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

shutterstock 2552783091

Paradigm Pressroom's 5 Bullets

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

<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

shutterstock 1715586853

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)

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.

Four Reasons for Yesterday’s Dump

<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" />A Match Made in Heaven
<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 a groundbreaking fusion of artificial intelligence and meteorology, Google DeepMind's GenCast is revolutionizing weather prediction.
This AI-powered model is not just matching current forecasting systems &mdash; it's surpassing them with remarkable consistency.
GenCast, trained on nearly four decades of historical weather data, demonstrates an extraordinary 97% accuracy rate compared with the current gold standard, the European ensemble forecast (ENS) system.
What sets GenCast apart is its ability to generate probabilistic forecasts, offering a spectrum of potential weather scenarios with associated likelihoods, much like how large language models (LLMs) like ChatGPT process information.

<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/2tJXOYwnk4S3JLJC12cYTm/71fd29d00e72472fd3cea428f891c870/weather.png" width="540px" />

Source: <a href="https://www.instagram.com/goyashy.ai/reel/DDWsPMCy1G2/">Instagram</a>
The model's prowess extends beyond day-to-day weather predictions. GenCast excels in forecasting wind conditions and tracking the paths of tropical hurricanes and cyclones, a capability that could prove invaluable for natural disaster preparedness and potentially save thousands of lives annually
GenCast, however, is not without limitations: Its reliance on historical data, for instance, may lead to inaccuracies when applied to future climate scenarios.
Additionally, the model still grapples with certain aspects of forecasting, such as upper troposphere conditions and hurricane-intensity predictions.
<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" />Importantly, GenCast is designed to complement &mdash; not replace &mdash; human expertise. 
As DeepMind researcher Ilan Price notes: &ldquo;There [are] actual meteorological experts that are looking at the forecast, making judgment calls and looking at additional data if they don't trust a particular forecast.&rdquo;
Moving forward, DeepMind's ambition to explore predictions based solely on observational data could further revolutionize weather forecasting. This innovation isn't occurring in isolation; other tech giants like Nvidia and Huawei are also applying AI to weather prediction, signaling a new era in meteorological science.
The partnership between AI and weather forecasting, exemplified by GenCast, marks a significant leap forward in our ability to understand and predict weather phenomena. As these technologies continue to evolve, we can anticipate more accurate, timely and potentially lifesaving weather forecasts.
The future of meteorology is here, and it's powered by artificial intelligence.
[UPDATE: A recent announcement from AI leader Nvidia has flown under-the-radar this week&hellip; But it could be the key to a 100X return over the next year and beyond.
Coupled with Trump&rsquo;s bullish crypto and tech-stock sentiment, this legendary investor says you should absolutely be aware of <a href="https://pro.paradigm-press.info/m/2396726">this market-moving opportunity.</a>
No, Nvidia is not the targeted company; instead, it&rsquo;s a virtual unknown that NVDA needs in order to survive.
And all the details can be found right here in this <a href="https://pro.paradigm-press.info/m/2396726">Urgent Account Message.</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" />Trump&rsquo;s Favorite Whipping Boy
<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" />Donald Trump&rsquo;s history of haranguing Fed Chair Jerome Powell has raised questions about Powell&rsquo;s future at the central bank. 
Despite Trump's campaign rhetoric suggesting he would fire Powell, the reality is more complex. &ldquo;No president has ever fired a Fed chair,&rdquo; says Paradigm&rsquo;s macro authority Jim Rickards. He adds, &ldquo;It's not even clear if that's legal.&rdquo;
For his part, Powell says he does not believe Trump has that power and he would not step down voluntarily before his term ends in 2026. In a recent interview, Trump seems to soften his stance when questioned about replacing Powell, saying: &ldquo;No, I don't think so. I don't see it.&rdquo;
&ldquo;Still, there&rsquo;s good reason for Trump to keep Powell around,&rdquo; Jim says. &ldquo;Whatever the long-term results of Trump&rsquo;s economic policies, it&rsquo;s likely the short-term results could be rocky.
&ldquo;We may be in for a recession in early 2025,&rdquo; he continues. &ldquo;The Trump White House could simply blame Powell for the bad news (whether he deserves the blame or not) and avoid responsibility, at least for a while&hellip; Trump gets to avoid controversy and keep Powell around as a convenient punching bag.
&ldquo;The irony would be if Powell resigned early of his own accord and left Trump holding the bag for whatever economic turmoil we may face,&rdquo; Jim concludes. &ldquo;As they say, two can play.&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" /> In the meantime, markets await the latest policy proclamation from Powell and the Fed&rsquo;s Open Market Committee. It&rsquo;s due for release at 2:00 p.m. EST.
As mentioned yesterday, there&rsquo;s no drama about the decision itself: The benchmark fed funds rate will be cut another quarter percentage point to 4.5%.
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? We&rsquo;ll follow up tomorrow with Jim Rickards&rsquo; assistance.
Until the decision, markets are treading water as they often do on these Fed Wednesdays. All the major U.S. stock indexes are in the green &mdash; but not dramatically, with the S&amp;P 500 up less than a quarter percent at 6,062.
Precious metals continue losing ground with gold at $2,636 and silver at $30.15. Crude is back above $70. Bitcoin is back below $105,000.
<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" />Two Key Dates on Trump&rsquo;s Calendar
<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 President-elect Trump prepares to take office on Jan. 20, 2025, two key events loom large on the calendar in the five days leading up to Inauguration Day.
On Jan. 15, the contract extension between the International Longshoremen's Association (ILA) and port employers is set to expire, potentially triggering a major dockworkers' strike.
Trump has thrown his support behind the union, meeting with ILA leaders and expressing concern over the threat of automation to American jobs.
In a social media post, Trump claims to have &ldquo;studied automation,&rdquo; indicating the cost savings from automation do not justify the harm caused to dockworkers.
Just four days later &mdash; on Jan. 19, 2025 &mdash; a congressional ban on TikTok is scheduled to go into effect unless the app&rsquo;s Chinese parent company, ByteDance, sells TikTok to a non-Chinese owner.
<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 a somewhat surprising move, TikTok CEO Shou Chew met with Trump at Mar-a-Lago on Monday.
Trump, who tried to ban the social media platform during his first term in office, now says he has a &ldquo;warm spot&rdquo; (ew) for TikTok &mdash; particularly since he believes the platform rocked the vote for Team Trump this election season.
Together, these two dates pose immense challenges for Trump. (And unless we&rsquo;re missing something, these events are not examples of Biden &ldquo;Trump-proofing&rdquo; the president-elect&rsquo;s early days in office&hellip; Unless Biden was really playing the loooong game.)
The potential port strike could disrupt supply chains, impacting the economy for months, possibly years, while the TikTok ban raises questions about national security and free speech.
But Trump&rsquo;s stance on both matters seems to have evolved since his first term, reflecting the balance his administration must strike between &ldquo;America first&rdquo; policies and the hard realities of global trade and technology.
As his inauguration approaches, how Trump navigates these pressing issues could set the tone for his second term and have far-reaching consequences for American workers, consumers and the tech industry.
<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" />A Warning From Year 2000
<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;It&rsquo;s important to know that every investor has different goals and time horizons,&rdquo; says Paradigm editor Davis Wilson at The Million Mission. &ldquo;And [three] investor types operate daily in the stock market.&rdquo;
For instance: &ldquo;How much should you pay for Tesla (TSLA) stock today?&rdquo; Davis asks. &ldquo;The answer depends on one important factor &mdash; time horizon.
<ol>
<li>If you&rsquo;re a long-term investor, the smart price to pay can be determined by discounting cash flows in Microsoft Excel. (Easier said than done.)</li>
</ol>
<ol>
<li>If you&rsquo;re looking to cash out in one year, pay attention to Tesla&rsquo;s product sales cycles and do your best to predict if we&rsquo;ll have a bear market within the year.</li>
</ol>
<ol>
<li>If you&rsquo;re a day trader, the answer is who cares what price you pay! You&rsquo;re just trying to make a few dollars before dinner, and that can be done at any price.</li>
</ol>
&ldquo;Whereas Tesla&rsquo;s current $475 stock price may look ridiculously expensive to one investor, a different investor may be willing to buy at these prices.&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" />According to Davis, it&rsquo;s time to break glass in case of emergency &ldquo;when too many investors [are] the day-trader type. 
&ldquo;We saw this with Cisco Systems (CSCO) in 2000,&rdquo; he notes. &ldquo;The stock began the year 1999 trading around $20. Within 14 months, the stock was $80.
&ldquo;Cisco was trading at a 200X price-earnings ratio and a 40X price-to-sales ratio. Yet people continued to buy the stock at higher and higher prices.
&ldquo;The reason was that many investors were characterized as day traders at the time,&rdquo; Davis says. &ldquo;These traders didn&rsquo;t care about fundamentals, P/E ratios, growth prospects, etc.&rdquo; Their goal? &ldquo;To make a few dollars before dinner&hellip;
&ldquo;This is how the dot-com bubble began &mdash; when the makeup of investors shifted more in favor of short-term traders vs. long-term investors.
&ldquo;Eventually the bubble burst, wiping out over $6 trillion of household wealth,&rdquo; he says.
<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;I mention this today because there seems to be a subset of companies whose stock prices are controlled by short-term traders,&rdquo; says Davis.
&ldquo;You know the names: MicroStrategy, SoundHound AI, Robinhood and I&rsquo;m even throwing Tesla into this category. Regardless of price, these stocks continue to get bought.
&ldquo;In just over one month, MicroStrategy is up nearly 40%,&rdquo; he adds. &ldquo;SoundHound AI has more than doubled. Tesla and Robinhood are moving higher because of hype.
&ldquo;And because of Elon Musk&rsquo;s newfound friendship with Donald Trump&hellip; which is apparently worth an additional $400 billion in market cap in one month.
&ldquo;These are not fundamentally driven moves,&rdquo; Davis recaps. &ldquo;These prices are rising because short-term traders are controlling prices.
&ldquo;We&rsquo;ve seen this playbook before,&rdquo; he warns. &ldquo;I&rsquo;m not calling the top yet. But I believe this is the biggest risk to the stock market.&rdquo;
<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" />Majoring in Minors: SF Edition
<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" />San Francisco's bureaucratic brilliance strikes again! 
In a stunning display of misplaced municipal priorities, the city&rsquo;s Department of Public Works has been obsessing over tiny cafe tables (and potted cacti!) while ignoring a treacherously uneven sidewalk.
The saga begins with Lisa Church, a long-time Nob Hill resident who spent four years filing 311 complaints about a sidewalk near 1360 Taylor St.&hellip;

