5 bullets hero TikTok app logo on a smartphone screen and flags of China and USA

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Paradigm Pressroom's 5 Bullets

TikTok faces a death sentence next Sunday. The hypocrisy on all sides has been thick.

Shut up and Obey

5 bullets hero The word Recession on a red background with the us dollar

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So… the sure-fire indicator of a recession? 

The Recession Indicator to Watch

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Hey, Big Spender
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> And people thought Jimmy Carter was a &ldquo;big-spending Democrat.&rdquo;
As maybe you&rsquo;ve heard, the U.S. stock market is closed today for the funeral of the 39th president.
That&rsquo;s not unusual, if you&rsquo;re wondering. During this century the market closed for George H.W. Bush&rsquo;s funeral in 2018, for Gerald Ford&rsquo;s in 2006 and Ronald Reagan&rsquo;s in 2004.
You can find Carter remembrances anywhere &mdash; some of them fond, others less fond, still others indifferent. Today, we simply direct your attention to a startling statistic, courtesy of our acquaintance and one-time colleague David Stockman.
Mr. Stockman was a young congressmember from western Michigan during the Carter years &mdash; before becoming Ronald Reagan&rsquo;s first budget director.
He points out that Jimmy Carter&rsquo;s biggest annual budget deficit was $74 billion. Using the yardstick of &ldquo;constant 2024 dollars of purchasing power,&rdquo; that translates to $240 billion in today&rsquo;s money.
For perspective, Uncle Sam ran up the national credit card by $367 billion during a single month back in November.
&ldquo;It can be well and truly said that the Washington UniParty is now capable of generating more red ink in 20 days than Jimmy Carter did during his worst year,&rdquo; Stockman writes.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> When Carter left office in 1981, the national debt was $908 billion. Adjusted for inflation, that&rsquo;s $3.46 trillion.
Even grading on a curve with inflation-adjusted numbers, the national debt has grown more than tenfold since Carter&rsquo;s day &mdash; sitting this morning at $36.18 trillion.
That&rsquo;s bad enough but this is worse: Back then, the national debt was only 31% of America&rsquo;s annual economic output.
In 2023, the most recent figures available, it was 119%.
It&rsquo;s just as high now as it was in 1946 &mdash; when Washington had the excuse of fighting World War II to justify unprecedented deficit spending. What&rsquo;s the excuse now?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/10BB8Yzk9lu7IGQSohf0Mn/099b40c2e4b3a1fb38719ae4d0e87ce3/FMF_5Bullets_Chart_0109.jpg" alt="excuse" width="540px" />
For years, Paradigm&rsquo;s macroeconomics maven Jim Rickards has cited the research of economists Kenneth Rogoff and Carmen Reinhart, summarized in their 2009 book This Time Is Different: Eight Centuries of Financial Folly.
Rogoff and Reinhart&rsquo;s central insight was that once government debt reaches 90% of economic output&hellip; well, that&rsquo;s the point of no return.
As Jim explained it in his 2019 book Aftermath, &ldquo;The debt itself causes reduced confidence in growth prospects partly due to fear of higher taxes or inflation, which results in a material decline in growth relative to long-term trends.&rdquo;
Yes, this debt-to-GDP ratio fell steadily after WWII. But that was an extraordinary circumstance: The United States&rsquo; industrial base emerged from the war unscathed, while the rest of the world&rsquo;s was devastated.
No such consolation this time. Now we&rsquo;re just in the same high-debt company with developed-world basket cases like Japan, Italy and Greece.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> That&rsquo;s a vicious headwind facing Donald Trump as he embarks on his second term &mdash; a headwind Ronald Reagan did not face after taking the baton from Jimmy Carter 44 years ago.
Any hope for a revival of authentic American prosperity depends on the Trump administration pulling down that sky-high line on the chart above.
&ldquo;The national debt does not have to be paid off,&rdquo; Jim Rickards wrote his Strategic Intelligence readers last month. &ldquo;It just has to be made sustainable so it can be rolled over.
&ldquo;That requires reductions in the debt-to-GDP ratio, which can be achieved with higher real growth and smaller deficits from spending reductions.&rdquo;
Spending reductions. That&rsquo;s what it will take. Any revival of authentic American prosperity is riding on Elon Musk and Vivek Ramaswamy&rsquo;s DOGE project (&ldquo;Department of Government Efficiency&rdquo;) &mdash; and Musk&rsquo;s target of $2 trillion in spending cuts.
But the swamp water in Washington runs deep &mdash; as the aforementioned David Stockman knows well.
He too had a blueprint to cut spending as Reagan&rsquo;s budget director. But Reagan was surrounded by deep-state types who tore up that blueprint. The national debt tripled during Reagan&rsquo;s two terms &mdash; a feat no one has matched since.
Something to think about today as Jimmy Carter is laid to rest&hellip; and Donald Trump prepares to return to the Oval Office.

[Editor&rsquo;s note: Do you belong to Jim Rickards&rsquo; new &ldquo;testing group&rdquo;?
Jim has 500 spots available to test his new controversial stock-scanning software based on his work for the CIA. And they&rsquo;re filling up fast.
Our customer service team has been flooded with calls from Jim&rsquo;s readers who don&rsquo;t want to miss out on what&rsquo;s happening. If you&rsquo;re wondering what the buzz is all about, Jim just released a two-minute video where you can learn how to test his patented stock-scanning software now. <a href="https://pro.paradigm-press.info/m/2401035">Click here to watch immediately</a>.]

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Why Did Trump Post This Video?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />What&rsquo;s the one thing that could derail the Trump economic agenda faster than anything else?
The Paradigm Press editors kicked around that question yesterday during our weekly conference call.
The most obvious thing that came to mind was an outbreak of war within the first 60 days of Trump&rsquo;s term &mdash; well, an outbreak above and beyond the current conflicts in Eastern Europe and the Middle East.
It&rsquo;s a possibility that&rsquo;s been on this editor&rsquo;s mind ever since Trump&rsquo;s win in November.
One week after Election Day, I mentioned how Trump was already surrounding himself with warhawks like Marco Rubio (secretary of state), Mike Waltz (national security adviser) and Elise Stefanik (UN ambassador).
I cited former CIA analyst Larry Johnson. &ldquo;Trump is staffing his new administration with pro-Zionists who are likely to press for a conflict with Iran.&rdquo;
And I cited retired Army Col. Lawrence Wilkerson. &ldquo;This is the one place where Trump really worries me &mdash; doing everything in his power for Israel.&rdquo;
I mention all of this to tee up the following&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Two days ago on his Truth Social account, Trump <a href="https://truthsocial.com/@realDonaldTrump/posts/113789043423746072">shared</a> a video in which Columbia economist Jeffrey Sachs labeled Israeli Prime Minister Benjamin Netanyahu &ldquo;a deep, dark son of a bitch.&rdquo;
Sachs has emerged in recent years as one of the most trenchant critics of the bipartisan &ldquo;blob&rdquo; that runs U.S. foreign policy &mdash; neoconservatives on the right, liberal internationalists on the left.
The video clip Trump shared was an interview Sachs did with Tucker Carlson. Sachs said Netanyahu deftly maneuvered Washington into several Middle East conflicts and now wants U.S. forces to go to war with Iran.
&ldquo;Netanyahu had, from 1995 onward, the theory that the only way we&rsquo;re going to get rid of Hamas and Hezbollah is by toppling the governments that support them. That&rsquo;s Iraq, Syria and Iran. And the guy is nothing if not obsessive,&rdquo; Sachs said. &ldquo;He&rsquo;s gotten us into endless wars and because of the power of all of this in U.S. politics, he&rsquo;s gotten his way.&rdquo;
As a reminder, Netanyahu came to Washington in 2002 to sell Congress on going to war with Iraq: &ldquo;If you take out Saddam, Saddam&rsquo;s regime, I guarantee you that it will have enormous positive reverberations on the region,&rdquo; he said.
Yeah, not so much.
We have no idea why Trump chose to post this video. But it&rsquo;s worth your contemplation as an informed citizen &mdash; and so far, U.S. corporate media haven&rsquo;t picked up the story.
Israeli media, in contrast, are all over it. You find full-length writeups inYedioth Ahronoth,The Times of Israel and Israel Hayom, the free daily founded by the late casino magnate Sheldon Adelson.
Count on us to keep tabs on this situation, since neither mainstream nor conservative media will.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Money Miscellany
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />One thing Trump won&rsquo;t be facing as he begins his second term is a dockworker strike.
The International Longshoremen&rsquo;s Association and the U.S. Maritime Alliance have reached a tentative contract agreement &mdash; heading off a strike at East Coast and Gulf Coast ports. Absent the deal, 45,000 workers from Maine to Texas would have walked next Wednesday.
Both sides still have to ratify the agreement. Neither side is saying how they came to terms.
Labor and management agreed last year on a pay package but they remained far apart on the issue of automation &mdash; and Trump weighed in on the side of the union.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> The tension between the incoming president and the Federal Reserve is getting thick.
Yesterday afternoon the Fed released the minutes from its December meeting. At the risk of repeating ourselves, Fed &ldquo;minutes&rdquo; aren&rsquo;t like the minutes from your local sewer board. They&rsquo;re not an objective record of who said what. They&rsquo;re a political document, calculated to telegraph a message to the markets.
And the message in this case is, &ldquo;Trump&rsquo;s policies could be inflationary.&rdquo;
Of course, Trump&rsquo;s name shows up nowhere <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20241218.pdf">in the Fed&rsquo;s document</a>. But it&rsquo;s easy to read between the lines &mdash; especially in the discussion about how soon inflation might return to the Fed&rsquo;s 2% target.
<blockquote>With regard to the outlook for inflation, participants expected that inflation would continue to move toward 2%, although they noted that recent higher-than-expected readings on inflation, and the effects of potential changes in trade and immigration policy, suggested that the process could take longer than previously anticipated. [Emphasis ours.]</blockquote>
After the release of the minutes, the trade in fed funds futures suggested the Fed might be already done with its rate-cutting cycle, which began only last September.
There&rsquo;s a 95% probability the Fed will leave rates alone at its next meeting on Jan. 29 &mdash; and an over-50% probability of the same outcome on March 19. (Beyond the next one or two meetings, this metric has zero predictive value.)
Trump can&rsquo;t be happy. &ldquo;Interest rates are far too high,&rdquo; he complained during a rambling press conference at Mar-a-Lago on Tuesday. Hilariously, that sentence was preceded by the assertion that &ldquo;inflation is continuing to rage.&rdquo;
Well, yes it is. That&rsquo;s why the Fed might be done cutting rates. More cuts would goose the economy short term, but they&rsquo;d also stoke the inflationary fires.
Trump wants low rates and low inflation. Well, so would we. We&rsquo;d also like a pony.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> While stock and bond markets are closed today, the commodity complex is still buzzing &mdash; and rallying.
Gold is up another $11 at last check to $2,674, the highest since mid-December. Silver&rsquo;s grip on the $30 handle is getting firmer, now $30.26. Crude has rebounded past $74.
Crypto, of course, trades 24/7. Alas, Bitcoin has slipped below $94,000 for the first time this year.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Comic Relief
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />We don&rsquo;t have much to say about Mark Zuckerberg&rsquo;s decision to give &ldquo;fact-checkers&rdquo; the boot at Facebook, Instagram, etc.
Of course, we&rsquo;ve said plenty over the years about <a href="https://paradigmpressroom.com/post/the-censorship-industrial-complex">the censorship-industrial complex</a>. Our own firm was the victim of it <a href="https://paradigmpressroom.com/post/the-censors-smack-paradigm-press">shortly after Election Day</a> &mdash; and it wasn&rsquo;t the first instance. As time has gone by, we&rsquo;ve also <a href="https://5minforecast.com/2022/10/26/the-media-vs-jim-rickards/">run afoul of the fact-checkers</a>.
But the caterwauling from the mainstream after Zuck&rsquo;s move has been something to behold. This is, hands-down, our favorite hot take.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2vOJKGUfPTTON6VfPwQsM8/f62196299354992cb9d8147a138eb8b4/NewYorkTimes.png" alt="kyle tweet new york times" width="450px" />
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />About Those Costco Apartments&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />On the subject of a developer&rsquo;s plans to build apartments atop a Costco in Los Angeles, a couple of readers weigh in&hellip;
&ldquo;If I remember correctly Costco members have an average income Of $90K per year. I wonder what will happen when it is integrated with a low-income housing project?&rdquo;
&ldquo;What about the parking?&rdquo; wonders another. &ldquo;They better have a lot/garage with tenant only access because when the wife and I go to Costco, parking is the biggest exercise in futility.
What a mess!&rdquo;
Dave: The developer plans two levels of underground parking. That&rsquo;s the extent of what we know.
As for the first question, it&rsquo;s a novel arrangement. Costco typically owns its properties, but not in this case. Costco will pay rent to the developer, Thrive Living. The rent in turn will help Thrive rely less on government affordable-housing subsidies.
Or so says Thrive founder Ben Shaoul, who tells The Wall Street Journal that if this project flies, it&rsquo;ll be a model for more affordable housing elsewhere.
Honestly, I&rsquo;ll be surprised if it ever gets off the ground given that we were first writing about it nearly two years ago and nothing of substance seems to have happened since&hellip;
Best regards,
<img class="aligncenter" src="https://media.paradigmpressgroup.com/signatures/dave-gonigam.png" alt="Dave Gonigam" width="250px" align="left" />
Dave Gonigam Managing editor, Paradigm Pressroom's 5 Bullets

