Mr GG,
The $MOVE is the volatility index for the Bond market. Up = more volatile, down less volatile.
Politics:
The outgoing Biden administration has pointed to its investments in U.S. manufacturing as signature economic achievements. One big question now is how much of that the new Trump administration will change or scrap.
- As it happens, an 11-month-old paper offers a preview.
Why it matters: The man tapped to be President-elect Trump‘s top White House economist published a detailed critique of President Biden’s industrial policies last February. It offers a sense of the strategies for reindustrializing the U.S. economy sought by those with the president-elect’s ear.
- Stephen Miran, Trump’s designee to chair the Council of Economic Advisers, argued that industrial policy should focus on supply-side reforms that make it easier for companies to invest in factories, and be driven by demand from the defense industry.
- He is critical of heavy subsidies for electric cars and labor, environmental, and other regulations that, in Miran’s view, make the U.S. too inhospitable to manufacturing.
What they’re saying: “Bidenomics not only imposes onerous costs on industry in various ways — from incentives for unionization to special environmental restrictions — that raise the cost of production and work against the stated goal of expanding our industrial plant,” Miran wrote for the Manhattan Institute, where he is an adjunct fellow.
- “[It] does so while targeting sectors of the economy for which there would be very little demand, absent government support to artificially lower prices,” he adds.
- “A more robust form of reindustrialization would instead combine aggressive supply-side reform with demand support from defense-driven procurement,” he wrote, “which would produce enormous positive economic spillovers.”
Zoom in: Among other specific policies he critiques as counterproductive are EPA rules governing chipmakers, the Davis-Bacon Act (which includes wage requirements for public projects) and Occupational Safety and Health Administration rules on worker safety that he argues go overboard.
Flashback: Biden has made revitalizing U.S. manufacturing central to his domestic agenda — and his political identity.
- His signature legislation — the Inflation Reduction Act, Bipartisan Infrastructure Law, and CHIPS and Science Act — were meant to deploy hundreds of billions of dollars to encourage domestic manufacturing.
- But even some allies were critical of a thicket of rules attached to those dollars that may have made it cumbersome for manufacturers to take advantage. For example, chip manufacturers are required to make child care accessible to employees.
- On net, manufacturing employment is not meaningfully higher than it was before the pandemic (12.9 million jobs in December, versus 12.8 million in February 2020).
Reality check: Miran’s will be one voice among many seeking to influence Trump on industrial policy, and the CEA job is more advisory than responsible for carrying out programs.
- Much of the policy detail of the Biden-era legislation is carried out by the Commerce Department, Treasury Department, and others.
- Should Trump seek to change or repeal the laws, it will require action from a closely divided Congress in which many Republican states have benefited from the investments.
Oil News:
The gradual return of oil market participants from the New Year’s Eve holidays has been marked with tacit optimism as US stock draws tightened product availability just as cold snaps are threatening both Europe and the US. Meanwhile, China’s vows to be more proactive with stimulus measures have lifted the spirits of those who gave up on more robust policy coming from Beijing, even if temporarily, pushing ICE Brent futures closer to $76 per barrel.
Biden to Ban Some US Offshore Drilling. Outgoing US President Joe Biden is reportedly preparing to issue a decree that would permanently ban offshore drilling in US coastal waters that are to be considered biodiversity-sensitive, under the 1953 Outer Continental Shelf Lands Act.
Key African LNG Project Starts Up. The Greater Tortue Ahmeyim liquefaction terminal offshore Senegal and Mauritania achieved first gas this week, with the BP(NYSE:BP) operated 2.7 mtpa project expected to load its first cargo at some point in the first quarter of this year.
Norway’s LNG Hampered by Equipment Failure. Norway’s state oil firm Equinor (NYSE:EQNR) expects its 4.7 mtpa Hammerfest LNG export terminal to be shut down at least until January 9 following the failure of a key compressor this week, halting flows from the country’s only LNG facility.
Beijing Eyes Further Curbs on Battery Technology. China’s Ministry of Commerce proposed additional export restrictions on battery and critical mineral processing technologies, with a particular focus on lithium processing in a move that could also hinder the overseas expansion of CATL or Gotion.
Indonesia Botches Biofuels Transition. Indonesian authorities have mandated a 40% mix of palm oil-based fuel in diesel sales starting January 1, but Jakarta has halted the nationwide rollout of the new biodiesel because there’s still no government regulation specifying the pace of its roll-out.
