Market Review: Tariffs, AI Earnings & Robotics — Full Breakdown & Transcript

[00:00] Coming up today, markets bet on the art of the deal, China bites back, what could be in the firing line, could Bill Ackman lead the new sovereign wealth fund, come on there, smash his earnings, a huge contrarian indicator, and how to hedge your labour value and wealth well into the future.

[00:12] You don't want to miss this one guys, let's go. And so we've got a bit of a continuation on yesterday's buy the dip, started the week off with peak fear again,

[00:24] had a pretty broad-based rally across the board here today, looking at global ETFs, The red you're seeing on the screen are mostly these inverse ETFs and volatility coming down again today. Apart from crypto, which we'll also take a look at later, international stock indices actually doing really well today,

[00:38] especially China, which I'll get into in a minute as well, back at the latest developments there. Now we saw bounces in energy, financials and small caps deleting index today, along with commodities still getting bid here, and a switch in this heat map over to year-to-date performance, but a pretty broad-based rally.

[00:53] Again, it's mostly just the inverse ETF showing red tick. Slightly a little bit negative year to date. We've got bonds up, crypto up, international stock indices, led by Brazil. Best performing stock market year to date.

[01:05] Country I've been bullish on for the last couple of months. As the regular viewers know, they got deeply oversold. However, how many people know that gold miners are actually the leading sector year to date? GDX up 18% as we just make our way into the second month.

[01:17] And FYI, I also took a bullish position in Newmont Mining recently. So far, still looking good. But we do have a lot going on in the markets at the moment. Tariffs do remain the focus. Got a bit of a relief rally. Over the past 24 hours or so, as Trump has agreed to push back the start of 25% tariffs against Mexico and Canada for 30 days.

[01:34] Just as they're about to be introduced, last minute negotiations between the leaders of these countries seem to work out a little bit of an initial deal to begin with. Mexico is going to deploy 10,000 troops to the Mexico-US border.

[01:46] They're actually going to try and help and stop flow of fentanyl and illegals into the states. Something that should have been done a long, long time ago. Not to mention money laundering. They can't fail controlling much of the Mexican side of the border. We also heard from Canada.

[01:58] They're going to appoint a Fetinal SAR to have a joint task force with the US to address the drug trafficking. Not to mention the money laundering coming in on the northern border as well. There's a little bit of Canadian ETF today. They looked like a strong buy to dip yesterday. Rallied up 1.82% today.

[02:11] And Mexican shares stabilizing somewhat there as well. Now the Trump 10% tariffs on China take effect midnight tonight. And in true Chinese fashion, they responded in kind, announcing 10% tariffs on some select US goods coming into their country,

[02:24] namely crude oil, agricultural machinery and large engine cars, in addition to a 15% tariff on US coal and LNG. Kind of a soft bite back, not too big, could still be potentially the start of an ongoing global trade war between the world's two biggest economies.

[02:38] China does have more to lose and is in a weaker position. Even though Chinese GDP is still above 5%, still far away from technically being in a recession, the path of their growth and the health of their capital markets, relatively speaking, to where they used to be and where they want to be

[02:52] relative to the States, is not as good. And unlike Canada and Mexico, it doesn't look like Trump and Xi are going to speak straight away. We might not see a quick deal or the Chinese tariffs go on hold for 30 days like they have done with Canada and Mexico.

[03:05] Very well could be the worst of it with Canada and Mexico. Might not even get any prolonged tariffs. However, could be a different story with China. And some things in the firing line, critical minerals, rare earth elements. Chinese dominates the global market. For a lot of these, small to less known minerals,

[03:19] but still critical, especially the new industries, EVs, solar, semiconductors, just to name a few. A lot of people don't realize how much leverage China actually has over some of America's most valuable companies. Apple and Nvidia, both companies heavily relying on China

[03:33] as part of their supply chain. China really want to, they could do a blockade on Taiwan. However, I don't think they will. But for now, they're just biting back in kind, definitely not more than the States, and this may have to escalate before it gets better.

