Tariffs, Tech, and Gold: Market Moves – Feb 27, 2025

We're on the broadcast today. It is 7 a.m. West Coast, 10 a.m.

East Coast here on February 27th. I know I have to tell people sometimes, like, if you live on a coast, you think everything revolves around you, Bakes. February 27th, 2025. We got today and tomorrow before we mark the end of February. If anyone else is freaking out about that, I can't believe it. It still seems like you just went through the holidays. We've got Bob Morris, Kevin Bakes-Baker, and Nadine Turman with you today for

Wall Street Beats. we're going to be talking for sure, Bakes and I about gold. Bob, what are you going to be talking about today? We're going to be talking about some of the natural gas names that reported this week and sort of the pullback you're seeing there with where natural gas prices are. And in particular, we just topped off the expand energy earnings call, which was very interesting on some of the macro comments from management there.

Okay. And a question for you before we get into stocks is you get this announcement today that the 25% tariffs are going to go into effect in early March. Does that matter? It does probably for some of your names, but I know you're talking NatGas, but what matters for Canadian names? I know you're in love with CNQ. Does this matter? Do you think it's going to be a nothing burger? It matters on the margin. I think it ends up, whatever happens is priced into

the stock here. That's the important thing. The stock's underperformed. It's pricing in these tariffs, but then the question becomes how much of that tariff is absorbed by U.S. Refiners that crude oil flows to from Canada and how much comes back to the producer. So we're watching that Canadian oil prices of the WTI spread, which is not blown out here. So I think there's a lot priced in here. And look, oil prices are up today. Gas prices are slightly.

I'm still a buyer of C&Q down here below 30. Okay. Okay. And I know we're teasing people here before we get into the thick of things.

What else bakes are you looking at headline-wise today in the markets? Oh, I think I was right at NVIDIA on Tuesday. And I was nervous last night and in the morning, but I think I'm being proven right that NVIDIA's best days are behind us. Yeah. Although massive growth, unknown forecast. We'll see what happens here on restrictions, right? I think there's just a lot of devils in the details with the new administration and how that's going to

affect them and the growth of them. But what are your big concerns?

Is it more from technicals or what are you looking at on nvidia that's saying that the best is behind but number of things the relative strength line is waning i you want to go right into it now because this is my my all right all right let's do it let's do it i'm gonna i'm gonna finish with a flourish here so i really don't i want to keep people on and then i'll go through the whole shooting match okay okay all right taste i haven't had breakfast give me a little taste i'm so i'm.

I'm excited about that. And I'm going to be talking about gold. Obviously, it came up on the longbow system as a buy today, but we see a weakening. So Bakes and I were just having a little conversation before you guys were joining about that and saying, okay, is this a buy at this level or this could continue to weaken? Could it go from bullish to neutral? So we'll be covering that too. Lots going on here this morning. It was interesting because the market was up

pretty strong until the tariff news came out. I know Indonesia did a deal. You've got a lot of countries doing deals here with companies, with administration, trying to get around these tariffs, levies, whatever you want to call them. Lots going on here in the markets this morning around that. How do you thread that needle? But I'm interested, Bob, in energy. Obviously, we've seen a big pullback in oil prices. How does someone understand if we're seeing some of these slowing growth numbers

out of various countries. How do you forecast where that could be in the future? Is it more about the supply versus the demand? Or how should people be translating the growth softness that we're seeing in some macro data into a forecast for oil? Yeah, I think it's more on the demand. When oil prices weaken, it's typically on demand fears. And you've seen that in the past when people have gotten worried about China in particular in their growth, you've seen some weakness in the oil price.

Now, I'm looking at the oil price this morning. It's just a tad bit under $70 a barrel. That's still a very good price. I don't think anybody's worried about it'll be in just under $70 a barrel, except for Donald Trump, who probably wants it a lot lower. And we're still waiting to see how he's going to do that. because what we've seen so far from earnings is that everybody's sticking to the plan of returning capital to shareholders.

Nobody's ramping up production. Nobody's looking to spend more money to ramp up production. So yes, when we look out globally, if you're seeing weakening demand out of China, out of Europe, that's a concern that flows into the oil price. But it's held up very nicely here, in my opinion, at close to $70 a barrel. Now, what does Trump do to bring down the oil price. It's not going to be drill, baby, drill. We all know that.

