On My Radar - American Pie — CMG Private Wealth Group

April 25, 2025
By Steve Blumenthal

“I can still remember how that music
Used to make me smile
And I knew if I had my chance
That I could make those people dance
And maybe they'd be happy for a while.”

— Don McClean, American Pie

Fun, peaceful, upbeat. Susan seared the salmon, and I poured the wine. She played some of her favorite songs. There is a moment when I see her smile as she slowly starts to dance, melting into the music. It’s not always, but it happened this time. And it was needed.

There is something special about music.

We had been talking about the sad state of the world. Susan shared a recent Peggy Noonan article with me, excellently written as only Peggy can, that captured the moment. You can find it in the What I Read This Week section further below.

By our second glass of wine, we were a bit deflated. What a mess the country is in. What a mess the world is in. And then, as we began cleaning up, a song that symbolizes change in American society, and not necessarily for the better, began to play. Perfectly capturing our collective moment… “American Pie.”

Susan and I looked at each other, and we started to sing. We smiled!

“A long, long time ago
I can still remember how that music
Used to make me smile
And I knew if I had my chance
That I could make those people dance
And maybe they'd be happy for a while

But February made me shiver
With every paper I'd deliver
Bad news on the doorstep
I couldn't take one more step
I can't remember if I cried
When I read about his widowed bride
But something touched me deep inside
The day the music died

So, bye-bye, Miss American Pie
Drove my Chevy to the levee, but the levee was dry
And them good ol' boys were drinkin' whiskey and rye
Singin', "This'll be the day that I die”

American Pie tells the story of America's cultural shift from the optimistic 1950s into the turbulent 1960s and early 1970s. McLean sings about the loss of innocence, the fragmentation of society, and the darkening of the American dream.

Arriving right on queue is Neil Howe’s “The Fourth Turning Is Here: What the Seasons of History Tell Us About How and When This Crisis Will End.”

Bridgewater Associates Co-CIOs said this in a recent report, “To state the obvious: we are now facing a radically different economic and market environment that threatens the existing world order and monetary system,” the Bridgewater Associates said in their most recent letter. Adding, “We have been transitioning to this world for several years, but now the shift has sharply accelerated and become chaotic. This new macroeconomic and geopolitical paradigm is turning past tailwinds into headwinds and reshaping global flows of capital.”

I remember my early years working as a young financial consultant at Merrill Lynch. It was 1985, and inflation was through the roof. Treasury yields were in the mid-teens. Everyone knew that the only way to make money in the stock market was to trade the trend cycles. No one can make money buying and holding, I was consistently reminded. And everyone loved gold.

Everyone was wrong. It was the beginning of the most significant bull market in history. A long-term buy-and-hold bull market for stocks, and gold's shine began to fade.

Are we entering a period of high inflation, high interest rates, and currency restructuring similar to the 1960s through the early 1980s? It is not so trivial a thought.

Please know I am not bearish on making money. However, I am bearish on buying and holding overvalued stocks and low-yielding bonds.

Grab your coffee and find your favorite chair. Some great stuff this week. Felix Zulauf sees a bottoming process over the next three to six months, advises to keep some powder dry, and get ready to put it to work. He expects an explosive rally in 2026 and into 2027. Then perhaps, what he calls “the grandaddy bear market” arrives. Also, Howard Marks shared his views on the current state and made a few suggestions to consider. You’ll find my bullet point notes and links to the replays.

On My Radar:

See Important Disclosures at the bottom of this page. Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.

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Felix Zulauf and Howard Marks

“When there is too much government debt relative to the quantity of money that is needed to service debts, the government will either increase the amount of money that exists and/or cut the amount they will pay. In either case, it’s not good for holders of debt assets.” - Ray Dalio, @raydalio, Principle of the day.

Felix Zulauf’s Adam Taggart interview - First, the link, followed by my bullet point notes.

Source: Adam Taggart, Felix Zulauf, YouTube

I broke my summary notes down into six major points with bold emphasis:

1. Tariffs and the Dollar

Trump’s renewed tariff strategy, especially against China, represents a shift toward protectionism. While initially meant to rebalance the trade deficit and "onshore" production, it creates systemic consequences:

Tariffs introduce uncertainty into global trade flows, prompting retaliation or realignment from partners.
Foreign demand for U.S. assets may decline as tariffs disrupt the trade surpluses that were once recycled into Treasuries.
He suggests we’re entering a multi-year decline of the U.S. dollar, not because another reserve currency is emerging, but because less global trade is being settled in USD.
Capital flight, where foreigners sell off Treasuries, equities, etc., leads to a weaker dollar, higher yields, and a feedback loop of tighter financial conditions.

