TABLE OF CONTENTS

1. Market Recap

2. EQUITIES: Gareth Soloway on a coming significant market breakdown

3. EQUITIES: Markets are at an “inflection point,” says Peter Boockvar

4. ECONOMY: Eric Basmajian on the economy’s “warning signs”

5. ECONOMY: Bob Elliott on why the economy could slow down

6. TECH: John Belton on whether the Nasdaq has hit a top

7. What to Watch

MARKET RECAP

Relations between the U.S. and Ukraine broke down on Friday, February 28th, following a tense Oval Office meeting between American President Donald Trump and Ukraine’s President Volodomyr Zelenskyy.

The discussion between the leaders led to an argument, with Trump accusing Zelenskyy of “gambling with World War III.” The leaders did not sign a proposed minerals deal, as had been planned, and a joint press conference was cancelled.

The Trump-Zelenskyy meeting comes amidst rising strains on Washington-Kiev relations, with Trump calling Zelenskyy a “dictator” on February 19th, and Zelenskyy accusing Trump of falling victim to Moscow’s “disinformation.”

Following the latest meeting, Trump issued a statement, saying that “[Zelenskyy] disrespected the United States of America in its cherished Oval Office. He can come back when he is ready for Peace.”

The S&P 500 dipped briefly following the exchange before paring losses. The Euro fell 0.27 percent against the U.S. dollar. The VIX spiked to 22.3, up 6 percent from the start of the trading session.

Market Movements

From February 21st to February 28th, the following assets experienced dramatic swings in price. Data are up-to-date as of February 28th at 5pm ET (approximate).

1. iRobot Corp. — down 16.9 percent.

2. Peloton — down 12 percent.

3. Nvidia — down 7.2 percent.

4. Anheuser-Busch InBev — up 11.7 percent.

5. American International Group — up 8.2 percent.

The following major assets experienced the following price movements during the same time interval.

DXY — up 0.9 percent.

Bitcoin — down 14.3 percent.

Gold — down 2.7 percent.

10-year Treasury yield — down 5 percent.

S&P 500 — down 1 percent.

Russell 2000 — down 1.5 percent.

USD/yuan — up 0.4 percent.

EQUITIES:
SIGNIFICANT MARKET BREAKDOWN
Gareth Soloway, February 26, 2025

Gareth Soloway, Chief Market Strategist and President of Verified Investing, said that he expected “significant downside” in markets.

“You have to be more bearish now,” he said. “The trend has broken… and I think it’s important to note that we have some very big negatives that are concerning investors.”

Pointing to inflation, a slowing economy, and tariffs as examples of “negatives,” Soloway said that recent consumer data also point to headwinds for the markets.

“We’ve seen recently the Michigan [consumer] sentiment numbers coming in much weaker than expected,” he explained. “The consumer is the backbone of the U.S. economy, and if that players is slowing — and even the mid-tier to upper-tier [like Walmart] is slowing — this economy is in some trouble.”

When it comes to Bitcoin, Soloway said that it is likely to head lower, based on his technical analysis.

“You’re going to likely head back [down] to this $73-$74,000 level, which again would be major technical support,” he said. “The stock market [has] been tanking [in] the last couple [of] days, Bitcoin’s tanking the last couple [of] days.”

However, Soloway said that in the long-term, he is bullish on Bitcoin.

“I think there’s a viability towards having an alternative to the U.S. dollar or fiat currencies,” he said. “That’s where Bitcoin comes in.”

Gold’s recent rally, which saw the precious metal up 8.6 percent since the start of the year, is over for now according to Soloway.

“In the short-term, we know that gold sells off when there’s panic in the markets,” he said. “We’re starting to see a little bit of that.”

EQUITIES:
MARKET ‘INFLECTION POINT’
Peter Boockvar, February 24, 2025

Peter Boockvar, CIO of Bleakley Financial Group, said that the tech trade is “over.”

“I think that there is some reality check to [Magnificent 7 stocks’] fundamentals, and potentially their growth rates,” he explained. “Whether it’s the DeepSeek news… [or] AI’s influence on Google’s search business, for example… [Mag7] stock market dominance, I think, is coming to an end.”

He added that U.S. markets are at an “inflection point,” and that a rotation out of U.S. major indices and into small-caps, mid-caps, or emerging markets is possible.

“I think that U.S. tech stocks, the Mag7, have become a reserve holding of many foreigners, and some foreign central banks,” he explained. “If this trade is sort of tiring out [then] what happens if foreigners start to reallocate some of this capital into other things, maybe outside the U.S.? Does that have implications for the U.S. dollar?”

Responding to Microsoft CEO Satya Nadella’s February 19th announcement that Microsoft had made a quantum computing breakthrough, Boockvar said that it had the potential to be “disruptive” to the tech sector.

“Think about all the data centers that are being built,” he said. “If you can sort of shrink the size of the capability of the data centre, there’s going to be a lot of wasted real estate out there. There’s going to be a lot of technological obsolescence on all the data centers that are being built right now.”

