenges to any kind of continued normal market dynamics: “At some point, today’s ‘typical’ market recovery will have to contend with a list of quite atypical risks. Ten-year Treasury yields rose seven bps this week to 4.31%. Yields traded down to 4.00% on April 4th, only to then spike 49 bps the following week. Another upside yield surprise is a reasonable bet. A continuing stock market rally would become a growing bond market worry. Meanwhile, tariff-related price increases and supply chain issues loom large. The environment is certainly conducive to inflation. Q1’s GDP Price Index jumped to 3.7% (from Q4’s 2.3%), while Core PCE rose to 3.5% (from 2.6%) during the quarter. I also ponder festering liquidity issues.”
Hard Asset Insights: The Uncertainty Variable
As his title suggests, Morgan focuses this week on the uncertainty in markets arising from President Trump’s Hail Mary attempt to refloat a sinking ship. When it comes to those efforts in toto, they could work or not. Or they could work in large part or small. Of such an iffy situation, Morgan notes that, “uncertainty and volatility tend toward a freezing up of risk-taking, which translates to a slowing risk-off posture in the economy broadly.” In such an environment, recession is a possibility, though not a certainty. It’s clear that the Trump administration is employing a mix of strong policy moves and conciliatory countermoves when things get dicey—two steps forward, one step back (or one, forward; two, back, as the case may be). Planning major projects in such an environment is challenging in the extreme. As Morgan puts it, “in a world of profound uncertainty in the short term, HAI is just speculating on potential outcomes that could span from deflationary crash to inflationary crack-up boom.” That’s a big span, and Morgan continues to emphasize that only one investment covers the alternatives adequately.
Golden Rule Radio: Dollar Index at a Crossroads
Miles weekly chart recap of the metals shows them even or down slightly across the board. The S&P is up slightly and the dollar down slightly. The hosts then discuss the possibility of recession in the US, citing a somewhat stronger certainty that one will occur than is stated in the publications summarized above. To support their contention, they look at consumer sentiment indicators, which are way down, and airline business, which is also down significantly. Tory advises listeners to pair sentiment with reality, and asks if the 100:1 gold:silver ratio and the 100 level on the dollar index are meaningful. Miles responds in detail that the dollar is likely to experience resistance going above 100 again. Rob takes the conversation from there and believes the dollar will do just fine. America is leading the world, for better or for worse. And he emphasizes that the only alternative to the dollar worldwide is gold, not any other fiat currency. Tory returns to the topic of consumer sentiment, and wonders if it’s a bit overdone, giving some reasons for hope going forward. Part of such reason for hope is in key commodities such as copper, oil, and natural gas, which have all come down in price.