And we did some bilateral agreements, which he's been working on and getting other parts of the world to buy our crude oil and not somebody else's. The other fear that creeped into oil prices here a few weeks ago was when they announced that they are looking to broker a peace deal between Ukraine and Russia.

And that was huge because then if you lift those sanctions against Russia and they're able to put more oil in the market, which is apparently able to get them to the table, that's been a fear for oil prices. But despite everything that's happened in the past week and being a lot closer, apparently, to a deal, oil's still up here, closer to $70 a barrel. We'll see how this plays out. And in the meantime, natural gas is holding up here close to $4, which is amazing.

Now, what's amazing is all the natural gas things are all- Let's get into natural gas, some of those names. Yeah. They're all off this morning. And I think it's not because gas is down, because it's not. I think it's more on the fear that we're two days away from March, and that's when weather warms up and we get into the shoulder period where natural gas demand wanes and you look for weakness in the natural gas price.

We're keeping an eye on that. What's interesting is that Expand, which is the former Chesapeake, reported this morning, we just jumped off that call, EQT reported last week, Range Resources reported this week, all these natural gas companies are building what they call productive capacity. They're not increasing production this year, but they're building inventory, basically, of production to turn on next year or toward the end of this year, once they see that demand start to pick up.

And to your demand question on oil, for natural gas, the big key is when do we see that demand uptick? And these things took a big hit when that deep seek announcement came out, when everybody thought, oh, gee, we're not going to have as much data center demand as we thought.

I think that was a hit fake. but these companies are not increasing production now, but they've got plenty of capacity for building that capacity to increase it next year when that demand takes up. One thing that was interesting is you've got a lot of companies like UKT saying, oh, you have to have $5 gas in the Hainesville for these guys to increase production. Expand Energy is the largest natural gas produced in the U.S., over 5% of total U.S. production.

The Hainesville is where they have the ability to grow. And they said, no, $3.50 to $4, that's where we grow. Some of that flowing into the market where they put a damper on what people think is the upside to natural gas prices, perhaps they could increase production meaningfully at $4 gas. And they would probably look to do so if they saw that to be sustainable. It expands off here. I've been wanting to add to my positions in EQT and expand.

I've got a market limit buy order to add to my expand position at $98 today. We'll see if we get down to there, but I don't have a full position yet in EQT and expand. So I'm looking to add to those names on any weakness we see here in the March. Nice. And what's the timeframe if let's say somebody does get those levels, what's the timeframe on that? Do you have expected return on that? Is that a buy and hold? Yeah, that's a buy and hold because natural gas prices always peak in the winter

and we've had a much colder than normal winter. So we got that spike. Now we're going into the shore of the period where demand wanes. We go into the summertime and we get a hot summer. Is that impact things, maybe not. But then you're looking then to this data center demand coming on in next winter.

So that's a buy and hold. And in the meantime, one of the reasons I like about Expand is they pay a nice dividend. We're at over 3% yield here. EQT pays a nice dividend. So it's a good buy and hold and you get paid to buy and hold here. Nice. Bix, what are you looking at today here? We talked a little bit about NVIDIA. You want to start going through it? Let me do it in order, if you don't mind, because I do want to finish with NVIDIA.

You tell me what you want to start first. You've got Bob's names on here. That's great. Yeah, and I think Expand 94 looks like a decent support level going back a year plus, just for what that's worth. But I'm going to go through my mea culpa first. I'm like Don Corleo, and I like to deliver bad news swiftly. ARC genomic revolution, it was a speculative position.

I use it in the past tense because I took my loss. When I open my statement every night and I see anything that is down 15%, I take this behind the barn and shoot it. And it's down 15%. This is money losing biotech. My eyes were wide open. I thought we had a trend change. We might at some point down the road. This is Cathie Wood's Arc Genomic Revolution, ARKG, and I'm wrong. And I'll be wrong with a little bit of money so I can go fight another day.

7% of the portfolio. I took my 15% loss, so that's 1%, give or take. That's a landing I can walk away from, which I said in my base camp. And just for what it's worth, I'm now 14% in cash, and I'm up in line with the S&P for the year. And I'm not happy about that.