2. Inflation and Interest Rates Outlook

The structural decline in the dollar, combined with reshoring supply chains and less global labor arbitrage, points to:

Persistent upward pressure on prices, especially for goods that were previously cheaply imported.
This likely marks the end of the disinflationary period that resulted from decades of globalization, leading to a shift in the regime toward higher structural inflation.
Consequently, interest rates will need to stay elevated to counteract these inflationary forces. This is a stark departure from the ZIRP/NIRP era.

Geopolitical Economics

The U.S.’s era of global financial and military leadership is giving way to a multipolar world.

3. Breakdown of Multilateral Trade Norms

The death of GATT/WTO rules, as the report phrases it, signals a breakdown in the rules-based global trade system.
Trump's unilateral tariffs violate WTO norms, and while the Biden Administration initiated moves like removing Russia from SWIFT, Trump is accelerating the decoupling of U.S. economic dominance.
Other nations are responding by diversifying away from the US Dollar in trade and reserves, further eroding its dominant role.

4. Pax Americana in Decline

The U.S.’s era of global financial and military leadership (Pax Americana) is giving way to a more multipolar world.
As the U.S. retreats from acting as a global enforcer, regional powers like China are asserting themselves.
This accelerates a geopolitical realignment with long-run implications for capital flows, currency reserves, and commodity trade.

Economic Cycle and Policy Response

5. Recession Likely in 2025, Stimulus Thereafter

Felix forecasts a brief global recession due to the tariff shock and widespread uncertainty.
Trump is front-loading pain to reset global trade terms early in his term. From late 2025 into 2026 (midterms), fiscal stimulus is expected, including tax cuts and public investment, especially in the U.S., Germany, and China. A trigger for a strong stock market rally in 2026 into 2027.
However, the stimulus will be debt-financed, requiring central banks to monetize deficits, which could lead to steeper yield curves and renewed QE-like policies.

Markets and Monetary Implications

Felix is expecting a roller coaster-like ride for equities. Trade the trends. Buy and hold to produce little net gain over the coming 10 years. He is bullish on gold, bitcoin, and commodities.

6. Asset Price Signals

Equities: Most global indices have corrected. Felix believes we are currently in a bottoming process (over the next three to six months) and forecasts an S&P 500 rally of as much as 40% from current levels in 2026 and 2027. (SB here: This is undoubtedly not the general consensus.)
Gold: Acting as a safe haven and de facto reserve asset. The current rally is entering a parabolic climax phase (~$3,400 target), but remains structurally bullish as dollar hegemony wanes.
Bitcoin: High-beta proxy for risk sentiment, also potentially co-opted by the Trump administration to boost demand for U.S. Treasuries by using crypto collateral in financial plumbing.
Commodities: He expects oil to eventually surge beyond $150–$200 per barrel (not a typo) due to underinvestment, geopolitical realignments, and replenishments of strategic reserves.

Bottom Line

Felix is forecasting a macro regime shift: from globalization to protectionism, from USD dominance to multipolar trade, from disinflation to structurally higher inflation. He forecasts that market volatility will remain elevated as the system rebalances. He believes that equity markets are near a medium-term bottom, especially if Trump tones down tariffs ahead of the 2026 midterms.

At a higher level, he argues that we’re witnessing the end of the post-WWII U.S.-led economic order and entering an era where geopolitics, inflation, and trade frictions define capital flows and monetary policy more than they have in the last 30 years.

Source: Sited in the above video with the replay link.

Views are Felix Zulauf’s and are subject to change. This is not investment advice for you. Speak with your advisor. Please reach out to me if you would like to know what we’re doing. All investing runs the risk of loss. There are no guarantees.

Lights on! Let’s see what the great Howard Marks has to say.

Howard Marks on Globalization (from X)

1 - Globalization was the invisible force behind 30 years of disinflation.

Cheap labor from abroad
Unlimited access to global supply chains
Relentless outsourcing to drive margins up

This kept consumer prices low and profits high. That era is ending.

2. Deglobalization is inherently inflationary. When you replace efficient, global production with expensive, domestic alternatives:

Input costs rise
Supply chains slow down
Price volatility increases
Mark’s sees this as structural, not temporary.

