“I believe it is highly possible to improve your long-term results by adjusting your investment position at the extremes of the cycle. Not that often. But at the extremes.” — Howard Marks
Chart of the Day
Good morning!
This is an unusual market environment. Investors are playing both offense and defense.
The latest example comes as two completely opposite investing strategies are becoming popular in tandem, further driving home the point that these aren’t normal times. We break it down.
The super safe play
Gold has rallied 26% this year—hitting fresh records almost every other day—and the SPDR Gold Shares ETF is up nearly 30%.
The perennial safe-haven metal has been bid up sharply this year because of tariff-driven uncertainty and worries that inflation could rear its ugly head. RBC Capital Markets analyst Chris Louney sums it up well in a Barron’s article: “Gold is that asset of last resort…the part of the investing universe that investors really look for when they have a lot of questions elsewhere.”
Readers, I wrote about gold at WSJ, and to me, that idea of a changing world order isn’t enough to justify a move that big. I’m not the only one questioning this, according to a MarketWatch article, which suggests that others too think this move could be driven by speculative investors.
Yet despite gold having run up so much already, Wall Street remains bullish about gold. JPMorgan’s head of base and precious metals research said that gold prices will likely surge past $4,000 a troy ounce by the second quarter of 2026. From Tuesday’s close, that would represent a gain of 17%.
Big investors are optimistic about gold, too. Billionaire investor John Paulson is teaming up with Canada’s NovaGold Resources to purchase a stake in an Alaskan gold-mining project. Talk about a real goldbug.
The ultra-risky play
Leveraged stock ETFs are also roaring in popularity. This popularity seems to ignore the fact that single-stock leveraged ETFs have come under scrutiny for being volatile and losing investors billions of dollars.
But in the hopes of scoring it big, investors remain undeterred. Bank of America’s chief investment strategist Michael Hartnett said that leveraged equity ETFs saw $14 billion in weekly inflows about two weeks ago, a record in the firm’s data. After that, he said there was a “tiny” outflow of about $300 million last week. In his note, he said, “the ‘bro bid’ for stocks continues.”
Leveraged ETFs are more for short-term investors and very risky, so inflows into these funds suggest that investors are gearing up for when markets recover from this choppiness. That optimism seems impressive even though buying the dip isn’t really being rewarded right now.
If investors were really worried about the sky falling down, we wouldn’t simultaneously see a surge in interest for gold and leveraged ETFs. This leads me to believe that investors (unsurprisingly) have no idea what’s going on and are simply panicking and feel like they have to buy gold and leveraged ETFs before it becomes too late and they miss the boat.
Bizarre times, indeed.
Share your thoughts
What other market extremes are you noticing? Click here to send us your response.
Here’s what a reader commented
Question: What percentage of your portfolio is reserved for active investing and do you expect it to grow?
Answer: I think active investing is especially needed when there are market upheavals that make the usual technical analysis difficult to utilize. I’ve already moved half of my portfolios into a basket of international ETFs. My portfolios used to be 90% aligned with FS Insight’s recommendations. Now they’re at 40%-50% with the remainder in international ETFs. I believe our president has so severely damaged our relationships with other nations that American products are being avoided by other nations whenever possible, and their purchase of our debt instruments will be similarly impacted. This does not bode well for our future in terms of the strength of the dollar, inflation, and our debt structure.
Catch up with FS Insight
Stocks managed to recover ground Tuesday as it appears the White House wants to de-escalate tariff deliberations and we will closely watch Bessent’s comments Wed at the IIF.
Technical
U.S. Equities showed signs of extending gains Tuesday in a way that is suggestive that our rally from 4/7 lows should start to work its way higher.
Crypto
We sat down with Mark Newton to walk through some key charts and highlight the critical levels he is monitoring for BTC, ETH, SOL, and JTO.