I gave a lot back. but listen to the market I said with Ben on Tuesday we've had some torpedoes and we're taking on water and in a lot of different names so this is just ARKG I'm wrong I take a 15% loss so I never have anything and I'm never anything down 50% because I've seen that movie and I've starred in it and I don't want to see it again I'm gone with ARKG. On to greener. Unless you get something for me, I can go to greener. I don't know if this is a greener pasture.

Google Alphabet is joining the Mag7 Exodus. We talked about Microsoft on Tuesday. That's been a sale for a while. NVIDIA, we'll go to that later. See how I tease this? I don't know if Ben told you. We've been short in Apple. We made some money on that. Yeah, I think that's okay. But this is me being very simple. Google is close below the 200-day moving average. The volume is picking up, and it's just time. And I don't care if it's deep seek. I don't care if it's tariffs.

I don't care if it's Lithuanian pork futures. I don't care. It is time for all of these MAG7 names. And I think this is a big part of it. All the portfolio managers got their heads kicked in over the last couple of years because they didn't own these enough. And so they finally topped them off. So they were market weight to overweight. And now they're saying, oops, the earnings reports are being greeted with gaps down on huge volume.

And I'm going to take my I'm picking numbers out of the air here. My 5% position, I'm going to take it down to three. So when I talk to the Philadelphia pipe fitters, I can say we get out of the way of the of the the mag seven drawdown. And this is just the latest one. And Google is, I would sell a third. I would have sold a third a couple of days ago. And it's just, this is happening a lot, like we talked about on Tuesday.

So, and what about NVIDIA? What are you doing on that? Oh, is anything going on with NVIDIA? CNBC tried hard last night. First, all day, it was breathlessly awaiting Jensen Wang's proclamations and the NVIDIA earnings. And I said on Tuesday that I was leaning to the downside. I said, it's right there. It's all timestamped. And mainly because of technicals, obviously. Here's another gap down on deep seek and obviously huge volume. Yeah, the growth forecast is slowing.

Nobody likes that. Nobody likes slowing, even if you're slowing from a big base. And this is uncanny. If you're a William O'Neill disciple, there's a few of them left. This is 476% earnings growth five quarters ago, decelerating over the ensuing 15 months to 71%, which most people would kill for, but it's a decelerating earnings growth story. And earnings year over year, the growth rate is declining. I don't like, I mentioned this before.

The relative strength line is hitting lower highs. And I think it's the same dynamic. I was a little bit nervous because in the aftermarket, it was up and bounced around the Mendoza line. But I got up this morning and it was up 3%, 4% pre-market. And it was up literally for the first seven minutes of trading and then went down to the red. And I just think it's time. You have the same dynamic with portfolio managers. Oh, I've got to own NVIDIA. I've got to get it to overweight.

And now they're taking their 7% positions down to four. And oh, by the way, who's the incremental buyer? What Graham and Dodd type is saying NVIDIA is undervalued right now? So I just didn't like Microsoft. I don't like this. I don't like Google now. What's on? Are you on Amazon? Amazon is held up better. Yeah, see, Amazon is held up better. It's respected the 200-day moving average. It didn't have this gap down. It just looks like a more orderly consolidation.

It's still in an uptrend. So I'm not too concerned about Amazon. It will probably have its day. When these things start to, I talked about the shoe stocks the other day. When a group gets hit, they tend to all get hit because the same market dynamics are in place for the group. And if you're seeing big cap tech, which is obviously a very broad group with very disparate businesses, most of them are starting to go down. I think all these things are in trouble. Amazon's fine for now.

Doesn't bother me. I'm going to look at Apple now that you brought it up. Sorry. Yeah, we covered it, but we made the money short in Apple. Recently, because it wasn't cracking. It was one of those that wasn't cracking. And we're like, it's going to crack. We shorted it, made a little money, covered it. Yeah, this isn't an odd name. And it seems like that no matter what you do, the growth rate disappoints, the iPhone sales disappoint.

And they say, OK, it's Tim Cook, and he gets to play nicely at Mar-a-Lago. And we're going to keep this above the 200-day moving average. We don't care that Buffett's selling it. That's our point. But I'm not still shorted, but we're looking at that as when people need liquidity, eventually they will go there.

But I want to talk about something else today. So I'm going to share my screen, if you don't mind, Bakes, and get to what I wanted to talk about today. Absolutely. I'm going to share the type of audio. Let's mix this. So for those who you guys probably know that we go through market stuff in the morning, like I'm looking at gold and it's showing. Oh, I guess I'm not showing. So you might have to, there we go. Bingo. I'm going gold as a bot. This is the GLD I'm just showing here.