<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1eUJ2Y0i5rH85f8Nwb7c6w/01ed8e85cd898a8128bf695da2f57539/Street-priorities.png" width="540px" />

Courtesy: X, @emily_hoeven
The DPW swooped into action... but not for the dangerous sidewalk. 
No, they were laser-focused on Taylor Street&rsquo;s Cafe Isabella, demanding the removal of &ldquo;unpermitted&rdquo; outdoor tables as well as two potted cacti that had flanked the cafe&rsquo;s doorway for 20 years.
Meanwhile, Nob Hill resident 74-year-old Jane Oleson, tells The San Francisco Chronicle that the sidewalk was like an &ldquo;obstacle course.&rdquo; Another local reports a sprained ankle last year while walking her dog in the area.
The city's response? Complaints were mysteriously &ldquo;closed&rdquo; despite the sidewalk remaining untouched. It took journalist Emily Hoeven&rsquo;s inquiry to finally spark action, with the DPW suddenly deciding maybe a sidewalk that could hospitalize residents might be worth fixing.
But what does one expect from a city that spends a half-million dollars on <a href="https://5minforecast.com/2022/08/18/everything-changes-on-sept-15/#435">designer trash cans?</a> (Already graffitied and derelict, by the way.)
Chalk it up to another case of urban absurdity this year.
Happy Wednesday! We&rsquo;ll be back with another round of 5 Bullets tomorrow&hellip;
Best regards,
Emily Clancy Associate editor, Paradigm Pressroom's 5 Bullets

shutterstock 178550741

In a groundbreaking fusion of artificial intelligence and meteorology, Google DeepMind's GenCast is revolutionizing weather prediction.

