Monthly rollup | April 2025
- May 1
- 10 min read
Stocks Mentioned Nvidia (NVDA), Galaxy Digital (GLXY.TO), CoreWeave (CRWV), Bitcoin Miners ETF (WGMI), Peabody Energy (BTU), Champion Iron (CIA.TO; CIA.AX), Circle (CRCL), Taiwan Semiconductor Manufacturing(TSM), Phillips 66 (PSX), Valero (VLO), Rio Tinto (RIO), Northern Dynasty (NAK), Wolfden Resources' (WLF.V), NextDecade (NEXT)
Highlights
April 01, 2025
Nvidia (NVDA) TA is pretty straightforward. We saw a fan principle breakout in October, which didn't last, and now it's re-testing the trendline.
A break below the trendline and we should see a real selloff. For now, the bulls bleed theta and cling to hope of a recovery.
Galaxy Digital
Galaxy Digital (GLXY.TO) reported $365 million in net income for full year 2024 and expects to report a pre-tax loss of ~$300 million for Q1 2025. The stock trades at 2.7x book equity.
Galaxy straddles both the AI and the crypto bubble. At one point, they were advising CoreWeave (CRWV) (surprise, surprise!), and have since taken on a role as CRWV's landlord.
Adding to the entertainment factor, Galaxy was fined $200 million by the NY Attorney General for pumping and dumping Luna.
As a market observer, I suspect Galaxy's well-timed dump may have actually accelerated Luna's demise, vaporing $4 billion in "value".
With Bitcoin Miners ETF (WGMI) down 42% YTD, Ethereum down 45%, I thought I'd sort through the rubble to see if there are any gems. So far, all I've found is more overvalued stocks that have a long decline ahead.
Digital pyrite had its run. Hard assets are just getting started.
April 02, 2025
Indian equities, adjusted for inflation, have been a terrible long-term investment. If you factor in taxes and capital controls, this is a market to avoid.
Indians preference for gold over equities is rooted in common sense.
April 03, 2025
Today was a great day to go shopping. Long exposure is going to get to a crazy level by the time I'm done.
These VaR spikes are a gift for those who can trade the longer time horizon.
April 04, 2025
A personal story
When I graduated in 2013, the official food inflation rate in India was 13%. I watched vegetable prices go up on a near daily basis.
The 2008 bust had shrunk opportunities in the Indian IT sector, which predominantly catered to US BFSI clients. The companies pivoted to more UK & Europe business, which ended up slowing down as well post the PIIGS crisis.
High paying jobs were scarce and even graduates from premier B-schools were feeling the pinch.
My first act of saving was purchasing physical gold, silver, and dollars. I started learning about commodities and fell in love with the field.
Had I graduated two years later, my starting salary would have been 2x. The oil price crash in H2 2014 cooled inflation. SoftBank and other VCs were flooding the market with liquidity, and IT sales jobs were aplenty.
If I had witnessed that boom in the formative years of my career, my life may have turned out completely differently.
I'm risk averse as a trader because I started out during tough times. But 'cos of that, I get to enjoy making money in a year like this while everyone is panicking. This is going to be fun!
April 07, 2025
It's funny to see all the bearish influencers saying retail buying on Thursday and Friday was dumb suddenly turn bullish now.
I put 20% of NAV to work while these guys were crying that the sky was falling.
Some people like to pay full price, some like to shop during a sale. Some don't shop at all but comment about the price tags on various goods based on whether prices went up or down that day.
April 09, 2025
An underground fire is being characterised as an "ignition event" by coal miner Peabody Energy (BTU).
A lot of investors were pitching BTU last year, calling it a value stock. The Consol-Arch merger made both companies uninvestable. Yancoal cut its dividend. It was a toss up between other Aussie coal miners or BTU, and people went for BTU.
Peabody management went on an ill-advised acquisition spree, and now the company heads towards bankruptcy (again).
Whoever said value investing in high cash flow/ high dividend yielding sectors was easy?
On Contrarian Investing
When commodities bottomed in December 2015, almost no one wanted to bet on a recovery in China and hence, on iron ore demand.
No one, except Michael O'Keeffe. He bought Bloom Lake in a bankruptcy sale for a mere $11 million and turned it into a $2 billion company.
Early investors got a shot at 20x on their investment.
O'Keeffe didn't spend his time looking at a stock chart and worrying about tops and bottoms. He studied iron ore deposits the world over and zoomed in on Bloom Lake.
