April 23rd, 2025: Weekly Market Review

1. This week’s stock market experienced heightened volatility as shifting political dynamics injected uncertainty (and later, some cautious optimism) into investor sentiment.

Initially rattled by concerns over the ongoing standoff between former President Donald Trump, Federal Reserve Chair Jerome Powell, and Chinese President Xi Jinping, markets swung in response to signals of easing domestic tensions. In particular, the evolving relationship between Trump and Powell appeared to take on a more collaborative tone, softening fears that monetary policy could become a political flashpoint. The more harmonious messaging between the two figures reassured investors that rate policy may stay stable in the near term.

However, the U.S.-China tariff dispute remains a wildcard. While relations with the Federal Reserve have improved, China continues to be an unresolved piece of the broader economic puzzle. Despite the uncertainty, a more constructive tone emerged late in the week when economist Scott Bassett suggested that promising negotiations between the U.S. and China may be on the horizon. This hint of diplomatic progress offered a glimmer of hope to markets, helping to temper earlier fears and spark a late-week rebound in equities. Still, investors remain cautious, watching for concrete developments in trade policy that could further impact global risk appetite.  REF: CNBC, WSJ

2. This week, we highlight a venture capital icon – Vinod Khosla.   

Mr. Khosla, an Indian-American entrepreneur and venture capitalist, co-founded Sun Microsystems in 1982 as its first chairman and CEO, later launching Khosla Ventures in 2004 to focus on tech and social impact investments. With a net worth of $9.2 billion as of January 2025, he’s celebrated for bold bets on transformative fields like AI, robotics, healthcare, and clean energy. Driven by a belief in technology’s power to create abundance and solve global challenges, Khosla continues to shape the future through visionary investing.  REF: KhoslaVentures

In the 159th episode of Moonshots with Peter Diamandis, recorded at the 2025 Abundance Summit, Vinod Khosla of Khosla Ventures predicts a tech-driven future where AI makes expertise free by 2030. He boldly claims there will be no programmers, teachers, or drivers as AI automates coding, personalizes education, and powers autonomous vehicles that outstrip the auto industry. Khosla sees this as part of an exponential shift where robotics and AI render human expertise ubiquitous, disrupting traditional roles and economies.

Khosla also emphasizes robotics surpassing automotive applications and energy innovations like geothermal and fusion revolutionizing power supply. These advancements could eliminate jobs while fueling a new era of abundance in transport, education, and energy. His vision, shared with Peter Diamandis, highlights technology’s potential to solve major challenges, urging society to adapt to a world where expertise is no longer scarce but universal, reshaping how we live and work by 2030.  Click onto picture below to access video, lots of nuggets here.  REF: Moonshot159

If you enjoy the above, and if you have the time, then you might also like Vinod’s TED Talk recorded 9 months ago in Vancouver BC.  Here, Vinod offered 12 bold predictions for the future of technology — from preventative medicine to car-free cities to planes that get us from New York to London in 90 minutes — and shows why a world of abundance awaits.  Click onto picture below to access video.  REF: TEDTalk

3. Two items caught my attention this week: Gold and the US dollar.

With the recent parabolic move up, Gold will likely retrace back to earth around the $2,900 levels – Gold’s recent parabolic rise to record highs appears overextended, making a short-term retracement to the $2,900 level increasingly likely. This surge has been driven by heightened geopolitical tensions, central bank buying, and expectations of lower interest rates, but much of this bullish sentiment now seems priced in. As momentum cools and speculative positioning becomes stretched, any easing in global risks or stronger-than-expected U.S. economic data could trigger profit-taking. Additionally, rising real yields or a stabilization in the U.S. dollar could act as near-term headwinds, encouraging a healthy pullback before gold resumes its longer-term upward trend.  REF: GLD-Chart

USD heading lower with Head and Shoulders pattern at work – The U.S. dollar is likely to head lower in the near term due to a combination of easing inflation pressures, expectations of Federal Reserve rate cuts, and improving global economic conditions. As inflation continues to trend downward, the Fed is signaling a potential shift toward a more accommodative monetary stance, reducing the yield advantage that previously supported the dollar. Simultaneously, signs of economic stabilization in Europe and Asia are boosting investor appetite for risk and encouraging capital flows into non-dollar assets. With geopolitical tensions and trade frictions adding further uncertainty, the dollar’s safe-haven appeal may diminish, accelerating its short-term decline.  REF: FXY-Chart  (The FXY ETF, which tracks the value of the Japanese yen against the U.S. dollar, is often used as an indirect way to gauge the strength or weakness of the U.S. dollar in global currency markets)

NOTE: Not investment advice or recommendations. Investor should consider the investment objective, risks, charges and expenses carefully before investing.  For prospectus or summary prospectus with this and other information about these Funds, please visit referenced links listed below.  Read carefully before investing.