[03:45] But who knows? Like I said last year, don't be surprised if Xi and Trump do eventually come to the table and get a deal done. Maybe we just need to see another good spike in volatility. Pullbacks in the market prompt them to come to the table. And it's interesting just looking at Chinese securities today.

[03:59] Actually been doing pretty well this last week. There's barter slacking on another 3.8% today, pushing up against monthly highs here. I know a lot of people were bearish coming into the start of this year with potential Chinese tariffs. Now the market had already discounted that

[04:11] and so they were too late. Stocks now up over 25% just in the last couple of weeks alone. And technically speaking, shaping up pretty good. No doubt we're going to have our fair share of volatility. Alibaba longs like myself, however. However, once these tariff storms subside,

[04:25] I think that'll clear the way for a fresh breakout this year. And I expect Alibaba to be trading above 120. But no doubt for the here and now, we should still expect a little bit more volatility for sure. Another area of the market I've been researching lately,

[04:38] potentially for my next stock pick, is companies involved in rare earths. Just looking at the ETF here, Rare Earth and Strategic Metals from Van Eyck. And it's going out to a monthly chart. It's actually been in a bear market for a few years. But like I said, this sector could really come into play,

[04:50] potentially be used as a pawn in trade wars and a batch of shops, global supply chains, to give us a squeeze in prices. Not to mention the secular demand for these types of minerals going forward, thanks to the electrification of the world as well.

[05:02] And just looking at Baidu and some other Chinese stocks, starting to get a bit of activity here. Quite a bit of volume on these momentum struts. Tiger Brokers shaping up a little bit as well. Like I said, once we get past these tariffs, hopefully it doesn't turn into a full-blown multi-year trade war.

[05:16] Of course, that's the risk. But once it all clears, I think that just paves the way for a really good rip in Chinese shares this year as the valuations on them are still very low. But for the here and now overall, the market is betting on the man who wrote the book himself,

[05:29] the art of the deal. Could very well work out in favour of the state. Definitely going to incentivise domestic production at least. It'd be a tailwind for domestic producers. No doubt it comes with inflation risks Tower risks of global trade wars but so far pretty encouraging signs early on from Canada and Mexico We just got to wait and see what happens with China next up United Kingdom and Europe

[05:48] We've also been hearing that possibly Trump may use proceeds from tariffs to help fund the United States Sovereign Wealth Fund, which he just signed in yesterday. With rumors circulating that Bill Lackman is set to become the head of this massive new fund, which I think is a brilliant idea.

[06:02] one of the most confident investors on the street. Has a long-term track record of producing exceptional returns and he'd be one of the best guys you could get to look after a wealth fund for the state and give the Saudis and other sovereign wealth funds a run for their money.

[06:14] One thing that would be interesting to see over the next couple of years is if the new Trump admin really does get federal government spending down from the crazy pandemic years. And what effect is that going to have on the economy and inflation? Just like artificial intelligence, it could be really deflationary.

[06:28] I've already seen a lot of government employees take up his offer to resign with eight months' pay. pretty good deal actually. Gives them plenty of time to get into the private sector. If that works out as intended, just like we've seen in Argentina, that could really actually help the

[06:40] economy by better allocating human labor and resources into the private sector where wealth is created instead of it being hoarded in the public sector where it's all spent. And as we've been discovering, thanks to Elon Musk, gracefully so as well. Bordering on levels of corruption,

[06:53] some of the stories we've been hearing. So that's obviously a big thing that's going to play out over the coming years. How big a reduction in US government spending are we going to see? and will that help inflation? And can federal employees successfully transition into the private sector?

[07:06] But just moving on from all that to one of the biggest headlines. We're in the market today after we got earnings from Palantir last night. Absolutely blowout numbers showing that AI trade is still well and alive, with earnings coming in 14 cents per share, 26% above what the street had forecast.

[07:20] And so the valuation on this is simply incredible. They reported not even a billion in revenue for the last quarter. Now with a market cap of $236 billion, people cry about Tesla's valuation being 100 times earnings, This thing's approaching 100 times sales.