Nigeria Tightens Upstream Mandates. Nigeria will from now on require that applicants for exploration blocks show evidence of lowering carbon emissions and embracing renewable energy in line with the country’s 2060 net zero emissions target, with enforcements starting from January 1, 2025.
China’s EV Champion Posts Record Numbers. Sales of new energy vehicles from China’s largest EV carmaker BYD (SHE:002594) reached all-time highs in 2024, rising by 41% year-over-year to 4.304 million units and accounting for exactly one-third of the country’s total electric vehicle sales.
European Major Boosts Libyan Exploration. Spain’s oil major Repsol (BME:REP) has resumed oil exploration in Libya after a 10-year hiatus, drilling an exploration well in the Murzuq basin across the country’s southwest regions, following in the footsteps of ENI and BP that resumed drilling in 2024.
Diamond King Builds Up Huge Inventory. De Beers, the world’s largest producer and distributor of diamonds, has reportedly built up its largest stockpile of diamonds since the 2008 financial crisis, with 2024 annual sales down 20% on the back of weaker Chinese demand and lab-grown competition.
Nippon Steel Fails to Persuade White House. US President Joe Biden is set to block the sale of US Steel Corp. (NYSE:X) to Japan’s Nippon Steel, putting an end to a proposed $14.1 billion deal, derailed because the sale of a storied American company to a foreign competitor was deemed a national security risk.
Russia Halts Pipeline Flows via Ukraine. Following the expiry of the 5-year gas transit contract between Russia and Ukraine, Russia’s gas giant Gazprom halted natural gas supplies through Ukraine, with the halt in pipeline supplies triggering an energy crisis in Moldova and the breakaway region of Transnistria.
Nickel Hits Four-Year Low Amidst China Gloom. Nickel prices hit their lowest level since 2020 with cash settlement quotes falling below $15,000 per metric tonne as the market still waits for Chinese stimulus measures to trickle into demand dynamics, with copper seeing similar negative pricing dynamics.
US Cold Snap Lifts Diesel Prices. The Nymex ULSD futures contract rose to $2.36 per gallon this week, hitting a three-month high as forecasts indicate a series of Arctic cold snaps across the United States that should lift diesel and heating oil demand beyond seasonal patterns over the course of January.
Below is a one-sentence description of what each of the 20 best performing stocks in the Russell 3,000 in 2024 does to generate revenues:
- GeneDX (WGS): Provides advanced genetic testing and analysis to support precision medicine and healthcare solutions.
- Rigetti Computing (RGTI): Develops cutting-edge quantum computing systems and software for various industries.
- Sezzle (SEZL): Offers “buy now, pay later” financing solutions for e-commerce platforms and retailers.
- Dave (DAVE): A personal finance app designed to help users manage expenses, avoid overdraft fees, and build credit.
- SoundHound AI (SOUN): Develops AI-powered voice recognition and conversational intelligence solutions for businesses.
- D-Wave Quantum (QBTS): Specializes in quantum computing hardware and software to solve complex optimization problems.
- AppLovin (APP): Provides tools and services for mobile app marketing and monetization.
- Intuitive Machines (LUNR): Focuses on lunar exploration technologies and space systems for commercial and government missions.
- Root (ROOT): Offers personalized auto insurance powered by advanced data analytics and telematics.
- Summit Therapeutics (SMMT): Develops innovative therapies for infectious diseases and other critical health challenges.
- Redwire (RDW): Provides advanced space solutions, including manufacturing, infrastructure, and engineering for space exploration.
- RealReal (REAL): Operates a luxury consignment platform for buying and selling pre-owned high-end goods.
- NuScale Power (SMR): Develops modular nuclear reactor technology for clean and efficient energy production.
- Candel Therapeutics (CADL): Focuses on the development of oncolytic viral therapies for cancer treatment.
- Innodata (INOD): Provides data annotation, AI model training, and digital content services for enterprises.
- Janux Therapeutics (JANX): Develops innovative immunotherapies designed to treat various types of cancer.
- MicroStrategy (MSTR): Offers enterprise analytics, business intelligence software, and cryptocurrency-focused solutions.
- Rocket Lab (RKLB): Designs and manufactures launch vehicles and space systems for small satellite deployments.
