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you'd have to be a real fool to believe that I would be foolish enough to to buy Bitcoin now yeah Bitcoin had a great quarter and I'm going to get to that but enjoy it while you can [ you'd have to be a real fool to believe that I would be foolish enough to to buy Bitcoin now yeah Bitcoin had a great quarter and I'm going to get to that but enjoy it while you can because it's not going to be repeated because the real fools this April Fool day were the people who were buying all these tech stocks during the first quarter including cryptocurrency Bitcoin all this risk stuff got bit up in the first quarter of 2023 you know a lot of people got caught off guard by the strength that we had in Risk assets in the first quarter right I mean the NASDAQ infected NASDAQ had its best quarter since the second quarter of 2020.
it was up 17 I believe on the quarter and the reason that NASDAQ did so well back in the second quarter of 2020 that's when the Fed you know went back to QE that's when they slashed interest rates back to zero because of covet now the market sold off early on when covet first got started but once the FED went to zero and launched QE you know Infinity for qe4 that caused the NASDAQ to sharp back I mean to snap back very sharply and so the you have to go back then to find a quarter where the NASDAQ was as strong as it was in the first quarter of uh this year now of course the NASDAQ went way down it was down about 30 percent for 2022.
so big move down it's not that crazy that we had a snapback plus I think a lot of people were probably short a lot of these tech stocks going into the year certainly people who were shorty stocks made a lot of money on those shorts in 2022 and so a lot of them were probably still there in 2023 and the expectation of course was that the FED would keep hiking rates and in fact it did we had 75 basis points of rate hikes during the first quarter of 2023 so that is what the markets had expected and all that of course had been bad for tech stocks but the reason we got the sharp turnaround is because of the economic events and most particularly the onset of the 2023 financial crisis that really changed the mindset and I think even prior to the onset of this financial crisis you were starting to see a bid in the tech stocks based on the idea that the tightening cycle was coming to an end yes maybe the Fed was going to ratchet up rates a couple more times but it didn't matter because the Lion's Share of the work had been done and we were now on the cusp of another easing cycle the Fed was soon going to be cutting rates and of course quantitative tightening would eventually give way to another round of quantitative easing and so investors wanted to get ahead of that remember the markets look forward so they're looking beyond the last few rate hikes till two the First Rate cuts and not just the First Rate Cuts but the many many rate cuts that are likely to follow as well as the return to quantitative easing and I think that is what is responsible for the big rise in the NASDAQ and if you look at what happened with the Dow for example the Dow was barely positive in fact it may have been negative up until the last day of the quarter because the Dow was up 400 points on Friday and the Dow only gained 0.4 for the entire quarter so I think all of that gain was attributable to Friday's rise so but for that rise if the Dow might have had a negative quarter but the S P 500 was up about seven percent and what powered the s p was the tech stocks that are large components of the s p certainly other sectors of the s p like the financials did extremely uh bad right the financials got clobbered especially at the latter part of the quarter but the tech stocks were strong enough that it it outdid the damage gun by the financials but if you look at let's say the Russell 2000 which doesn't have nearly as much as the s p or the NASDAQ obviously that index was only up 2.3 percent so not nearly as big a balls now I didn't participate as an investor I didn't own uh much of these tech stocks actually I did own some of the uh the Asian stocks I had some tech stocks uh in Asia some of them are in our funds so we know we caught a bit of the tech rally but we're way underway Tech in general but where we ate we're able to participate was in the gold stocks because the gold stocks had a decent quarter not a spectacular quarter but they had a decent quarter the GDX was up 13 on the quarter and the Juniors actually didn't even do as well they were up about 10 percent on the quarter now for those of you who are shareholders of the euro-pacific gold fund we actually did a little bit better during the quarter than both of those index the Europe Civic gold fund was up 14.2 percent during the first quarter so not nearly as much as the NASDAQ although actually not that far behind 17 percent versus 14 so almost as good as the NASDAQ but a lot better than the s p and certainly even bet more better than the uh the Russell 2000 or the Dow and what I think should be going on right now is more people who are buying these tech stocks should actually be buying gold stocks instead because I think the gold stocks are the new tech stocks for this new easing cycle the people who are buying tech stocks all quarter we're correct in their judgment that we were coming to the end of the tightening cycle because we were and they were correct to anticipate that there would be an easing which there already has been I mean the FED has already acknowledged that it's probably not going to hike much if at all and whether they want to admit it or not they're back to quantitative easing although uh this week on on Thursday when they reported the balance sheet it actually shrank Again by about 25 billion so we didn't have a third week in a row of an expansion there was a little bit of a of a contraction but I think that is the exception not the rule I think going forward we're going to see the balance sheet continue to expand every once in a while there may be a weekly contraction but the direction now for the balance sheet is up but I think investors are wrong in thinking that this easing cycle is going to be good for tech stocks I think they've got it wrong the last easing cycle was great for tech stocks but I don't think that we're going to repeat that I think this time around it's going to be gold stocks and in fact if you go back to the 2000 a bubble that popped and you know NASDAQ was down 80 percent mostly because of those tech stocks the tech stocks rebounded from 2002 to 2008 when we had the financial crisis but the gold stocks did much better during that easing cycle because you know the FED moved rates down to one percent and then kept them there for a while and then gradually normalized but during that entire cycle the gold stocks actually did much better than the tech stock so I think the same thing is going to happen this time it's not going to be the people in tech stocks are going to make money again like they did uh from 2000 and you know nine-ish all the way through 2021 or whatever that that bubble finally peaked it's not going to be the same nor is it going to be the crazy days of the coveted lockdowns where all these tech stocks you know went went ballistic because what I think investors don't get is that inflation is the wild card because it's not going back down the last easing cycle was good for tech stocks because inflation was below two percent at least the inflation that anybody admitted to right the Fed was below two percent and so in that environment it was able to get away with quantitative easing low interest rates and and the dollar was strong during that time period and so I think this favored the tech stocks but I don't think this easing cycle is going to look anything like that because what I think is going to happen this time is inflation is already well above two percent and you know we got some more inflation data on Friday we got the personal consumption expenditure uh index and contained within that number there was a better than expected reading on inflation but just barely the core pce which is the least accurate and therefore the fed's favorite way to measure inflation because it understates it the most it was supposed to go up by 0.4 on the month and it went up by 0.3 I mean big deal because point three annualized is still way above uh the feds two percent uh level I think it's right now if the annualizes out I think year over year we're at 4.6 rise in the core pce you know the core right that strips out uh food and energy right which was even higher but even if you strip that stuff out and you go down to the core you're still at 4.6 year over year yes that was slightly better than the 4.7 percent that they were looking for but it's nowhere near the two percent but what's more significant about that is that that's where the year-over-year core pce is when the FED has stopped the inflation fight it is no longer hiking rates but more importantly than the rate hikes is it's back to quantitative easing the FED is creating inflation the FED is printing money all over again and that just fuels the inflation fire so I think we're we're kind of at trough inflation now maybe it gets a little bit lower but we're not going to get anywhere near two and then we're just going to pick up momentum and head for new highs and that is going to create a completely different environment for tech stocks and for gold stocks
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