Cloudy With a Chance of AI

<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" />&ldquo;If You Want to Export To America, You Must Invest In America&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" />OK, we&rsquo;re filing this one away for future reference&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/zwBvHkqUSOrDvlTXrB5uF/de5cc9b003c2d0dde09e28d07a3af1e0/CamiloTweet.png" alt="Camilo Tweet" width="540px" />
(By the way, I&rsquo;m seeing the exact same wording on tweets posted by several users at X. Bots much?)
Japanese tech billionaire Masayoshi Son &mdash; CEO of SoftBank Group &mdash; paid a call on Donald Trump yesterday at Mar-a-Lago. He promised to invest $100 billion in the United States over four years, creating 100,000 jobs in data centers, semiconductors and energy.
&ldquo;Masa,&rdquo; as he&rsquo;s known in Japan, has a mixed reputation for his business prowess &mdash; &ldquo;a colorful character known as much for his major flops as his big accomplishments,&rdquo; the BBC describes him diplomatically.
Over the years his major investments in the United States have included Uber, T-Mobile and Nvidia.
But his most infamous U.S. investment was WeWork &mdash; the startup that tried to &ldquo;disrupt&rdquo; the business of subleasing office space by&hellip; well, creating an app with which you could sublease office space. According to a 2023 Business Insider article, SoftBank&rsquo;s losses on WeWork total $14.4 billion and counting.
<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" /> Anyway, the Masa photo op yesterday underscores what&rsquo;s been advertised as the second Trump administration&rsquo;s approach to trade.
If you were to sum it up in a catchphrase, it&rsquo;s this: If countries want to export to America, they must invest in America.
&ldquo;Tariffs are two things if you look at it," Trump told Bloomberg News editor-in-chief John Micklethwait in October. "No. 1 is for protection of the companies that we have here, and the new companies that will move in because we're going to have thousands of companies coming into this country.
"The higher the tariff,&rdquo; he went on, &ldquo;the more likely it is that the company will come into the United States and build a factory in the United States, so it doesn't have to pay the tariff.&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" /> The model here, many pundits and observers tell us, is the treatment the Reagan administration gave Japan in the 1980s.
As you&rsquo;ll recall if you were around then, Japanese automakers were eating Detroit&rsquo;s lunch with cars that were better built and more responsive to American consumers&rsquo; needs.
A Reagan-era official named Robert Lighthizer drove a hard bargain &mdash; jacking up tariffs on Tokyo until Tokyo cried uncle. As a result, Hondas began to be built in Ohio, Toyotas in Kentucky, Nissans in Tennessee.
Lighthizer returned to Washington as U.S. trade representative during Trump&rsquo;s first term. He won&rsquo;t be around for a second term; he was angling for treasury secretary but that job went to Wall Street veteran Scott Bessent instead.
But Lighthizer has plenty of acolytes who will be in the second Trump administration &mdash; people who share his worldview and know his playbook.
<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" />Still&hellip; how useful is the playbook now compared with the Reagan years?
The trading partner with whom Washington had the biggest beef then was Japan &mdash; an ally.
The trading partner with whom Washington has the biggest beef now is China &mdash; which few call an ally and many inside the Beltway consider an adversary.
In Washington these days, everything China does is viewed through the lens of &ldquo;national security.&rdquo; Every technology and every industry is considered potentially &ldquo;dual use&rdquo; &mdash; with both civilian and military implications.
So how is &ldquo;If you want to export to America you have to invest in America&rdquo; supposed to work now?
Let&rsquo;s say one day Trump follows through on his campaign promise to slap a 60% tariff on all Chinese exports to the United States.
And let&rsquo;s say the next day, Chinese President Xi Jinping strides before the cameras&hellip;
<blockquote>Yes, Mr. Trump. I see the light. I see the error of our ways. Effective today, I will marshal the resources of my nation&rsquo;s mighty industries to build 50 new gleaming factories in each of your 50 states.</blockquote>
Well, you know what the reaction would be the day after that in Washington, right?
<blockquote>NOOOO! What&rsquo;s his hidden agenda?! It&rsquo;s a Trojan Horse!</blockquote>
And that reaction wouldn&rsquo;t just come from Team MAGA. Democrats and Never-Trump Republicans would say the same thing.
So then what?
No, your editor doesn&rsquo;t have an answer to that question. But we&rsquo;re raising it today because no one else is. And the answers that emerge over the next four years will be market-moving. We&rsquo;ll aim to keep you ahead of the curve, because there will be investing opportunities to emerge from the chaos.
(Oh, and we&rsquo;ll also keep track of Masa&rsquo;s promise of $100 billion in investment and 100,000 jobs.)
<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" /> A brief postscript: Come to think of it, even allies aren&rsquo;t always welcome to invest in America.
Both Trump and Joe Biden oppose the bid by Japan&rsquo;s Nippon Steel to acquire U.S. Steel.
Nippon Steel promises to plow $2.7 billion into U.S. Steel&rsquo;s archaic and decrepit American operations.
That&rsquo;s not chump change: Barron&rsquo;s says it amounts to two years of U.S. Steel&rsquo;s operating profits. U.S. Steel says without an infusion of Nippon Steel&rsquo;s cash, it might have to close factories in Pennsylvania.
But it seems no amount of money is good enough for Washington in this instance.
The Treasury Department panel that reviews foreign acquisitions for national-security concerns has to make a decision on the deal by this Sunday.
<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 Fed Must Preserve Its Credibility
<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&hellip; remind me why the Federal Reserve is cutting interest rates again?
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3YbFrHjeYHgcazmFH31VX2/51eeeaafea5d92b8f1346ac3d58429a5/CharlieTweet.png" alt="Charlie Tweet" width="540px" />
Starting today, the Federal Reserve&rsquo;s Open Market Committee is gathered in Washington for one of its two-day policy-setting meetings.
At the conclusion of the process tomorrow afternoon, Jerome Powell and crew will cut the fed funds rate another quarter percentage point to 4.5%. For perspective, it was 5.5% before the Fed embarked on its current rate-cutting cycle in September.
Going back more than 40 years, the current rate-cutting cycle is unique in that long-term interest rates have responded by rising.
Usually, longer-term rates like the 10-year Treasury note fall in sympathy with short-term rates controlled by the Fed. And it&rsquo;s those longer-term rates that determine the rates consumers pay for things like mortgages. But go figure: A 30-year fixed that was 6.1% when the Fed began cutting rates three months ago is now 6.6%.