[07:33] However, that's the market for you. It can go a lot further for a lot longer than you think. And so clearly, I sold this one too early last year. But that's trading for you. Nobody buys the bottom or sells the exact top down to the dollar. Our job as traders and investors is to take the meat in between.

[07:46] And so even the best investors in the world will often get out too early. It's best not to dwell on it. And I'm not complaining either. It's one of my best trades last year. In fact, my members and I made 178% on Palantir last year. I'm not sure how many other YouTubers can say the same thing about their members.

[08:00] And most of them just try and sound smart, but they don't actually make any money for their members. And I'm not even sure if they do for themselves either, judging by some of the ridiculous things they say. Though we've been hearing plenty of, I told you so's, over the past 24 hours.

[08:12] It's really quite amusing actually. However, none of them actually keep any track records to back it up. Instead, they like to play it safe by sitting on the fence. And just looking at my new investing account that I opened in June last year, starting with $500 US, part of a million dollar challenge for my stock pick service,

[08:27] it's currently sitting at all-time highs. It's up around 30% in simple returns, but since I buy $500 in a new stock every Monday, it's better to use time-rated returns, which are up over 43% since June last year.

[08:39] S&P 500 is up about 12% in the same period, and these returns are with no leverage either. I've got a diversified portfolio of 26 stocks, and in fact, most of the time, I also have a cash position, so I'm not even fully invested right now either. And so if you want to follow someone who actually puts their money where their mouth is, and

[08:53] I'll let you know what stocks I'm going to buy the day before I do, same with exit alerts, I'll keep a 100% transparent track record in the private members area along with screenshots of all my trades from my brokerage account. And click the link below this video and check out my StockPix service as I still have available spots.

[09:08] I'm expecting them to all fill up at some point this year before I'll have to close it to new members. And so what you get when you sign up is an email in your inbox every Sunday morning from me where I give you some macro analysis of a sector or industry that I'm focused on for this week.

[09:21] And then within the industry, a specific stock, normally a small cap or a micro cap is what I focus on. and after my macro analysis is a link to a deep dive report with one stock pick every week and that's the stock I'm about to invest in next on the coming Monday.

[09:33] And so I'll share all details about the stock explaining in simple terms what they do, the length of their latest investor presentation, clear bullet points of why I like them along with their latest numbers, technical analysis of the chart,

[09:45] what the key risks are and a summary of why I'm about to invest in a particular stock next. This example here was Innovative Solutions and Support which I gave out a little over a month ago and that's already up 30% as well. Included as a private members area, you can see all my open picks, links to all the research,

[10:00] and like I said, 100% transparent performance tracking of my real money account. All my picks and exit alerts are sent the day before I make the trades. And another one of my stock picks has been performing really well of late. Members are really happy with him and her health, up another 7.5% today.

[10:14] And so like I said, my goal for this account is to turn it into a million US dollars in less than 10 years. I'm not going to stop until I do it. And so if you want to follow a YouTuber who actually puts his money where his mouth is and keeps a track record, then click the link below this video and head on over to my website,

[10:27] click capital.io and sign up to my stock pick service whilst I still have available spots. I guess moving on to some other earnings we're getting at today, Alphabet. Actually, missing a little bit on revenue expectation. Not by much though, talking about $200 million

[10:40] on $96 billion in revenue. Pretty much coming in line on earnings, $2.15 a share. We're just going down the five-minute chart after hours as I speak. It's off pretty sharply, 7.5%. But still nothing that crazy. We're trading around $1.90 after hours here. In fact, looking a little bit like

[10:54] an area of support, which I wouldn't be surprised if the dip gets bought on this as well. Super high quality company. Searching YouTube, still monster businesses. Waymo, Cloud, Android. I think this is just a little blip in the road and this is still one of the most exceptional companies and

[11:08] businesses in the world, for which I'm still a long-term holder as well. Stock I've been in for so long, I always forget about it. And so in my opinion, any further dips on Alphabet just represent good buying opportunities Also not doing well after hours AMD did get a bit of a rally there in the regular session They were down over 10 after hours even though numbers came in in line as expected It looks like they missed on data center revenue The data center sales still nearly doubled in

