On My Radar - Frozen Into Inaction — CMG Private Wealth Group

May 16, 2025
By Steve Blumenthal

“I don’t reach my conclusions with confidence or act without trepidation. There’s absolutely no place for certainty in the world of investing, and that’s particularly true at turning points and during upheavals. I’m never sure my answers are right, but if I can reason out what’s most logical, I feel I have to move in that direction.”

— Howard Marks, Oaktree Capital, Nobody Knows April 2025 Memo

I began reading John Mauldin’s Thoughts From the Frontline twenty-five years ago, with coffee in hand every Saturday morning. I’ve attended all but one or two Mauldin Economics Strategic Investment Conferences. The 2025 Conference kicked off this week.

Presenters include: Howard Marks, Felix Zulauf, David Rosenberg, Dr. Lacy Hunt, Peter Boockvar, Barry Habib, Danielle DiMartino Booth, Louis Gave, Karen Harris, Joe Lonsdale, Pippa Malmgren, Rene Aninao, Jim Bianco, Erik Prince, George Friedman, Ed Yardeni, Mark Mills, Liz Ann Sonders, and others.

Marks spoke this morning about his biggest worries: the size of the debt, deficit spending, the pace of the increase in our debt, and the value of our currency. His presentation was similar to his recent Nobody Knows April Memo, which you can read in full here.

From Howard’s April Memo, “One of the things I insist on is that even for someone who deals with the future via forecasts, a forecast isn’t enough. In addition to a forecast, you also need a good sense for the probability your forecast is correct, since not all forecasts are created equal. In this case, under these circumstances, it must be accepted that forecasts are even less likely to prove correct than usual.

Why? Primarily because of the vast number of unprecedented unknowns involved in the current matter, which has the potential to turn into the biggest economic development in our lifetimes. There’s no such thing as foreknowledge here, just complexity and uncertainty, and we must accept that as true. This means that if we insist on achieving certainty or even confidence as a precondition for action, we’ll be frozen into inaction. Or, I dare say, if we conclude we’ve reached decisions with certainty or confidence, we’ll probably be mistaken. We must make our decisions in the absence of those things.

But we also have to bear in mind that deciding not to act isn’t the opposite of acting; it’s an act in itself.”

Since my early days in the investment business at Merrill Lynch in 1984 and the years working with individuals and investment professionals, I have concluded that most investors become “frozen into inaction” during periods of fear and euphoria. What I like about Howard Marks is how he thinks in terms of probabilities. He’s been a regular at my friend John Mauldin’s conference for several years.

I feel like a kid in a macro candy store - so many sharp perspectives, thoughtful debates, and big ideas in the room. Today alone, we heard from Howard Marks, a veteran of distressed debt, and Felix Zulauf, a global macro trader. Two very different lenses. We’ll unpack their contrasting views next week.

There’s a lot to absorb. Over the coming weeks, I’ll share my thoughts and key takeaways - always with an eye toward probable outcomes and investment opportunities. As I’ve written before, we’re navigating terrain few investors have seen firsthand: the end phase of a long debt supercycle. It all comes down to approach and positioning. That’s where we’ll stay focused.

Grab that coffee and find your favorite chair. Today, let’s start with my high-level takeaways from two good friends: Peter Boockvar on markets and Barry Habib on interest rates, mortgages, and housing. They didn’t disappoint.

If you’d like the full details, it’s not too late to sign up and tune in to SIC2025. You’ll find recordings of all the sessions. Please know that Mauldin Economics does not pay me. I'm just a big fan of their work.

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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Peter Boockvar - The Game Has Changed

Big Picture:

We're in a new economic environment: less government spending, more tariffs, and consumer stress.
The days of easy U.S. market dominance are likely over.
International stocks and commodities are set up to outperform going forward.

Macro Outlook

Growth was recently driven by upper-income spending, government stimulus, and AI — all are now fading.
Lower/middle-income consumers are struggling. Manufacturing is in recession. Home sales are at 30-year lows.
Global trade is weak. Capital investment (outside of AI) has stalled.
Europe and China are both underperforming.

MAG-7 Losing Steam

Microsoft peaked in mid-2024 — before big AI announcements.
MAG-7 index down 7% year-to-date, 11% off the highs (as of mid-May).
Foreign investors are selling both the MAG-7 and the U.S. dollar — a major sentiment shift.
The U.S. now makes up over 65% of global market cap — the highest since the 1970s. Likely unsustainable.

Government Spending & Deficits

U.S. budget deficit has been a key driver of corporate profits — but rising debt service costs are crowding out spending.
Interest on U.S. debt approaching $1 trillion/year. Good for savers, but could pressure consumers if rates fall.

Tariffs: A Hidden Tax

New across-the-board tariffs (10%) could act as a $330 billion tax on U.S. businesses.
Equivalent to raising the corporate tax rate from 21% to 34% — wiping out the 2017 tax cut.

Consumer Stress is Building

Buy Now, Pay Later usage is up — and 40% of users are behind on payments.
Companies like Domino’s, Pepsi, Colgate, AutoNation — even Gucci — are reporting weaker consumer trends.