It&rsquo;s not normal by recent standards. It suggests the bond market is sniffing out a resurgence in inflation during 2025 &mdash; something the official inflation numbers are <a href="https://paradigmpressroom.com/post/fallen-pharma-phenom#2">already hinting at</a>.
But the Fed can&rsquo;t very well start a rate-cutting cycle and then abort it only three months later. That wouldn&rsquo;t be good for the Fed&rsquo;s precious credibility.
So&hellip; a rate cut tomorrow is in the bag. And Paradigm macro maven Jim Rickards says right now, another cut at the next meeting in late January is &ldquo;the most likely outcome&rdquo; &mdash; especially if there&rsquo;s any sign of inflation stabilizing.
<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" /> Going into the Fed meeting, traders are chewing on two economic numbers out this morning &mdash; neither one of them good.
<ul>
<li>Retail sales jumped 0.7% in November, more than expected. But the number is severely skewed by a leap in auto sales, likely the result of folks who had to replace their cars destroyed by Hurricanes Helene and Milton. If you back out auto sales, the jump is only 0.2%, in contrast with Wall Street&rsquo;s expectation for 0.4%</li>
</ul>
<ul>
<li>Industrial production fell 0.1% in November. Oops, the &ldquo;expert consensus&rdquo; was looking for a 0.3% increase. Manufacturing grew less than expected; mining/energy production fell outright, and so did utility output. (So much for the &ldquo;rebound&rdquo; from the hurricanes and the Boeing strike.) All told, 76.8% of U.S. industrial capacity was in use last month &mdash; the lowest since the spring of 2021 and well below the long-term average of 79.7%.</li>
</ul>
<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" /> Whether it&rsquo;s the punk economic numbers or something else, nearly every asset class is in the red today.
The Dow is taking the biggest hit among the major U.S. stock indexes &mdash; down two-thirds of a percent at last check. CNBC informs us that the Dow is &ldquo;poised for its first nine-day losing streak since the &rsquo;70s.&rdquo;
Isn&rsquo;t Big Data wonderful, serving up utterly useless factoids like this? You&rsquo;d hardly guess from that headline that the Dow is down all of 3.5% from a record high over those nine trading days.
The Nasdaq and the S&amp;P 500 are holding up better, each down about a half percent.
Bitcoin took a run at $108,000 but at last check is back to $106,225.
<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 Case for Intel (Even 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" /> &ldquo;Intel is still a big value at current prices,&rdquo; says Paradigm tech specialist Ray Blanco.
Ray is among several members of our team who&rsquo;ve been bullish on INTC all year &mdash; even as its share price has been steadily cut in half, and then some.
As we mentioned briefly at the start of the month, CEO Pat Gelsinger &ldquo;got quit&rdquo; &mdash; abruptly announcing his retirement a little less than four years into his attempted turnaround. Ironically, perhaps, the news has sent the share price still lower.
But Ray says two capable replacements are under consideration &mdash; Marvell Technology CEO Matt Murphy and semiconductor veteran Lip-Bu Tan. &ldquo;Both bring valuable expertise that could help advance Intel's transformation,&rdquo; says Ray.
&ldquo;The thesis for Intel remains intact despite the recent turmoil. At a current valuation of around $89 billion, Intel represents a strategic American asset trading at a big discount to its potential value.&rdquo;
For one thing, Intel is set to collect $7.86 billion in taxpayer subsidies thanks to the CHIPS Act of 2022 &mdash; plenty of resources to upgrade its fabrication plants.
&ldquo;The company's distributed network of American fabs remains a unique strategic advantage that single-location manufacturers cannot match,&rdquo; Ray goes on. &ldquo;I believe the board's apparent retreat from Gelsinger's vision is concerning but unlikely to derail Intel's ultimate foundry ambitions.
&ldquo;The geopolitical necessity for domestic advanced chip manufacturing grows stronger as tensions with China increase. Intel remains the West's best hope for achieving semiconductor manufacturing independence at leading-edge nodes.
&ldquo;While Gelsinger's departure introduces new execution risks, Intel's stock price of around $20 fails to reflect the company's strategic importance and potential.&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" />The Only Way a Ukraine Ceasefire Happens
<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 commodity complex is showing little reaction to the latest provocation in the Russia-Ukraine war.
Ukraine is claiming responsibility for the killing of a Russian general, Igor Kirillov. He was outside an apartment building in Moscow when a device hidden in a scooter was detonated remotely.
But there&rsquo;s no safe-haven response to be seen in the markets: Precious metals are sinking further into the doldrums as the dollar remains strong; gold is down to $2,639 and silver to $30.31. Crude has tumbled back below $70.
<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 killing comes at a delicate moment for Washington&rsquo;s involvement in the war &mdash; 35 days before Inauguration Day.
As you might have heard, Donald Trump has called for a ceasefire in Ukraine.
&ldquo;The manner in which Trump did this was interesting,&rdquo; Jim Rickards writes to his Strategic Intelligence readers.
&ldquo;In an interview, he referred first to the fall of Assad in Syria and the fact that Russia had been Assad&rsquo;s biggest supporter alongside Iran. That much is true. Then Trump went further and said Russia&rsquo;s loss in Syria combined with huge losses in Ukraine would drive Russia to seek peace and set the stage for a Trump-initiated ceasefire.
&ldquo;That shows Trump has badly misread the situation.&rdquo;
Jim says Trump has little negotiating power. Russian losses pale in comparison with Ukrainian losses, and Russia&rsquo;s economy is holding up fine &mdash; Western sanctions notwithstanding. &ldquo;A ceasefire is possible,&rdquo; Jim allows &mdash; &ldquo;but only on Russian terms.&rdquo;
&ldquo;The concern now,&rdquo; he continues, &ldquo;is that Trump has been taken in by the warmongers in Washington, London and Paris and imagines that Russia is dealing from a position of weakness. They&rsquo;re not. Let&rsquo;s hope that Trump quickly wakes up to the realities on the ground and does not get sucked into another endless war.&rdquo;
That said, there&rsquo;s something encouraging on the &ldquo;endless war&rdquo; front &mdash; which brings us to Bullet No. 5&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" />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" /> Sometimes it&rsquo;s not what&rsquo;s being said, but who&rsquo;s saying it&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1WXp50AbBa9gdWmRJ4pV4y/5626dc458a0450a2ba905539f94e642a/ElonTweet.png" alt="elon tweet" width="540px" />
One wonders if Elon Musk is whispering something similar in Donald Trump&rsquo;s ear &mdash; a counterweight to Trump&rsquo;s many advisers eager for regime change in Tehran. We can only hope&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