GLD – https://www.spdrgoldshares.com/usa/

FYX – https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&ticker=FXY

**With the current macro-economic backdrop, below are areas we currently favor:

• Fixed Income – Short-term Corporates (Low-Beta)
• Fixed Income – Corporates High Yield as Opportunistic Allocation (Low-Beta)
• Businesses that contribute to and benefit from AI & Automation (Market-Risk)
• Cloud Computing (Market-Risk)
• Cyber-Security (Market-Risk)
• Biotechnology (Market-Risk)
• Financials (Market-Risk)
• Digital Asset – Bitcoin (Market-Risk/Hedge)

4. World Watch

4A. ​ China is in no shape to endure a prolonged tariff war with the United States. 

The country’s economy is already facing significant headwinds, with 2025 GDP growth expected to decelerate to between 3% and 4.5%, a sharp drop from recent years. This slowdown is being driven by both external and internal pressures. On the global front, the reintroduction of steep U.S. tariffs (some as high as 145%) has led to a short-term surge in exports, but that front-loading is likely to reverse, depressing future shipments and undercutting industrial output. Meanwhile, currency depreciation pressures from widening U.S.-China interest rate differentials raise the risk of capital flight and financial instability. Simply put, China’s reliance on export-driven growth is becoming a vulnerability in this economic environment.

Domestically, the country is grappling with structural issues that weaken its ability to absorb further shocks. The real estate sector remains deeply troubled, with unsold housing inventory far outstripping demand and weighing heavily on consumer sentiment and household wealth. China’s total debt has swelled to more than 365% of GDP, severely limiting the scope for effective stimulus. Demographic challenges—including an aging population and shrinking labor force, further constrain growth potential. Despite expected fiscal and monetary policy measures, the effectiveness of government intervention is hampered by the long-term nature of these problems. In this context, a drawn-out trade confrontation with the U.S. could exacerbate China’s economic fragility, making it unlikely that Beijing will have the capacity or appetite to sustain a prolonged tariff war.  Click onto picture below to access video.  REF: CNBC, TradingEconomics, REUTERS

4B. Elon Musk has pledged to scale back his involvement with the U.S. government to focus more heavily on Tesla Inc.

This move is intended to reassure investors concerned that his growing presence in Washington was becoming a distraction. In recent months, Musk has been increasingly active in government affairs, from engaging in policy discussions to advising on AI and national defense topics. While these initiatives reflect his influence beyond the private sector, they have also sparked unease among Tesla shareholders who fear the CEO’s attention is being diverted from the company’s core business.

Musk’s vow to “pull back significantly” comes at a time when Tesla is navigating a complex operating environment, including heightened competition in the EV space and evolving regulatory pressures. By reasserting his commitment to Tesla, Musk aims to refocus leadership energy on product innovation, margin recovery, and global expansion—areas seen as critical to the company’s long-term success. The announcement appears to be a strategic effort to rebuild investor confidence by demonstrating that Tesla remains his top priority.  Click onto picture below to access video.  REF: Bloomberg

NOTE: Not investment advice or recommendations. Investor should consider the investment objective, risks, charges and expenses carefully before investing.  For additional information about this company, please visit referenced links listed below.  Read carefully before investing.

TSLA – https://ir.tesla.com/#quarterly-disclosure

4C. Below is an updated snapshot of the current global state of economy.

According to TradingEconomics as of 4/21/2025.  REF: TradingEconomics:

• The Chinese GDP grew by a seasonally adjusted 1.2% in Q1 of 2025, slowing from a 1.6% rise in Q4 and falling short of the market consensus of 1.4% . 
• China’s surveyed unemployment rate fell to 5.2% in March 2025, easing from a two-year high of 5.4% in the previous month and coming in below market expectations of 5.3%.
• The benchmark interest rate in Germany is set by the European Central Bank. Interest Rate in Germany averaged 1.87 percent from 1998 until 2025, reaching an all time high of 4.75 percent in October of 2000 and a record low of 0.00 percent in March of 2016.
• Japan’s annual inflation rate edged to 3.6% in March 2025 from 3.7% in the prior month, marking the lowest print since last November.

5. Quant & Technical Corner

Below is a selection of quantitative & technical data we monitor on a regular basis to help gauge the overall financial market conditions and the investment environment.

