4/18/2025
A Slew of Reliale Indicators
We are early in the bear market. The Dow Industrials double topped at 45,000 from December to February. Already, $11 trillion in market capitalization has evaporated. DOW formerly Dow Chemical has dropped 50% in the last year. If the Industrials matched that, they would already be at my target of 22,000.
Here are more qualitative indicators. At past market tops, the US Government sues the most successful tech company. In 1929 it was RCA. RCA never recovered its 1929 high until the early 1950s. In 1966 the target was IBM. In 2000 Bill Gates was astonished that the US sued his Microsoft firm. He then hired Washington DC lobbyists. Now the US is suing both Google (alphabet) and Meta/Facebook. In the latter case the Government wants an astounding $30 billion for monopolistic practices. That is rich considering there is no bigger monopoly than the US Government. Who would be the better fiduciary of $30 B, Mark or the Washington bureaucrats?
The 1930s saw an expansion of the luxury car industry. One could order a Dusenberg chassis, engine and frame. Then order up a one-off special coach construction. Auburn and Cord offered special sport high versions of their cars. All three firms vanished in the Depression. The same thing now exists with McLarens and Bugattis. Mercedes cashes in with its AMG series, even including a hot rod SUV! For 2025 Chevrolet will over its first ever 1,064 bhp ZR1 Corvette. It requires every engineering trick in the book including twin turbos and a flat plane crankshaft.
From the 19269 high one can draw a trend line connecting subsequent market highs. The Industrials just thrust over that top trendline. It now has fallen back some 6,000 points. The trend is now down.
With all the fuss over the Magnificent Seven tech stocks, one does not hear much about the former tech indicator, the SOX index. The SOX is the semiconductor index of chip makers. It peaked at 5,750 last summer. It has already lost 34% of its value.
Last week the Chief Economist for Patterson and myself were concerned about crude oil falling to the low 50s. Apparently the market has responded to our alarm. Today crude has climbed back to $64.68. I am not sure why but with Trump’s tariffs and shipping fees changing daily, volatility reigns. The energy XLE and service XES ETFs are bouncing but face some big gaps to overcome as prices have fallen.
We remain steadfast in recommending Treasury Bills as a safe harbor for your money. There will be a time of great bargains and we will be alert, but those are a long way off.