[11:31] 24, just fell short of estimates. The guidance for the first quarter pretty much came in along with analyst expectations as well. This is the thing with earning. The numbers can come in as expected, even better, and the market just kind of sells it off. That's why playing earnings is a real crapshoot. It's pretty much gambling. And again, this is another

[11:46] stock they could represent good value especially around 106. I imagine the puts will be juicy on them tomorrow morning and they're definitely going to play a role in chips for many years. They're good at producing really low cost chips actually and the shares are down quite a bit since

[11:58] their peak last year. So we'll keep an eye on them going forward as well. Just looking at NVIDIA not really reacting after hours too much to Alphabet and AMD. Looks like it's still trying to find support around this oversold level as well. We are getting a little bit of a bullish divergence on my

[12:11] DSI. Institutional buy percentage indicator is quite green here. Wouldn't be surprised if this dip is getting bought also looking at my seasonality forecast indicator typically over the coming weeks and months or so as we're coming into earnings in 22 days nvidia can rally no doubt the market's

[12:25] still shaken by deep seek potential chinese tariffs no doubt volatility will remain elevated in nvidia for some time however i think the market can shake off deep seek if we can just get past any chinese risks again i think it paves the way for us to at least come back up and potentially

[12:39] retest highs especially with the market sitting at highs as well also doing well today and again one of the most exceptional businesses in the world, Ferrari. Shares popping as luxury car maker used for their earnings growth in 2021.

[12:51] Luxury rich still doing very well. Huge amounts of wealth been created over the last couple of years. Some of that finds its way into really nice cars. Full year net revenue came in 6.7 billion euros, up nearly 12% year on year. Expecting a 5% growth this year in 2025.

[13:05] It's in a pretty low hurdle actually. Let's look at the stock up 7% today and it's going out to a monthly chart on this. This is what I call a perennial winner. One of these stocks that just keeps doing well and well over time. Any sizable dip in the price

[13:17] has proven to be a good opportunity. Market cap, $111 billion. It's actually more than General Motors and Ford combined. And believe it or not, it's still only shipping less than 14,000 cars per year. It's a niche market. It's just super profitable.

[13:29] And such a strong brand, it'll always be defensible and push into new areas. And there's always going to be super wealthy people that want that status symbol of a Ferrari. Like I said, it's a great long-term stock. But just moving back to the market for a minute, one article that caught my eye today,

[13:42] Morgan Stanley's Chief Investment Officer is investors should expect weak stock returns for the next three months. There's none other than Mike Wilson, who competes with Jim Cramer on who could be the biggest contrarian indicator for making the most boldest claims that turn out to be completely wrong a few months later.

[13:56] Of course, no one's right all the time. Anybody who tells you what can happen in the short term is either a liar or Nancy Pelosi. Part of trading and investing is speculation, is forecasting. You can call it whatever you want. Guessing, gambling.

[14:08] It's trying to look into the future, work out probabilities and payoffs. and they're only taking opportunities when the numbers line up. And so when these pundits come out and constantly make these bold calls on what's about to happen next, the stuff that makes Buffett chuckle,

[14:20] the market gods quite often like to throw it in their face. And I know Mark Wilson's probably a nice guy and means the best, but if he's constantly going to go on TV and make these big bold calls, then he has to stand by them, right? Looking back in history, especially the last couple of years,

[14:33] he's almost nailed the exact tops and lows with his contrarian statements. And so what he's saying now is the stock market will struggle to keep the 2024 rally alive in the early months of this year. Thanks for the challenges of macroeconomics and risks stemming from Trump's policies.

[14:47] Pretty sure the market's already had a few months to think about this. This is nothing new. I think sometimes people with politics pull the ball over their eyes almost like they want things to go to crap. They want a recession. And that's the thing, you can never be upset with what the market does.

[15:00] A lot of people out there can't get over Tesla's valuation. The market's wrong, it's a bubble. And it very well may turn out to be a bubble, but that doesn't mean the market's wrong. It's kind of like saying the weather's wrong because we've had 100 sunny days in a row or whatever. It's not wrong, it's just the way it is.