So obviously it's had a massive run, right? Everybody knows that. But it's hitting our proprietary algorithm, the low end of the trading range, which was 266, because right now it's, call it 265 and change. It's got momentum, bullish short-term, bullish medium-term, but, right? And I say, but is that if it cracks here, the blue, which is a short term, that's 65 to 6536, which it just did.

And if we start seeing it head towards the yellow, which is 251.88, that's the medium term line, you could see the short term bullish indicator go to neutral. And once you start getting a momentum shift from bullish to neutral, then maybe even to bearish, things fall apart. And we talked a little bit about that. But this could be a good buying opportunity. If, for example, people are going to be worried about inflation. Headline risk, et cetera, et cetera, this might be the signal for the buy.

I'm going to look at our backtesting stats. This is pretty solid for a couple of days. If you're just going to trade for a few days, like you're not making a ton, because obviously this isn't moving 10%. This isn't some snowflake security here. You could make a little bit of money if you see the momentum switch back to bullish. But I'm going to be watching this, right? I put a little trade in today because I want to watch to see what happens here to see if the momentum shifts on this.

And I see, and we'll get to your technicals in a second, but I view that as the opposite, right, of the dollars. Dollar being up today because you had this massive move in the dollar, but then you've seen depreciation of the dollar since, call it mid-December, we're getting a bounce up because of tariffs. So that sometimes has a negative correlation with gold.

So dollar up, gold down, that can happen. And so this is in some ways an opposite trade, but we're watching here to see, does the dollar continue its bearish short-term and medium-term decline, or do we see a settling here in the dollar because of tariff concerns and the like. I don't know if you have any points on the dollar or gold, but I will stop sharing my screen. But that's something I am looking at today. This is not beyond the trading range though, but it's super close, right?

So the high end of mine is 29 spot 28. We're at 29.25. So we're just cents away. And then you're going to see this hold become a sell. And then I can show you some backtesting stats. But that's something that I'm looking at today and really watching during the day. What do you think on those two? Gold to me is just consolidating this nice run-up we've had. This is GLD. Here we are at 264.94, but my eye is always drawn to this, and maybe I'm an old school. I am old school.

The up volume is beating the down volume, and so when you have a low-volume pullback today that looks fairly orderly, and over the last week or so, I need to see this below this 257.71 before I get really concerned. My AUMI, which is the gold miners, is acting well. I know Ben Brey insists that over the last 472 years, you'd be better off owning gold than the miners. But that's tongue in cheek. But this is a low volume, orderly.

Everyday kind of pullback in gold. I'm not concerned about it. All right. Thank you.

Anything else to go over today, folks? Anything? The only thing we're waiting for EOG is earnings after the market closed tonight. That stock's been outperforming. We've said we think they report a very nice quarter. It'll be positive. So we'll see what they come out with. And they're called tomorrow morning. Awesome. So we'll check back in with you on that. And we'll be watching the dollar and the gold today.

And as Bakes said, he thinks it's just a soft pullback here and it could resume its run. We'll check in the gold and the dollar and all the names that we're talking about here and seeing if tech continues to weaken or people just a little bit worried today, taking chips off the table. Will we find that incremental buyer? I tend to agree with you, Bakes, that most people are full up on tech.

We do have tech short out there. I keep things simple. And I always say that if earnings don't drive the stock up, what the hell will? And so we just had earnings. We've had this drop expansion. That's a lesson I learned in the last few years. Multiple expansion can certainly drive a stock up, but that can go the other way too. And we've had a ton of multiple expansion. I think we're more on the asymmetric downside risk than we are on the upside of multiple expansion.

It's going to be more like a shrink. Yeah. We got NVIDIA and I just like to take the victory lap a little bit. You can dance a little bit on that. All right. You've been right on Microsoft too. You've been dead right on that too, Banks. Thank you. Thank you. That's it for us today. It is again, February 27th, 2025. You got us on a Thursday post NVIDIA reporting. We're still alive. We ran the gauntlet. We were amazed runners here through that earnings, But then we got the tariffs.

So here we are today and we'll be back tomorrow, Friday. Take care. See you folks.