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And here people thought Jimmy Carter was a “big-spending Democrat.”

Hey, Big Spender

5 bullets hero donald trump silhouette, ai deregulation, big tech industry

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What if Trump breaks his CBDC promise? Follow along on managing editor Dave Gonigam’s “low probability, high impact” thought experiment. 

What if Trump Breaks This Promise? 

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Still the AI Leader
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> So what&rsquo;s up with the buzziest company on the planet?
On the day after CEO Jensen Huang did his latest Steve Jobs-ian razzle-dazzle at the Consumer Electronics Show in Las Vegas&hellip; NVDA shares tumbled 6.2%.
To hear the corporate media tell it, the reaction to Huang&rsquo;s presentation was &ldquo;Is that all there is?&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Paradigm&rsquo;s own Davis Wilson, on location in Vegas, has no idea what the media&rsquo;s talking about.
Of course the crowd on hand for Huang&rsquo;s presentation wasn&rsquo;t exactly skeptical. But even taking that into account, Davis came away impressed.
&ldquo;First off, Nvidia&rsquo;s latest Blackwell AI chip is in full production after (wrongful) delay/malfunction rumors. In other words, the race to build bigger, faster, better AI models is only gaining steam.
&ldquo;Here&rsquo;s another big takeaway: AI is making GPUs cheaper and more efficient, and it&rsquo;s giving Nvidia an even bigger moat over its competition.&rdquo;
GPUs are &ldquo;graphics processing units.&rdquo; They&rsquo;re NVDA&rsquo;s bread and butter.
&ldquo;During his keynote address,&rdquo; says Davis, &ldquo;Huang used the company&rsquo;s new, updated gaming GPUs as an example: Previous models were being sold for $1,599. The new model is $549, and that cheaper price tag is all thanks to the efficiency created by AI in the design and manufacturing process.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;Nvidia is also hyper-focused on creating the world&rsquo;s first physical AI model for robotics and industrial AI called Nvidia Cosmos,&rdquo; Davis continues.
What does that mean, exactly?
&ldquo;If you think large language models like ChatGPT or Grok take a lot of data, compute and training, now apply all that to the physical world.
&ldquo;Nvidia is going to lead this buildout, too, which analysts expect could create another $1 trillion opportunity for the company. Jensen even stated that: &lsquo;The ChatGPT moment for general robotics is just around the corner.&rsquo;&rdquo;
And there&rsquo;s more. Advances in AI agents that can streamline mundane business tasks&hellip; advances in autonomous vehicle technology (already in use by Mercedes-Benz and Volvo)... and something called Project DIGITS. Davis says that&rsquo;s &ldquo;the company&rsquo;s effort to put an AI supercomputer into the hands of individuals with just a PC.
&ldquo;The bottom line is that AI is advancing across the board and a whole new crop of exciting innovations are coming down the line in the near future, thanks to the leader in AI &mdash; Nvidia.
&ldquo;NVDA is still at the top of my high-quality list.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> It&rsquo;s at this point we&rsquo;ll remind you of what we&rsquo;ve been saying for a few weeks, most recently Monday: NVDA&rsquo;s share price is in line for a 25%-or-better scalping this year.
That&rsquo;s the outlook of Paradigm trading pro Enrique Abeyta. He says NVDA will see $1 trillion slashed from its market cap.
As Enrique sees it, the company is priced to perfection at a time when the buildout of AI infrastructure is getting ahead of itself. He compares it with the excess buildout of rail lines in the 19th century and fiber-optic lines for the internet at the turn of the 21st.
Yes, all that capacity came into use over time &mdash; but there was a wicked shakeout in the interim. (Remember the dot-com bust?)
Lo and behold, at its worst yesterday NVDA&rsquo;s market cap was down $275 billion &mdash; more than a quarter of the way toward Enrique&rsquo;s audacious $1 trillion forecast.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> As goes NVDA, so goes the market?
It sure seemed that way yesterday. NVDA&rsquo;s 6.2% slide helped drag down the Nasdaq by 1.9%... and the S&amp;P 500 by 1.1%.
The Dow was not spared, but because it&rsquo;s a price-weighted index NVDA had less of an impact &mdash; sending the Big Board down 0.4%. (NVDA became one of the 30 Dow stocks last November, replacing Intel.)
We&rsquo;ll reiterate what we said Monday: Enrique believes after NVDA&rsquo;s $1 trillion drawdown, it will roar back to at least double its current market cap. Davis will use any drawdown to add to his NVDA position.
That said, NVDA wasn&rsquo;t the only market story yesterday or today&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Inflation Jitters
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> The mainstream attributes yesterday&rsquo;s sell-off to inflation jitters &mdash; and for once the mainstream might be onto something.
The ISM Services Index came out yesterday. Ordinarily we pay no nevermind to this number. The service sector of the economy has been robust for months now &mdash; and yesterday&rsquo;s headline number of 54.1 was further confirmation. (Anything above 50 suggests growth; below 50, contraction.)
But the internals of the survey are cause for concern. The &ldquo;prices paid&rdquo; sub-index blew out from 58.2 to 64.4. Here, higher numbers are bad; service-oriented businesses are seeing their costs explode.
Either they&rsquo;ll have to eat those costs&hellip; or they&rsquo;ll have to pass them onto their customers.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> As we mentioned yesterday, the bond market is definitely sniffing out a continued resurgence of inflation during 2025.
The official inflation rate bottomed in September at 2.4% It rose in October to 2.6% and in November to 2.7%. The next read on this number is due a week from today.
Three weeks from today the Federal Reserve will issue its next proclamation on interest rates.
At this time the betting in the futures market is that the Fed will stand pat &mdash; leaving the benchmark fed funds rate at 4.5%. If that&rsquo;s what happens, the Fed&rsquo;s rate-cutting cycle will be put on hold only 4&frac12; months after it began.
That&rsquo;s unprecedented &mdash; at least so far in this century. It would confirm that inflation is not &ldquo;contained&rdquo; &mdash; and perhaps that it was a mistake for the Fed to start cutting rates in the first place.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Amid that backdrop, the major U.S. stock indexes are in the red again today.
Now it&rsquo;s the Dow&rsquo;s turn to take the bigger hit &mdash; down 0.4% as we check our screens. The S&amp;P 500 and the Nasdaq are both down about a third of a percent, the S&amp;P back under 5,900. Nvidia is slightly in the green, up a third of a percent.
A resurgent dollar isn&rsquo;t helping stocks; the U.S. dollar index is back above 109.
Inflation continues to spook the bond market, too &mdash; pushing yields higher. The 10-year Treasury is *this* close to 4.7% &mdash; which would equal a peak set nearly nine months ago.
Dollar strength isn&rsquo;t hurting precious metals, however. Gold is up to $2,664 and silver $30.17. Crude is flat at $74.19.
No joy in crypto-land &mdash; with Bitcoin under $95,000 for the first time in nearly a week.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />De-Dollarization Update
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> By one measure, the dollar&rsquo;s status as the world&rsquo;s reserve currency sits at a three-decade low.
New figures from the International Monetary Fund reveal that dollar-denominated foreign exchange reserves make up 57.4% of total forex reserves worldwide.
That&rsquo;s down from 66% a decade ago.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1IlULiprcRwZbH84AW3kO9/11bd5354ff7f440f861ee919a0513fa5/Dollar.png" alt="Dollar" width="540px" />
Note that there was a bit of a recovery going into 2022 &mdash; and then came Russia&rsquo;s invasion of Ukraine and Washington&rsquo;s unprecedented sanctions on Russia.
The Global South has collectively accelerated its exodus from dollar reserves since. Many of those dollars have flooded back stateside, fueling the inflation of recent years.
At this pace, financial blogger Wolf Richter says the dollar&rsquo;s share of forex reserves will fall to 50% by 2034.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> On a related note, the BRICS grouping of countries has expanded from nine members to 10.
Indonesia is the fourth most populous country in the world, right behind the United States. Its economy is the seventh largest.
As a reminder, the original BRICS grouping of Brazil, Russia, India and China was joined by South Africa in 2010&hellip; and expanded last year to include Egypt, Ethiopia, the United Arab Emirates and Iran.
At his Geopolitical Economy Report page on Substack, independent journalist Ben Norton notes that Indonesia is the world&rsquo;s biggest producer of nickel &mdash; essential to EV batteries and solar panels.
Reminder: During Tesla&rsquo;s conference call in July 2020, Elon Musk pleaded: &ldquo;Any mining companies out there, please mine more nickel.&rdquo; Wanna bet China gets dibs on Indonesia&rsquo;s nickel now? China is already Indonesia&rsquo;s No. 1 trading partner.
BRICS present the most credible threat to the dollar&rsquo;s status as the globe&rsquo;s reserve currency &mdash; although we caution that toppling a reserve currency is a decades-long process. It took 30 years for the dollar to supplant the British pound &mdash; a process that came to a head with the Bretton Woods agreement of 1944.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Seems to Be Taking a Long Time&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Headlines abound this week about Costco&rsquo;s plans to stack apartments on top of a store in Los Angeles.
Which is bizarre because we first mentioned it in this space nearly two years ago.
A developer called Thrive Living aimed to build a mixed-use complex on five acres that used to be the site of a hospital. Here&rsquo;s the artist rendering we shared <a href="https://5minforecast.com/2023/02/02/artificial-intelligence-gets-woke/">on Feb. 2, 2023</a>&hellip;

<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1IRWKRtEjAbvNlZDbLvTOL/e29c801897bb8f398e83400df62f9f87/Costco.png" alt="Costco" width="300px" />