3 - Tariffs are a symptom of a deeper fracture. Forget just US-China. Look around:

US-Europe disputes
India is raising import duties
China retaliating against Western tech restrictions

This isn’t a trade war. It’s a global economic divorce. And the market isn’t pricing it in.

4 - The old playbook dies here. For decades, the move was:

Long multinationals
Long emerging markets
Short volatility
Buy the dip

In a tariff-heavy, fragmented world:

Margins get squeezed
Supply chains fracture
Inflation spikes unpredictably
Policy risk rises

It’s a different game now.

5 - Marks’ big thesis: Pricing power is survival. In a fragmented, inflationary market, the companies that win are those who can:

Control their supply chain
Set their own prices
Operate regionally
Withstand higher input costs

This will radically reprice sectors.

6 - The likely winners in this regime:

Domestic manufacturers
Defense and aerospace
Commodities and miners
Infrastructure and utilities
Industrials with pricing power

He said, “Safe-haven hard assets will matter again.”

7 - The losers?

Global retailers are reliant on imports
Debt-loaded companies exposed to rate shocks
Tech firms with fragile margins
Emerging markets tied to exports

Many of today’s market darlings are structurally disadvantaged in this environment

8 - The wildcard risk: Policy intervention. As inflation persists and economic pressure mounts, governments will:

Subsidize industries
Impose new price controls
Restrict capital flows

Markets aren’t built for this kind of hands-on management. Volatility will rise.

9 - The market isn’t pricing this in yet. Most models still assume a return to pre-2020 norms.

Marks argues this is a decade-long shift, not a blip.
Smart money will start repositioning before it’s obvious.

10 - Bottom line: Howard Marks’ message is clear:

“If you don’t adjust to this new world of tariffs, fragmentation, and inflation volatility — you’ll be left behind.”

He said, “Markets change. Winners change. The playbook must too.”

Source: Howard Marks, X

Please note that the information provided is not recommended for buying or selling any security and is provided for discussion purposes only. Current viewpoints are subject to change. The information provided is not recommended for buying or selling any security and is provided for discussion purposes only.

Trade Signals: Update - April 23, 2025

Market Commentary:

A roller-coaster market environment? Dust off some old technical trading tools. While not perfect, the Weekly MACD has done a good job of identifying intermediate-term trends in the market. Signals occur when the moving average lines cross (red and green arrows in the lower section of the chart).

Source: StockCharts.com

No guarantees. Not a recommendation to buy or sell any security.

I share trend charts and more each week in Trade Signals, a free service for clients.

TRADE SIGNALS SUBSCRIPTION ACKNOWLEDGEMENT / IMPORTANT DISCLOSURES

The views expressed herein are solely those of Steve Blumenthal as of the date of this report and are subject to change without notice. Not a recommendation to buy or sell any security.

Please note that the information provided is not recommended for buying or selling any security and is provided for discussion purposes only. Current viewpoints are subject to change. Please note that the information provided is not recommended for buying or selling any security and is provided for discussion purposes only.

Personal Note: What I Read This Week

I’m writing you from Arizona today and racing to hit the send button. I’m here for several business meetings. I fly to Austin, TX, early tomorrow. First, to celebrate the opening of my friend Joe Q and his team’s new office. Second, to celebrate a good friend’s 50th birthday. A big party I am very much looking forward to (a shout out to JP). I arrive back home at midday on Sunday.

What I Read This Week

I hope you find them useful.

Peggy Noonan - I mentioned the Peggy Noonan article Susan shared with me. It is titled, Trump’s Climbdown for the Ages

*Special note: Please know I am not taking a political position. I’m wide open to reading about things I may not agree with. I like to question, debate, and think about my biases. What might I be missing? I don’t agree with everything Peggy writes, but I sure do like her writing style. I like some of the ideas the administration is pursuing, and can’t get my mind around others. One million gold visa’s at $5,000 each - yes to the $5 trillion and potential capital flow that will flow into the U.S. with it. Pay down some of the $37 trillion in debt.

Peter Boochvar - Boock Report: Weak dollar, higher gold, higher yields

John Mauldin - The Inflationista Illuminati

Bridgewather Co-CIOs - Three Ways the World Is Changing

Wishing you a moment lost in music that fills your soul!

“And I knew if I had my chance
That I could make those people dance
And maybe they'd be happy for a while.”

I look forward to navigating the period ahead with you.

Here’s to making people dance.

All the best,

Steve

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Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
75 Valley Stream Parkway, Suite 201, Malvern, PA 19355
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Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management. Author of Forbes Book: On My Radar, Navigating Stock Market Cycles.

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