Labor Market Signals

Layoffs remain low, but hiring is slowing fast.
Companies are cautious about cutting jobs after pandemic hiring struggles — but that could change quickly.

Private Equity: Red Flags

PE valuations are stretched; exit options (IPOs, sales) are limited.
Secondary PE funds being used as a “shell game” for liquidity — a red flag.
From 2010–2022, 60% of PE returns came from leverage and rising multiples — both are now challenged.

Global Shift: International Markets Heating Up

U.S. stocks dominated for years — but international equities are starting to outperform.
Central banks are diversifying away from the dollar and boosting gold reserves.

Investment Ideas (some interesting ideas)

Undervalued public sports franchises.
Industry consolidators: He mentioned a large-scale publicly traded car wash, landscaping, and auto services companies.
Commodities: bullish on fertilizer and platinum.
International equities: He likes certain parts of Asia and Latin America.

I am a subscriber to Peter’s daily economic commentary. No one I know listens to more corporate earnings calls than Peter. Extremely smart, candid, and to the point. You can learn more about Peter Boockvar here.

If you are a CMG Private Wealth Client, I am happy to speak one-on-one and expand on themes and ideas. Email me at blumenthal@cmgwealth.com.

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. Views are those of Peter Boockvar and not necessarily Steve Blumenthal’s nor CMG’s.The information provided is not recommended for buying or selling any security and is provided for discussion purposes only.

Barry Habib - Interest Rates, Inflation, and Housing

Key Takeaways:

Interest Rates & Inflation Outlook
- Barry sees inflation trending lower ahead — expects minor improvement in core inflation by mid-to-late 2025.
- He believes the Fed will cut rates significantly once inflation cools further.
- Expects mortgage rates will drop to the low 6% area.
Housing Market Dynamics
- Strongly bullish on housing: limited supply, strong demand, and strong demographic tailwinds.
- Aging housing stock and millennial household formation continue to support prices.
- Believes a housing crash is highly unlikely, despite high prices - affordability will improve with lower rates.
Bond Market Opportunities
- Bonds are extremely attractive now, especially longer-dated Treasuries. Sees rates moving lower.
- Thinks this is a potential buying opportunity for fixed income as inflation subsides.
Economic Slowdown is on the Horizon
- Signals of an economic slowdown are building - lag effects of prior rate hikes will bite.
- Warns that unemployment will likely rise as businesses adjust to tighter financial conditions.
Timing the Fed
- Fed tends to overtighten - Barry sees parallels to past cycles.
- He expects the Fed to pivot later in 2025, pushing bond yields and mortgage rates lower.
Investor Strategy Suggestions
- Now is the time to lock in long-term bonds.
- Real estate remains a solid investment due to tight supply and rate tailwinds.
- Stay patient: market pessimism may offer great entry points in the months ahead.

Barry’s 2024 forecast earned him his 4th Crystal Ball Award from Zillow. He is my go-to on all things mortgages and housing. You can learn more about Barry here.

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. Views are those of Barry Habib and not necessarily Steve Blumenthal’s nor CMG’s.

The information provided is not recommended for buying or selling any security and is provided for discussion purposes only.

Trade Signals: Update - May 15, 2025

Market Commentary:

I share trend charts and more weekly 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: Positive Potato

I have yet to watch the replay of Dr. Lacy Hunt and Danielle DiMartino Booth’s presentations. I know they both see a recession near, if not already here, similar to Barry’s view on declining interest rates. Stay tuned. I’ll be lining up a call with Peter and Barry soon. I’ll see if Lacy and Danielle can join us as well. That would be great fun.

I remain in the long-term inflation camp, with a recession target on the 10-year at 3.5% (currently 4.44%). I continue to expect a roller coaster ride for bonds and equities. As Felix Zulauf says, trade the cycles, don’t buy-and-hold. We are in an entirely different ballgame. One helpful tool is the Daily MACD. I update the MACD trend charts for stocks, bonds, commodities, and international markets in Trade Signals weekly. Not a perfect technical tool (there is no perfect in the investment business), but it does a pretty good job. The idea is to invest in line with the cyclical trends.

It’s good to be back home. I enjoyed last weekend in Florida, and I want to thank my friend John L. We played his Hawks Nest golf course in Vero Beach. The upside was a good start and a birdie on the difficult par-3 hole number 2. We teed off just after the Mid-Am players. Fun to see. What wasn’t fun were the sand traps. I found too many of them, but the layout was beautiful and the greens were rolling at a 13 (super fast). I loved the course. John beat me streight up. Well done, my friend. I’m envious of your game.

The Moorings at Hawk's Nest (Hawk's Nest Golf Course) - Host of the 2025 Florida Mid-Amature Chapionship

I ran into this guy sitting on a friend’s office desk. I think it was a message to get to the driving range this weekend. We humans see what we want to see, but I’m sticking with that; it’s good advice. Thank you, Positive Potato.

*Steve, beat John next time. Steve, beat John next time. Steve, beat John next time.*

Stay positive! And enjoy your weekend! Thanks for reading…

With kind regards,

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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