Two Mondays in a row, investors have had an opportunity to buy the dip in the stock market. In February there may be even more chances to do so depending on geopolitical developments.

 

For the source of much of this week's volatility, one need look no further than the White House. The number of executive orders has ramped up further. On-again, off-again tariff talks sent traders into despair, and then giddiness.

 

In the few hours between daily press conferences and announcements, markets held their breath with one finger on the buy button and the other ready to sell. If you throw in geopolitical news on topics such as Gaza, Greenland, Panama, Iran, Ukraine, and more, it is no wonder that the currency, bond, and commodity markets are churning as rapidly as the stock market.

 

Tariff fears last weekend saw stock futures on Sunday night swoon. The small-cap Russell 2000 Index futures were down 4 percent at one point. The same thing occurred the previous Sunday night when DeepSeek, the Chinese AI company, triggered a steep decline in technology and other index futures that carried into the next day's trading. But the markets rebounded quickly thanks to individual investors at the vanguard of the dip buying.

 

"Buying the dip" is alive and well among the retail crowd. On Monday, they purchased over $4 billion worth of stock options and equity. There is an entirely new generation of younger traders, forged during the COVID-19 decline in the markets, who have emerged with a different perspective on investing. 

 

Years of easy money by the Federal Reserve Bank and bucketloads of government spending have taught these investors that buying pullbacks was the way to go. Fundamentals matter less and momentum much more. Rapid rebounds in stock prices have encouraged this practice. Combined with what they call the "Trump Pump," animal spirits are lending even more volatility to the markets.

 

I have tuned out much of the political noise since the election and have concentrated instead on the economy. Here is what I am seeing.

 

The dollar is peaking because the threat of tariffs is on hold for now (except for the 10 percent tariff in China). The weaker dollar has driven down bond yields and that combination has been great for gold. Gold is reaching new highs daily. At the same time, the economy seems to be softening a wee bit while inflation is rising a tad.

 

Friday's non-farm payroll report was weaker than expected raising fears that employment is falling. I am expecting inflation to be above 3 percent year over year when the January data is released. That situation is creating a mild form of stagflation, something I predicted would happen this year, but it won't last long.

 

I expect February's inflation will decelerate to 2.85 percent based on the decline in energy we see today, while the economy continues to slow. Lower oil prices will help ease inflation if it continues to fall, which is part of the president's game plan. At the same time, our new U.S. Treasury Secretary Scott Bessent, a successful hedge fund manager, has an entirely different private-sector approach to inflation, interest rates, and economic growth.

 

The wild cards, however, are still unanswered. How will the next round of tariff threats play out? Will China and the U.S. make a deal? Is the European Union next on the list of Trump tariff threats? Do Mexico and Canada come back for a second round of tariffs?

 

I wish I had the answers, but I don't. What is clear is that the financial markets do not like uncertainty. It tends to create volatility of the kind we have been experiencing thus far in 2025. That should continue. The days of straight-up are over for the time being. Instead, we should experience ups and downs for some time. Despite that, I remain positive on the markets so buy the dips. 

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

Game Day is just around the corner. On Feb. 9, at the Caesars Superdome in New Orleans, the Philadelphia Eagles will face last year's winners, the Kansas City Chiefs. America is gearing up for the biggest game ever.

 

Grocery stores are stocking up on chicken wings, nachos and soda. Consumers are shopping early and spending more while companies are breaking records on ad spend. And for many viewers, the Chief's tight end's romance with Taylor Swift will add a dose of human interest to the festivities.

 

This year the heavy demand for ads had some 30-minute spots selling for more than $8 million versus $7 million last year. It is probably the only TV event in America where the 120.7 million estimated viewers pay almost as much attention to the commercials as they do to the game.

 

This year prepare for an avalanche of celebrities, cute animals, and snack brands during the breaks in the action. Meta, PepsiCo, Frito-Lay, Taco Bell, Uber Eats, and Anheuser-Busch will all be back. Meg Ryan, Billy Crystal, Willem Dafoe, Catherine O'Hara, Chris Pratt, and Chris Hemsworth among others will be hawking everything from beer to Smart Glasses.

 

One area where prices have fallen this year is ticket prices. The cheapest nosebleed ticket has dropped below $4,000 on the secondary market — less than half the price from last year's record-breaking event. Why the drop? It could be the location.