Yeah, but does your rent come with a Costco membership? [Artist rendition by Thrive Living]
The same drawing shows up in a Wall Street Journal article published on New Year&rsquo;s Day that spells out a few more details about the first-of-its-kind project.
&ldquo;Thrive Living is planning to begin construction in early 2025 on an 800-unit affordable-housing complex with the megaretailer on the ground floor in the Baldwin Village neighborhood of South Los Angeles. The project, which includes a rooftop pool and fitness center, would have 184 apartments for low-income households.&rdquo;
OK, fine, but what&rsquo;s the news here? What actually changed in the last 23 months?
Also unanswered are the cheeky answers we first posed at the time: Will the elevators be big enough to accommodate one of those flatbed carts? Will the giant jars of mayonnaise fit in the kitchen cabinets?
And most important&hellip; What if you come home one day and find they moved your apartment to a different part of the building?
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />A Reader Is Triggered
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;Find another job,&rdquo; a reader writes after <a href="https://paradigmpressroom.com/post/is-nvidia-the-next-amazon">Monday&rsquo;s edition</a>.
&ldquo;I made the mistake of reading your gibberish today! Usually I delete and forget when it&rsquo;s your turn to comment.
&ldquo;It&rsquo;s humorous that you have anything to pontificate about Elon Musk. Back to deleting. You&rsquo;re not worth getting worked up over.&rdquo;
Dave responds: Which suggests you did get worked up over something originally. But what? And what did I say about Elon that set you off Monday?
Anyway, I stumbled across something else this morning you might find triggering. Enjoy!
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/76vQzHKQi700KtJ1enEeKf/35eb3cb848e6d073f0561ae3cc9dba80/ElonMuskTweet.png" alt="elon musk tweet" width="540px" />
Whatever that was supposed to mean, right?
Best regards,
<img class="aligncenter" src="https://media.paradigmpressgroup.com/signatures/dave-gonigam.png" alt="Dave Gonigam" width="250px" align="left" />
Dave Gonigam Managing editor, Paradigm Pressroom's 5 Bullets

mis-hero-img-01-08-25 Jakarta, September 07,2024: Nvidia corporation logo displayed on smartphone with photo of CEO and Founder, Jensen Huang. Nvidia is a global leader in artificial intelligence hardware and software

shutterstock 2513393439

So what’s up with the buzziest AI company on the planet?

Still the AI Leader 

shutterstock 492348688

Because the corporate media won’t tell you, it falls to us...

Will the Big Banks Sabotage Trump’s Legacy?

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />The Biggest Financial Story of 2025
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> It will be the most talked-about financial story of 2025. And you&rsquo;re reading about it today &mdash; weeks or months before it becomes headline news.
Welcome to the latest installment of the Paradigm Press editors&rsquo; 2025 predictions. Today we&rsquo;re revisiting a forecast that our hedge fund veteran and trading pro Enrique Abeyta first shared in this space last month.
The forecast is this: AI darling Nvidia will shed $1 trillion from its $3.5 trillion market cap. Probably in a single day.
We&rsquo;ll spare you the trouble of doing the math. That&rsquo;s a 28.6% plunge in NVDA&rsquo;s share price.
It wouldn&rsquo;t take much to push Nvidia over the edge. The most likely catalyst, Enrique says, is an earnings-season disappointment.
And by that he means something as mundane as, say, revenue growth of &ldquo;only&rdquo; 65% when the Wall Street consensus was looking for 82%.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Why is Enrique so certain? Because AI is in the same place now that the internet was a generation ago&hellip; and where railroads were in the 19th century.
In both of those instances, there was a massive overbuild of infrastructure &mdash; be it rail lines back in the day or fiber-optic lines more recently.
Yes, all that excess capacity was put into use eventually. But in the interim, there was a vicious shakeout.
If you&rsquo;re old enough, you remember the internet example well &mdash; perhaps too well. The dot-com bust took down the price of Amazon, for instance, by 90%... before it rebounded and became a world-beating colossus.
Enrique says AI is at the same pivot point: &ldquo;We&rsquo;re moving from the network-building phase of the AI boom to the implementation and harvesting phase,&rdquo; he says in today&rsquo;s edition of our sister e-letter Truth &amp; Trends. &ldquo;So investment will shift from hardware to software.
&ldquo;The shift could set Nvidia up for disappointment, especially after two tremendous years that have set extremely high expectations.&rdquo;
Long term, Enrique is confident that Nvidia will recover the losses he&rsquo;s forecasting &mdash; and go on to double or triple or even 10X from today&rsquo;s valuation.
But shorter term, he says NVDA is set for a great fall &mdash; one that will catch nearly everyone by surprise. Not you, though. Not now.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> How should you position yourself in light of this forecast, you ask?
Well, if you&rsquo;re a long-term buy-and-hold kind of person, you simply hold on for dear life through the downdraft in NVDA shares &mdash; confident that it&rsquo;s a strong company, that the share price will roar back and that you&rsquo;ll be rewarded for your patience. (Not everyone has that patience. Part of good investing is knowing how much pain you&rsquo;re willing to endure.)
Enrique recommends out-of-the-money put options on NVDA. Alternatively, colleague Davis Wilson figures whenever the sell-off comes, he&rsquo;ll simply add to his NVDA position &mdash; scooping up even more shares at a bargain price.
But it&rsquo;s our AI authority James Altucher who has the most intriguing way to hedge the risk from NVDA right now.
If you&rsquo;re a member of his premium advisory True Alpha, you&rsquo;re already hip to it. If you&rsquo;re not, it has to do with an announcement James expects Nvidia CEO Jensen Huang to make tonight at the Consumer Electronics Show in Las Vegas.
James anticipates the profit potential coming out of this announcement will run as high as 2,350% or 5,133% even 7,100% &mdash; in a matter of days. (Those aren&rsquo;t numbers we pulled out of the air; those are actual returns after announcements of similar magnitude.)
As might expect, you won&rsquo;t achieve these gains buying NVDA shares. Also as you might expect, time is of the essence if you want to seize the moment. Huang takes the stage tonight at 6:20 p.m. in Las Vegas, 9:20 p.m. on the East Coast. <a href="https://pro.paradigm-press.info/m/2399848">Follow this link and James will walk you through this one-of-a-kind opportunity</a>.

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />A Rising Tide Lifts SOME Boats
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Rarely have the major U.S. stock averages been this high&hellip; while so many companies comprising the index are underperforming.
As a new week begins, the S&amp;P 500 is back above 6,000. Not bad at all &mdash; only 1.4% below its record close notched one month ago today.
But beneath the surface? Paradigm chart hound Greg Guenthner points us to this statistic from Bank of America: &ldquo;The percentage of stocks outperforming the S&amp;P 500 is at an all-time low. That&rsquo;s right, never in the stock market's history have so many issues lagged their benchmark.
&ldquo;Here&rsquo;s another breadth measure that caught our attention: A mere 20% of S&amp;P stocks are trading above their 50-day moving average&hellip;
&ldquo;We use a stock&rsquo;s 50-day average to measure its intermediate trend,&rdquo; Greg explains.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4hyMhIpYRxKTzCnntj1L4u/6a595e5c99e25e9860efc453a883209c/BadBreadth.png" alt="bad breadth" width="540px" />
&ldquo;Based on the chart, four out of five S&amp;P 500 components are failing to keep pace with the bull market. That jibes with the BofA stat and the handful of failed breakouts in the market's small-cap, biotech and speculative growth areas.
&ldquo;I doubt stock market bulls envisioned such a precarious start to the year. More individual names must kick into gear and head higher. If they don&rsquo;t, watch out for the stock market averages to catch lower with most of the market.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> For the moment, however, the disconnect is widening further.
As mentioned a few moments ago, the S&amp;P 500 is back above 6,000 &mdash; that&rsquo;s a 1.1% gain on the day. But at last check the small caps are lagging (up 0.75%) and biotechs are lagging worse (up 0.23%). It&rsquo;s the chip stocks, including Nvidia, that are doing well on the back of a strong earnings report from Foxconn &mdash; the big Taiwanese supplier to both Nvidia and Apple.
Elsewhere gold is flat at $2,633 &mdash; but silver has recovered a $30 handle for the first time since before Christmas. Crude is up again to $74.43, another high last seen in mid-October.
The crypto complex is solidly in the green, with Bitcoin reclaiming $100,000 for the first time since Dec. 19. In fact, checking our screens, it&rsquo;s over $102,000.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />The Year of the Biotech Takeover
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> The current weakness in biotech stocks could easily be erased with a couple of takeover announcements &mdash; and Paradigm biotech specialist Ray Blanco expects just that.
On Friday, Ray told us he expects the biotech sector to get a lift starting next week when several companies will break news at the J.P. Morgan Healthcare Conference in San Francisco.
But apart from the scientific breakthroughs, Ray is also eyeing the potential for buyout activity.
&ldquo;Big Pharma's massive patent cliff issue isn't going away,&rdquo; he tells his Catalyst Trader readers. &ldquo;They're staring down hundreds of billions in revenue at risk through the end of the decade as top-selling drugs lose their market exclusivity to generics.&rdquo;
And the reality of pharma is that internal research and development is a lot harder than simply buying out smaller developers of promising new treatments.
Buyout activity in 2024 was sluggish. &ldquo;But we started seeing a small surge in biotech IPOs late last year,&rdquo; Ray says &mdash; &ldquo;plus venture money is flowing again.
&ldquo;The deal landscape is also shifting. Instead of waiting for late-stage assets, pharma's getting comfortable betting earlier. We're seeing more Phase 1 and 2 deals.
&ldquo;Hot areas include immunology and autoimmune diseases, while antibody-drug conjugates (ADCs), radioligand therapies and brain disorder treatments remain in high demand.
&ldquo;To top it off, we&rsquo;re now past the election and clarity is setting in on the regulatory front. I expect the dealmaking pace to pick up significantly as we get a better look at the new administration&rsquo;s policies.&rdquo;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Once More, for Old Times&rsquo; Sake
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />With Congress about to certify Donald Trump&rsquo;s election as the 47th president today, the establishment media are hauling out this chestnut one more time&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4VF1Gh8E8PkpI5rm5CbGxG/4775c70faa688abed9e255ae44628396/NewsAnalysis.png" alt="News Analysis" width="540px" />
That&rsquo;s The New York Times, by the way.
&ldquo;Jobs are up, wages are rising and the economy is growing as fast as it did during Mr. Trump&rsquo;s presidency,&rdquo; says the Times. &ldquo;Unemployment is as low as it was just before the COVID-19 pandemic and near its historic best. Domestic energy production is higher than it has ever been&hellip;
&ldquo;Those positive trends were not enough to swing a sour electorate behind Vice President Kamala Harris in the November election, reflecting a substantial gap between what statistics say and what ordinary Americans appear to feel about the state of the country&hellip;&rdquo;
And on and on. You get the idea.
As far back as the spring of 2022, we noticed how mainstream media adopted a running theme to the effect of: The economic numbers are good! Why don&rsquo;t the rubes appreciate how good they&rsquo;ve got it?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4EvlQwWeEtAcF903IsQx2X/dfa5dd2656f04586d3976ee9c5aa489f/MSNBC.png" alt="msnbc" width="540px" />
By last year, the media was fretting over a &ldquo;vibecession.&rdquo; The Wall Street Journal ran with this headline: &ldquo;What&rsquo;s Wrong With the Economy? It&rsquo;s You, Not the Data.&rdquo; (I <a href="https://paradigmpressroom.com/post/mainstream-muddies-the-waters-inflation">tore apart</a> the article at the time.)
We mention this not to take Donald Trump&rsquo;s side; your editor has every expectation Trump will find entirely new ways to foul things up. It&rsquo;s just amusing how the media seems hell-bent to take one more whack at a dead horse&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />The H-1B Commotion&hellip; and X Censorship
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;As much as I hate to agree with Bernie Sanders, he is right,&rdquo; writes a reader on the ongoing H-1B visa commotion.
&ldquo;I have personally seen H-1B engineers treated like slave labor, or indentured servants as Bernie called them.
&ldquo;They are locked into working for the sponsoring employer often in less than desirable conditions or environment and certainly half the pay that American counterparts make and have no freedom to escape except by going home.
&ldquo;It is all so the hiring manager can save money for the firm, look good and earn a bigger bonus or promotion. It is simply greed.
&ldquo;The quantity of H-1B visas needs to be cut back to a much smaller number
and the qualifying criteria should be enforced.&rdquo;
Dave responds: It&rsquo;s been fascinating to watch this commotion unfold &mdash; especially Elon Musk&rsquo;s involvement.
As John Robb writes on his Substack site, Musk made two unforced errors over the holidays. First, he labeled people with an opposing opinion &ldquo;subtards&rdquo; (shades of Hillary Clinton&rsquo;s &ldquo;deplorables&rdquo; slur)... and then he implicitly threatened to censor them on X. (&ldquo;I will go to war on this issue the likes of which you cannot possibly comprehend.&rdquo;)
Eventually he relented &mdash; acknowledging &ldquo;that the program is broken and needs major reform.&rdquo;
Coincidentally or not, Musk has announced a new and extremely vague policy on X in which posts with a &ldquo;negative&rdquo; tone will reach fewer users.
Several well-known users have put Musk&rsquo;s Grok AI tool to work&hellip; to see if their content will run afoul of the new standards. The results are equal parts amusing and disturbing.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7qObJvPubwyJg0oXGOwHjP/61d39aecc0a59b305d7f5e8449bc95c8/mel-tweet.png" alt="mel tweet" width="540px" />
Or maybe the new policy doesn&rsquo;t stem from the H-1B controversy at all.
That&rsquo;s because other folks point out the crackdown on &ldquo;negativity&rdquo; comes shortly after Musk&rsquo;s xAI artificial-intelligence venture got a $6 billion infusion from several institutional investors including BlackRock &mdash; the one-time advocate of corporate &ldquo;wokeism&rdquo; until CEO Larry Fink decided it was bad for business.
Whatever the case, the meme-o-verse sees the writing on the wall &mdash; and is not posting it on X!
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3NGB301iTLQxJu8JcNVzHt/c87853d75797623ceef2b7eecdcd033e/ElonTweet.png" alt="elon tweet" width="540px" />
Best regards,
<img class="aligncenter" src="https://media.paradigmpressgroup.com/signatures/dave-gonigam.png" alt="Dave Gonigam" width="250px" align="left" />
Dave Gonigam Managing editor, Paradigm Pressroom's 5 Bullets