News We’re Following
Breaking News
- European Union hits Apple and Meta with nearly $800 million in fines amid U.S. trade tensions CNBC
Markets and economy
- $1 Trillion of Wealth Was Created for the 19 Richest U.S. Households Last Year WSJ
- Trump Says He Has ‘No Intention’ of Firing Fed Chair Powell WSJ
- Credit-Card Companies Brace for a Downturn WSJ
- Eurozone business confidence plunges over US trade war FT
- Japanese investors sold $20bn of foreign debt as Trump tariffs shook markets FT
Business
- Tesla Has a Deep Hole to Pull Out Of WSJ
- Boeing Reports Smaller Loss but Trade War Threats Loom NYT
- Software giant SAP’s shares surge 10% after first-quarter profit beat CNBC
Politics
- Pete Hegseth under siege as Pentagon plunges into disarray FT
- London talks on ending war in Ukraine downgraded as Rubio pulls out RT
Overseas
- Slaughter of Civilians in Kashmir Shatters an Illusion of Calm NYT
- From trains to tanks: Germany’s rearmament marks industrial shift FT
Of Interest
- They Criticized Musk on X. Then Their Reach Collapsed. NYT
- Chocolate makers slash price hedges in bet that bull market is over FT
| Overnight |
| S&P Futures +109
point(s) (+2.0%
) Overnight range: +63 to +120 point(s) |
| APAC |
| Nikkei +1.89%
Topix +2.06% China SHCOMP -0.1% Hang Seng +2.37% Korea +1.57% Singapore +0.97% Australia +1.33% India +0.68% Taiwan +4.5% |
| Europe |
| Stoxx 50 +2.46%
Stoxx 600 +1.66% FTSE 100 +1.29% DAX +2.76% CAC 40 +2.18% Italy +1.2% IBEX +1.09% |
| FX |
| Dollar Index (DXY) -0.02%
to 98.9 EUR/USD +0.06% to 1.1428 GBP/USD -0.06% to 1.3324 USD/JPY +0.14% to 141.77 USD/CNY -0.27% to 7.2879 USD/CNH -0.33% to 7.288 USD/CHF +0.31% to 0.8214 USD/CAD -0.05% to 1.3808 AUD/USD +0.77% to 0.6416 |
| Crypto |
| BTC +3.23%
to 94120.28 ETH +5.84% to 1795.14 XRP +5.75% to 2.2815 Cardano +8.25% to 0.7089 Solana +5.4% to 152.37 Avalanche +4.09% to 22.99 Dogecoin +5.96% to 0.1831 Chainlink +8.09% to 14.91 |
| Commodities and Others |
| VIX -7.03%
to 28.42 WTI Crude +0.36% to 64.54 Brent Crude +1.29% to 68.31 Nat Gas +1.16% to 3.04 RBOB Gas +1.23% to 2.125 Heating Oil +1.19% to 2.174 Gold -1.58% to 3327.26 Silver +1.14% to 32.88 Copper +0.44% to 4.899 |
| US Treasuries |
| 1M -1.8bps
to 4.2483% 3M -0.8bps to 4.2937% 6M -0.8bps to 4.1789% 12M -1.1bps to 3.9679% 2Y +0.9bps to 3.8278% 5Y -1.6bps to 3.9766% 7Y -3.9bps to 4.1534% 10Y -5.5bps to 4.3461% 20Y -8.3bps to 4.826% 30Y -8.7bps to 4.7909% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 0.9bps to -51.2
bps 10Y-2 Y Spread narrowed 6.5bps to 51.4 bps 30Y-10 Y Spread narrowed 3.2bps to 44.3 bps |
| Yesterday's Recap |
| SPX +2.51%
SPX Eq Wt +2.47% NASDAQ 100 +2.63% NASDAQ Comp +2.71% Russell Midcap +2.78% R2k +2.71% R1k Value +2.35% R1k Growth +2.73% R2k Value +2.7% R2k Growth +2.73% FANG+ +2.75% Semis +2.17% Software +2.68% Biotech +2.82% Regional Banks +3.21% SPX GICS1 Sorted: Fin +3.28% Cons Disc +3.23% Comm Srvcs +2.9% Utes +2.76% Energy +2.62% SPX +2.51% Tech +2.45% Materials +2.35% REITs +2.09% Healthcare +1.8% Indu +1.77% Cons Staples +1.61% |
| USD HY OaS |
| All Sectors -20.2bp
to 441bp All Sectors ex-Energy -14.7bp to 398bp Cons Disc -16.4bp to 436bp Indu -15.1bp to 334bp Tech -17.5bp to 440bp Comm Srvcs -15.4bp to 627bp Materials -14.4bp to 431bp Energy -54.3bp to 467bp Fin Snr -16.0bp to 372bp Fin Sub -3.7bp to 297bp Cons Staples -14.9bp to 288bp Healthcare -20.1bp to 450bp Utes -13.0bp to 304bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 4/23 | 9:45AM | Apr P S&P Manu PMI | 49.0 | 50.2 |
| 4/23 | 9:45AM | Apr P S&P Srvcs PMI | 52.6 | 54.4 |
| 4/23 | 10AM | Mar New Home Sales | 685.0 | 676.0 |
| 4/23 | 10AM | Mar New Home Sales m/m | 1.3 | 1.8 |
| 4/24 | 8:30AM | Mar P Durable Gds Orders | 2.0 | 1.0 |
| 4/24 | 10AM | Mar Existing Home Sales | 4.15 | 4.26 |
| 4/24 | 10AM | Mar Existing Home Sales m/m | -2.58 | 4.16 |
| 4/25 | 10AM | Apr F UMich 1yr Inf Exp | 6.8 | 6.7 |
| 4/25 | 10AM | Apr F UMich Sentiment | 50.6 | 50.8 |
| 4/29 | 10AM | Apr Conf Board Sentiment | 88.45 | 92.9 |
| 4/29 | 10AM | Mar JOLTS | n/a | 7568.0 |