 

Last year the Super Bowl was held in Las Vegas between the Chiefs and the San Francisco 49ers. Some believe that New Orleans does not have the same appeal as Vegas, the quintessential party city. The Caesars Superdome also holds more people, 74,000 seats versus the 65,000 seats of the Las Vegas Allegiant Stadium. In addition, New Orleans' reputation is still suffering from the terrorist attack last month where 14 people were mowed down by a man driving a pickup truck.

 

It could also be that football fans are getting bored with the same champions year after year since this is the Chief's third straight Super Bowl bid. However, couch potatoes have no problem with the match-up. Sixty-five percent of consumers plan to watch the game, up from last year. 

 

Numerator, a data and tech company in market research, found in a recent survey that sitting at home was the most popular game option, while hosting or attending a party was the favored venue for 47 percent of those surveyed.

 

From a generational point of view, Boomers are much more likely to watch the game, while Gen Z and Millennials look forward to eating, drinking, and making merry. The younger set are also far more interested in the commercials and halftime shows than the game, according to the survey.

 

They also claim that 46 percent of viewers planned to favor the Philadelphia Eagles. I count myself in that camp simply because I come from Philadelphia. Swift's attendance at the game is also an attraction since 36 percent of those asked say they have a Swift fan in their household. Many viewers, however, have less interest this year in the halftime show and more interest in watching the game and commercials.

 

Super Bowl Sunday is the second-largest food consumption day in the U.S. after Thanksgiving. This year the nation will spend a record $17.3 billion on food and drink. Chicken wings still hold the number one spot in favored food.

 

Americans will consume 1.47 billion chicken wings, 11.2 million pounds of potato chips, and 8.2 million pounds of tortilla chips. In addition, 12.5 million pizzas will be ordered, not counting those made at home. The Wells Fargo Agri-Food Institute pegged the cost of a Super Bowl party menu for 10 people at $139 this year, about the same price as last year, if you pick and choose what you are serving.

 

Stay away from beef and eggs and go easy on the cheese. Those items have seen hefty price increases. Frozen shrimp, celery, and broccoli have seen price declines, so they are all good substitutes, but chicken wings cost about 7 percent more than last year.

 

Given the last few weeks of rapid change in the nation, something apolitical could do us all some good. A weekend away from the news and social media where just about every story begins with a "T" may be just what the doctor ordered.

 

Enjoy the weekend.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

As January ended, the pace of activity across global financial markets had traders lurching from one event to another. If this is a prelude to what investors can expect from 2025, fasten your seatbelts because this could be a bumpy ride.

 

Monday opened with a huge move down led by technology stocks. The trigger for the decline was DeepSeek, a small, little-known Chinese private company that announced a breakthrough in artificial intelligence. It created a ChatGPT-like AI model with all the capabilities of companies like OpenAI, Google, and Microsoft but at a fraction of the cost.

 

The company claims it has spent just $5.6 million on computing power for its base model. This compares with the leading companies in the U.S., which have already spent billions of dollars in developing their AI technologies and billions more that they plan to spend.

 

The U.S. semiconductor company that supplies the most advanced chips to fuel the coming AI generation, Nvidia, plummeted and took the NASDAQ down by 3.1 percent.

 

As the week progressed, American analysts and corporate AI CEOs rushed to assure investors that this was not the end of U.S. AI. In fact, the breakthrough simply meant that artificial intelligence could now be implemented faster while penetrating deeper into a whole host of industries with less cost and less use of energy.

 

And while the markets were wrestling with this shockwave, Washington was generating its own brand of turbulence. The last 10 days have seen a flurry of executive orders from the White House. Orders to freeze spending (later reversed), buyouts for federal employees, declaring a national energy emergency, and tariff threats were just some of the memorandums, proclamations, and executive orders that have kept markets and corporations working overtime to digest.

 

As the Trump administration's immigration deportation begins to gather speed, videos of empty construction sites, farm fields, factories, and warehouses are being posted on social media. They supposedly claim that illegal immigrants are hiding and staying away from work sites amid the government's crackdown on illegal immigrants.

 

Whether disinformation or fact, given the sky-high prices at the grocery store, some consumers see this as another consequence of government intervention.

 

Switching gears, the Federal Open Market Committee Meeting held on Wednesday decided to keep interest rates on pause. As usual, Chairman Jerome Powell  said the Fed continued to be "data dependent." He acknowledged that the new administration's fiscal policies would impact the economy, but it was too soon to say how.

