New and fresh market insights from the Free Whelan! Thank you for your continued support and keep unlocking valuable insights into the global market with me!
A few spooky things to lay out for you today in between some chunks of great-looking news.
The Trade That Paid
Firstly, we enter the last days of Impact Minerals’ shortfall to the rights offer. A rare opportunity has presented itself in which they have purchased a company in administration that happens to hold a pilot plant that they need.
So, they’ve gone into the raise in one form and are at the end of it, being two years ahead of schedule. Yet the shortfall is still open for a few more hours and needs to stay at the same price with the attached options, obviously.
This is for sophisticated (s708) investors only, but it’s a rare opportunity to capitalise on a fortunate situation.
Truth be told that based on arb situations, the stock has to stay around the level of the shortfall. So, if you’re a retail investor, it wouldn’t be the worst idea to potentially pick some up here and let the price rerate when the shortfall is closed. General Advice, of course, call for any information.
See, adding value every day?
Now on to the news.
Markets absolutely ripped last week on the news that the tariff news was on its way to being yesterday’s story.
In fact, if you pull a chart of the Nasdaq with monthly candles, it’s a flat month. We know this is not necessarily the case, but the journey and the destination are rarely at the same comfort level.
Source: Spectra Markets
Up 6.73% for the week, making for the best week since November 2022. Funnily enough, Consumer Confidence came in at the worst rating since 2022 as well, showing that markets are not economies.
Which is where I’m bringing this…
The tariff rollback started to be speculated and was basically announced by Treasury Secretary Scott Bessent at a closed meeting hosted by JP Morgan and the market took off. Trump and Xi are going to hug it out. We’re golden.
What turned Trump?
Source: AXIOS
More specifically it was the fear that 4th of July festivities would be ruined by cheap, crappy goods on shelves.
Shoddy fireworks from last year just blowing up in hands, deck chairs collapsing, taking off little Timmy’s fingers.
Scary stuff. So scary that the President would back down on his nonsense maths competition against China.
And so, on that chatter, the market has been rallying. It has triggered something that, when triggered, is bullish 100% of the time after 6 or 12 months.
Welcome to the Zweig Breadth Thrust.
Source: Carson Investment Research, Ned Davis Research, FactSet 04/23/2025
What is a Zweig Breadth Thrust?
The Zweig Market Breadth Thrust is a classic technical indicator developed by Marty Zweig — he was a famous investor and market analyst. It’s designed to identify the start of a new bull market with precision.
Here’s the basic idea:
- It measures breadth — how many stocks are advancing vs declining, not just price.
- Specifically, it looks at the 10-day moving average of the number of advancing stocks divided by the total number of advancing + declining stocks on the NYSE.
- If this 10-day moving average moves from below 40% to above 61.5% within 10 trading days, that's the "thrust."
- Such a surge indicates a sudden, powerful shift from bearish to bullish sentiment across the market.
So, who’s buying this deck chair news?
Source: Markets & Mayhem - X
As usual, retail is the first to climb over the parapet….
Source: Goldman Sachs FICC and Equities Futures Sales Strats as of 4/23/25.
And the CTAS have slowly begun unwinding their $26bn short position…
Source: Fidelity
So we’re golden, right? Credit spreads have narrowed in recent weeks, supporting the more constructive price action in stocks. If spreads were still widening, it would be an ominous signal for the economy.
Calm Down
However, and this will be the realisation this week, things are still not ok. All the hugging in the world won’t stop the fact that shelves are about to get empty real quick, and as we learnt in Covid, they take time to refill.
Source: Mostly Borrowed Ideas - X
It takes about 13 days to get from China to LA, so the pre-tariff ships have already arrived.
Now there’s a stall in ordering, and so a slowdown in China activity,which takes about 30 days to restart, and that’s just for things to get to LA.
To get things to the rest of America takes another few weeks.
Source: Bloomberg & WSL POLITICS <GO>
From the Odd Lots podcast over the weekend. Anna Wong, Chief of US Economics at Bloomberg Economics. Pay attention:
“So we are right in this period where all this planning has to happen, yet this is also when tariffs are implemented. So as a result, basically the inventory for Christmas, for Halloween is already being disrupted right now. So even though it's still many months away, and with the 90-day delay on the reciprocal tariffs, it's not until July 9th where we have, US firms have better clarity on whether these tariffs vis-a-vis other countries would be raised.
And so basically it exactly felt on this planning and shipping and producing period for holiday season. So I think this is one reason why, just based on the high-frequency data we have on the volumes, on the quantities, the dropping of it, and also just the timing of this period, it suggests that there's a high probability that we may be seeing some empty shelves in the holiday season. And even with less varieties, I basically consider that part of the empty shelves, just having less varieties.”
From Odd Lots: Anna Wong: Empty Shelves Are Coming Soon, 25 Apr 2025
The US is already cooked, they just don’t know it yet.
Because look at this!!!
Source: Bloomberg Apollo Chief Economist
US weekly bankruptcy filings (Companies with more than $50 million in liabilities) 4-week average jumped to 7, the most since the 2020 Crisis. Outside of 2020, this is the highest level since the Financial Crisis.
The basic premise of this is that large companies can ride out any delays in restocking and absorb margin decreases on having to pay more for faster or different goods, but small companies can’t. If you run a 5 man operation that specifically brings in one thing from China then you’re pretty much toast.
The trade…
In short, yes, I think the market ploughs on and will be up after a certain time, but I think there’s already a recession in the US, but they just don’t know about it yet.
In the short term, pops should be sold into.
However, the tariff situation is behind us and China will be back on the tear.
So where’s the play? Gold will get the flow out of it and into equities and treasuries, even if gold continues to be a long-term buy, there’s a stack of profits to be taken by investors, so there’s some easy thinning out to be done.
Keep in mind if there’s an actual recession AND everyone is all buddy-buddy with China again, then yields will drop, which means treasuries will rise. Weird, you’d think that would be met with some flow data…LIKE THIS!!!
Source: EPFR
As usual, copper presents an opportunity on the backfoot, and I’ll end with BofA’s chatter on copper from last week.
BofA on Copper: “China’s copper demand has been resilient, notwithstanding the unfolding trade war in 1Q. During quarterly results, Teck confirmed that “Expectations for 2025 (copper) mine production have fallen by over 1.0 million tonnes from this time last year." Meanwhile, new smelter capacity continues to come online into 2025, with both new smelters and expansion of existing smelters expected in 2025 and 2026. With no clear pathway to solve the excess in global smelting capacity, in our view treatment and refining charges (the fee miners pay smelters/ refiner to process mine supply) have reset to a lower range than seen previously, with an even greater share of revenue accruing to miners. Global stocks of copper cathode on exchanges at the end of the first quarter were approximately 6.6 days of global consumption compared to the long-term average of 10.3 days, with more than half of the stocks currently in China and close to 80% of visible stocks in Asian warehouses.”
Stay safe and all the best,
James
Introducing BPC Wealth Management
BPC Wealth Management is dedicated to shaping a resilient investment portfolio, empowering you to achieve and sustain your financial aspirations. While the foundation of your portfolio focuses on long-term investments, through BPC, clients will be offered opportunities in equities trading and equity capital markets. This aspect is highly customised, allowing asset flexibility. Discover how our proactive and client-focused approach can help you achieve your financial aspirations by booking your discovery call with James Whelan.
Ready for the market’s next move? Contact us today for your complimentary portfolio review.