5A. Most recent read on the Fear & Greed Index with data as of 4/21/2025 – 8:00PM-ET is 22 (Extreme Fear).  Last week’s data was 18 (Extreme Fear) (1-100).  CNNMoney’s Fear & Greed index looks at 7 indicators (Stock Price Momentum, Stock Price Strength, Stock Price Breadth, Put and Call Options, Junk Bond Demand, Market Volatility, and Safe Haven Demand).  Keep in mind this is a contrarian indicator!  REF: Fear&Greed via CNNMoney

5B. St. Louis Fed Financial Stress Index’s (STLFSI4) most recent read is at 0.5535 as of April 17, 2025.  Previous week’s data was 0.0944.  A big spike up from previous readings reflecting the turmoil in the banking sector back in 2023.  This weekly index is not seasonally adjusted.  The STLFSI4 measures the degree of financial stress in the markets and is constructed from 18 weekly data series: seven interest rate series, six yield spreads and five other indicators. Each of these variables captures some aspect of financial stress. Accordingly, as the level of financial stress in the economy changes, the data series are likely to move together.  REF: St. Louis Fed

5C. University of Michigan, University of Michigan: Consumer Sentiment for February [UMCSENT] at 64.7, retrieved from FRED, Federal Reserve Bank of St. Louis, March 28, 2025.  Back in June 2022, Consumer Sentiment hit a low point going back to April 1980.  REF: UofM

5D. The Chicago Fed National Activity Index (CFNAI) increased to +0.18 in February from –0.08 in January. Three of the four broad categories of indicators used to construct the index increased from January, and two categories made positive contributions in February. The index’s three-month moving average, CFNAI-MA3, increased to +0.15 in February from +0.07 in January. REF: ChicagoFed, February’s Report

5E. (4/21/2025) The Conference Board Leading Economic Index (LEI) for the US declined by 0.7% in March 2025 to 100.5 (2016=100), after a decline of 0.2% (revised up from –0.3%) in February. The LEI also fell by 1.2% in the six-month period ending in March 2025, a smaller rate of decline than its –2.3% contraction over the previous six months (March–September 2024). The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The indexes are constructed to summarize and reveal common turning points in the economy in a clearer and more convincing manner than any individual component. The CEI is highly correlated with real GDP. The LEI is a predictive variable that anticipates (or “leads”) turning points in the business cycle by around 7 months. Shaded areas denote recession periods or economic contractions. The dates above the shaded areas show the chronology of peaks and troughs in the business cycle. The ten components of The Conference Board Leading Economic Index® for the U.S. include: Average weekly hours in manufacturing; Average weekly initial claims for unemployment insurance; Manufacturers’ new orders for consumer goods and materials; ISM® Index of New Orders; Manufacturers’ new orders for nondefense capital goods excluding aircraft orders; Building permits for new private housing units; S&P 500® Index of Stock Prices; Leading Credit Index™; Interest rate spread (10-year Treasury bonds less federal funds rate); Average consumer expectations for business conditions.  REF: ConferenceBoard, LEI Report for February  (Released on 3/29/2025)

We have experienced a “rolling recession” since June 2022 and are only now emerging from it. However, authorities are not labeling it a recession due to high employment data. 

5F. Probability of U.S. falling into Recession within 3 to 4 months is currently at 46.74% (with data as of 04/14/2025 – Next Report 04/28/2025) according to RecessionAlert Research.  Last release’s data was at 48.26%.  This report is updated every two weeks. REF: RecessionAlertResearch

5G. Yield Curve as of 4/21/2025 is showing Normal.  Spread on the 10-yr Treasury Yield (4.42%) minus yield on the 2-yr Treasury Yield (3.78%) is currently at 64bps.  REF: Stockcharts   The yield curve—specifically, the spread between the interest rates on the ten-year Treasury note and the three-month Treasury bill—is a valuable forecasting tool. It is simple to use and significantly outperforms other financial and macroeconomic indicators in predicting recessions two to six quarters ahead.  REF: NYFED

5H. Recent Yields in 10-Year Government Bonds.  REF: Source is from Bloomberg.com, dated 4/21/2025, rates shown below are as of 4/21/2025, subject to change.