 

Beyond all these events, markets are awaiting President Trump's tariff decisions, which are expected this weekend. He has said that Canada and Mexico could be the first countries targeted with 25 percent across-the-board tariffs unless they showed substantial progress on curbing immigration at the borders and a reduction in drug smuggling into the U.S. 

 

The facts are that no one knows what the president will do until he does it. Investors could wake up on Monday morning with tariffs levied on Mexico and Canada or not. Given this backdrop, there is little value in trying to predict market direction on fundamentals such as earnings, revenues, etc.

 

I will say that earnings so far this quarter have been good. S&P 500 companies' earnings are up on average 13 percent. Technology companies even more, while small-cap companies in an important reversal are up 13 percent. It also appears, as I mentioned last week, that the run in the dollar may be over for now. Of course, that could change overnight if the Trump tariffs are implemented. However, if the dollar continues to pull back, investors should consider the merits of investing in precious metals and emerging markets, as well as Bitcoin.

 

Technically, after the sharp decline we experienced this week, markets should re-test those lows before bouncing back. Instead, they bounced. It doesn't have to but I would not discount the risk of  80-100 points of downside on the S&P 500 Index from here on the back of a tariff announcement.

 

In my last column, I warned readers to expect a decline. I advised those with cash to use that as a buying opportunity. Any further declines into next week would be another opportunity to add to positions.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

It was supposed to be Agamemnon. Sixty percent plus tariffs on all Chinese products imported into the U.S. levied on Day One. What happened? Nothing.

 

Investors are still waiting for the first shoe to drop on the world's second-largest economy and America's No. 1 enemy. China has been the nation's punching bag ever since Donald Trump first acted against that country in his first term.

 

His actions resounded favorably with most Americans. China-bashing took on a life of its own. Decades of losing U.S. jobs and investment to China took its toll on both Democrats and Republicans. President Biden took up the baton and in the name of national security slapped all sorts of restrictions on high-tech exports to China.

 

TikTok is just the most recognized company among hundreds that were restricted, delisted, or blackballed because of ties to the Chinese army, intelligence departments, or just because someone decided to round out a list. Some countries have jumped on the bandwagon at U.S. insistence and the once miracle of export growth became a piranha with ties to our most hated enemies in North Korea, Iran, and Russia.

 

As a result, geopolitics has reduced the allocation of funds to China to almost zero for both U.S. and global financial institutions. The boards and trustees that run these institutions (many with ties to the government) passed down the word that China was off-limits for the foreseeable future. Many of these stocks, former darlings of both the investing public and the media, with names like Alibaba, Baidu, and Pinduduo (owner of Temu), are at valuations that practically give these companies away.

 

At the same time, the Chinese economy never quite recovered from the COVID-19 pandemic. Gross domestic product slowed, inflation rose and the country's main engine of domestic growth, the real estate market, succumbed to years of overbuilding. From a decade ago, annual growth rates of 10-12 percent per year, China's GDP is barely half that rate today.

 

The Chinese government finally began working to turn around their economy last year but rather than provide a bazooka of stimulus, both monetary and fiscal support has been applied at a more moderate but steady pace. After an initial spike in the stock market, when stimulus was first announced, stocks have since declined.

 

Donald Trump's campaign promise to slap 60 percent tariffs across the board on Chinese goods added further pressure to prices as investors prepared for the worst. It remains to be seen, however, if the worst fears of Wall Street will materialize.

 

In a column last year, I floated the possibility that Trump, if elected, might surprise us. Instead of continuing to punish China for wrongs real and imagined, we might work to settle some of our major differences with China. After all, who better to make peace than the man who started the tariff war in the first place?

 

I could be wrong but since his election, it appears that the president has gone out of his way to avoid the China-bashing that colored his first term. He even invited China's leader Xi Jinping to his inauguration. He rescued TikTok from a forced shutdown the day before his inauguration. He then suggested the government, along with another American buyer, could purchase half the company from its Chinese owners. 

 

Trump has said he could put a 10 percent tariff on certain Chinese products in February, such as solar panels and electric vehicles, but that is a far cry from his original intentions to tariff all goods.  I have also noticed that soybean prices have strengthened lately. Chinese authorities have notified Brazil that soybean import contracts may not be renewed this year. China switched its purchases to Brazil from the U.S. in retaliation for some of the tariffs levied on Chinese products in the past years.

