April 18, 2025 – Market volatility remains high, with MarketGauge's Mish Schneider warning that investor optimism may be misplaced as key consumer indicators flash caution. She highlights the critical role of consumer spending, the impact of tariffs, and the threat of recession if support falters. Safe havens like gold and long bonds are shifting, while tech stocks and the MAG7 show vulnerability. Schneider urges caution on “buy the dip” strategies, favoring diversification into commodities, long bonds, and even Bitcoin. She also notes that political and policy uncertainty is driving markets, and advises investors to watch consumer trends and charts closely for early warning signs.
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Key topics discussed in today's show:
- Consumer as Key Indicator: Consumer spending, XRT ETF, and tourism’s role in signaling market health or recession.
- Tariffs and Policy Risks: The impact of tariffs and geopolitical tensions, especially with China, on business and markets.
- Tech Weakness: Caution on tech stocks and the MAG7, with warnings against blindly “buying the dip.”
- Safe Havens Shift: Gold, long bonds, and Bitcoin as shifting safe havens amid market stress.
- Commodities Outlook: Industrial metals, grains, and the gold-silver ratio as economic and inflation barometers.
- Sector Leadership: Healthcare, energy, and defensive sectors showing relative strength, but no clear new leaders yet.
- Diversification Advice: Caution urged, with suggestions to diversify into commodities, emerging markets, Bitcoin, and to monitor long bonds for recession signals.
Transcript
Jim Puplava:
Well, investors have been taken on a roller coaster ride over the last two weeks. Will the volatility in the markets continue, or is something more ominous or even better coming our way? Let's find out. Joining us from MarketGauge is Mish Schneider. Mish, let's take it from the top. As you look at the major indexes and the breakdown that we've seen since probably mid-February, what's your take on stocks here?
Mish Schneider:
Well, first of all, hello Jim, it's great to be with you again. We're like old pals by this point. Essentially, this is a market that was already starting to show issues before the tariffs were kind of nailing the coffin. If you go back to the beginning of the year and look at the consumer, particularly the ETF for the consumer, which I like to use, XRT, because it blends consumer staples and consumer discretionary, it flashed warnings right out of the gate this year. So, coming in with a highly bullish feeling, for whatever reasons people had, I thought was a little misplaced because of that. I still think we have to watch the consumer very carefully, even now that we're in April, as a dictator of what happens with the SPY, the Qs, the Russells, and some of the other inside sectors, particularly transportation and regional banks. Because if we don’t have the consumer on board, as we know, 70% of GDP, and tourism is also getting hit, which is part of the consumer market—that’s 9% of GDP—it’s going to be really hard to sustain any rally without the consumer involved. How will we know if we’re going into a recession, just staying in stagflation, or moving into more hyperinflation? XRT is holding a critical, and I mean critical, line in the sand right now, which is the 80-month moving average. That represents a six- to eight-year business cycle. It’s already contracted under a two-year business cycle when it was doing well, so we’re already in contraction. That’s obvious. But the 80-month moving average has not been broken except for once, and that was the brief dip during COVID. If that does break and it cannot recover, all these calls for recession will start to resonate even more. Then, of course, you have to change your game plan. What do you do during a recession? What type of stocks do you buy, if any?
Jim Puplava:
Yeah, because it’s not just consumer uncertainty, but there’s a lot of uncertainty with business. What do you do? You don’t know where—like, we’re looking at some stocks, and I have a tech stock I want to buy, but 30% of their production is in China. So, you know, I’m a little leery of getting into a stock like that when it looks like an outright economic war with China right now.
Mish Schneider:
Absolutely. That’s exactly what I’m saying. You really have to think very carefully. And, of course, we also know, as we saw when we had that huge flush on April 9, hardly anything is safe when that happens—even gold, which everybody’s loving. You and I have been talking about gold for as long as we’ve known each other. Even that falls on high-liquidity days because you get margin calls, and people have to raise funds, or they get forcibly liquidated. So, the whole thing is very tricky. The safety plays are starting to shift. Although gold is still phenomenal, we’re starting to see a little movement in long bonds. That’s the other thing I’ve been watching very carefully. We established a position in TLT earlier in the week, and I’m looking at it right now as we’re speaking. If TLT can get through, say, 89, it shows real potential for those to soar, which means yields drop—but not necessarily good news. It could be another warning of a recession coming. So, whether it’s tariffs or whatever, it’s going to be difficult to find safety on the board if all of this takes place.