5 bullets hero USA America trade war economy conflict tax business finance

shutterstock 1400822942

In summary, the second Trump administration’s approach to trade: If countries want to export to America, they must invest in America.

Export to America, Invest in America

<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 Future Is &ldquo;Tokenized&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" /> The year 2025 will be the year of &ldquo;tokenization,&rdquo; declares Paradigm&rsquo;s crypto and AI authority James Altucher.
James was one of 11 Paradigm editors who gathered near our Baltimore headquarters last Thursday for a meeting of the minds. They unveiled their top forecasts for 2025 &mdash; the trends, the opportunities and especially the surprises.
What follows are some highlights from this extended bull session &mdash; and we do mean &ldquo;some.&rdquo;
In several cases, the editors purposely submitted ideas still in their formative stages &mdash; eager for their colleagues to poke holes in their arguments so they can refine those ideas and make them &ldquo;ready for prime time&rdquo; in the form of an investment thesis to present to paid subscribers. So you won&rsquo;t hear about those today.
In a few cases, though, the ideas presented were already fully vetted &mdash; with compelling supporting evidence even when they seem over-the-top outrageous.
And so it goes with James&rsquo; tokenization forecast&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" />We&rsquo;ll get to what &ldquo;tokenization&rdquo; is momentarily. First, some background&hellip;
In 2017, James declared there was $200 trillion of currency in the world &mdash; and if Bitcoin could capture just 1% of that share, it would have a $2 trillion market cap and be worth $100,000.
Lo and behold, that&rsquo;s where we are here in December 2024.
But in retrospect, James says he was missing the full picture. Yes, there&rsquo;s $200 trillion of currency in the world &mdash; but there&rsquo;s $1.4 quadrillion in financial assets.
And any financial asset can be turned into a cryptocurrency. That&rsquo;s tokenization.
What&rsquo;s the benefit, you ask?
<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" /> Think about this, says James: &ldquo;Every time you use your credit card, you're basically saying, &lsquo;I agree to give some random companies 2-3% of my money just to spend my own money.&rsquo;
&ldquo;If you make $100,000 a year, you're instantly giving away $2,000&ndash;3,000 just for the privilege of buying stuff. It's even worse if you're a small-business owner &mdash; those fees might be eating up 15&ndash;20% of your actual profits.&rdquo;
Oh, and in the 48 hours it frequently takes to process each transaction, all those middlemen are earning interest on your money.
Tokenization can change all that: Any financial asset can be a cryptocurrency, traded on an exchange 24/7 and at a fraction of the fees. The time isn&rsquo;t that far off, says James, when instead of jumping through the hoops of taking out a home-equity loan, you could tokenize your house and lend 10% of it to anyone who&rsquo;ll agree to your terms.
It sounds far out &mdash; but with a more crypto-friendly administration about to take over the executive branch, it&rsquo;s coming faster than you think.
James is especially encouraged by Donald Trump&rsquo;s appointment of a crypto and AI &ldquo;czar&rdquo; &mdash; David Sacks. Sacks helped revolutionize payments a generation ago as chief operating officer of PayPal. He was right there in the &ldquo;PayPal mafia&rdquo; along with Peter Thiel and Elon Musk. And he&rsquo;s in a position to effect an even more radical transformation now.
Crypto is &ldquo;not JUST about Bitcoin,&rdquo; says James &mdash; &ldquo;it's about the entire financial system being rebuilt from scratch.
&ldquo;Remember when we all thought the internet was about email? This is like that.
&ldquo;We're all focused on crypto prices while the actual infrastructure of money is being reinvented.&rdquo;
It&rsquo;s early days and James is still researching the best-in-class players who will put the word &ldquo;tokenization&rdquo; on everyone&rsquo;s lips in 2025.
In the meantime, here&rsquo;s an idea of James&rsquo; that&rsquo;s ready for you to seize on right now. It comes on the heels of a major announcement from Nvidia &mdash; and James has discovered a way to bank 10X, perhaps in as little as 12 months.
<a href="https://pro.paradigm-press.info/m/2395571">For details, please review this urgent message from our director of customer success</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" />Revealed: The Biggest Market 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" />&ldquo;What if I told you that I could tell you the biggest news story of next year?&rdquo; says trading pro Enrique Abeyta, the newest member of the Paradigm team. &ldquo;I know exactly what it&rsquo;s going to be.&rdquo; 
Hold onto your hat: Enrique says Nvidia Corp. will shed $1 trillion of its market cap sometime in 2025 &mdash; or at the outside, the first half of 2026.
Given NVDA&rsquo;s current market cap of $3.21 trillion, we&rsquo;re looking at a 31% drop. And that drop could happen in a matter of days &mdash; most likely on an earnings disappointment.
The drop will be a shock for anyone who&rsquo;s not ready &mdash; which is to say nearly everyone. But Enrique says it&rsquo;s baked into the cake: There&rsquo;s 150 years of history and data behind it, and a dozen market cycles &mdash; some of which have happened within our lifetimes.
The best analogue he can draw on is Amazon during the dot-com bust from 2000&ndash;2002: AMZN&rsquo;s share price lost a staggering 90% before staging a comeback and becoming a dominant force.
Nvidia, he says, will do the same. Over time, its present $3.21 trillion market cap will double or maybe even 10X. But before that happens, there will be a drop that catches the CNBC crowd totally off-guard.
Enrique shared an idea with the group about how to hedge this risk. For the moment we&rsquo;re going to withhold that idea in case he wishes to release it first to some of our paying readership&hellip;
<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" />As the Bull Market Enters Year Three&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;Some of you might have noticed we&rsquo;re in a bull market,&rdquo; quips Paradigm chart hound Greg &ldquo;Gunner&rdquo; Guenthner.
And he says you can be forgiven for thinking the atmosphere right now is a little too bullish, maybe even bubbly, given the enthusiasm for AI and memecoins.
But here&rsquo;s the reality: The current cyclical bull market began in October 2022 &mdash; the S&amp;P 500&rsquo;s bottom after a bear-market drop of over 20%.
Since 1950, the typical bull market has run 5&frac12; years, generating an average gain of 114%.
So by that standard, we&rsquo;re not even halfway through, and more gains are yet to be had: We&rsquo;re early in year three, and the gain so far is about 70%.
That said, the third year of a bull market tends to be a snooze compared with what came before: &ldquo;We&rsquo;re probably not going to have the big push higher that we did in 2024,&rdquo; says Gunner.