The 10-Year US Treasury Yield… The 10-Year Yield is indirectly related to inflation. I expect the 10-Year Yield to drop further as dis-inflation kicks in.  REF: StockCharts1, StockCharts2

10-Year Real Interest Rate at 1.66841% as of 4/10/25.  Last month’s data was 1.86151%.  REF: REAINTRATREARAT10Y

ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) currently at 4.16 as of April 17, 2025.  This is a key indicator of market sentiment, particularly regarding risk and economic health.  At its core, the spread reflects the extra return investors demand to hold riskier corporate debt over safer government securities. High-yield bonds are issued by companies with lower credit ratings (below investment grade, like BB or lower), meaning they carry a higher chance of default. The spread compensates for this risk. When the spread is narrow—say, around 2.5% to 3%, as seen recently—it suggests investors are confident, willing to accept less extra yield because they perceive lower default risk or a strong economy. Narrow spreads often align with bullish markets, where cash is flowing, growth is steady, and fear is low.   REF: FRED-BAMLH0A0HYM2

5I. (4/21/2025) Today’s National Average 30-Year Fixed Mortgage Rate is 6.98% (All Time High was 8.03% on 10/19/23).   Last week’s data was 6.88%.  This rate is the average 30-year fixed mortgage rates from several different surveys including Mortgage News Daily (daily index), Freddie Mac (weekly survey), Mortgage Bankers Association (weekly survey) and FHFA (monthly survey).  REF: MortgageNewsDaily, Today’s Average Rate

The recent spike in the 30-year fixed-rate jumbo mortgage to 6.98%, compared to Freddie Mac’s rate at 6.83% and the Mortgage Bankers Association (MBA) rate at 6.81%, highlights key differences in the mortgage market. Jumbo mortgages, which exceed the conforming loan limits set by government agencies like Freddie Mac, typically carry higher interest rates because they are riskier for lenders. These loans are not backed by government entities, which increases the risk for lenders and, consequently, leads to higher rates. In contrast, Freddie Mac and MBA provide averages for conforming loans, which meet federal guidelines and have lower risk due to government backing, keeping their rates lower.

(4/15/25) Housing Affordability Index for Feb = 102.2 // Jan = 100.7 // Dec = 100.7 // Nov = 99 // Oct = 102.3 // Sep = 105.5 // Aug = 98.6. Data provided by Yardeni Research.  REF: Yardeni

5J. Velocity of M2 Money Stock (M2V) with current read at 1.387 as of (Q4-2024 updated 3/27/2025).   Previous quarter’s data was 1.390.  The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.  Current Money Stock (M2) report can be viewed in the reference link.   REF: St.LouisFed-M2V

M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1. Board of Governors of the Federal Reserve System (US), M2 [M2SL], retrieved from FRED, Federal Reserve Bank of St. Louis; Updated on March 25, 2025.  REF: St.LouisFed-M2

Money Supply M0 in the United States decreased to 5,614,000 USD Million in February from 5,614,200 USD Million in January of 2025. Money Supply M0 in the United States averaged 1,177,483.25 USD Million from 1959 until 2025, reaching an all-time high of 6,413,100.00 USD Million in December of 2021 and a record low of 48,400.00 USD Million in February of 1961..   REF: TradingEconomics, M0

5K. In March, the Consumer Price Index for All Urban Consumers fell 0.1 percent, seasonally adjusted, and rose 2.4 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.1 percent in March (SA); up 2.8 percent over the year (NSA). April 2025 CPI data are scheduled to be released on May 13, 2025, at 8:30AM-ET.  REF: BLS, BLS.GOV

 5L. Technical Analysis of the S&P500 Index.  Click onto reference links below for images.

• Short-term Chart: Trend Bearish on 4/21/2025 – REF: Short-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Medium-term Chart: Trend Bullish to Bearish on 4/21/2025 – REF: Medium-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Market Timing Indicators – S&P500 Index as of 4/21/2025 – REF: S&P500 Charts (7 of them) by Joanne Klein’s Top 7 (Click Here to Access Updated Charts)

• A well-defined uptrend channel shown in green with S&P500 broke away from the uptrend.  REF: Stockcharts

• S&P500 and CBOE Volatility Index (VIX) as of 4/21/2025.  REF: FRED, Today’s Print

5M. Most recent read on the Crypto Fear & Greed Index with data as of 4/21/2025 is 38 (Fear).  Last week’s data was 31 (Fear) (1-100).  Fear & Greed Index – A Contrarian Data.  The crypto market behavior is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers. With the Crypto Fear and Greed Index, the data try to help save investors from their own emotional overreactions. There are two simple assumptions:

• Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
• When Investors are getting too greedy, that means the market is due for a correction.

Therefore, the program for this index analyzes the current sentiment of the Bitcoin market and crunch the numbers into a simple meter from 0 to 100. Zero means “Extreme Fear”, while 100 means “Extreme Greed”.  REF: Coinmarketcap.com, Today’sReading

Bitcoin – 10-Year & 2-Year Charts. REF: Stockcharts10Y, Stockcharts2Y