Jim Puplava:
Well, let’s talk about one of our favorite asset classes, which is commodities. On the day you and I are speaking, gold is up over a hundred bucks—it’s over 3,300. You’ve got silver close to 33 right now. Where do you think we go from here? Even people like Ed Yardeni are talking about gold hitting 4,000, and Yardeni is not known as a gold bug.
Mish Schneider:
No, and Yardeni was very bullish coming into this year, by the way. He’s changed his mind—I saw some of his representatives more recently. That’s interesting, but I don’t know if it necessarily means anything in terms of predictions. For gold, we had looked at 2,800. You and I talked about 3,000, and then what happens next? 3,400 was another goal. Well, now we’re not even that far away. We have to look at it in tranches right now. But what interests me more is the silver-to-gold ratio. If we really want to be commodity-based, we have to know—going back to our conversation about long bonds, the consumer, and businesses reflecting the consumer—are we going into a recession? That’s where this gold-silver ratio comes into play. Gold went up to almost 103 in terms of its ratio to silver, meaning 103 times the price of silver. As we’re speaking, it’s at 101.38. People keep saying, “Oh my God, silver’s so cheap relative to gold.” Historically, that’s true, but it’s irrelevant if we go into a recession because what will happen is maybe that ratio will come in, but it’s because gold will fall even faster than silver. That’s what I’m concerned about getting long up here. I think you have to watch silver. If that ratio starts to break down, say under 99, maybe we can say, “Ah, it’s peaked, silver’s going to go up relative to gold,” and that would be more stagflationary. I’m not ready to rule on inflation right now because I’ve seen too many instruments I watch giving me wonky signals. The gold-to-silver ratio is one. The dollar’s weak—that’s certainly concerning. Then sugar, which has always been my barometer, is not performing impressively. It’s down at around 17 and a half cents a pound, which, if that breaks, means it could go lower as well.
Jim Puplava:
Yeah, one of the things investors have to remember, and this gets back to where the economy’s heading, is that 70% of silver consumption is industrial.
Mish Schneider:
Exactly. That’s why it’s such a great barometer for whether or not we’re heading into a recession. I didn’t think we were headed to a recession until the last week or so. One of the holdouts, in terms of risk, was that long bonds were holding steady. But now, as we’re talking, TLT was trading at 88.48, now it’s at 88.36. There was a little knee-jerk reaction after Powell’s speech this morning because he’s still talking about not really doing anything for the market. Many people don’t think he can even save the market at this point. The bigger problem is if he starts talking about lowering rates, I think the message to the market is that even the Fed has given up, and they’re worried about a recession.
Jim Puplava:
If any of you are confused about what’s happening in the markets right now, feel free to reach out to us at Financial Sense. We’ve been in business for nearly four decades, helping high-net-worth clients achieve their financial goals with comprehensive financial planning and asset management. Give us a call at 888-486-3939 or leave us a message at financialsensewealth.com. Mish, I can’t think of a year where policy has played such a key role in determining what’s happening with investments. We have a three-legged stool we use: fundamentals, technicals, and politicals. This is a year where politicals are dominating the market.