Understanding Fibonacci retracements or DeMark top signals isn't going to make you a resource millionaire. Chart analysis, especially during volatile times when prices are irrational, is useless.
This is one of those rare periods when stock ownership gets passed from renters to owners. Ignore the charts, focus on fundamentals and commodity supply/ demand dynamics.
A New Zealand based iron ore miner had made the news by announcing its pivot from mining to selling eggs to China.
Sentiment was as bad as it gets after a brutal 4-year bear market. And commodities bottomed and never looked back.
Most resource bulls from the 2000-11 cycle now have too many grey hairs and won't take the same risks. I worked with them during the 2016-21 cycle, and I know they didn't have the same appetite even back then.
That's the opportunity for a guy like me, and all the 30-something investors keen to invest in the next Airbnb and Uber.
When a16z said software was eating the world, they inadvertently timed the commodity cycle well. The world is de-globalizing and resource nationalism is only going to make commodities more expensive.
Stagflation is going to eat the world, and commodity assets are the place to be.
If you merely rent stocks and don't own them, this isn't for you. If you do have permanent capital, this is the time to get fully invested.
On China
This one is for all the "China is crashing" doom and gloomers.
The offshore currency weakened in 2022 during the big dollar bull market but now it's just sideways.
China has massive US dollar reserves and can raise USD loans at will. They weakened the currency to stimulate trade during their deflation years (2014-2024). Now that trade with the US has been cut, will they weaken or gradually strengthen the currency?
A strong currency is a great flex when US yields soar and the dollar tanks. Expect RMB strength, not weakness.
April 10, 2025
The dotcom bust was hard to short because of sharp bear rallies. The simpler trade was buying gold miners, shipping stocks, uranium, bonds, etc.
April 11, 2025
Circle IPO
Circle (CRCL), the firm behind the USDC stablecoin, seeks to IPO at a $5 billion valuation. This is an even worse deal than CoreWeave (CRWV).
USDC has a market cap of $60 billion and makes money off bank interest. They need to pay exchanges like Binance just for the privilege of getting a listing, and pass on most of the interest income to stablecoin holders.
At 4% interest, if they retain 20% and pass on the rest, that's $480 million in gross margin. Once the executive suite gets their hands on the cash, it's slim pickings for shareholders.
What happens if the Fed rates back to zero? The company loses money just paying bloated salaries to their executives.
Besides, if 100% reserve banking in crypto is so lucrative, there will be more competitors. The cost of launching a stablecoin on Solana is near zero (I'm not that familiar with TON but I assume it's the same).
This is a no moat company with an easy to replicate business model trying to get a 12x PE multiple when 1x or 2x net income is more appropriate.
No wonder their previous attempt to go public through the SPAC route failed.
Crypto VCs don't understand that the public markets aren't dumb money anymore. This isn't "anything goes" 2021.
Just as LPs have woken up to "volatility laundering" (HT: Clifford Asness), public market investors have rejected the VC/PE playbook of using IPOs and SPACs as exit liquidity.
This IPO is ill-timed and looks fated to fail.
Swiss Franc
In 1979, foreigners were so wary of lending to the United States that then President Jimmy Carter borrowed in Swiss Francs.
With ~$9 trillion in US debt maturing within a year, there is a non-zero chance the US will be forced to borrow in a stronger currency. The Swiss Franc is starting to price this in.
Mean reversion is the wrong framework for understanding current macro trends. The British Pound didn't mean revert to become a reserve currency again after WW I, although Churchill tried to return the currency to pre-war parity. Once it lost it, it lost it for good.
Macro trends are powerful.
April 13, 2025
If you are a '90s kid, you grew up in an environment which took free trade for granted. Nixon going to China, Gobarchev's perestroika and glasnost, China joining the WTO - these are all stuff found in history books and it's easy to miss the importance of these events in ushering in globalization.
For the US, running a trade deficit was a policy goal. It was a way to encourage other countries (including China) to embrace capitalism and not be swayed by the worst ideology known to mankind.
A trade deficit is also nothing to fear. This article (link below), written by French economist Frédéric Bastiat way back in 1845, explains how running a trade deficit benefits France and French business.
The basic rules of economics and logical thinking haven't changed in the last 200 years.
Trade deficits, which stem from the law of comparative advantage, are the reason billions of humans have been lifted out of poverty in the last 40 years.
The biggest beneficiary of this shift - the United States of America - will also be its biggest loser if the status quo changes.
Don't take my word for it. Read Bastiat and Hazlitt.