 

The Chinese startup DeepSeek recently launched several artificial intelligence products, which experts say are on par or better than industry-leading models in the United States at a fraction of the cost. This could revolutionize the energy-intensive AI industry worldwide and allow the penetration of its usage to explode far faster than anyone imagined. It could also do so with significant savings in energy and investment.

 

DeepSeek could be a possible wild card in U.S./China relations since President Trump announced a $500 billion AI initiative only last week. He would also like to reduce the price of energy and this new addition to the AI world promises to do just that.

 

It would not surprise me to see a deal with China this year on a variety of fronts including their help in ending the war in Ukraine. I may be a cock-eyed optimist, but if so, we could see a thawing of relations on several fronts between the two nations. That could be a major positive for the Chinese stock market.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

As we step into the new year, stocks have soared in celebration as Donald Trump took the reins of office. This transition of power has brought a wave of optimism, which can continue, although a mild bout of profit-taking in the near term should be expected.

 

A flurry of Day One executive orders kept the markets busy parsing the meaning of this one or that one. However, the enthusiasm had more to do with what President Trump did not do than what he did. The greatest fear of investors was that the president would levy 10 percent tariffs across the board on all nations. Some nations, such as China, Mexico, and Canada, were expected to get hit by even higher duties on Day One. It didn't happen.

 

Most economists are convinced that tariffs would not only hurt economic growth both here and abroad but also fuel further growth of inflation. That does not mean that tariffs are off the board. The president indicated that tariffs on our North American trading partners could be announced by early February. China, however, not so much.

 

The currency markets immediately began to sell the dollar, which has been a winning trade (up 10 percent) over the last several months. Foreign nations have been willing to see (or orchestrate) their currencies decline to reduce the impact of the expected 10 percent tariffs Trump promised during his campaign. See how that works?

 

As a result, the yield on U.S. bonds fell in tandem with the dollar. Those developments partially explain the rally in equities this week. Of course, this trade can reverse in the blink of an eye. The president has not said tariffs are off the table. I believe it is just a question of when some countries will be targeted for tariffs. Trump has made it clear that tariffs are a negotiating tactic. There is no reason to think he would drop this tool in the days and weeks ahead. However, do not tariff trade. That is a losing proposition for those who tried that during Trump's first term.

 

Next week, the Federal Reserve meets on Jan. 29. Expectations are that the FOMC will stand pat, keep interest rates where they are, and take a wait-and-see attitude toward the future. Bond investors are not expecting any more than one or maybe two interest rate cuts (if any) during 2025. Many of the president's policies could boost economic growth and possibly inflation and the Fed will want to see how the government's economic policies unfold. 

 

Investors are focusing almost solely on Donald Trump. In a Davos speech on Thursday, for example, the president said that interest rates around the world should be "dropped immediately" and that the price of oil should also be lowered. Taking those statements as gospel, I think is a mistake.

 

A U.S. president may be able to jawbone an easier interest rate policy from a Fed chairman. It has been done before, for example, under Richard Nixon's administration, but he has zero influence on other central bankers worldwide. As for the oil price, OPEC-plus is not about to reverse policy quickly, nor would Saudi Arabia agree without some kind of multi-billion-dollar trade deal since that nation needs Brent Crude at $90 a barrel or higher to balance its budget.

 

After living and investing through Trump's first term, I learned that much of what the president says should be taken with more than a grain of salt. I consider his many pronouncements as more of a wish list, some outrageous, others as catalysts for change. He announced his new initiative called Stargate this week. It is an artificial intelligence infrastructure project, which is a joint venture formed by OpenAI, Oracle, and SoftBank. It is a great idea that promises big dividends for our country.

 

The three companies, he said, would invest $500 billion in AI infrastructure. Yet Elon Musk, the world's richest man and a close Trump adviser, who was also an early investor in AI, responded to the announcement by expressing some doubt.

 

He posted on his social platform X that these venture partners "…don't actually have the money," to accomplish the president's goal. His critique enraged many of the president’s yes-men, but the beauty of Musk is that he can speak his mind with impunity. That may get him in trouble down the road with his new-found, best bud but not right now.

 

The point is that investors should not take everything the president says as gospel. Instead, consider his statements more of a directional outline of where he wants the nation and the world to go. It doesn't mean that what he wants he gets, as his first term demonstrated.

 

As for the markets, I am looking for a small pullback in the markets over the next few days leading up to the FOMC on Wednesday. I would consider that a gift. It would be a dip worth buying before the market resumes its climb to new highs.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.