What&rsquo;s more, we&rsquo;re overdue for a 10% pullback &mdash; the last one came more than a year ago. &ldquo;Be on the lookout, even in the first half of 2025, for the S&amp;P 500 to drop 10%.&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" />Which means you can&rsquo;t rest on your laurels in an S&amp;P 500 index fund &mdash; especially if your impulse is to hit &ldquo;sell&rdquo; as soon as there&rsquo;s a flurry of bearish mainstream headlines.
You&rsquo;re going to have to be more selective to achieve outperformance. On that score, Gunner is still keen on Bitcoin, seeing the potential to hit $279,000 by this time next year. (Just beware that it&rsquo;s far more volatile than an S&amp;P index fund!)
Something else to consider is the enormous outperformance of &ldquo;soft&rdquo; commodities like coffee and cocoa. Coffee futures recently eclipsed their all-time high set in 1977. &ldquo;No wonder I haven&rsquo;t been able to get Dunkin&rsquo; coffee on sale at Costco!&rdquo; he laments.
The simplest way for retail investors to play the trend is the Invesco DB Agriculture Fund (DBA).
&ldquo;DBA presents a picture-perfect uptrend off the 2022 bottom and the closest thing to a pure play on coffee and cocoa,&rdquo; says Gunner.
<img class="aligncenter" src="https://url.us.m.mimecastprotect.com/s/BZ31CXDA4js2OXKKu6f2IWB_4R?domain=images.ctfassets.net" alt="soft commodities" width="540px" />
&ldquo;If today&rsquo;s agriculture rallies mimic the 1970s bull runs, coffee is just beginning to percolate,&rdquo; he concludes, &ldquo;and cocoa will likely see another 400%-plus markup.&rdquo;
[Dave&rsquo;s disclosure: I built a small position in DBA throughout 2021 and I might add to it here.]
<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 most interesting market story as a new week begins is in crypto: Bitcoin sailed past $106,000 over the weekend and that gain is holding for the moment.
Elsewhere in the cryptosphere, Ethereum poked past $4,000 this morning &mdash; testing its year-to-date peak from mid-March. (Unlike Bitcoin, Ethereum still has a ways to go to equal its giddy late-2021 record near $4,750.)
As for stocks, it&rsquo;s the Nasdaq leading the major indexes higher &mdash; up 0.85% at last check, into record territory at 20,096. The S&amp;P 500 is up 0.4% at 6,074 while the Dow is flat.
Not much action in the commodity complex &mdash; gold at $2,654, silver at $30.56 and crude at $70.72.
<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" />The National Strategic Computing Reserve
<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 U.S. government has a Strategic Petroleum Reserve. And Donald Trump is talking up a strategic Bitcoin reserve. How about a strategic reserve of computer power?
That&rsquo;s the bold forecast of Paradigm&rsquo;s tech-investing specialist Ray Blanco &mdash; a National Strategic Computing Reserve.
It will be an expensive and all-encompassing undertaking &mdash; comparable to the Manhattan Project and the moon landing.
Ray says it will aim to ensure the United States is the world leader not only in AI but in the next generation of digital technology &mdash; quantum computing.
We won&rsquo;t get into the weeds of quantum computing today except to say that it&rsquo;s an enormous leap from anything we&rsquo;ve seen up until now.
If quantum physics blows your mind &mdash; the idea that, say, a particle can be in two places at once &mdash; quantum computing is much the same. Rather than bits of 0s and 1s, the building block of quantum computing is qubits that can be 0 and 1 at the same time.
Ray says the guts of a National Strategic Computing Reserve are already in place, thanks to a Biden administration initiative in 2021 that aimed to harness computer power to track the progress of COVID and other viruses.
And with figures like Elon Musk, David Sacks and Marc Andreessen in Trump&rsquo;s circle, Ray believes it will become a newsmaking force in 2025 comparable to the space program in the 1960s.
Yes, there&rsquo;s an investment play, and it&rsquo;s not a tiny unknown thing either; it&rsquo;s a $28 billion company. But the recommendation will likely go out first to readers of Altucher&rsquo;s Investment Network, so we&rsquo;ll hold off naming it here&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" />Mailbag: Taxing Matters
<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;Thank you for the inflation tax adjustments detailed in Bullet No. 2 <a href="https://paradigmpressroom.com/post/trumps-tax-deadline-yours-too">on Friday</a>,&rdquo; a reader writes.
&ldquo;I was so impressed, I sent a revised version to my congressperson. He has been a reliable vote for the Nancy Pelosi party since 2001: likely not a reader of your newsletter.&rdquo;
Dave responds: There&rsquo;s no reason Democrats couldn&rsquo;t get behind some of these ideas &mdash; especially adjusting the &ldquo;provisional income&rdquo; threshold on Social Security and raising the capital gains exemption on a home sale.
But at this stage, it appears that any bipartisan momentum on taxes will probably coalesce around lifting the SALT deduction on state and local taxes.
One wonders, however, how much of an increase will make a difference &mdash; even in high-tax &ldquo;blue&rdquo; states. For a lot of folks, the standard deduction nowadays is such that it would take a very high SALT cap to make it worth the trouble to start itemizing again&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 government is a devious lot,&rdquo; a reader writes on the notion of &ldquo;Rothifying&rdquo; 401(k) contributions &mdash; also detailed <a href="https://paradigmpressroom.com/post/trumps-tax-deadline-yours-too">in our tax-themed edition Friday</a>.
&ldquo;In Canada we have a RRSP (Registered Retirement Savings Plan) similar I believe to the 401(k). You put money in and get a tax break, about which you think, Woo-hoo. The money inside the RRSP grows tax free. When you retire your earned income goes down and you pay less taxes.
&ldquo;Then when you have to withdraw savings from your RRSP, according to government rules, your earned income goes up and voila you&rsquo;re paying the same high taxes as when you were working. It&rsquo;s nothing more than income leveling for the legalized mafia (government). So if this is similar to your system, they won&rsquo;t change the rules.
&ldquo;P.S. Don&rsquo;t ask me about property assessment in Canada, which most inhabitants of this country aren&rsquo;t aware of.
&ldquo;I&rsquo;m not going to say I love The 5. Love is reserved for people but I have to read it every day, no ifs ands or&hellip; those buts weren&rsquo;t intentional but I couldn&rsquo;t think of any other wording.&rdquo;
Dave: Yes, we have RMDs, or required minimum distributions, starting at age 73, although that will go up to age 75 come 2033.
The amount you&rsquo;re required to take out rises each year &mdash; which, without judicious tax planning, puts retirees at risk of going into a higher tax bracket and/or paying higher Medicare premiums. So the mafia metaphor is apt&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 2075937937

