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Market Update
Markets are starting to price in no more rate cuts.
USD strengthening on hawkish Fed expectations
When markets are coming down always look at relative pairs between assets to see what is outperforming or under performing.
After TRUMP coin focus on Bitcoin and Solana.
Japanese interest rates are going straight up (a global risk)
On Dec 30th we wrote how our favorite investors, Rick Reider and Stanley Druckenmiller, are concerned about failed long-end auctions causing panic in the market. Keep an eye out.
Canada's Hidden AI Advantage: While investors focus on Northwest Passage shipping routes, Canada's strategic asset lies in its massive hydroelectric capacity - the world's third-largest at 82 GW. Article Here
Watch: AMD, ARM, META, NVDA, TSLA, XOM, JCI, BTC.
Stay away from quantum stocks.
We want to reiterate our 3 MAJOR THEMES IN 2025
Underestimated AI Impact: AI's impact over the next 3-4 years is vastly underestimated. This isn't a bubble but a fundamental economic shift, requiring massive infrastructure investment comparable to the Industrial Revolution.
Rethinking Traditional Investment Approach: Traditional investment approaches (like 60/40 portfolios) are no longer effective. Focus should shift to thematic investing and company-specific opportunities, particularly in U.S. markets, as AI influence expands beyond tech.
Higher Interest Rates, USD and Inflation: Expect sustained higher interest rates and inflation, driven by deregulation, tax policies, and tech innovation. U.S. economy remains resilient with broad earnings growth, while global economic fragmentation continues.
This is an important indicator. % of S&P 500 above 50ma. Typically shows at tactical lows.
USD is foreshadowing higher than expected rates.
META will continue to outperform Apple. Compelling L/S pair.
AMD has been hated but we are still true believers in Lisa Su.
Great chart on interest rate projections.
Important chart on equity and bond correlations flipping above 5%.
Japanese yields are straight up (a global risk)
ARM: Starting to perform again. LLMs will slowly move from the cloud to direct personal devices (Digits by Nvidia).
Bitcoin higher.
Illiquid markets (Pokemon & Magic the Gathering) are ripping higher.
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THE IMPORTANCE OF MACRO: It is extremely important to learn and understand global macro. Majority of a stock’s movement can be explained by the “big-picture” story, while company-specific movements only account for a fraction of their move. Most sheep investors on Wall Street (CFA) are trained with a bottom-up mindset which can lead to a lot of confusion when macro forces take over markets.
Return always wants its risk payment.
NOT INVESTMENT ADVICE. Only for entertainment.
