April 3, 2025
What You Need to Know Today:
Another day, another tariff “plan”
On Sunday, President Donald Trump told reporters on Air Force One that he plans to impose 25% tariffs on all U.S. imports of steel and aluminum. Trump said the tariffs would apply to shipments from all countries, including major suppliers Mexico and Canada. No word yet on Monday as of 11 a.m. New York time on when the duties would take effect.
“Drill, baby, drill”? OPEC doesn’t think so
Oil edged lower–West Texas Intermediate closed down 0.06% and Brent ended 0.08% lower–after OPEC+ announced plans to defer supply increases for three months, but still add barrels starting in April to a market that’s expected to be oversupplied. The Organization of the Petroleum Exporting Countries and its allies agreed to delay their planned output hike.
Peak gasoline demand is near (or maybe even here) in China
The forecasts don’t totally agree on the date but they do agree on the trend: Because China’s sales of electric vehicles and hybrids accounted for more than half of retail passenger vehicle sales in the four months from July, the country’s demand for gasoline is near a peak. And unlike in the U.S. and Europe where peaks in consumption were followed by long plateaus, the drop in demand in the world’s top crude importer is expected to be more pronounced. Brokerage CITIC Futures sees Chinese gasoline consumption dropping by 4% to 5% a year through 2030. The
International Energy Agency says demand peaked in 2024 and forecasts a 2.3% decline in 2025.
When does that U.S.-China tech trade war arrive? Right about now
Yesterday, Tuesday, December 3, China retaliated to a new round of U.S. technology restrictions from the Biden Administration with a ban on exports of high-tech minerals gallium, germanium, and antimony. Beijing will also place tighter controls on sales of graphite. On Monday the White House slapped new restrictions on the sale of high-bandwidth memory chips made by U.S. and foreign companies to China. The measures blacklisted 140 additional Chinese entities with a focus on companies that produce chip manufacturing equipment that’s crucial to China’s pursuit of semiconductor self-sufficiency. The metals targeted in China’s export ban are used in everything from semiconductors to satellites and night-vision goggles.
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
I the Big Event to be Friday morning’s report of the November jobs numbers. The Dow Jones Industrial Average rose more than 2% last week. The Nasdaq Composite and the Standard & Poor’s 500 rose more than 1%. Both the S&P 500 and Dow Jones ended November at all-time highs. A ”good” jobs report, which is likely, will keep the records coming for at least another week–until the usual Fed meeting jitters set in on the run up to the central bank’s meeting on December 18.
Adding Berkshire Hathaway as Pick #9 in my Special Report “10 New Stock Ideas for an Old Rally”
Today I added Berkshire Hathaway (BRK-B) as Pick #9 in my Special Report “10 New Ideas for an Old Rally.” Here’s what I wrote in that Special Report.
Special Report: 10 Great Growth Stocks that Are Getting Greater–today my 9th pick PANW
GREATER Growth Stock Pick #9: Palo Alto Networks (PANW). I’m not going to try to convince you that shares of cyber-security favorite Palo Alto Networks are a value stock. It trades at 166 times trialing 12-month earnings per share. And I’m not going to try to convince you that this is an undiscovered stock that’s going to sneak up on anyone. The shares was up 111% in 2023. (The stock has been a member of my long-term 50 Stocks Portfolio since July 17, 2019. In that time the position is up 296%.) But remember the point of this Special Report–I’m looking for great growth stocks, which aren’t cheap in this market by any means, with catalysts in the next year or two that will push growth higher. And here I think Palo Alto Systems rings the bell three times over.
Live Market Report (20 minute delay)
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
I’m hoping for some clarity this week on the market trend after Friday’s wild day. Friday’s intraday moves summed up the uncertainty about the direction of this market.