April 15, 2025
NVDA is getting into the manufacturing game. AI bulls love to see this, but take note - manufacturers command a lower multiple than design firms given the capex heavy nature of the business.
Even during an AI bubble, Taiwan Semiconductor Manufacturing(TSM) trades at "only" 9x sales vs 21x sales for NVidia. From a valuation standpoint, this is a negative for NVidia, though it no doubt helps win brownie points with the current administration.
April 16, 2025
First a trickle, then a flood.
Phillips 66 (PSX) announced plans to shut down their LA refinery last year. Now Valero (VLO) is following in their footsteps and has announced plans to exit California altogether.
April 21, 2025
According to research firm S&P Global, it takes an average of 29 years to build a new mine in the US, the second-longest in the world behind only Zambia.
Turkey has permitted more hard rock mines than the US.
A couple of weeks ago, Trump signed an Executive Order to fast track permitting for critical minerals projects in the US.
Among the beneficiaries are Rio Tinto (RIO) and BHP's Resolution Copper project in Arizona and Perpetua Resources $PPTA Stibnite gold-antimony project in Idaho.
Conspicuous by its absence is Northern Dynasty's (NAK) Pebble project in Alaska and Wolfden Resources' (WLF.V) Pickett Mountain zinc-lead project in Maine.
Fast tracking permitting in Idaho and Arizona is great, but greenlighting projects with solvable issues that have been stuck in Permitting Hell would really change investors' perception of the US as a mining jurisdiction.
This is merely the first wave of top 10 priority projects, with more to come.
April 22, 2025
"Sell US stocks. Sell US bonds. Sell US dollars. Steer clear of US exposure."
Now that global investors have turned critical, what happens when they start to realise the whole Mag7/AI bubble was built on top of a lie?
That the high corporate governance standards they took for granted doesn't apply to US big tech?
That NVDA SMCI et al managed to commit fraud and violate sanctions with impunity, with external auditors, exchanges and regulators turning a blind eye while the party was in full swing?
The Nvidia fraud alone is bigger than Enron, WorldCom and Tyco rolled into one. How will this fraud coming to light affect US equities as a class?
Trends in motion stay in motion until something changes. It's a long way down for US assets and the not-so-almighty dollar.
You can only connect the dots looking backwards but how well they connect!
April 26, 2025
Unintended consequences
But, not too bearish. NextDecade (NEXT) managed to sign 20-year deals with Aramco and Total this month.
April 28, 2025
Zweig Breadth Thrust
We've been hearing a lot about the Zweig Breadth Thrust (ZBT) lately.
The signal has some logic to it. When stocks on the NYSE start advancing rapidly after a slowdown, it could signal the start of a new trend. The signal uses an exponential moving average, which biases it towards short-term "bursts" of activity as opposed to the kind of long, steady drift higher in stocks that is seen during the course of a bull market.
In other words, the ZBT is meant to catch bullish turning points in the broad market shortly after the fact.
This "rare" signal has been triggered 20 times in the last 82 years. Assuming 252 trading days in a year, this signal has been triggered 20 times out of a universal set of 20,664 days, or less than 0.1% of the time.
The signal is being touted because it has a 100% hit rate as a predictor of positive returns for the S&P 500 6-mo and 1-yr forward.
Being a "rare" indicator adds to its allure.
But is it really a good indicator, though?
Professor Siegel wrote a popular book Stocks for the Long Run based on the premise that the market will forever go higher. The Vanguard marketing machine is always reminding investors of the same.
If the market goes higher forever, it is no genius at all to pick 20 dates at random and claim that the 6-mo and 1-yr forward returns will be positive.
In order to accord any merit to the ZBT indicator, it should go beyond making that claim.
That is, the ZBT should prove itself a better indicator than 20 dates chosen at random over the same 82 year timespan.
I'll believe it is a useful statistical indicator if someone proves it has an edge over sheer randomness.
To use an analogy, if a biased die comes up '6' 25% of the time, a strategy for rolling a '6' is only useful if it takes the probability to 30% or higher.
If the market goes higher all the time, the bar for an indicator should adjust for this upward bias.
It is easy to backtest performance when a signal triggers 20 times in a year. It is impossible to backtest a rare signal because there aren't enough data points, making any claim hard to disprove.
The merits of ZBT are hard to disprove. That is by design.
As a discretionary trader, I'm always on guard against letting bias creep into my mind. The ZBT is a source of positive bias with dubious statistical merit.
I'd rather discard it and not let it influence my views on the market.
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Good Trading!
Kashyap
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