The year 2025 will be the year of “tokenization,” declares Paradigm’s crypto and AI authority James Altucher.

A $1.4 Quadrillion Transformation

<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 First Order of Business
<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 a whirlwind &mdash; 11 presentations in two hours and 45 minutes.
From far and wide, the Paradigm Press editors converged on our Baltimore headquarters yesterday.
They unveiled their top forecasts for 2025 &mdash; the trends, the opportunities and especially the surprises.
They faced a tough crowd &mdash; their fellow editors as well as our support staff of laypeople who are much like you &mdash; open to entertaining complex ideas, but wanting them boiled down to clear takeaways.
I&rsquo;m still pulling all my notes together; look for highlights on Monday.
In the meantime, it&rsquo;s not too early to look ahead to one of the major economic agenda items for the Trump administration&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" /> Beyond whatever executive orders he issues on Inauguration Day, the first order of business in Donald Trump&rsquo;s second term will be the same as it was in his first &mdash; taxes.
Well, actually, the first order of business in his first term was repealing Obamacare &mdash; but that never got done, even with Republican control of the House and Senate.
But tax cuts did get done in 2017. And they came with an expiration date &mdash; year-end 2025. Barely 12 months from now.
That&rsquo;s a function of the byzantine budgetary logic under which Washington, D.C., operates. Everything has to pencil out (kinda, sorta) over a decade-long time horizon. So in this instance, the only way to &ldquo;recover&rdquo; the &ldquo;lost&rdquo; revenue from this tax law was to sunset the entirety of the law after eight years.
The Trump tax cuts &mdash; formally the &ldquo;Tax Cuts and Jobs Act&rdquo; &mdash; lowered average tax rates for all income groups, according to research from the Tax Foundation&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/1aYRd1QOszAROtnfo9Syhx/451d359700a99e6d87594fb62495ed92/TaxRates.png" alt="Tax Rates" width="540px" />
With Republicans in charge of both the House and Senate, those post-2017 rates are sure to stay in place now &mdash; even for folks at the top end of the income scale.
But beyond that, there are many other details to thrash out. On the campaign trail this fall, Trump said he wanted to&hellip;
<ul>
<li>End the taxation of Social Security benefits</li>
<li>Eliminate taxes on tips</li>
<li>Exclude overtime pay from income tax</li>
<li>Make interest on auto loans fully deductible</li>
<li>Jack up the child tax credit.</li>
</ul>
One more possibility &mdash; raising the cap on the SALT deduction for state and local taxes. Republicans from high-tax blue states like New York and California have wanted this for years; Given how Trump <a href="https://rudeawakening.info/posts/crosses-and-pitchforks-reclaim-america">improved</a> his vote margin in those states between 2020 and 2024, he might be receptive.
But political realities are such that he&rsquo;s not going to get everything he wants on that list.
Today, we&rsquo;ll propose an alternative wish list. It has to do with a series of &ldquo;gotcha&rdquo; taxes that you may or may not be aware of. They&rsquo;re worth bearing in mind as you get ready to prepare your taxes next spring.
Every item on the following wish list would ease the burden of inflation &mdash; which, you&rsquo;ve probably noticed, has had an impact on your monthly budget in recent years.
<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" />Please, Please &mdash; Repeal These &ldquo;Gotcha&rdquo; Taxes
<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 Trump can&rsquo;t end the taxation of Social Security benefits, the least he could do is to end the &ldquo;gotcha&rdquo; tax that&rsquo;s built into Social Security.
First, the background. When Social Security was overhauled during Ronald Reagan&rsquo;s first term, Social Security benefits became taxable income for the first time.
Since 1984, seniors have paid tax on &ldquo;provisional income&rdquo; above $32,000. The figure is calculated by adding up your gross income, tax-free interest and 50% of Social Security benefits.
Even though this formula came into effect 40 years ago, it&rsquo;s never been adjusted for inflation. If it were, the threshold would be $96,863.
LOGO &mdash; Another gotcha tax is more recent: It affects homeowners and it came into effect under Bill Clinton.
Under the Taxpayer Relief Act of 1997, there&rsquo;s an exemption on any capital gains you rake in from the sale of a personal residence &mdash; $250,000 for individuals, $500,000 for couples. (You have to have lived in the home for at least two of the last five years, and the exemption is allowable only once every two years.)
Even though this legislation was passed more than a generation ago, those thresholds have never been adjusted for inflation. If they were, they&rsquo;d be $489,740 for individuals and $979,490 for couples.
And even those higher figures wouldn&rsquo;t be fair &mdash; considering that home prices have risen much faster than the inflation rate.
Imagine a just-retired couple looking to downsize and sell a home where they&rsquo;ve lived for the last 20 or 30 years. Ouch.
This is a reality that&rsquo;s biting especially hard right now for Californians looking to move to a lower-tax locale like Arizona or Texas.
<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 there&rsquo;s the Obamacare tax.
Strictly speaking, it&rsquo;s a Medicare surtax, but it took effect along with Obamacare in 2013. There are two main features to this surtax&hellip;
<ul>
<li>A 3.8% levy on dividends and long-term capital gains for individuals earning over $200,000 and couples earning over $250,000</li>
</ul>
<ul>
<li>A 0.9% levy applied to all income over $200,000 for individuals and $250,000 for couples (on top of the 1.45% Medicare tax everyone pays on every dollar of wages)</li>
</ul>
Even though these income thresholds came into effect more than a decade ago, they&rsquo;ve never been adjusted for inflation. If they were, they&rsquo;d be $269,960 for individuals and $337,450 for couples.
(And even with those higher thresholds, there&rsquo;d still be a heckuva marriage penalty.)
<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 gotcha tax &mdash; and this one even precedes the tax on Social Security benefits.
As you might be aware, you can write off investment losses on your income taxes &mdash; up to a point.
Tax-loss selling, it&rsquo;s called: You sell an underperforming investment and apply the loss to reduce your taxable capital gains. If your losses are greater than the gains, you can offset as much as $3,000 of your ordinary income.
Sounds generous, you say? Not so much. Under the Tax Reform Act of 1976, this $3,000 cap took effect way back in 1978 &mdash; when Grease was the No. 1 movie and the year&rsquo;s top-charting song was Andy Gibb&rsquo;s &ldquo;Shadow Dancing.&rdquo;
Yeah, it&rsquo;s never been adjusted for inflation. If it were, it would be nearly $14,500 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" /> Fixing these gotcha taxes seems like a modest and doable way to take some of the sting out of this decade&rsquo;s inflation &mdash; for which both Trump and Biden bear responsibility.
But before we move on, there&rsquo;s one other item we need to address: We sincerely hope it doesn&rsquo;t end up on Congress&rsquo; agenda, but we can&rsquo;t dismiss the possibility.
See, if the Trump tax cuts are to be made permanent, the politicos are gonna have to come up with more revenue from somewhere.
<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 End of the 401(k) Tax Break?
<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 that &ldquo;somewhere&rdquo; might be your 401(k).