- Byrna Technologies (BYRN): Produces non-lethal self-defense products and devices for personal and law enforcement use.
- Palantir Technologies (PLTR): Provides data analytics platforms and solutions for government and enterprise use.
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Summary of Trades:
There are still summaries of less used strategies.
10 Predictions (from this guy):https://spyglass.org/10-big-predictions-for-2025/
There was a time, many years ago, when I used to do predictions for the upcoming year. Once I even won an award for accuracy!1 These days, I tend to look down at such things, as most are simply obvious year-end content filler. But here I am, on December 31, as a dad of two young children who is trying to stay up until midnight. And so it’s time to fill some content. But really, I realize that most of these are too grandiose and unlikely to happen – most years are relatively boring as it turns out when it comes to what we think will happen (and far more exciting when it comes to things we’d never even think to predict) – but hitting just one would be a win, I think.
So, 10 big things that could happen this year:
- Apple buys an AI company – As we enter 2025, the consensus view on Apple’s initial foray into AI seems to be indifferent at best and underwhelmed at worst. As Siri herself starts to get real upgrades in 2025, that could change a bit. But Apple is running a race quite slowly – too slowly – behind folks who are doing laps much faster. One way to leap ahead would be to buy a player. Apple famously doesn’t do a lot of splashy M&A but perhaps an exception could be made for a Mistral or a Perplexity. Who knows if Apple would even be allowed to buy the former given their war with the EU. But the latter could be interesting in particular in light of the impending end of the Google default search deal/payments…
- Someone buys Warner Bros Discovery – David Zaslav clearly – clearly – wants to do a deal. But the music is slowing down and other players are already finding seats to the point where it’s looking more like he won’t be able to find a partner to buy as much as he’ll be the one selling. Perhaps it’s just some assets – CNN and/or HBO? – or maybe it’s the whole thing. If the M&A environment truly is about to thaw, Comcast or someone else could make a move. Might Paramount aim to bulk up even more post-Skydance deal? And of course, I’m always trying to come up with ways for Apple to spend money, per above. It does make some sense…
- Intel gets bailed out – We’ll see what ends up happening with the CHIPS Act under the new Trump administration, but regardless, I have a hard time believing they’re going to just let Intel wither on the vine. Enabling/bolstering a true American player in chips is a win, no matter the political party. Could a new administration help broker a deal to get, say, Microsoft to support the rejuvenation of Intel? First things, first, Intel needs to put in place a new leadership team. I’ll keep my (early) money on Lip-Bu Tan here – if he can overhaul the entire board as well…
- Elon Musk bails on the White House – I’m a bit torn on which side will sour on the other first here, but I’ll go with Elon getting fed up with all the in-fighting – which we’re seeing already, of course – and bureaucracy. He’ll say the whole thing is f***ed and go back to trying to bring about change in his more insurgent manner, by shitposting on Xitter. There are many reasons for him to hang on as long as he can – billions, in fact – but perhaps he’ll pre-empt a move by Trump here. There can be only one main character, after all. And he only shares the spotlight for so long…
- Amazon’s Alexa overhaul proves less than “remarkable” – Not exactly shocking given all the reports and the fact that that project has clearly been delayed multiple times already. But I just have this feeling that Amazon is going to have a hell of a time trying to convince the world that a new Alexa is above and beyond the old Alexa – let alone worth paying for. Their previous success with the Echo devices is their undoing here. Might it push them ever closer to Anthropic as a result? The pieces are already in place for that relationship to be the new Microsoft/OpenAI marriage…
- Microsoft and OpenAI kiss and make up, or break up – It all comes down to the negotiations to turn OpenAI into a for-profit company. Assuming this happens, and Microsoft gets a massive (actual) equity stake as a result, I think that plus the continued floundering of their own consumer AI efforts will lead to a re-kindling of the relationship. Oh yes, and the fact that OpenAI still needs another $20B+ or so to make their AGI dreams come true. SoftBank and the sovereigns can help, but they still need a true American Big Tech™ partner to compete with Google and DeepMind here. If/when the for-profit status comes into effect and the relationship is rekindled, OpenAI should shoot past a $200B valuation in new tender offers. If the rift instead deepens and Microsoft and OpenAI break up in the name of independence, look for the former to be involved in a deal to buy TikTok…