Mish Schneider:
And again, you and I have talked about this as well—we always tell people, don’t trade with your politics. What I think that means is, depending on what side of the fence you’re on, or I think a lot of people are sitting in the middle right now, you can’t say, “Oh, I know this is going to work because I’m a Republican,” or “I know this is going to work because I’m a Democrat.” That’s what I mean when we talk about trying to trade off political statements. They’ve been fast, furious, confusing, and gyrating, and we’re seeing it in the VIX with a lot of fear. But I have to tell you, Jim, by focusing on the charts, they kind of tell me what’s coming even before the news comes out. Here’s a perfect example, and this is a way for people to find some clarity, to find some relaxation, if you will, from the stress they’re feeling. I wrote an article yesterday, April 15, about the MAGS, the ETF that represents the MAG7, because I noticed it went into a death cross. For those who don’t know, that means the 50-day moving average crossed below the 200-day, putting it in a bear phase, even though it’s been in negative phases. This is an official bear phase. I use a different parameter than just a 20% drop. Anyway, I saw that happening. I saw the price was trying to bounce, but it didn’t have a clean reversal pattern. So, I wrote, “Are you worried about MAGS? You should be.” Then, whammo, we wake up this morning to the 245% tariffs and NVIDIA with the blocking of the H20 chips and all the rest that came out. So, do I look like a genius because I could predict something was going to happen with NVIDIA, or did the charts tell me, “You know what, this is definitely not out of the woods”?
Jim Puplava:
Yeah, for almost two years, the MAG7 drove the S&P. And, of course, the reverse of that—as money comes out of the S&P, the MAG7 get hit harder because they’re so cap-weighted in that index.
Mish Schneider:
Exactly, exactly. There were even people on the media constantly saying, “Keep buying, keep buying,” particularly NVIDIA, which was really the MAG1. I don’t mean to laugh, but I’ve tried so hard this year, Jim, to do my part to get on any media that will have me. I’ve had a pretty good presence this year to tell people, “Don’t listen to that. Don’t listen to the generational buy opportunity.” Yeah, we all know AI is the future. We know that. But that doesn’t mean markets aren’t cyclical, things didn’t get a little overvalued, and news wouldn’t overrule whatever the future is in terms of the valuation of the stock price itself, forcing people to liquidate. Please don’t buy the dip until it’s obvious things have settled. I’m still hearing people say, “Buy the dip, buy the dip, buy the dip.” What we need is a rotation from tech—tech not to fall apart any further, although I’m not sure that’s not going to happen—into other areas to show there’s some optimism that we’re going to do better in this country because businesses are going to invest here, they’re going to have jobs here, and “Made in America” is ultimately not going to be so expensive, and we don’t need all these other countries. That’s what they’re trying to sell us. But we need to see that in the price action of the market. I’m seeing that in very few places right now—not enough to be convincing.
Jim Puplava:
The other thing about reshoring—if you’ve heard all the announcements, whether it’s Apple’s $500 billion investment here—it takes time to build a factory. Unless you get rid of the regulations that make it difficult to start a factory or create tax incentives to follow through, it may take longer. The other thing that struck me, Mish, is a lot of the equipment we need to build a factory comes from China.
Mish Schneider:
Yes, another one of those laughs—I don’t mean to laugh, but yes, absolutely. Here’s another thing, and I get this freedom when I talk to you, so I like to say these sorts of things because people need to understand this battle we’re having with China and that we expect China to fold. If you look at the history of both countries, China pulled itself out of poverty. They had a tremendous poverty problem, and that was basically eradicated over the last 20 years. Now, China has a strong middle class. That’s not to say there aren’t problems, but from a general macro backdrop, China knows how to be poor and has pulled itself out of poverty because of its industriousness. Whether you want to argue it underpays or has monetary issues, that’s not the point. The point is the philosophy. In contrast, this country has done nothing but be prosperous and has a lot of entitlement. We’ve expected all these countries to pay their workers bare-bones minimum and send stuff here so we could buy it cheaper and continue our wonderful lifestyle. That’s a dangerous game being played right now. We’re anticipating China will fold when it really could be us that hurts a lot more because, as you said, we depend on China maybe more than they depend on us.
Jim Puplava:
Yeah, the idea is we have the largest consumer market in the world, so we’re holding the cards. But all the things we’re trying to do, whether it’s building new factories—let’s talk about commodities, because factories need raw materials to make things. So, let’s talk about commodities because you also have to have access to these commodities if you’re going to start producing again.