shutterstock 2425904837

It will be the most talked-about financial story of 2025. And you’re reading about it today – weeks or months before it becomes headline news.

Is Nvidia the Next Amazon? 

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />AI &ldquo;Shows Its Work&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;We're witnessing something truly historic &mdash; the birth of machines that can actually think and reason,&rdquo; says Paradigm&rsquo;s AI authority James Altucher.
&ldquo;This isn't just about computers getting faster or smarter. This is about machines developing real problem-solving abilities.&rdquo;
Big claim, we know. As the saying goes, extraordinary claims require extraordinary proof.
James brings the goods in today&rsquo;s installment of the Paradigm team&rsquo;s 2025 predictions&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> While most of us were gearing up for the holidays, James says &ldquo;the world&rsquo;s top AI companies unveiled new artificial intelligence models so advanced they can solve complex math problems better than most humans.&rdquo;
On Dec. 19, Google released Gemini 2.0 Flash Thinking. James says this model &ldquo;can work through problems step-by-step, just like a person would.&rdquo;
The next day, OpenAI &mdash; the company behind ChatGPT &mdash; took the wraps off its own model called o3.
&ldquo;The timing wasn't a coincidence,&rdquo; James tells us. &ldquo;These companies are locked in an intense battle for AI supremacy.
&ldquo;Both of these models use something called &lsquo;chain-of-thought&rsquo; &mdash; basically teaching AI to show its work, like your math teacher always wanted. Instead of just spitting out an answer, these models break down problems into smaller pieces and work through them one at a time.
&ldquo;Think of it like teaching a child to solve 247 + 385. Instead of just guessing, they learn to add the ones column first, then the tens, then the hundreds.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />&ldquo;This might sound simple, but it's revolutionary for AI,&rdquo; James goes on.
&ldquo;Previous AI models often struggled with complex problems because they tried to solve everything at once. These new models are different. They take their time, think things through and explain their reasoning along the way.
&ldquo;The results are impressive. OpenAI's o3 model can now solve graduate-level physics problems and write sophisticated computer code. In fact, o3 has achieved scores that put it in the top 1% of competitive programmers worldwide.
&ldquo;It can even solve complex math problems that stumped earlier AI models just a few months ago.
&ldquo;Google's Gemini 2.0 Flash Thinking is showing similar capabilities. It can analyze both text and images together, making it more versatile than previous models.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;What's even more remarkable is how quickly this technology is advancing,&rdquo; James enthuses.
&ldquo;OpenAI just released their previous model, o1, a few months ago. Now o3 is already here and performing dramatically better.&rdquo;
Key point: &ldquo;Every time AI gets smarter, it creates new opportunities for companies to make money.
&ldquo;Think about it: As AI gets better at solving complex problems, more businesses will want to use it. They'll use it to write better software, design new products and solve difficult engineering challenges.
&ldquo;Some companies are already using AI to speed up drug discovery and improve medical diagnoses. Others are using it to optimize supply chains and reduce energy consumption in data centers.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;The possibilities seem endless. And we're still in the early stages. The companies that successfully harness this technology could create generational wealth for their shareholders,&rdquo; James concludes.
Among them is the AI chip giant Nvidia &mdash; which we&rsquo;ll remind you is up 187% so far in the Altucher&rsquo;s Investment Network portfolio.
&ldquo;Just training these new AI models,&rdquo; says James, &ldquo;requires millions of dollars worth of specialized computer chips. And as the models get more complex, they need even more powerful hardware to run them.&rdquo;
With that in mind, Nvidia CEO Jensen Huang will take the stage this coming Monday evening at the Consumer Electronics Show in Las Vegas. And James believes Huang will use that venue to make an earth-shaking announcement.
The profit potential coming on the back of this announcement could be enormous. James says, &ldquo;We&rsquo;ve seen similar events produce peak gains as high as 2,350%... 5,133%... and even 7,100% in only six days.&rdquo;
What might this announcement be? James thinks he knows based on the information served up by his own AI tool &mdash; <a href="https://pro.paradigm-press.info/m/2399431">as he&rsquo;ll show you when you follow this link</a>.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Follow-Ups: U.S. Steel, Winter Power Outages
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Shares of U.S. Steel (X) have tumbled 5.2% so far today &mdash; now that Joe Biden has nixed a takeover bid by Japan&rsquo;s Nippon Steel.
The announcement this morning wasn&rsquo;t a total surprise; we anticipated the move last month. Biden cited risks to &ldquo;national security&rdquo; &mdash; even though Japan has been a steadfast U.S. ally for nearly 80 years.
Nippon Steel promised to plow $2.7 billion into U.S. Steel&rsquo;s archaic and decrepit American operations. That wasn&rsquo;t chump change: Barron&rsquo;s says it amounts to two years of U.S. Steel&rsquo;s operating profits.
Now that&rsquo;s all up in the air: U.S. Steel says without an infusion of Nippon Steel&rsquo;s cash, it might have to close factories in Pennsylvania. By most accounts a firm majority of U.S. Steel workers were on board with the deal, even if leadership of the United Steelworkers Union was not.
According to Paradigm&rsquo;s natural resources expert Byron King &mdash; who grew up in the shadow of U.S. Steel&rsquo;s Pittsburgh operations &mdash; none of this would be an issue were it not for the name of the company.
&ldquo;If U.S. Steel was named Monongahela River Steel, it would be a no-brainer,&rdquo; he tells us. &ldquo;But the name alone has certain optics that alarm Biden and Trump.&rdquo;
Yes, Trump opposes the deal as well.
It&rsquo;s all so silly. The name notwithstanding, U.S. Steel hasn&rsquo;t been the biggest U.S. steelmaker for a long time. Based on market cap, it&rsquo;s No. 4 behind Reliance, Steel Dynamics and No. 1 Nucor.
At this point, finding another buyer for U.S. Steel might be a non-starter. In late 2023, No. 5 steelmaker Cleveland-Cliffs (CLF) submitted a low-ball offer &mdash; barely half that of Nippon Steel&rsquo;s.
But Bloomberg News says since then CLF has been busy digesting its acquisition of the Canadian steelmaker Stelco &mdash; &ldquo;and waffled on whether it would still want all or some of US Steel."
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> As a polar vortex bears down on the eastern United States, the rickety power grid might not be able to keep up.
On New Year&rsquo;s Eve, the North American Electric Reliability Corp. issued a call to arms that&rsquo;s &ldquo;chilling&rdquo; in two senses of the word.
&ldquo;I'm asking everyone in the electricity supply chain, from natural gas producers to pipeline operators, to system operators, to power generators and the utilities themselves, to take all appropriate actions to ensure that we can maintain an uninterrupted supply of electricity to customers,&rdquo; said a video message from NERC President Jim Robb.
In a separate statement, NERC says it&rsquo;s &ldquo;especially concerned about natural gas supply given the significant amount of production in the mid-Atlantic and Northeast.&rdquo;
Absent &ldquo;all appropriate actions,&rdquo; the system risks a rerun of the outages in Texas in early 2021&hellip; and the Christmas Eve cold snap of 2022 that hit the mid-Atlantic.
As we reminded you throughout 2024, the power grid&rsquo;s capacity is no bigger now than it was more than a decade ago &mdash; and at a time when power-hungry AI is imposing <a href="https://paradigmpressroom.com/post/the-monster-that-ate-the-power-grid-ai">ever-greater demands on the grid</a>.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Santa&rsquo;s a No-Show
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Santa Claus has only a few hours left to show up at Wall Street&rsquo;s chimney.
As we mentioned yesterday, there&rsquo;s a precise definition for the term &ldquo;Santa Claus rally&rdquo; &mdash; encompassing the final five trading days of the year, and the first two of the new year. The current window opened on Christmas Eve, and slams shut at the close today.
Going into this window, the S&amp;P 500 sat at 5,974. As we write this morning, it&rsquo;s at 5,908. The index needs to rally another 1.1% just to equal its level at the start of the window. Anything can happen, but it seems unlikely&hellip;
In years when a Santa Claus rally doesn&rsquo;t materialize, the market is typically only 0.4% higher six months later. And that&rsquo;s an average &mdash; encompassing painful years like the 2000 dot-com bust and the 2008 financial crisis.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> So why didn&rsquo;t the Santa Claus rally materialize? 
&ldquo;Here&rsquo;s my best guess,&rdquo; Greg Guenther writes his Trading Desk readers: &ldquo;First, Trump&rsquo;s victory emboldened the bulls and pulled much of what would have been the December melt-up gains ahead by a month. November featured a massive crypto breakout and a stock market run that featured some pretty bubbly groups extending higher.
&ldquo;So I think it&rsquo;s fair to say that the market became way too frothy by the time December rolled around. That&rsquo;s when market breadth began to deteriorate. Fewer and fewer stocks were moving higher, and we once again found ourselves in a market propped up by the mega-caps and many of the bigger breakouts started to reverse.&rdquo;
All that said, &ldquo;I don&rsquo;t want to put too much emphasis on this week&rsquo;s action,&rdquo; Greg avers. &ldquo;But it&rsquo;s clear many traders are spooked right now. The S&amp;P and Nasdaq Composite haven&rsquo;t posted a gain since before Christmas. Buyers will need to step in sooner rather than later.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Dollar strength against other major currencies isn&rsquo;t helping the U.S. stock market.
Yesterday the U.S. dollar index (DXY) broke above 109, the highest since late 2022. All else being equal, a strong dollar translates to weak stocks &mdash; as foreigners have to pay more in their own currency to buy American multinationals&rsquo; goods.
Seen in the context of a strong dollar, gold continues to be remarkably resilient &mdash; trading today at $2,641. That was an all-time high in late September. It just feels rotten because of the monster rally to nearly $2,800 by late October.
Crude is up another 1% today to $73.87, the highest since mid-October.
Bitcoin is suddenly back within $1,700 of the $100,000 level &mdash; and smaller alt-coins are rallying in sympathy.
<blockquote>➢ One economic number of note: The December ISM Manufacturing Index clocks in at 49.3 &mdash; better than expected, but at under 50 it still suggests the U.S. factory sector is shrinking. With the exception of one month last spring, the index has been stuck under 50 since late 2022.</blockquote>
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Biotech Booster
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;A big catalyst looms for the biotech industry in a couple of weeks,&rdquo; says Paradigm biotech specialist Ray Blanco.
The annual J.P. Morgan Healthcare Conference starts a week from Monday in San Francisco.
&ldquo;The JPM Conference often sets the tone for where biotech stocks run in a given year,&rdquo; says Ray &mdash; &ldquo;and with the subpar performance for the sector over the past couple of years, I&rsquo;m expecting we&rsquo;ll start to see a reversion to mean and bios starting to outperform.
&ldquo;The JPM Healthcare Conference is where money meets science &mdash; institutional investors, Big Pharma dealmakers and ambitious biotechs all packed into the same hotels trying to make magic happen.
&ldquo;Companies love to drop big news during their presentations. Clinical trial results, new partnerships, even full-blown takeovers often get announced when everyone's in town. With all eyes on biotech, positive news tends to move stocks more than usual.&rdquo;
Ray will be keeping extra-close tabs on the names he follows for both his Catalyst Trader advisory and the Paradigm Mastermind Group. If you subscribe to either of those services, watch your inbox&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />The H-1B Visa Commotion
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />In the mailbag, one of our regulars is kicking the hornet&rsquo;s nest of H-1B visas.
(If you&rsquo;re not familiar with the commotion, <a href="https://rudeawakening.info/posts/did-human-trafficking-build-silicon-valley">today&rsquo;s edition of the </a><a href="https://rudeawakening.info/posts/did-human-trafficking-build-silicon-valley">Rude Awakening</a> from colleague Sean Ring is a good place to get acquainted.)
&ldquo;With the row going on at X over H-1B visas,&rdquo; our reader writes, &ldquo;I had seen that Eric Weinstein wrote <a href="https://www.ineteconomics.org/uploads/papers/Weinstein-GUI_NSF_SG_Complete_INET.pdf">a paper</a> on how the government in cooperation with corporations uses false claims of labor shortages to import workers from abroad to suppress wages.
&ldquo;While his paper is limited to discussing workers with Ph.D.s in the STEM disciplines and from 1998, the practice is not only still well and alive today, but also expanded beyond just workers with Ph.D.s in STEM fields as I can personally attest to. Companies don't fight over new engineers, and schools put great effort into herding kids into STEM disciplines.
&ldquo;I was glad I read the paper and learned something new, as disheartening as it was to find out the practice has been going on longer than I've been alive, and I encourage anyone who wants to learn more about it to read it as well.
&ldquo;Hard to call it a Happy New Year with the way this one seems to be starting, but I'm not about to write off the other 363 days just yet. Here's to wishing everyone the best!&rdquo;
Dave responds: And likewise to you &mdash; thanks for weighing in.
I don&rsquo;t have a whole lot to say on the subject, not right now anyway. What&rsquo;s striking to me is how quickly some of MAGA Nation has turned on Elon Musk &mdash; and to some extent, even on Donald Trump after his remarks <a href="https://x.com/amconmag/status/1874280786100445690?mx=2">at a New Year&rsquo;s Eve press gaggle</a>.
Meanwhile, look who&rsquo;s on board with the claim that corporate America is gaming the H-1B visa system&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2zTZSHOAgnmBgpJFCZOWR/385007728389399f4121daec10a18318/BernieTweet.png" alt="Bernie Tweet" width="540px" />
Obviously it&rsquo;s still early days &mdash; but I&rsquo;ve already seen more than one commentator remark that if Trump fails to get a handle on the abuse in the system, he&rsquo;s doomed to a Democratic landslide in the 2026 midterms. We shall see&hellip;
Best regards,
<img class="aligncenter" src="https://media.paradigmpressgroup.com/signatures/dave-gonigam.png" alt="Dave Gonigam" width="250px" align="left" />
Dave Gonigam Managing editor, Paradigm Pressroom's 5 Bullets

