Making Hay Monday – March 10th, 2025
Making Hay Monday
Commodities and COPS
Rosenberg, BWD
It’s simply stating a fact that the majority of U.S. employment growth in recent years has come from government and government-related sources. To say that is at-risk of reversing is putting it very mildly. What has been a major economic tailwind is nearly certain to become a gale-force headwind. In the private sector, both corporate and personal bankruptcies are surging, as are layoffs. Overall job cuts are now approaching 2009 levels, with the trend straight up. Accordingly, the odds of a recession, one that has long been delayed by astronomical amounts of federal government spending, are increasing on a daily basis. Yet, the Wall Street consensus remains convinced the risks of the next downturn are negligible. The stock market, however, is increasingly pricing in that potential.
Note: In the above chart, the top (light blue) line is the German stock market (DAX), the next (red line) is the Hang Seng Index (Hong Kong, the third (orange line) is gold, the fourth (purple line) is the French stock market (CAC), the bottom three lines are the U.S. Dollar, the S&P 500 and the Nasdaq, though for the latter prices are down sharply again today.
Sourced via Luke Gromen
When Donald Trump was re-elected, the assumption was this was highly bullish for the U.S. equity market. Initially, that was the case. However, as of today, the S&P 500 is below where it was trading on Election Day, as is the once-unstoppable NASDAQ. From their mid-February highs, the two primary U.S. indexes are lower by 8% and 13%, respectively. This may have serious economic consequences.
As the venerable Canadian economist and market strategist David Rosenberg wrote this morning:
Wealthy Consumers Holding Up the Economy: Consumption is now dominated by the richest 10% of Americans who make up nearly half the spending pie and own half the stock market, worth $23 trillion. We have already lost the low-end consumer and the middle-class so if the stock market causes the high-end to pull back, we will be in for the mother of all consumer-led recessions.
The good news is that for those who did diversify overseas, and have also been well-exposed to precious metals, this year is off to a strong start. Further, the Japanese yen has been rising in 2025, as have silver and platinum, with palladium roughly unchanged. In other words, this is a year when the long-derided core investment principle of diversification has been extremely beneficial. This is in contrast to crowding into the mega-cap tech stocks, which millions of investors, both here and abroad, have engaged in for years, especially the last two.
“Despite elevated levels of uncertainty, the U.S. economy continues to be in a good place.” -Jay Powell on Friday, March 7th
“Allow us to state this as bluntly as we can: Government spending and rising stock prices effectively ARE the US economy…and now the Trump administration is reducing both.” -Luke Gromen in his March 7th , Forest for the Trees newsletter.
“The knee-jerk selloff in uranium miners, natural gas producers, and nuclear utilities was not just an overreaction—it was a misreading of the core drivers of future energy demand. As Jevons’ Paradox takes hold in the AI industry, energy consumption will surge, not decline. Investors who recognize this now have a significant buying opportunity in the very sectors that will be essential to meeting AI’s growing power needs.” -From the recent Goehring & Rozencwajg Commentary (re: the DeepSeek sell-off)
Is the Bottom In?
Shutterstock
That question is almost as hazardous in the financial game as are those ultra-dangerous words: “This time is different.” To that point, there are some with a scatological inclination who might say the only thing you get from picking bottoms is a stinky finger. With those as caveats, that’s exactly what I’m going to try to do… with an important qualification.
The asset in question is uranium. As many of you know, we put out a Trading Alert buy on the leading uranium ETF last week when it was trading around $14. It’s still bouncing around that level, one that has been a bitter disappointment to uranium bulls…
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