A New Sheriff in Town…

2:00 AM CDT

The Federal Tariff Court Ruling kind of throws more fuel on the stock rally fire. Last week Longterm Bonds put in a bottom, but one probably doesn’t want to get too heavy there yet as stocks are going to pull on the fuel first. Stocks are staging for a push heading into a Bubble, this could well be a big one before it is all over in the fourth quarter. I will talk about this later today, about what the drivers will be, at the moment it is primarily animal spirits, other supportive factors will have to come along later.

Update @ 11:30 AM CDT

The Market has reservations about the New Sheriff so far, and that is good as this market equation is not really about Tariff’s. It is about the play Trump has initiated with the Arabs, which in short form is, ” Oil has Peaked, you need a new game, U.S. Tech Guru’s will get you on board in the new game with AI, just send your money to the U.S., invest in data centers and Chips, and Nvidia will do the rest”. Trump is always about two things, who has the money and how can he get it into his pocket.

So, my view, this will not end well, Arabs will end up with less money, Trump will have more money for a while. Eventually the world will come to grips with the reality of A.I., it is a massive data manipulator, but it really cannot Think, and the answers it comes up will be full of holes.

All this talk about whoever has the most A.I. will win WWIII is worthless, it might give the A.I. aggressor the initial advantage, but the country that lays in the weeds and watches will be the one to deal the winning hand.

Trading this Scenario

How does one trade and invest in this environment? What I have said here is the groundwork for the move that is starting in the markets. It unfortunately is about Tech, it might drag the small cap stocks along but until we see a definitive turn in the ratio of the Russell to the Nasdaq 100. And I will repeat, come 4th quarter 2025, the chickens will come home to roost, the markets will find out that whatever Tariff’s survive have decimated the economy.

As I periodically cover, i.e. the use of two Paradigms, first the Index of Market based Monetary Drivers, which to repeat are 1) Dollar, 2) Gold, 3) Oil, 4) 30-05Y Yield Curve, 5) 2Y Interest rate. The second paradigm is the index of the difference between the market based Monetary Driver and market prices. This Index has an all-time high at 3.92 when the Animal Spirits were running in January 2021. In the last 12 months the high on this index was at 2.94 in December 2024 when Bidenomics was in its final phase. Today on the early rally this Multiplier Index hit 2.93, seemed to hit some resistance and has backed off to 2.87 interday.

It is probably instructive to see what occurred with the basics on April 7, 2025 when the SPX hit a 4835 low. At that very time the Market Monetary Driver index hit the high for the year at 63.1 basically the five factors adjusted to the situation and made the stock market a buy. At the very same time the Multiplier Index hit the low for the year at 2.40, basically the animal spirits were wrung out that morning.

Here is the table of recent values on these two mentioned indexes:

Bottomline, the Monetary Driver index is in a good place, at a better level than the December and February market highs. That means we watch the Multiplier Index bounce around against resistance at the 2.94 December closing high.