Exxon Mobil in talks to acquire Pioneer Natural Resources for $60 billion–I’m selling my position on Monday
The Wall Street Journal has reported that Exxon Mobil (XOM) is in advanced talks to buy Pioneer Natural Resources (PXD) in a deal valued at $60 billion. Pioneer currently has a market cap of $55 billion. Through in th debt that Exxon would be buying and there’s not a lot of extra upside here, in my opinion. Today’s 10.45% jump in pioneer shares to care of a lot of any potential deal premium. (I’m assuming that the report is accurate. Today’s news story follows on earlier speculation that the two companies were talking.) Unless you think another bidder will emerge–difficult but not impossible at this deal size, I’d sell my shares here. I like Pioneer as an independent big dividend paye
Ya can wrap fish in that ADP report showing a slowing jobs market
The U.S. economy added 336,000 jobs in September, the Bureau of Labor Statistics reported today, October 6. The unemployment rate held 3.8%. Economists surveyed Bloomberg had expected to see continued slowing growth in the labor market—-with forecasts of 170,000 jobs created, down from 187,000 in August. On Wednesday the ADP Research Institute reported that private payrolls rose by just 89,000 jobs in September. That was the fewest jobs added in a month since the start of 2021 and added to expectations of a weak report this morning.
So how high will yields go? I’m hearing 6% or even 7%
Today the yield on the 10-year Treasury closed at 4.71%. That was down 2 basis points on the day but in the year the yield is up 96y basis points. Almost a full percentage point. How high can yields go? Bond traders and investors want to know. Investors in other financial assets, stocks, for instance want to know. The Federal Reserve, which is supposed to set interest rates but is increasingly a sideline spectator on rates, wants to know.
The oil slump continues with WTI crude dropping below its 50-day moving average
So suddenly oil traders are worried about slowing global growth? Remember that just last week, these same folks bid oil up to near $100 a barrel after Saudi Arabia and Russia announced that they would extend curbs on production. My take on all this: Nobody knows and the traders driving these moves don’t have much conviction in their buys or sells. Which means that any move in either direction is likely to be followed by a strong move in the opposite direction.
Count on another shutdown “emergency” and another temporary spending “fix”
Here’s the math that leads me to believe we’re headed to a new show down crisis when the temporary fix that keeps the government open until November 17 runs out.
The bond plunge (and soaring yields) isn’t limited to the United States
Yesterday, October 3, the yield on the 30-year U.S. Treasury hit 5% for the first time since 2007. The yield on the German 10-year bond hit 3% for the first time since 2011. In one financial market after another higher U.S. yields are driving global bond prices lower and bond yields higher.
Good news for inflation, interest rates, the Fed in today’s ADP jobs number if we can believe it
Private payrolls rose by just 89,000 jobs in September, according to figures published today by the ADP Research Institute. That’s the fewest jobs added in a month since the start of 2021. Private payrolls climbed 180,000 in August. The results trailed all estimates in a Bloomberg survey of economists. The report is more evidence of a further slowing in the labor market. “We are seeing a steepening decline in jobs this month,” Nela Richardson, ADP’s chief economist, said in a statement. “Additionally, we are seeing a steady decline in wages in the past 12 months.” Both trends would be good news for the Federal Reserve in its fight to lower inflation. And would be positives for a financial market which has seen bond yields rise and stock prices stagnate recently in fears that inflation might be staging a come back. Good news–if, that is, the ADP numbers can be believed.
My VIX Call Options are up 38% since September 25–hold ’em
The VIX, the CBOE S&P 500 Volatility Index, climbed another 12.32% today, October 2, to 19.78. The Call Options–with a strike at 17 and an expiration on December 20–I bought on the VIX on September 25 are up 38% as of the close on October 2. (I hold them in my Volatility Portfolio.) I’m inclined to hold them a bit longer because:
The yield on the 10-year Treasury jumped another 13 basis points today, October 3
Where did the slow-moving, deep and placid Treasury market go? The yield on the 10-year benchmark Treasury–you know the one used to set the interest rate on things like mortgages–moved up another 13 basis points today, October 3, to 4.80%. That’s a jump to 24 basis points in just two days. The Treasury market just doesn’t move like this. The yield on the 10-year Treasury is now up 63 basis points in the last month.