- NVIDIA comes back to Earth, a bit – Overall, there’s almost no way that Blackwell isn’t a massive hit for the company. To say there’s pent-up demand undersells it, and these will certainly not be undersold! But I also wouldn’t be surprised if NVIDIA’s overall numbers are more muted in 2025 than people may think due to supply and complexity issues. But more so I’d chalk this prediction up to the law of large numbers simply catching up with NVIDIA. They can’t keep growing as they have, so simply awesome growth will have to do instead of bonkers growth. Also, what if they’re not as dominant in AI inference as they have been in pre-training? And, of course, everyone – including all of their major partners – are now sprinting full speed to try to diversify away from the reliance. Still, that’s probably much further off than 2025. Again, this year already seems pretty signed and sealed…
- Threads passes Xitter in active users – This seems to be more a matter of “when” not “if” at this point. But while early models suggested it may take a few years, Meta is seemingly getting more aggressive when it comes to growth. A few more turns of their dials and I bet they pass Xitter this year. Bluesky will continue growing too, but I don’t think they will be able to compete with the growth engines and talents (and cloning capabilities) that Meta possesses – even if they’re making more of the right moves in the space…
- Google starts to feel real pressure on search – This is a tricky prediction to make because everyone makes it every year – and has for years. And yet it’s never true. But I do think that the various AI players may finally start to make some inroads here in 2025. And that could also be related to the end of the default search contracts – that will undoubtedly be tied up in courts for years, but just the threat of it may open some players – like Apple – to start to look at other options here. Perhaps this is just anecdotal, but I’m using ChatGPT for a lot more queries these days… Of course, Google could combat this with a bold placement for Gemini…
- Mark Zuckerberg unchained – While it all felt a bit too calculated for my taste, the “Zuckaissance” of 2024 was nevertheless impressive. But come on, this is PR 101. The media builds someone up to then knock them down. Zuck has lived this cycle a few times now and he’s due to be knocked down again after a year of the press eating up the gold chains and wakeboarding. Not even sucking up to the incoming president can stop this inevitability. It’s just a question of what causes the backlash. Something with Llama? Instagram? WhatsApp? Good old Facebook? Something political? Maybe flooding all our feeds with AI bot nonsense? Anyway, this knock down needs to happen in 2025 to get ahead of the next Zuck build up as the “Orion” AR glasses get closer to launch…
One more thing: My bet would be that after some strong initial buzz amongst the Apple diehards – including myself – Apple’s new ‘FacePod’ home hub thing fails to catch on in a major way as well. Beyond people who buy everything Apple – again, that’s me – it’s not clear what it will be used for. Though I’m not sure how much it will matter as it’s just an initial attempt to enter the home in a major way (well, beyond HomePod, I guess), but still, if it’s not a hit out of the gate, there will be pressure on Apple following the fizzle of the first Vision Pro as well…
So currently the market is just chopping around in no-man’s land: off the highs and off the short term lows. Trading in this environment, other than scalping day trades is a good way to reduce your account.
This might persist until Trump is sworn in.
At some point the market will move in a direction. The question is which way?
Take your best guess, no-one really knows.
Fundamentally the economy is bad. This will eventually create a bear market. That being said, it has been bad for the entirety of 2024, yet the market and several stocks moved higher. So hard out short is a dangerous bet to make: the powers that be NEED stocks higher, the stock market is their tax base. They will do everything that they can to propel stocks higher. That is a good argument to be long. However, ultimately they will lose and the market will crumble. A good argument to be short.
So I think short term we move higher. The question will be: (i) a fast top or (ii) a slow top? Both have their problems. In (i) getting out or short fast enough can be the issue. In (ii) you are fooled and don’t recognise the top and keep buying long, because to date, that was the winning trade.
In the video above, again the recommendation was ‘trade small’. This is also the recommendation from my Prop Firm. It is also the recommendation from TastyTrade and probably countless others.
I want to trade size: (i) because I have (leveraged) capital to do so and (ii) farting around with small positions (making hundreds, thousands of trades is somewhat boring) you want big positions that move the needle.
In 2024 I ruminated.
In 2025 I have a new strategy on paper. I have just initiated it with, LOL, small positions. However, if it performs as it should, I will size up to 100’s or 1000’s of contracts.
So currently I have XLF, CORZ, ACI and FCX as positions.
jog on
duc