shutterstock 2464910497

“We're witnessing something truly historic — the birth of machines that can actually think and reason,” says Paradigm’s AI authority James Altucher.

AI “Shows Its Work” 

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Trump&rsquo;s Energy Agenda
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Someone created this meme in late 2024. We figured it would be prescient &mdash; but maybe not so soon in light of the New Year&rsquo;s Day headlines?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/irOuC1z0csqTZHQueSHzJ/298c918aceed2f800cf32d688b31ac7d/2025.png" alt="2025" width="540px" />
In any event, let&rsquo;s dive headlong into the Paradigm Press editors&rsquo; predictions for 2025 &mdash; starting with the outlook for energy once Donald Trump takes office in 18 days.
(Yes, for our purposes this morning we&rsquo;ll assume he takes office in 18 days&hellip;)
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;The needed executive orders have already been drafted and will be awaiting Trump&rsquo;s signature on day one,&rdquo; Jim says.
&ldquo;In some cases, legislation will be needed to implement Trump&rsquo;s policies in these areas but that legislation is also being drafted behind the scenes.&rdquo;
Jim describes three main elements to the Trump energy agenda &mdash; &ldquo;the implementation of &lsquo;drill, baby, drill&rsquo; energy policies, the end of the Green New Deal programs and changes in the current climate agenda.&rdquo;
Naturally, there&rsquo;s some overlap &mdash; but let&rsquo;s take them on one-by-one.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;On energy production, Trump will immediately open up federal lands to new permits for oil and natural gas exploration,&rdquo; Jim says.
&ldquo;These permits for new drilling will also apply to offshore drilling in the Gulf of Mexico and both the Atlantic and Pacific coasts as well as Alaska.&rdquo;
Meanwhile, &ldquo;Trump will permit more fracking in places like Pennsylvania and New York, which will result in production of far more natural gas.
&ldquo;At the same time, Trump will order the Environmental Protection Agency (EPA) to stop shutting down coal-fired plants using bogus environmental concerns.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;On the Green New Deal, Trump will end subsidies to electric vehicles and impose high tariffs on EV imports from China and Mexico,&rdquo; Jim continues.
&ldquo;Trump will also end subsidies to solar panels and windmills and will stop the installation of offshore wind farms, which are killing whales due to sonic booms and also killing rare birds with their turbines.
&ldquo;Trump is not opposed to EVs and solar and wind energy. He is opposed to green subsidies and EV mandates that are killing jobs in existing manufacturing facilities making internal-combustion engine vehicles and jobs in coal and natural gas-fired energy plants.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> As for climate change, Jim says Trump will &mdash; once again &mdash; withdraw the United States from the 2015 Paris Agreement adopted by the UN Climate Change Conference.
&ldquo;He will also repudiate any wealth transfers from the U.S. to developing economies agreed at the 29th Conference of the Parties (COP29) recently held in Azerbaijan (a major oil producer, by the way).
&ldquo;Trump will also reject the false science and flawed models produced by the United Nations Intergovernmental Panel on Climate Change (IPCC). These models have been used to justify the most extreme climate change mandates but they have been shown to be based on false assumptions and populated with manipulated data.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Add it all up and what do you get?
&ldquo;The combination of all of these policy changes,&rdquo; says Jim, &ldquo;will result in increased energy output, lower energy prices, a more reliable power grid and a strong dollar as the U.S. becomes a net exporter instead of a net importer of energy.&rdquo;
And contrary to what you might think, Jim says lower energy prices won&rsquo;t necessarily be bad news for Big Oil. As he sees it, what they lose from lower prices they&rsquo;ll more than make up for with higher production &mdash; which translates to higher profits and higher market share relative to the rest of the world.
The biggest of the Big Oil players are Exxon Mobil (XOM) and Chevron (CVX). Buy now and while you wait for the share price to rise you&rsquo;ll collect a respectable 3.7% dividend from XOM and 4.5% from CVX. At the moment, Chevron&rsquo;s yield is better than you can get from Treasury bills.
So that&rsquo;s Jim&rsquo;s prediction for 2024. Come back tomorrow when it&rsquo;s James Altucher&rsquo;s turn &mdash; and you&rsquo;ll learn about the next generation of AI.
In the meantime, we have other matters to attend to&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Supply Chain Alert: 13 Days Till Dockworkers Walk
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />While it&rsquo;s 18 days till Inauguration Day, it&rsquo;s 13 days until East Coast and Gulf Coast dockworkers go on strike.
Contract talks between the International Longshoremen&rsquo;s Association and the U.S. Maritime Alliance will resume next Tuesday. The two sides came to terms last year on pay &mdash; but automation remains a huge sticking point. Donald Trump spoke up last month in support of the union.
Between the threat of a strike and uncertainty over Trump&rsquo;s tariff plans, companies are loading up on inventory from overseas while they can: The logistics company Wabtec says imports through the Port of Los Angeles last week were up 73% from a year earlier.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Mr. Market has some heavy lifting to do if there&rsquo;s going to be a Santa Claus rally.
&ldquo;Many investors are often confused about how the Santa Claus rally works, and when it actually takes place,&rdquo; says Paradigm chart hound Greg Guenthner.
A Santa Claus rally covers the last five trading days of the year, and the first two of the following year. So this time around, the window started on Christmas Eve and ends tomorrow.
&ldquo;The Santa Claus rally has averaged a 1.6% gain since 1928, according to Oppenheimer, with one-month, three-month and six-month forward returns averaging 1.7%, 2.6% and 5.3%, respectively,&rdquo; Greg tells us. &ldquo;Not bad!&rdquo;
<blockquote>➢ That said, even when a Santa Claus rally doesn&rsquo;t materialize, the market posts an average 0.4% gain by the time Independence Day rolls around.</blockquote>
Among the big movers today are Tesla &mdash; down 5.5% after reporting its first year-over-year drop in annual vehicle sales in more than a decade.
Also in the spotlight is IAC Inc. (IAC) &mdash; a holding company chaired by the octogenarian media mogul Barry Diller. Among IAC&rsquo;s holdings is a car-sharing app called Turo. Investigators believe Turo was used to rent the vehicles used in both the New Orleans car-ramming incident and the Las Vegas Cybertruck explosion yesterday. But for the moment, IAC shares are flat on the day.
Crude is starting the year with a big rally &mdash; up 2.5% to $73.52, the highest since mid-October. Oilprice.com chalks it up to &ldquo;expectations of stronger economic and oil demand growth.&rdquo; Whatever the case, it comes despite a rally in the dollar relative to other currencies. Rude Awakening editor Sean Ring tells us crude now is moving toward an upside target of $76.70.
Precious metals are also on the rally tracks &mdash; gold up $30 to $2,655 and silver up 60 cents to $29.46. Bitcoin can&rsquo;t get any traction though, currently $96,428.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Loose Ends
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> We have a couple of loose ends from the period between Christmas and New Year&rsquo;s to tie up today&hellip;
First, Donald Trump filed a friend-of-the-court brief at the Supreme Court &mdash; urging the justices to pause <a href="https://paradigmpressroom.com/post/shortcut-to-a-miracle#4">the law that would ban TikTok</a> come Jan. 19, the day before his inauguration.
Trump &ldquo;takes no position on the underlying merits of this dispute,&rdquo; says the brief. Rather he&rsquo;s asking the court to take its time deliberating the case so that once he takes office his administration can &ldquo;pursue a political resolution of the questions at issue in this case.&rdquo;
Presumably the &ldquo;political resolution&rdquo; entails a sale of TikTok&rsquo;s U.S. assets to an American buyer. That&rsquo;s the one condition under which the ban would not take effect.
But TikTok&rsquo;s Chinese owners have had nearly nine months since the law&rsquo;s passage to line up a U.S. buyer &mdash; and no one has stepped forward yet with a credible offer.
The Supreme Court will hear arguments in the case a week from tomorrow.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Small-business owners have gotten a last-minute reprieve from onerous new regulations.
Under the Corporate Transparency Act of 2021, up to 32 million small businesses were under the gun to file a new form about their &ldquo;beneficial ownership&rdquo; with an agency many business owners had probably never heard of &mdash; FinCEN. That&rsquo;s a unit of the Treasury Department formally known as the Financial Crimes Enforcement Network.
The law is yet another attempt by the feds to stop &ldquo;money laundering&rdquo; via anonymous shell companies &mdash; and yet another thorn in the side of small businesses.
The deadline to comply was yesterday. But as of Dec. 2, only 10 million businesses &mdash; fewer than a third of those affected by the law &mdash; had gotten around to submitting the paperwork.
Fortunately, a week ago today a federal appeals court put the reporting requirements on indefinite hold while the court reviews the law&rsquo;s constitutionality.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Olympic Medals Ain&rsquo;t What They Used to Be
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> If you thought the Paris Olympics were a train wreck&hellip; well, this won&rsquo;t alter your perception&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7Jac11S3Z2QrccBFVj3gzd/5874da90eefeaaf1b9c65d35e4375fb8/YohannTweet.png" alt="Yohann Tweet" width="540px" />
&ldquo;French bronze medal-winning Olympic swimmer Yohann Ndoye-Brouard wondered over the weekend whether a medal he captured is from this summer or 100 years ago,&rdquo; says an NBC News article. &ldquo;That's because the bronze he won in the 4x100-meter medley relay at the Paris 2024 Games seems to be deteriorating faster than a Leon Marchand lap.&rdquo;
Nor is Ndoye-Brouard alone. Several bronze medalists report similar decay.
Fortunately there are no similar reports about the silver and gold medals. But as we mentioned once again last year, the &ldquo;gold&rdquo; medals haven&rsquo;t had much gold content since 1912. The 2024 edition weighed 18.66 ounces and consisted of 95.4% silver and a smattering of iron scraped from the Eiffel Tower &mdash; and gold-plated. At current prices it&rsquo;s worth roughly $1,020.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />The First Mailbag of 2025
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />We got plenty of positive feedback to last Saturday&rsquo;s edition &mdash; which featured our occasional foray into <a href="https://paradigmpressroom.com/post/who-we-are-and-what-were-all-about">who we are and what we&rsquo;re all about</a>.
&ldquo;Thanks for the candid, succinct, no-BS description of your business model and services. It helped to confirm my own observations and feelings during the last five months, during which I have done exactly what you described, starting small and then signing on to some of your premium services.&nbsp;
&ldquo;One of those is already very profitable, and I have high hopes for the others. Looking forward to 2025!!&rdquo;
From a longer-term reader: &ldquo;What a thorough, sensible and sensitive revelation of what Paradigm Press and 5 Bullets [I still call it &lsquo;The 5&rsquo;] are all about and how it all works.
&ldquo;I learned things I never knew about Paradigm and how that concept unites and propels the many [sometimes disparate] minds and voices that power the successful services you provide. Thanks for your independence and freedom of thought.
&ldquo;Good on you! Also, special kudos to Doug, Matt, Dustin, Emily and any others keeping the team running. Happy New Year!&rdquo;
Another longtimer: &ldquo;Been a Paradigm Press subscriber for something like 10 years. Wouldn't be without it.&rdquo;
&ldquo;Even though I fall into the category of entry-level subscriber,&rdquo; says a newbie, &rdquo;I look forward to receiving your correspondence, as well as Sean Ring, Byron and Rickards&rsquo; Strategic Intelligence. I am working toward the premium subscriptions.
&ldquo;Thank you for what you do and more importantly how you do it.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> One more: &ldquo;Last week I sent in a rant email. I rarely do that but I didn&rsquo;t understand the Altucher and Paradigm connection.
&ldquo;Thank you for your patient explanation in your &lsquo;Who We Are and What We&rsquo;re All About&rsquo; email on Dec. 28.
&ldquo;I appreciate you hearing me and responding, it was very helpful. I wish you all goodness in the new year!&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> On the subject of <a href="https://paradigmpressroom.com/post/declare-your-independence-from-inflation">our unconventional inflation-fighting advice</a>, a reader takes issue with razor blades as an asset class.
&ldquo;Maybe a few could come in handy to do emergency surgery with, but for shaving the answer is very simple: Why do you bother shaving?
&ldquo;Having a childlike, or ladylike, smooth face by shaving off your whiskers might please your overlords to help keep you looking suitably childlike and therefore submissive and non-threatening to them.
&ldquo;Be thankful if razor blades become scarce. You can then have a good excuse to explain to your masters why you quit emasculating yourself with them.&rdquo;
Dave laments: I hear ya. But when rolling in the genetic dice game for bountiful facial hair&hellip; some of us came up snake eyes!
Best regards,
<img class="aligncenter" src="https://media.paradigmpressgroup.com/signatures/dave-gonigam.png" alt="Dave Gonigam" width="250px" align="left" />
Dave Gonigam Managing editor, Paradigm Pressroom's 5 Bullets