[15:12] We can't control the market. The only thing we can control is how we react to it. And we do have something interesting going on in this market. Looking at volatility and implied correlations, it's a real stock picker's market. 11%. That means stocks are not really moving like a school of fish.

[15:25] Kind of a lot of sectors and stocks within the sectors doing their own thing. There's the 5th of August last year. Whenever markets spike on fear and sell off, correlations move to 1. Basically mass liquidations, margin calls, people hitting the sell button across the board.

[15:38] But what we've got right now is really low implied correlations and high single stock volatility. I can see that every day looking across option chains. Implied volatility is higher than historical realized volatility. But the VIX is still relatively subdued, 17.2 considering everything going on.

[15:53] It's not too bad. It's a really high dispersion between market level volatility and single stock volatility. And so that suggests a lot of internal market rotation. Remember, rotation is the lifeblood of a bull market. And we can see that in the six-month performance chart of all the sectors.

[16:06] We've got discretionary stocks up almost 35%, while REITs are still actually slightly negative over the last six months. Year-to-date, it's actually tech and staples that are flat with materials, healthcare, and communication out front. And so there's low correlation in the market, high dispersion.

[16:19] Some sectors doing well, some sectors a bit soft. Typically, when tech or defensives have a low correlation with the rest of the market. But it kind of sets up some opportunities as well, being short single-stock volatility and long index-level volatility, including on the VIX index as well.

[16:33] I thought of some events that could trigger volatility to rise. Some major earnings surprises, although so far we're looking pretty good. Fed changing its policy, indicating to the market they're going on pause. Further geopolitical risks, trade wars with China, causing deleveraging.

[16:47] But for the year now, markets are still relatively stable. You can see that in the SKU index, price of out-of-money puts, and high-yield credit spreads as well. It's all very low there. Getting a little bit of a pullback in the dollar after its months-long rally, going into the election and coming out of it.

[17:00] Bitcoin been consolidating for a few months now Could very well resolve itself to the upside Did see US job openings fall a little bit in December to a three low Not a huge signal though The bond yields consolidating as well And the other big thing this year will be oil.

[17:13] Trump wants to increase drilling to lower oil prices. Flood the market. Drill baby drill. However, that's not what OPEC wants. Their sweet spot for oil is around $80 a barrel. That wouldn't be interesting if Vladimir Putin and Trump did a deal that involved oil

[17:25] and resolving the Ukraine conflict. Another upside surprise that could potentially occur in the market this year. But of course, that's all easier said than done. It's only so low price a crude can go before US producers start losing money. Closely intertwined relationship with Canadian producers as well and refining.

[17:41] There's no doubt crude's going to be a big political football going forward. I think it's just likely to consolidate. Like I was saying last year, big forces on both sides here. Although technically speaking, we are seeing these monster bullish divergences from some big oil companies like ExxonMobil pushing up after earnings on Friday.

[17:56] And Buffett's favourite as well. I wonder if he'd been buying the dip in the last few days. on Oxy like he has done for a couple of years now. But it's still gold showing strength here. It's in at all-time highs, 3,000 amounts. Seems almost inevitable this year, doesn't it?

[18:08] Gold stuff's doing well again today. And maybe 2025 is the year the miners catch up. Gold could stay flat, and I still think the miners could appreciate some of the valuations are at rock-bottom lows. Not to mention they kind of make a good hedge on inflation as well

[18:21] if global trade wars do escalate. Not a bad way to have a little insurance. Also, if global trade war does get out of hand, that could very well impact shipping and shipping rates. So they could also make for a little bit of a hedge in one's portfolio. I also think there's a strong will to really ramp American chip reduction,

[18:37] which might actually help Intel find support as well. Still sitting at this big key support level, $19.50. And just speaking of rates, I think the Fed is likely to stay on hold for a few months here. Got plenty of ammo in the bag, should they need it this year.

[18:49] They have 400 basis points to work with. Haven't been cutting because they can, not because they have to. But they don't want to have egg on their face if inflation starts ticking back up. No one's really sure exactly how all these tariffs are really going to play out. We all have to kind of wait and see.