Mish Schneider:
Exactly. If we’re looking at metals, we’ve talked about silver. Silver’s big breakout would be over 33—we haven’t gotten there yet. We can see the flight to safety is still happening with gold, so industrial demand hasn’t shown up. Copper, even though it’s come off its highs, as long as it holds above 420 or 440—if you’re looking at the May contract—shows pretty strong demand. Platinum has been trying to go up. Even aluminum is rallying a little today. Steel would be another one. We have to keep an eye on those. You can look at individual commodities, or if you’re more financially oriented, through ETFs like XME, which, by the way, is still very much in a bearish phase. That’s why I’m saying, on paper, we could say this is going to be very bullish for metals and mining materials we need. Of course, we can look at lumber too, but we’re not seeing it reflected in the charts yet. So, you want to see whether that’s going to stress our raw material supply chain and all the rest—watch those charts. I’m still not ready to go madly bullish. What is looking better is grains. That has nothing to do with factories, but there’s been an interesting pop in DBA, which includes a lot of soft commodities and grains, and that’s looking a bit stronger.
Jim Puplava:
Usually, when you go through these cycles and downturns, when you come out of it, you see a change of leadership. Like when we came out of the 2022 period, where stocks were down 25-30%, technology stocks went through the roof, and the MAG7 took off. Do you see any change in leadership in the sectors you’re watching that might indicate a change could be afoot?
Mish Schneider:
Yeah, oil got really beat up, and oil services too, but that might be something interesting to watch. Healthcare has been very strong this year, and consumer staples have been strong. So, you have to say energy, which was beat up, looks better, and healthcare, which was beat up, looks better. But in terms of leadership, if you’re looking at the indices, the Dow is probably showing some leadership because of the defense sector and industrials. Nothing is as glaring as what we saw for two years when tech was just, “Okay, grab onto the tails and be strung along to make a lot of money in tech and ignore everything else.” I’m not seeing that so much that I’d be confident in the leadership of anything right now.
Jim Puplava:
What about natural gas? With all these AI centers and data centers going up, you need electricity to power them, and the only thing that seems to be working is natural gas because I think you’re years away from nuclear playing a role. What’s your take on utilities and natural gas here?
Mish Schneider:
Let me mention something about clean energy. I bought uranium—URA—a couple of dollars lower, like $3 lower, when the market looked like it was basing. I did that strategically because I saw that if you buy strength in that instrument, you get hurt. That’s happened to me a couple of times, thinking, “Oh, uranium’s running away.” So, I figured, let’s try weakness. Even with the Middle East situation, Iran, and so forth, maybe at some point cooler heads will say, “Let’s stop this dependency on oil and natural gas and look more at clean energy.” But since you asked specifically about natural gas, when it got down to around $2, it kind of bottomed out. But I’m not seeing anything yet that convinces me we’re heading into a big natural gas bull market. Maybe if it gets over $5. It went from 2 to 5, and now it’s trading at around 3.24. It’s potentially basing, not topping, but we haven’t seen the breakout yet. You need to wait for the actual breakout before getting too excited. As for utilities, they had a beautiful move last year because of the stories about AI and data center demands. Even though they’re doing better than many other instruments and could be said to have some leadership, they got hit a bit because of overall liquidity issues. If utilities can get back up—if you’re looking at XLU over 78 to 80—we’ll see a departure. But for now, leadership doesn’t necessarily mean a great buy opportunity.
Jim Puplava:
So, if you were to put some money to work, does anything look attractive to you right now?
Mish Schneider:
Interestingly enough, and I don’t know if we’ve talked about this much, but I really like Bitcoin. Bitcoin has fallen, clearly, but if you look at the flush we had in early April in many instruments and compare it to Bitcoin, versus, say, MAGS, which is hitting the lows of where it broke down in April, Bitcoin’s holding pretty well. It’s dancing on the 50-day moving average. If you’re looking at BTC/USD, it’s trading above 84,000. If we can get a couple of good closes over 85,000, there’s no reason it can’t get back over the 200-day moving average and possibly move back up closer to 95,000.
Jim Puplava:
It’s amazing. We’ve spent so much time talking about tech and the MAG7, but if you look at the last 12 months, gold, silver, and Bitcoin have been superstars.
Mish Schneider:
Yes, exactly. We can come up with theories on this. The number one theory, of course, is the dollar—it’s under 100. Even though some other fiat currencies have done better relative to the dollar, you have to ask, what’s the future of fiat currency here? Is Bitcoin finally going to find its place in the U.S. and global economies? I’d find that extremely exciting. Number two, it’s probably very alienating to older investors who still don’t understand what it does or why it has any store of value.