5 bullets hero Spending or investment of a country's revenues from petroleum exports industry

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We dive headlong into the Paradigm Press editors’ predictions for 2025 — starting with the outlook for energy once Donald Trump takes office in 18 days.

Power to the People (Trump’s Energy Agenda)

On this final day of 2024, we bring you a special video edition to help prime your portfolio for 2025.
In 2024, you&rsquo;d have done just fine buying an S&amp;P 500 index fund and forgetting about it. Going into the holidays, it was up over 25% year-to-date.
But Paradigm chart hound Greg Guenthner says 2025 won&rsquo;t be so easy. You&rsquo;re going to have to be more choosy.
Greg shows you why in this video recorded during a recent gathering of the Paradigm Press editors at our Baltimore headquarters.
More important, he lays out three specific ideas you can put to work in your portfolio today. (Make sure you see his case for Bitcoin.)
The whole thing takes only 10 minutes. Click below to get started&hellip;
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Happy New Year,
Dave Gonigam Managing editor, Paradigm Pressroom's 5 Bullets

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On this final day of 2024, we bring you a special video edition to help prime your portfolio for 2025.

Three Free Picks For 2025

This morning, we&rsquo;re broadcasting more never-before-seen footage from Paradigm&rsquo;s meeting of the minds in Baltimore on December 12.
In this ten-minute segment, colleague Chris Cimorelli of our Microcap Millionaire service explains how the next revolutionary tech stock also happens to be&hellip;
&hellip; the best-performing stock of all time. 
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A quantum leap in computing is on the horizon, Chris tells us, comparing this game-changing scenario to the transistor&rsquo;s replacement of the vacuum tube. But on a much grander scale.
While other Big Tech companies are in the race, Chris reveals why ONE company is poised to lead the quantum revolution.
Uncover this groundbreaking information before the race truly escalates in 2025&hellip;
Best regards,
Emily Clancy Paradigm Pressroom&rsquo;s 5 Bullets

chris-presentation

A quantum leap in computing is on the horizon, colleague Chris Cimorelli explains. 

The Race to Quantum Computing 

On this final day of 2024, we bring you a special video edition to help prime your portfolio for 2025.
Welcome to your post-holiday video edition of the 5 Bullets!
As you ease into your day, you won&rsquo;t want to miss some never-before-seen content forecasting one of the biggest investment trends for 2025.
In fact, exactly two weeks ago, Paradigm&rsquo;s top minds convened in Baltimore &mdash; where trading pro and former hedge fund manager Enrique Abeyta issued a monumental New Year&rsquo;s prediction.
He posed one intriguing question: Which Mag 7 mainstay will lose over 30% in market cap?
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In fact, Enrique believes, a major tech player&rsquo;s meteoric rise might be coming to an end.
And he&rsquo;s here to outline how this company will shock investors and financial media alike as he compares this scenario to a well-known plunge during the dot-com crash.
However, Enrique remains optimistic about this tech giant&rsquo;s long-term future, suggesting its value could eventually double. Or even increase tenfold.
Click above to view Enrique&rsquo;s surprise 2025 forecast&hellip; While you enjoy a lazy day in your pajamas (if you&rsquo;re into that sorta thing).
Best regards,
Emily Clancy Paradigm Pressroom&rsquo;s 5 Bullets

Enrique-marketcap

Paradigm’s top minds convened in Baltimore — where trading pro and former hedge fund manager Enrique Abeyta issued a monumental New Year’s prediction. 


Mega-Cap Meltdown in 2025

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />Snapback Odds Are Strong
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />What if Wednesday&rsquo;s mini-crash had nothing at all to do with the Federal Reserve?
I know &mdash; sounds crazy, right?
But we kinda-sorta said as much yesterday in our initial attempt to peel the onion. Recall the four possibilities we said were in play&hellip;
<ol>
<li>It took the Fed to make Wall Street wake up and realize inflation is not &ldquo;contained&rdquo;</li>
</ol>
<ol>
<li value="2">Wall Street is simply throwing a hissy fit because the Fed is taking away the proverbial punch bowl</li>
</ol>
<ol>
<li value="3">Wall Street is freaking out because it realizes the Fed doesn&rsquo;t know what it&rsquo;s doing</li>
</ol>
<ol>
<li value="4">Wall Street got too far out over its skis; if it weren&rsquo;t the Fed, something else would have knocked down the stock market.</li>
</ol>
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Paradigm trading pro and hedge fund veteran Enrique Abeyta is all-in on No. 4.
&ldquo;Big moves like this rarely happen because of the news,&rdquo; he says. &ldquo;They happen when traders shift their positions &mdash; and that&rsquo;s where opportunity lies for you.&rdquo;
We&rsquo;ll get to the opportunity soon enough. But first, let&rsquo;s unpack that shifting-positions thing.
Even before Wednesday, December had already been a lousy month for the Dow Industrials and the equal-weighted S&amp;P 500. That&rsquo;s a version of the S&amp;P in which all 500 stocks make up 0.25% of the index &mdash; as opposed to the usual top-heavy construction in which Apple makes up 7.6% of the index, Microsoft 6.5% and so on.
&ldquo;Coming into December &mdash; and after the re-election of Donald Trump &mdash; the market had risen relentlessly for months,&rdquo; Enrique writes in our sister e-letter Truth &amp; Trends. &ldquo;It was clear the stock market indices were very extended.&rdquo;
For the &ldquo;regular&rdquo; S&amp;P 500, it was up, up, up since a scare in early August &mdash; an episode widely attributed to another interest-rate shock, that time from the Bank of Japan.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/6HmoPG6I1jPzW4KmnLtd5X/0c94988862dccf442386822af0e232a3/5Bullets_Chart_121924.png" alt="nothing goes up" width="540px" />
&ldquo;Going into Wednesday&rsquo;s trading &mdash; even though most of the indices were down during December &mdash; the S&amp;P 500 was very extended from its 50-day moving average.&rdquo;
So that&rsquo;s the backdrop. Now the opportunity&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> &ldquo;My experience has taught me that big drops like this usually snap back, especially this time of year,&rdquo; Enrique continues.
&ldquo;Remember that almost every professional money manager out there is up for the year. Many of them also are compensated based on their year-end performance.
&ldquo;That doesn&rsquo;t make any logical sense, but that&rsquo;s how it&rsquo;s done.
&ldquo;This means they&rsquo;re much more willing to buy stocks while they are down to support their positions. Especially on the back of the kind of &lsquo;news&rsquo; we just got &mdash; an unimportant change in the bias of the Federal Reserve.&rdquo;
But it&rsquo;s not just the fact we&rsquo;re approaching the end of the year. Any time the Dow Industrials have an extended stretch of losing days &mdash; the Dow broke its losing streak yesterday at 10 &mdash; the odds of a snapback are strong.
Enrique directs your attention to this table from the renowned Stock Trader&rsquo;s Almanac, depicting all the episodes in which the Dow traded down at least nine days in a row. Yes, there are a lot of numbers here, but look at the bottom line in those last four columns&hellip;