When it comes to the performance of Walmart, whose stock fell 6 percent after the company issued disappoint guidance, Boockvar said that it was trading at “crazy multiples,” like other big retailers.

“We’ve seen that [happen] in a variety of other stocks,” he said. “It was a momentum trade that took them to tremendously elevated levels, and I think the Walmart news, I guess, maybe, is just a wakeup call… All these momentum stocks, all these comfort stocks, including the Mag7, really sucked a lot of the stock market energy away from everything else and into these names.”

ECONOMY:
ECONOMIC WARNING SIGNS
Eric Basmajian, February 26, 2025

Eric Basmajian, Founder of EPB Research, said that the concern that tariffs will cause inflation is “overstated.”

“If you increase tariffs on, let’s say, motor vehicles, that will increase the price of [motor vehicles],” he explained, “but unless there’s a broad-based increase in money supply, that increase in the price of motor vehicles will be offset by a decrease in price in another good that’s not being consumed, or it will reduce the amount of vehicles being consumed — so growth would go down, in that sense… nominal economic growth is not changed by tariff policy.”

Basmajian said that, based on leading indicators such as manufacturing and construction sector job losses, the overall labor market is not at significant risk of major weakness at present, though he sees “early warning signs.”

“Usually you need to see job losses in those two sectors [manufacturing and construction] combined increase to 100,000-200,000… before it starts to spill over into broader coincident economic weakness,” he said. “Those two sectors combined are only about 10,000-20,000 jobs lost so far. So we’re still pretty early in the labor market deterioration situation, in my view.”

The Federal Reserve is currently engaged in “tight” monetary policy, according to Basmajian, which could lead to an economic slowdown.

“If the Fed holds policy in this range, and money supply growth in real terms continues at about that 1 percent pace, they will continue to engineer a slowdown in the cyclical sectors, and then it will spread forward,” he said. “Should the Fed keep policy here, mortgage rates will stay elevated and the economy will continue to slow, with these long lag times notwithstanding.”

ECONOMY:
WHY MARKETS ARE FLATLINING
Bob Elliott, February 21, 2025

Bob Elliott, CEO of Unlimited, said that fiscal policy would be the big driver of economic trends in 2025.

“Look at the series of policies that have come in so far,” he explained. “Pretty much all of them are growth negative in the course of the next six to twelve months.”

Elliott pointed to immigration, trade, tax, and spending policies as potential contributors to an economic slowdown.

“The clampdown on immigration is reducing the potential growth rate of the U.S. economy,” he said. “If you look at tariff implementation, which is in the short term effectively a tax on consumption, that certainly is starting to add up to be a meaningful drag on the economy. And then there’s some ambiguity about what DOGE [The Department of Government Efficiency] and other tax and fiscal policies are going to be ahead.”

He added that inflation was likely to slow in 2025, based on the latest data releases, including the Producer Price Index.

“Inflation is not going to be interesting in 2025,” said Elliott. “It’s gradually cooling. All the data is aligned with that.”

Elliott said that the “real uncertainty” is whether real GDP growth would remain at 3 percent, and whether company earnings growth would remain strong.

When it comes to gold, Elliott said that foreign investors had been driving strong retail demand, and that gold is a “geopolitical hedge” and an “uncertainty hedge.”

“You look at the current circumstances, both of those things [geopolitical and policy uncertainty] are elevated, and so it makes sense that [gold] is getting a bid,” he said.

TECH:
HAS NASDAQ TOPPED?
John Belton, February 23, 2025

Despite DeepSeek’s and Alibaba’s recent advances in AI technology, John Belton, Portfolio Manager at Gabelli Funds, said that the U.S. continues to lead in artificial intelligence.

“The U.S. is still at the leading edge when it comes to generative AI technologies,” he said. “The U.S. is still far ahead of China when it comes to companies in the real economy having adopted and having started to build out useful AI applications.”

Belton added that Nvidia, the chip manufacturer, has “no real competition.”

“There is no alternative to Nvidia,” he said. “I don’t see that changing anytime soon… I think the valuation on Nvidia is still reasonable… I don’t think we’re anywhere near the peak in terms of earnings yet, so I’m still comfortable holding Nvidia over the medium to long term.”

When it comes to the tech-heavy Nasdaq, Belton said that in the long-term, he is optimistic.

“The economy is very resilient,” he said. “[There are] a lot of reasons to believe in and be excited about AI. There’s a lot of new things the new [Trump] administration is doing [that] should be more business-friendly. So, I think if you have a long-term perspective… stocks are still a good place.”

The Trump White House has brokered a $500 billion investment into large-scale data centres to benefit AI. This ‘Stargate Project’ could benefit companies like Oracle, which have invested in the project, but there is a lot of uncertainty surrounding the investment, said Belton.

“I think it’s hard to have real conviction on how this is going to unfold,” he said. “Beyond [the first $100 billion], I think it’s going to depend on a lot of factors that are still kind of unfolding.”