The Week in Charts (3/11/25)
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The most important charts and themes in markets and investing…
1) The End of a Historic Uptrend
It’s official: the 2nd longest uptrend in the history of the Nasdaq 100 Index ended last week with the first close below the 200-day moving average in nearly 2 years.
The Nasdaq 100 Index gained 73% during this historic uptrend.
The S&P 500 has now fallen over 9% from its peak on February 19, the biggest pullback since last August. This is the 30th correction >5% off of a high since the March 2009 low. They all seemed like the end of the world at the time.
The S&P 500 has returned an average of 10% per year since 1928 despite an average intra-year drawdown of -16%. The lesson here: there’s no upside without occasional downside, no reward without risk. This is the price of admission.
3) A Sentiment Shift
With the S&P 500 in the midst of its biggest correction since last August (-9%), sentiment among Individual Investors has turned decidedly negative.
The percentage of Bulls in last week’s AAII poll (19%) was lower than 98% of historical readings while the percentage of Bears in the prior week’s poll (61%) was the 7th highest reading in the survey’s history.
If you’re a long-term investor, this is good news as high levels of pessimism tend to be followed by stronger future returns on average.
4) Diversification Is Back
2025 thus far has been the polar opposite of 2024, with international stocks, bonds, and value outperforming large cap US growth. Foreign equities have gotten an additional boost as the US dollar has depreciated against most major currencies.
US stocks are among the bottom performers year-to-date with the S&P 500 down 4.4%. European equities are leading with a return of 12.7% for the Vanguard Europe ETF ($VGK).
The biggest driver of US underperformance this year? Large cap growth stocks led by the Magnificent Seven. Meta is the only member of the Magnificent 7 that’s up on the year and outperforming the S&P 500. The other 6 are down YTD with returns ranging from -9% (Apple) to -45% (Tesla).
This, of course, follows huge returns in 2023-24 for these same names, which drove massive US outperformance in both of those years.
5) Nvidia: Earnings Soar, Stock Plummets
Nvidia revenues surged to a record $39.3 billion in Q4, up 78% over the prior year (consensus estimate was $38 billion). Their revenue projection for Q1 2025 is $43 billion, which would be a 65% YoY increase.
Nvidia’s Net Income hit another record high at $22.1 billion in Q4. That’s an 80% increase over last year’s Q4 Net Income of $12.3 billion.
Nvidia’s net profit margin surged to a record high of 56% in 2024, up from 13% a decade ago. Few companies in history have had as much pricing power as Nvidia does today, fueled by its continued dominance in the AI chip market.
But while Nvidia’s profits continue to soar, its stock is now down over 28% from its January high. That’s the biggest drawdown in over two years.
6) A Growth Scare?
US employers have announced 221,812 job cuts so far this year, the highest year-to-date total since 2009. Of those, 62,530 cuts have come from the Federal Government (DOGE).
At the same time, uncertainty over US trade policy has never been higher.
While this number tends to have big fluctuations, the Atlanta Fed is currently estimating a 2.4% decline in real GDP for the 1st quarter.
What’s driving that estimate? A big decline in net exports on the assumption that US-based companies are pulling forward their imports before potential tariff increases are enacted.
7) Record Trade Deficit
The US Trade Deficit in Goods was -$1.2 trillion over the last 12 months, the largest deficit in history.
The largest deficits in goods by US trading partner…
- 1) China: -$295 billion
- 2) Mexico: -$172 billion.
- 3) Vietnam: -$123 billion.
- 4) Ireland: -$87 billion.
- 5) Germany: -$85 billion.
- 6) Taiwan: -$74 billion.
- 7) Japan: -$68 billion.
- 8) South Korea: -$66 billion.
- 9) Canada: -$63 billion.
- 10) India: -$46 billion.
8) Falling Real-Time Inflation
Truflation’s real-time US inflation gauge has moved down to 1.3%, the lowest level since December 2020.
9) A Few Interesting Stats…
a) 151,000 US jobs were added in February, the 50th consecutive month of jobs growth in the US. That’s the 2nd longest streak in history.
b) Japan’s 10-year government bond yield has moved up to 1.52%, its highest level since 2009. Japan’s inflation rate of 4% over the past 12 months is close to a 45-year high.
c) Mean reversion over the last 4 years…
Berkshire Hathaway $BRK.B: +105%
ARK Innovation ETF $ARKK: -60%
d) With 45,282 locations, China’s Mixue Ice Cream and Tea is now the world’s largest fast food chain, surpassing McDonald’s and Starbucks.
e) The average home price in the US is up over 53% in the last 5 years, more than double the increase in wages. The widening gap between prices and incomes has led to the least affordable housing market in history.
Every week I do a video breaking down the most important charts and themes in markets and investing. Subscribe to our YouTube channel HERE for the latest content.
Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosures here.
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