Jim Puplava:
It’s hard to believe that a decade ago it was $10, and now look at it.
Mish Schneider:
Exactly. If you’re looking at recession-proof areas, believe it or not, Chewy is above the 50-day moving average. If you look around to see what’s trading in a bullish phase, you don’t find much, especially in tech, like CrowdStrike. Not that I’d necessarily get involved with that. Bitcoin is one of the few things I like. I bought Symbotic because of robotics and AI in warehousing efficiency, but if the market goes down, that’s going down. That’s more speculative, more of a trade than an investment. Uranium—I won’t take a loss in it, and we’ve got a bit of a cushion. As for my vanity trade, I thought things like Ulta or Elf Beauty would be somewhat recession-proof. But the trend of diet drugs leading to a new brand of consumer is struggling because of the lack of consumer confidence. We have to continue looking at emerging markets. China’s down, but if you look at the China chart versus SPY—FXI came out of a huge base and has retraced to support while SPY has rolled over and can’t seem to get footing. I wouldn’t dismiss some foreign equity markets.
Jim Puplava:
Yeah, the European stock market has done very well this year.
Mish Schneider:
Exactly. A lot of investors have been getting involved with that. By the way, do you remember when we talked about the Swiss franc last year?
Jim Puplava:
Oh yeah.
Mish Schneider:
Well, FXF is trading at 108.82, and when we talked, it was at 96. That may not excite people who’ve seen things go nuts, but that’s pretty exciting to me because it’s a slow-moving currency. I saw that before—not only is the U.S. dollar fiat currency at risk, but it’s tied to gold, meaning gold was going to continue to go up as well.
Jim Puplava:
We’ve been big proponents of commodities, both of us, over the years, and I see a lot of potential down the road. But given all the uncertainty and geopolitical and domestic issues, you’ve got to have some kind of dollar hedge or inflation hedge. What better than precious metals?
Mish Schneider:
Exactly right. But be careful with the silver-gold ratio. It was trading at 85 for a while and then shot up with this recent move in gold. I still think we could easily go into inflation. What people don’t understand is you can have recession and hyperinflation at the same time—it doesn’t necessarily mean a death sentence for every commodity. I’d like to see more evidence of that. Whether we’re looking at copper, silver, food commodities, grains, the steel market, or oil—if it holds up and starts to do better in terms of departing from the overall equity markets, then the silver-gold ratio coming down might be the first real sign that inflation is starting to rip.
Jim Puplava:
So, in summing up, I’d say right now, Mish, you’re somewhat cautious.
Mish Schneider:
Yes. That doesn’t mean I’m not—I’m cautious in that I’m going to try to protect people from doing dumb things, like thinking stocks, especially tech stocks, only go up. It doesn’t mean they won’t come back, but after so many years of growth outperforming value, you’ve got to wait. That’s where I’m most cautious. I’m not as cautious in Bitcoin, and besides uranium, if you’re looking at things supported in the U.S., maybe even some car manufacturers, though they got beat up. We see Trump saying, “Maybe I’ll support you,” although we don’t really know. You have to be very careful. Watch food commodities too, and instead of being concentrated where you were, diversify a bit into some commodities, emerging markets, and keep your eye on long bonds—they’re going to tell you a story.
Jim Puplava:
Oh, absolutely. Well, listen, Mish, as we close, why don’t you let our listeners know how they can follow you?
Mish Schneider:
I’m very active on X, and that’s at @marketminute. I answer everybody’s questions. We have a website, marketgauge.com, where I post my daily blog, which is meant to point out a lot of things we just talked about. I’m also on Substack, LinkedIn, Instagram, and Facebook. I always say when we’re closing our show, it’s hard not to find me.
Jim Puplava:
You’re ubiquitous. You’re everywhere.
Mish Schneider:
Exactly.
Jim Puplava:
Well, listen, my friend, great speaking with you again, and have yourself a great holiday weekend.
Mish Schneider:
Same to you. I look forward to our next conversation.
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