[19:02] But that's all kind of just short-term noise. People get so caught up in, end up over-analyzing the day-to-day noise. Regardless of all that, always try and step back and look at what are the big secular trends in society and in the market.

[19:14] And so this year and beyond, I'm continuing to rent my investments and allocations to robotics. I think it's going to be one of the biggest themes of our lifetimes. And just looking at this research here, actually just released by ARC, we've seen previously what new technologies can do to save us all time.

[19:27] For example, washing machines, the assembly line started by Henry Ford for automobiles, Amazon automation already. Most of us still doing unpaid household work. Cleaning is a big one, not to mention ever since COVID. A lot of people really don't want to work service jobs anymore,

[19:40] especially in the hospitality industry. It's like I've been saying, artificial intelligence has pretty much conquered our language and understanding it. Next up is understanding our world. Artificial general intelligence, AGI, which will then morph into artificial super intelligence.

[19:53] eventually singularity. There'll be no intellectual task that can be done by a human that can't be done even better by AI or a robot. Now, this still might be a few years away, maybe two, three at the soonest, or possibly five, seven years.

[20:06] This is a long-term secular trend. And like I said, that whole deep-seek thing just adds to it. The cost of AI is dramatically coming down. That's great for robots. And like every new technology, it starts off expensive and eventually gets a lot cheaper. And so I've already got cleaning robots,

[20:19] delivery, warehouse automation. That stuff's already real. and AI is just going to ramp this exponentially. And so fundamentally, I think the industry has taken off, but also an investor sentiment. I see that again today, looking at my themes,

[20:31] watch those robotics, catching a pretty strong bid there across the board, along with battery stocks, which play a role in powering the robots, and 3D printing stocks as well, and actually creating robotic parts. All these sectors are kind of intertwined in the same secular thing,

[20:45] quantum computing, data analytics and storage, AI agents finding its way into AI healthcare, and even just the AI trade itself. Caught a little bit of a bid there today. Soundtown AI. And a stock I gave you guys last week,

[20:57] Redcore Systems, continuing to rally up again this week. Other hot stocks at the moment, Beyond, online e-commerce, and a collection of brands, including Bed Bath & Beyond, and other small stocks like Flex Steel Industries, involved in furniture. And let's not forget about space stocks,

[21:10] still doing well. Black Sky Technology, up 16.5% today. Not to mention other smaller healthcare stocks, like Synthetic Biology, company Ginkgo Bioworks, ticker symbol DNA. definitely a ticker symbol the market could get excited about.

[21:22] Pushing up again to show that there's plenty of opportunity out there in the market. When you look underneath the hood, like I said, a lot of dispersion. Some sectors not doing so well, some others doing really great, along with these early stage high growth small cap names.

[21:35] And so it's good to see the Russell bounce back. Like I said, my stock picks portfolio sitting at all time highs. Even though the Russell was still off more than 7% since its highs, I'm excited for 2025 in small caps. I think we've got a lot of catching up to do and that could go on for a few years.

[21:48] That pretty much wraps up the daily market review today, guys. Just looking at Alphabet. Still a little soft here after hours. See how that trades tomorrow when it opens around $1.90. I don't expect anything in the $1.80s. Potentially be a good buy to dip opportunity.

[22:01] Also AMD as well trading around $1.10. That may turn out to be a cheap price going forward. And interesting to see Chinese securities trading pretty firm here going into the announcement of pricing tariffs on each other. 10% to start.

[22:13] Watch how this evolves over the coming weeks. Along with any new tariffs from the UK and Europe. also got the jobs report coming this Friday morning. Otherwise, we should still expect some short-term volatility for a little bit here. I'd say fair value on the VIX, probably right around where it is now, 17, 17.5.

[22:27] Anything below 14, probably a good opportunity to hedge again. And of course, anything at the top of my buy sell band here should be another good opportunity to short volatility, as we've always got the Fed and now the Trump put. So no doubt we'll get more fierce spikes,

[22:40] but if they get bad enough, we'll be backstopped by those at the top. That's all for today, and I'll see you guys back again here this time tomorrow. Cheers.