<img class="aligncenter" src="https://media.paradigmpressgroup.com/enlarged-images/ttr-issue-12-19-24-enlarged-image-1.png" width="540px" />

<a href="https://media.paradigmpressgroup.com/enlarged-images/ttr-issue-12-19-24-enlarged-image-1.png">Click to Enlarge</a>
Yep, after an extended losing streak there&rsquo;s a better-than-70% probability that the Dow rallies in the next week and the next month. After three months, that probability rises to 82% &mdash; and the typical rally is nearly 6%.
&ldquo;For many traders, this data might be surprising,&rdquo; Enrique says &mdash; especially because, as he&rsquo;ll readily concede, &ldquo;the current selling pressure might feel terrible for most investors.
&ldquo;But history tells us that being open to further upside is the best strategy. It&rsquo;s a high-probability bet &mdash; and one that I think will pay off soon!&rdquo;
[Editor&rsquo;s note: If Enrique&rsquo;s point of view resonates with you, you should know I just got word that he&rsquo;s at the center of a major change we&rsquo;re making here at Paradigm Press for 2025.
<a href="https://pro.paradigm-press.info/m/2397954">Please watch this one-minute video</a> from our publisher Matt Insley explaining what&rsquo;s going on &ndash; and what&rsquo;s in it for you.]
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />Snapback Underway Already&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Indeed, the rebound might well be underway today &mdash; and not just in stocks.
All the major U.S. stock indexes are solidly in the green &mdash; at last check, all up about 1.7%. The Dow is back above 43,000.
Bonds are rallying too, pushing yields down. The yield on a 10-year Treasury note is back to 4.51% after touching a seven-month high yesterday.
Precious metals are likewise showing signs of life &mdash; gold up $31 to $2.625 and silver up 43 cents to $29.42. It helps that the dollar is weakening relative to other major currencies, the U.S. Dollar Index back below 108.
Crude is not sharing in the rally, however. A barrel of West Texas Intermediate is back below $70.
And Bitcoin couldn&rsquo;t hold onto $100,000. As we write, it&rsquo;s $97,543.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Behold, more evidence that inflation is proving to be &ldquo;sticky.&rdquo;
The Commerce Department is out this morning with &ldquo;core PCE&rdquo; &mdash; the Federal Reserve&rsquo;s preferred measure of inflation. When Fed officials discuss their 2% inflation target, this is the number they have in mind.
Unfortunately, the number is nowhere near 2% &mdash; and at 2.8% it&rsquo;s been moving higher four of the last five months&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1JNcFa0FCNYz7xzRzks8oM/c7550aa626e20b7a46323d7e83dfa493/5Bullets_Chart_122024.png" alt="nowhere near 2%" width="540px" />
If the Fed is looking for an excuse to &ldquo;pause&rdquo; its interest rate cuts, it&rsquo;s here. Granted, there will be one more release of this number before the Fed&rsquo;s next policy-setting meeting in late January.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Less Than 12 Hours&hellip;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />Wall Street certainly seems to have shaken off the threat of a &ldquo;partial government shutdown&rdquo; that came out of nowhere. But the threat lingers.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2n4G76cyWERt4c6xgOarAK/658605057d80de20b3fc1a22d37ad62c/Congress-Bill.png" alt="Congress Bill" width="540px" />
When we last left this saga yesterday, Donald Trump had deep-sixed an outrageous 1,547-page kitchen-sink &ldquo;continuing resolution&rdquo; that would have kept the government funded through mid-March &mdash; and averted a &ldquo;partial government shutdown&rdquo; effective midnight tonight.
So House Speaker Mike Johnson had to regroup. After cobbling together a 116-page alternative that met with Trump&rsquo;s approval, it was put up for a vote late yesterday &mdash; and went down in flames, 174-235.
Only two Democrats voted for it &mdash; and 38 Republicans, mostly fiscal hawks, voted against it. Trump&rsquo;s approval notwithstanding, it still smacked of business-as-usual.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/7CxsOPHrVPjIO7WpDUoMi1/d80a237cfbcfc15caf28bd693c9e6354/ThomasTweet.png" alt="Thomas Tweet" width="540px" />
With the benefit of hindsight, it appears Trump was actually OK with the original monstrosity. It was Elon Musk who was not &mdash; and he marshaled his followers on X to raise hell with their congresscritters. Trump boarded a train that was already in motion.
At least that&rsquo;s what Nick Catoggio reports at The Dispatch. &ldquo;If I'm not mistaken, this is the first time since Trump took over the [Republican] party that some other populist has managed to impose his will on it.&rdquo;
One member of Congress&rsquo; upper chamber is duly impressed&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/mHwuYYxG04JhQPFML8uTQ/adfe2b41f3604218bbf8f5465fbe73b8/RandTweet.png" alt="Rand Tweet" width="540px" />
Meanwhile, President Biden cut short a trip to Delaware so he could return to Washington &ndash; and Vice President Harris cancelled a trip to California.
Presumably all of that is to keep tabs on the situation &mdash; and for Harris to act as a tie-breaking vote in the Senate &mdash; but there&rsquo;s no shortage of speculation, including <a href="https://x.com/BasedMikeLee/status/1869961899422490790">from members of Congress</a>, that a &ldquo;25th Amendment moment&rdquo; is nigh and <a href="https://rudeawakening.info/posts/kamala-advisor-calls-for-bidens-resignation">Harris will occupy the Oval Office</a> for a few weeks until January 20.
If that&rsquo;s really what&rsquo;s going down, don&rsquo;t expect an announcement before the market closes today. Just sayin&rsquo;&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Follow-ups: Electricity Shortages, TikTok
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> The following is one of our occasional reminders that the electric grid is still in dire shape.
The North American Electricity Reliability Corporation is out with its annual &ldquo;Long-Term Reliability Assessment&rdquo; of the continent&rsquo;s power grid.
&ldquo;We&rsquo;re seeing demand growth like we haven&rsquo;t seen in decades,&rdquo; says John Moura, NERC&rsquo;s director of reliability assessment and planning &mdash; thanks in large part to <a href="https://paradigmpressroom.com/post/the-monster-that-ate-the-power-grid-ai">the explosion of data centers processing AI</a>. The buildout of new power plants simply isn&rsquo;t keeping up with the closings of older coal and nuclear plants.
As has been the case in recent years, the area of the country at highest risk of planned blackouts during times of peak demand is the red area on the map. It&rsquo;s served by the regional grid operator MISO and it stretches from the Upper Midwest to the Lower Mississippi River valley. This map comes straight from NERC&rsquo;s report&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3OnfrEsNqZuEeKWzNu94A/8ec6699cece335f5c26523d9af716e69/RiskArea-Map.png" alt="Risk Area Map" width="540px" />
Orange areas are at lesser risk &ndash; but they&rsquo;re not free and clear. That includes the grid operator PJM, whose service area stretches New Jersey west to Chicago. PJM was *this* close to imposing rolling blackouts during a Christmas Eve cold snap two years ago.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> For the record: Under an impending death sentence, TikTok will make its case for a reprieve before the U.S. Supreme Court.
As we&rsquo;ve chronicled since last spring, TikTok will be banned next month under legislation passed by Congress and signed by Joe Biden &mdash; assuming TikTok&rsquo;s Chinese owners can&rsquo;t line up an American buyer.
TikTok, along with some of its users, is challenging the constitutionality of the law. So far it&rsquo;s had little success in the lower courts, but the Supreme Court has agreed to take the case. Oral arguments are set for Friday, January 10.
We won&rsquo;t dwell on the matter today, seeing as we shared further background and our deep skepticism of Congress&rsquo; justifications for the law <a href="https://paradigmpressroom.com/post/shortcut-to-a-miracle#4">only a few days ago</a>.
There&rsquo;s only a nine-day gap between the time the high court hears the case and the time the law takes effect on January 19. The most likely outcome is that the Supreme Court puts the ban on hold long enough to send the case back to lower courts for further review.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Does Anyone Really Know What Time It Is?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />In case you missed it&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4ljX3Zu7Xh1FfN40fr2OWU/0b4c0b53fad4ed9aafccdc9d376dc92b/TruthDetails.png" alt="Truth Details" width="540px" />
Hear, hear! <a href="https://paradigmpressroom.com/post/the-secret-history-of-time-change">The end of time change can&rsquo;t come soon enough</a> &ndash; and it shouldn&rsquo;t be a partisan issue.
Have a good weekend,
<img class="aligncenter" src="https://media.paradigmpressgroup.com/signatures/dave-gonigam.png" alt="Dave Gonigam" width="250px" align="left" />
Dave Gonigam Managing editor, Paradigm Pressroom's 5 Bullets

shutterstock 2294182449

What if Wednesday’s mini-crash had nothing at all to do with the Federal Reserve?