After all, &ldquo;Eliminating the favorable tax treatment of the 401(k) is much less painful politically than increasing taxes directly,&rdquo; economist Allison Schrager wrote in a Bloomberg opinion piece earlier this year.
I&rsquo;ve been following this story since the 2008 financial crisis. Back then, when the crash had already vaporized $2 trillion from Americans&rsquo; 401(k) and pension plans, I wrote at The Daily Reckoning&rsquo;s website about a proposal in Congress to exclude &ldquo;high income&rdquo; earners from making tax-deferred 401(k) contributions.
Rep. George Miller, chair of the House Education and Labor Committee, was candid about the aim: &ldquo;We&rsquo;ve invested $80 billion into subsidizing this activity.&rdquo; In other words, Uncle Sugar was &ldquo;sacrificing&rdquo; $80 billion in revenue every year for the sake of a &ldquo;high-income&rdquo; giveaway.
The idea never got out of committee&hellip; but it&rsquo;s never gone away. Academics, think-tank types and investment bankers have all issued position papers on the topic in subsequent years &mdash; some of them suggesting that the tax breaks of a 401(k) be phased out for everyone, no matter their income.
<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" /> Key point: Republicans seriously entertained this idea while writing the Trump tax cut bill in 2017.
Trump&rsquo;s director of the White House National Economic Council, Gary Gohn, floated the idea.
House Ways and Means Committee chair Kevin Brady (R-Texas) appeared receptive. If it had gone through, your annual 401(k) contributions would have been capped at a paltry $2,400.
For perspective, the cap for most people that year was $18,000; this year, because the cap is adjusted for inflation, it&rsquo;s $23,000.
Under the proposal, any contributions above that puny $2,400 cap were to be &ldquo;Rothified.&rdquo; That is, it would be treated like a Roth IRA &mdash; you&rsquo;d pay taxes on it now, with the promise that the money plus any investment gains could be withdrawn tax-free in retirement.
There was just enough pushback that Trump issued a tweet promising &ldquo;NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!&rdquo;
Cohn lasted only 15 months at the White House and Rep. Brady retired at the end of 2022, so they&rsquo;re not around to resurrect this proposal. But someone else might this time: Would Trump squash it down again, or would he trade it off for another concession as he pursued the art of the deal?
We&rsquo;ll concede it&rsquo;s a low-probability outcome. But it would also be high-impact. We&rsquo;ll stay on top of it&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" />Reliable Recession Benchmark
<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, a 2025 recession is baked into the economic cake now.
That&rsquo;s because the 3-month/10-year yield curve has uninverted.
Yeah, we&rsquo;d better back up in case you&rsquo;re unfamiliar or you need a refresher.
Under normal circumstances, long-term interest rates are higher than short-term rates. That&rsquo;s because under normal circumstances, lending money for longer stretches of time is more risky; there&rsquo;s more time for something to go wrong and the borrower to default.
But on occasion, short-term rates become higher than long-term rates. When that happens lenders anticipate a higher risk of delinquency or default in the short term. Often, that risk is associated with fears of a recession. This is what&rsquo;s known as an &ldquo;inverted yield curve.&rdquo;
There&rsquo;s a lot of misunderstanding surrounding an inverted yield curve; many people think that when it inverts, a recession is imminent.
In reality, it&rsquo;s when the curve uninverts that a recession is nigh.
Certainly that&rsquo;s how it&rsquo;s worked out with every recession going back to 1990. When the line on this chart goes back above zero, the curve has &ldquo;uninverted.&rdquo; Note well: The vertical gray bars are recessions.
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/4FYzLbN7y9ukgwpR5vwKkj/ae3ad7fb3a4e7f539f52f398da7fb663/5Bullets_Chart_121324.png" alt="yield curve" width="540px" />
Timing, you wonder? Here&rsquo;s how it shook out with the four most recent recessions&hellip;
<ul>
<li>The 1990&ndash;1991 recession began eight months after the curve uninverted in November 1989</li>
</ul>
<ul>
<li>The mild 2001 recession began only two months after the curve uninverted in January</li>
</ul>
<ul>
<li>The &ldquo;Great Recession&rdquo; of 2007&ndash;2009 began seven months after the curve uninverted in May 2007</li>
</ul>
<ul>
<li>The brief 2020 COVID recession began four months after the curve uninverted in October 2019. <a href="https://5minforecast.com/2022/03/11/countdown-to-cover-up/">As we&rsquo;ve recounted</a> in the past, a 2020 recession was likely in the cards even without a pandemic.</li>
</ul>
Admittedly, this is a limited data set. But there&rsquo;s an average five-month interval between the time the curve uninverts and the time a recession sets in. So&hellip; next May, perhaps?
No guarantees, though: A lot of economic numbers have been scrambled in recent years by 1) the rise of work-from-home and 2) an enormous influx of immigrants, legal and otherwise. Perhaps the uninverted yield curve is one of those numbers and it no longer has the predictive value it once did&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" /> To be sure, there&rsquo;s little evidence of recession fears in the major U.S. stock indexes as the week winds down.
At last check, the Dow is flat, the S&amp;P 500 is up slightly and the Nasdaq is up about a third of a percent.
If these numbers hold by day&rsquo;s end, the Nasdaq will notch a record weekly close &mdash; but not the Dow or the S&amp;P.
<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" /> Meanwhile, commodities traders are shrugging off the risk of a sudden geopolitical blowup this weekend while the markets are closed.
Oftentimes, gold and oil traders avoid being &ldquo;short&rdquo; on a Friday when the world looks volatile &mdash; and that&rsquo;s certainly the case today&hellip;
<ul>
<li>According to Israeli media, the Israeli military sees the downfall of the Assad regime in Syria as an ideal opportunity to start bombing Iran. There&rsquo;s almost nothing left of Syria&rsquo;s Russian-made air defenses after Israel spent most of this week bombing the hell out of them. In the past, those air defenses were a formidable deterrent to Israeli bombings of Iranian targets, but no more.</li>
</ul>
<ul>
<li>Ukraine has once again used American-provided ATACMS missiles to strike well inside Russian territory. The last time Ukraine did this, Russia unleashed its new game-changing Oreshnik missile &mdash; as Jim Rickards recounted for us yesterday. The logical response this time would be an attack on the new U.S. missile base in Poland&hellip;</li>
</ul>
And yet gold and silver are taking another beating today &mdash; gold down nearly $19 at $2,661 and silver off another 46 cents to $30.47. The HUI index of mining stocks is back below 300.
Crude is rallying, but not dramatically &mdash; up 77 cents to $70.79, the highest since before Thanksgiving.
Bitcoin&rsquo;s rally back above $100,000 is holding going into the weekend.
Staying with geopolitics as we wind down the week&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" />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" /> Playing off a meme we shared on Monday&hellip;
<img class="aligncenter" src="https://images.ctfassets.net/vha3zb1lo47k/3HpG0LONndHsYCEupV2XpH/75762bd7b2843a72f2650a8b09b292a2/IranTweet.png" alt="Iran Tweet" width="540px" />
I don&rsquo;t know who&rsquo;s actually behind the &ldquo;Iran Military&rdquo; account on X, but it&rsquo;s home to some first-class trolling of the Deep State!
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

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The first order of business in Donald Trump’s second term will be the same as it was in his first — taxes.