The yields keep rising
Despite the Wall Street consensus that there won’t be an interest rate increase at the Federal Reserve’s November 1 meeting, Treasury yields keep climbing. The yield on the 10-year Treasury closed at 4.68% today, October 2.
I’ll be selling Nvidia out of my Volatility Portfolio tomorrow
I’m going to take advantage of today’s pop in Nvidia (NVDA) to sell the shares out of my very short-term Volatility Portfolio tomorrow, Tuesday, October 2. The shares closed up at the close today at $447.82, a gain of 2.95% on the day. I initiated the position in the Volatily Portfolio on Mach 25, 2023. It was up 66% as of the close today So why sell Nvidia here?
And don’t forget Friday’s jobs report for September
The September jobs report is expected to show that the U.S. economy added 168,000 nonfarm payroll jobs in September with the unemployment rate dropping to 3.7%.
Could be a rocky day for Tesla shares tomorrow, Monday.
It could be a rough day ahead for Tesla (TSLA).The company has broken four quarterly car delivery records in a row, but then the results for the current quarter–which could be announced as early as Monday, Ocroer 2, are likely to show that deliveries have slipped. Not seriously. But when a stock is trading at 70 times tailing 12 month earnings per share in a nervous market, a stumble is all it takes to send a share price down. And this nervous market doesn’t need bad news from one of its leaders.
Saturday Night Quarterback (on a Sunday) says, For the week ahead, expect…
Kicking the shutdown 45 days down the road doesn’t change a single vote in Congress. The question remains exactly what it was before Saturday’s vote–Will McCarthy–or whoever is Speaker–use Democratic votes to pass legislation to fund the operations of the Federal government? Anything that increases the chances the Congress will return to its pre-vote chaos–or worse–will be a negative for financial markets. Anything that points to a full fiscal year budget based on a willingness to use Democratic votes in the House to pass a full fiscal year budget will be a positive for financial markets.
Consumer showing signs of stress in August
Inflation-adjusted consumer spending rose 0.1% last month. The report from the Bureau of Economic Analysis showed inflation-adjusted spending on services rose 0.2%, helped by a pickup in outlays on transportation and recreation. Spending on merchandise fell 0.2%, the first drop since March, as purchases of motor vehicles and home furnishings declined. While wages and salaries growth accelerated, real disposable income declined by 0.2% for a second month.
Low inflation in Fed’s favorite indicator says No interest rate increase at November 1 meeting
The Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures index (PCE) rose at the slowest monthly pace inAugust since late 2020. The core personal consumption expenditures price index, which strips out food and energy prices, climbed just 0.1% month to month in August, according to the Bureau of Economic Analysis today, Friday, September 29. The so-called super core inflation index for services, which has been on the Fed’s watch list lately, also posted the smallest monthly advance since 2020. The super core rate also strips out housing costs. That rate climbed by just 0.1% in August.
Looking for signs of weakness in consumer spending? Did we just get one?
Consumer spending, which accounts for about 70% of U.S. economic activity, rose an annualized 0.8% in the April-to-June quarter, according to the third estimate of gross domestic product from the Bureau of Economic Analysis. The last estimate put the annualized growth rate at 1.7%.
Mortgage rates hit a 23-year high–is this the peak? (Probably not)
Mortgage rates surged to a 23-year high this week. The rate on the average 30-year fixed mortgage increased to 7.31% from 7.19% the week prior, according to Freddie Mac. That’s the highest rate since mid-December 2000, when it averaged 7.42%.
I just added moves 5,6, and 7 to Part 2 of my Special Report: Your 10 Best Moves for the Rest of 2023
I added three more moves to the four that I’d posted yesterday to bring the total moves in Part 2 of my Special Report up to 7.
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