Forget the Fed

<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-1-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-1_2x-new.png 2x" alt="1" width="37" />The Fed Fouls the Punch Bowl
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Well, that was interesting.
There&rsquo;s a saying on Wall Street about the Federal Reserve &ldquo;taking away the punch bowl&rdquo; &mdash; an alcoholic analogy for when the Fed does something to withdraw its monetary stimulus.
Yesterday Jerome Powell and crew didn&rsquo;t take away the punch bowl as much as they deposited a turd in it.
Little did we suspect how foreboding our words would be in yesterday&rsquo;s edition &mdash; when previewing the Fed&rsquo;s every-six-weeks policy proclamation&hellip;
<blockquote>&hellip; there&rsquo;s no drama about the decision itself: The benchmark fed funds rate will be cut another quarter percentage point to 4.5%.</blockquote>
<blockquote>But there might be a surprise included with the FOMC&rsquo;s economic forecasts for next year &mdash; or during Powell&rsquo;s press conference. With signs that inflation is accelerating, will he tamp down expectations for aggressive rate cuts in 2025?</blockquote>
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> The answer was yes. The Fed signaled only two more rate cuts next year &mdash; down from four back in September.
After cutting the benchmark fed funds rate from 5.5% to 4.5% over the last three months, Fed chair Jerome Powell said, &ldquo;From here, it&rsquo;s a new phase, and we&rsquo;re going to be cautious about further cuts.&rdquo;
With that, the Fed knocked the living snot out of every asset class except the dollar and (curiously) oil.
The Dow Jones Industrials have slid for 10 straight days now. The last time that happened was late September 1974 &mdash; when Gerald Ford was only a few weeks into his presidency and Barry White topped the charts with &ldquo;Can&rsquo;t Get Enough of Your Love, Babe.&rdquo;
We&rsquo;ll conduct a full damage assessment of the markets &mdash; and take a look ahead &mdash; in Bullet No. 2.&nbsp;
But first, let&rsquo;s dive deeper into why Mr. Market reacted so badly to what the Fed did. There are four possibilities in play &mdash; and they&rsquo;re not mutually exclusive.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> No. 1: It took the Fed to make Wall Street wake up and realize inflation is not &ldquo;contained.&rdquo;
Of course, we&rsquo;ve been telling you for months that inflation isn&rsquo;t yet under control. Even the official inflation rate is <a href="https://paradigmpressroom.com/post/fallen-pharma-phenom#2">ticking higher again</a>.
And forgive us for harping on the historical record once more, but <a href="https://paradigmpressroom.com/post/declare-your-independence-from-inflation">the evidence is overwhelming</a>: Once inflation sails beyond the 5% level as it did in 2021&ndash;22, it takes a decade or longer to get back to &ldquo;normal&rdquo; 2% inflation.
But to hear the mainstream tell it, it&rsquo;s all about Trumpy-Trump-Trump.
The Financial Times says Powell &ldquo;acknowledged that some [Fed] officials had begun to include assumptions about Donald Trump&rsquo;s policies in their forecasts, a marked shift from his initial stance of avoiding speculation about what the next administration would do.
&ldquo;Some economists fear that the president-elect&rsquo;s plans for tariffs, mass deportations and tax cuts could lead to higher inflation, lower growth and more volatility, further complicating the Fed&rsquo;s task of finding a &lsquo;neutral&rsquo; rate that neither slows nor accelerates growth.&rdquo;
That&rsquo;s not altogether wrong &mdash; but it&rsquo;s not the whole story. Again, inflationary forces are already at work that have nothing to do with Trump.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> No. 2: Wall Street is simply throwing a hissy fit because the Fed is taking away the proverbial punch bowl.
Wall Street has become addicted to the Fed&rsquo;s EZ money ever since the 2008 financial crisis. Not coincidentally, stocks have been in a secular (long-term) bull market since March 2009.
Still, Wall Street has shaken off Fed disappointments before. Going into this year, the widespread expectation was the Fed would cut rates six times during 2024, starting in the spring. Instead the Fed waited until the fall and cut only four times &mdash; to be precise, one super-sized cut in September and two smaller cuts since.
That disappointment notwithstanding, the stock market marched higher all year without even a 10% correction. Even after yesterday&rsquo;s drop, the S&amp;P 500 is up 25% year-to-date.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> No. 3: Wall Street is freaking out because it realizes the Fed doesn&rsquo;t know what it&rsquo;s doing.
This is your editor&rsquo;s preferred explanation &mdash; but hey, I&rsquo;m in the &ldquo;End the Fed&rdquo; crowd.
Hear me out, though: How can Jerome Powell breezily declare the Fed is entering a &ldquo;new phase&rdquo; when the previous one lasted only three months?
Looking at the history of the fed funds rate so far this century, slowing the rate-cut cycle now would be a huge anomaly&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2GPrnAfvJeP79ZOWNnAaSY/0cc98d8e47a18359b2fe683b5e4f96a6/FMF_5Bullets_Chart_1219.png" alt="new phase" width="540px" />
Worse, slowing the rate-cut cycle now suggests that Powell and crew realize perhaps it was a mistake to start it in the first place.
This wouldn&rsquo;t be the first time it&rsquo;s dawned on Mr. Market that the Fed is neither omniscient nor infallible. Or that Fed leaders are simply making it up as they go along. But every time feels like the first time.
As Paradigm&rsquo;s macro maven Jim Rickards sees it, the Fed is in reaction mode &mdash; waiting to see the job numbers and inflation numbers as the next rate decision looms in late January. Will the Fed pause in the face of resurgent inflation &mdash; or will it cut again because the job market is deteriorating, signaling an impending recession?
&ldquo;This kind of data dependence is revealing,&rdquo; says Jim, &ldquo;because it shows the Fed is following markets and not leading them.
&ldquo;That&rsquo;s bad news for investors because if the Fed were leading the economy, they would get ahead of the coming recession. They&rsquo;re not doing either.&rdquo;
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> No. 4: Wall Street got too far out over its skis; if it weren&rsquo;t the Fed, something else would have knocked down the stock market.
This comes back to something Paradigm chart hound Greg Guenthner mentioned in Monday&rsquo;s edition: The market hasn&rsquo;t had a 10% pullback since October 2023. That&rsquo;s hardly unprecedented, but it is unusual.
When the market rises so relentlessly for so long, it becomes vulnerable to any negative catalyst. If it weren&rsquo;t the Fed now, it would be a surprise job number or a bad earnings report from Nvidia later.
&ldquo;We&rsquo;ve been dealing with bad breadth and plenty of sneaky downside action for weeks,&rdquo; Greg writes his Trading Desk readers this morning. &ldquo;But Powell gave the herd what it wanted: an excuse to sell.&rdquo;
So those are your four possibilities behind yesterday&rsquo;s market dump. Again, they might have some overlap.
Now let&rsquo;s move on to the damage assessment and see what might happen from here&hellip;
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-2-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-2_2x-new.png 2x" alt="2" width="37" />The Numbers (and Some Perspective)
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Not surprisingly, the major stock averages are rebounding today. The Dow is on track to break that 10-day losing streak.
That said, it&rsquo;s not a robust rebound. The Dow lost 1,100 points yesterday and at last check has recovered only 161 of them. The S&amp;P 500 is clambering its way back toward 5,900. The Nasdaq is back above 19,400.
Perspective: The S&amp;P is more or less bouncing off its 50-day moving average. It&rsquo;s only 3.2% below its all-time high set on Dec. 6, not even two weeks ago. A short-term bear market &mdash; meaning a 20% drop from the high &mdash; would put the S&amp;P at 4,872. That number was an all-time high less than a year ago!
&ldquo;I think it&rsquo;s possible we do get a strong snapback into early January,&rdquo; says the aforementioned Greg Guenthner. &ldquo;From there&hellip; who knows? I&rsquo;m going to stay as nimble as possible, riding whatever bounce we get, then reassessing during the middle of next month as the seasonality tailwinds begin to dry up.&rdquo;
Beyond stocks, bonds also got clobbered yesterday, and that punishment is carrying into today &mdash; prices down, yields up. The yield on a 10-year Treasury note is up to 4.57%, the highest since Memorial Day.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Precious metals got the beat-down, too. The spot price of gold tumbled from $2,635 before the Fed announcement to nearly $2,580, then rebounded over $2,620 this morning. At last check, the bid is back to $2,594. Still, colleague Sean Ring at The Rude Awakening says that rebound is constructive and suggests an eventual rally back to record levels near $2,800.
Again, perspective &mdash; today&rsquo;s price of $2,594 was a record high only three months ago!
Silver, unfortunately, isn&rsquo;t demonstrating the same resilience &mdash; $30.30 pre-Fed, $28.82 now. Ouch.
Some of that weakness in precious metals can be chalked up to strength in the dollar relative to other major currencies: The U.S. dollar index has leaped to 108.26 &mdash; a level last seen in the autumn of 2022.
Bitcoin&rsquo;s been knocked down to barely $100,000 &mdash; although that round number seems to be holding.
As mentioned above, crude was oddly resilient in the face of the Fed and the strong dollar: It&rsquo;s still holding the line on $70 a barrel this morning. But that action might be meaningless long-term; oil is still smack in the midpoint of its trading range the last couple of months.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-3-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-3_2x-new.png 2x" alt="3" width="37" />Market Meltdown, Government Shutdown?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> Hard to say, but maybe the market&rsquo;s rebound today would be stronger were it not for the sudden threat of a &ldquo;partial government shutdown.&rdquo;
Not that there&rsquo;s anything wrong with that&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/17VC87EErgCgfj2oiP7ACY/d8724c41626aef627291bf443bfe9ca7/BeingLibertarian.png" alt="being libertarian" width="350px" />
Ordinarily, the markets shake it off whenever this happens. But this time it came out of the blue.
With business scheduled to wrap up for the year tomorrow, Congress was on track to pass a &ldquo;continuing resolution&rdquo; funding the government through mid-March.
A &ldquo;CR&rdquo; is what congresscriters do these days in lieu of passing an honest-to-God budget &mdash; keeping spending on autopilot while throwing in &ldquo;a variety of unrelated legislation they want to clear in the final days of the current session of Congress,&rdquo; as Politico puts it.
Sure, a few Freedom Caucus Republicans squawk about this &ldquo;Christmas tree&rdquo; bill &mdash; this year&rsquo;s model ran to 1,547 pages &mdash; but the business-as-usual crowd in both parties was set to pass it to avoid a partial shutdown on Saturday.
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> And then, after the markets closed yesterday afternoon, Donald Trump blew the whole thing up.
&ldquo;We should pass a streamlined spending bill,&rdquo; he said. &ldquo;The only way to do that is with a temporary funding bill WITHOUT DEMOCRAT GIVEAWAYS combined with an increase in the debt ceiling.&rdquo;
Even before Trump&rsquo;s statement, Elon Musk was badgering congress members on X to reject the CR.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2hOVSZErOw5dPBzSlFZ1V4/71a7058a65dbb2f7dd25e7486703a421/ElonTweet.png" alt="trump tweet" width="540px" />
&ldquo;Trump and Musk Unleash a New Kind of Chaos In Washington,&rdquo; says the oh-so-predictable CNN headline.
We&rsquo;re not really sure what Trump wants to see in this bill &mdash; for that matter, he&rsquo;s probably not sure himself &mdash; but it&rsquo;s fun to watch him give ulcers to all the usual suspects including House Speaker Mike Johnson, who promised to end this sort of nonsense when he won the job.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-4-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-4_2x-new.png 2x" alt="4" width="37" />Tax Relief for Americans Overseas?
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" /> When the new Congress convenes next year, one agenda item might be tax relief for Americans overseas.
As we mention now and then, the United States is one of only two countries on the face of the Earth that taxes your income no matter where you earned it. (The other is the northern African state of Eritrea.)
The result is that oftentimes, American expats pay taxes to two countries &mdash; the one where they&rsquo;re living, and the United States.
The burden is especially outrageous for &ldquo;accidental Americans&rdquo; who happened to be born in this country while their parents were here for a visit or a temporary work assignment.
The only way you can get out from under this obligation is to give up your U.S. citizenship. About 4,000 Americans have done so this year alone. (The aforementioned Sean Ring did so back in 2011; he holds Italian and U.K. citizenship now.)
On the campaign trail this fall, Donald Trump promised to remedy this injustice. And a member of the tax-writing House Ways and Means Committee is working up legislation to make it happen.
&ldquo;There&rsquo;s fundamental unfairness in the way this is currently done,&rdquo; Rep. Darin LaHood tells The Wall Street Journal &mdash; &ldquo;so it&rsquo;s exposing that, reminding people this is being done and letting people know there&rsquo;s a clear remedy.&rdquo;
We hope the legislation passes &mdash; but real relief won&rsquo;t come until there&rsquo;s an overhaul or repeal of the Foreign Account Tax Compliance Act of 2010. After passage of FATCA, many foreign banks closed the accounts of their U.S. customers; compliance with IRS reporting requirements was just too onerous.
<img src="https://media.paradigmpressgroup.com/fmf-assets/bullet-5-new.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/bullet-5_2x-new.png 2x" alt="5" width="37" />Final Thoughts
<img class="infinity-bullet" src="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left.png" srcset="https://media.paradigmpressgroup.com/fmf-assets/Paradigm_Logomark_left_2x.png 2x" align="left" />In light of the day&rsquo;s news, we conclude with an oldie but goodie&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/77ZjF7qc2NZT2lwAmbHnxc/591339dbdac1c798d2cb3f137be7d200/FedReserve.png" alt="Fed Reserve" width="350px" />
Best regards,
<img class="aligncenter" src="https://media.paradigmpressgroup.com/signatures/dave-gonigam.png" alt="Dave Gonigam" width="250px" align="left" />
Dave Gonigam Managing editor, Paradigm Pressroom's 5 Bullets

shutterstock 2179827025

There’s a saying on Wall Street about the Federal Reserve “taking away the punch bowl” — an alcoholic analogy for when the Fed withdraws its monetary stimulus.