What's Working and What's Concerning

No escaping tariffs... Stocks down, gold up – big... This Week on Wall Street with Matt Weinschenk... What's driving the action... A downsized IPO... A great case for quality...

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We can't escape the word 'tariff'...

I (Corey McLaughlin) thought the weekend would give me a break from all the crazy market-moving news. Then I made the mistake of checking the news on my phone...

Another tariff threat, this time on imports of Russian oil...

In a Sunday morning interview with NBC News, President Donald Trump made a few headlines...

Among them, he threatened 25% to 50% tariffs on oil and other products from Russia sold in the United States if Russia doesn't commit to a ceasefire in the war. He also said, "If you buy oil from Russia, you can't do business in the United States."

That's referring to primarily China and India, although European nations buy Russian oil, too.

And all this came ahead of the "Liberation Day" that's due on Wednesday, though the details remain unclear. Trump initially described the import taxes that will come on April 2 as blanket "reciprocal tariffs" on trading partners but lately has said he'll be "lenient."

The market absorbed this latest round of tariff uncertainty again today. The major U.S. stock indexes were mixed. The benchmark S&P 500 Index finished 0.4% higher, but it also hit a new intraday low for the year.

The tech-heavy Nasdaq Composite Index and small-cap Russell 2000 Index finished slightly lower, and the Dow Jones Industrial Average gained 1%.

The performance came after a Friday sell-off on a slightly higher-than-expected reading in the Federal Reserve's preferred inflation gauge (2.8% in the personal consumption expenditures index) and another sour report about consumer sentiment.

Meanwhile, gold is hitting record highs...

While stocks are enduring a rough ride, the "chaos hedge" of gold was up another 1% today to above $3,120. In short, it's working... doing exactly what we'd like it too when stocks are down.

Gold is up 18% since the start of the year alone – the precious metal's best first quarter since 1986.

We noted last week the impressive run gold's price has been on, and we highlighted recent research by DailyWealth Trader editor Chris Igou.

This week, our Director of Research Matt Weinschenk delved into the subject of gold in the first episode of a brand-new This Week on Wall Street video series...

Matt brings on Stansberry Research senior analyst Brett Eversole and they get into what has been driving gold's price lately. This includes significantly increased central-bank buying and growing bullish sentiment among individual investors... rather than the "inflation hedge" part of the equation that's typical of the bullish case for gold.

Be sure to check out this free video... We'll post a new episode every Sunday. Subscribe to our Stansberry Research YouTube channel to make sure you don't miss it or any of our other free videos.

We're trying to get more high-quality information out to folks to educate and inform them about the markets. Subscribers to our newsletters will still have exclusive access to our actionable stock recommendations and analysis, of course.

Regular readers may recall our heightened bullish stance on gold last year...

We noted last August that gold was already building on all-time highs set even earlier last year... and explained why the action could continue. As I wrote...

There are at least three fundamental catalysts that support a bullish case for the centuries-old store of value...

1. The threat of escalating war in the Middle East and the ongoing war between Russia and Ukraine. Simply put, more developments in these wars could lead to further "shocks" for stocks and send investors into "safe haven" assets like gold or bonds.

2. It looks like the Federal Reserve is comfortable returning to "business as usual" and will lower interest rates. This isn't that long after the economy endured a 40-year-high rate of inflation (and still-rising prices). Cheaper dollars means rising prices for dollar-denominated assets... like gold.

Other central banks are also buying gold as a way to hedge against the dollar... to the tune of more than 1,000 tonnes in each of the past two years.

3. Campaign promises from the U.S. presidential candidates to "fight" inflation. We've seen this story before... The proposed policies, in one way or another, will only exacerbate U.S. debt and inflation, and certainly won't get to the root of the problem: fiat currency and money printing.

And we'll repeat the same thing we said that day: Many of our editors have made the case for always having at least some gold in your portfolio as a "chaos" and/or inflation hedge. When storylines like these come together, it's easy to see why...

What's not working: A downsized IPO...

Stansberry Research analyst Gabe Marshank had his eyes on another important development in the market last week... CoreWeave (CRWV) began trading on Friday in what was once positioned as the biggest tech IPO since 2021.

But as Gabe explains, the debut fell short of expectations...

(And stay tuned for more from him... In a two-decade-plus investing career, Gabe has covered almost every industry in every geography... Before joining our company, he was responsible for managing billions of dollars in capital and generating more than $1 billion of profits for his firms' investors, like Point72 founder and New York Mets owner Steve Cohen.)

Gabe takes things from here today with the story...

You may not have heard of CoreWeave, but you have certainly heard of its industry. It's a large data-center operator, housing the chips that host artificial intelligence ("AI"). The big expectations reflected its big ambitions: The company had aimed to raise $2.7 billion at a $32 billion valuation. It ended up raising $1.5 billion.

The stock was down almost 7% today.

Even in a red-hot sector like AI infrastructure, the market seems wary of this IPO... And that's a telling signal.

Data centers are currently one of the most hyped areas in tech investing. Billions are being poured into these facilities. Nvidia (NVDA) – the world's leading AI chipmaker – is central to this boom, with its chips driving the computing behind AI models. Alphabet (GOOGL), Microsoft (MSFT), and Amazon (AMZN) have all doubled down on AI efforts.

CoreWeave fits right into this story... but its path has been anything but typical.

The company started in 2016 as a crypto-mining side hustle by former natural gas traders. When crypto crashed in 2019, they pivoted to renting out GPU power for 3D video rendering. Then, when the AI wave hit in 2022, CoreWeave went all in.

But growth like this requires serious capital. Today, CoreWeave has $8 billion in debt and posted a $900 million net loss last year – even as revenue jumped more than sevenfold to $1.9 billion. The company needs more cash to grow, so it's turning to the public markets.

But public investors seem skeptical. On Thursday, CoreWeave cut its IPO target – and brought in Nvidia as an anchor investor, with a $250 million commitment.

That raised more questions than answers about the company and the AI boom in general...

Here are the three big ones...

1. Can data-center pricing hold up?

Tech prices tend to fall fast. Nvidia's top chip in 2019, the V100, cost $10,000. Now it goes for less than a tenth of that. Rental rates for Nvidia products followed the same pattern. Companies like CoreWeave that operate data centers are constantly buying the newest chips – yet may not recoup costs before those chips become obsolete.

2. Will demand hold up?

AI felt like a revolution when ChatGPT launched. But competition has arrived fast, and cheaper. DeepSeek, a Chinese AI provider, now offers a rival at a much lower cost. Meanwhile, recent reports suggest Microsoft – CoreWeave's likely largest customer, making up 62% of its sales – is scaling back on data-center leases.

3. Why is Nvidia investing in its own customer?

Nvidia sells chips to CoreWeave – but it's also investing in the company, effectively recycling profits back into its own sales pipeline. This isn't organic demand. It's a feedback loop: Nvidia funds CoreWeave, CoreWeave buys Nvidia chips, and the cycle continues. If CoreWeave struggles to find end customers, the loop breaks – leaving Nvidia exposed as both a supplier and an investor.

And it's not just CoreWeave. Nvidia has been financing chip purchases more broadly. On its balance sheet, this shows up as "accounts receivable," which jumped by $13 billion last year. That increase helped inflate Nvidia's reported $72 billion in net income. If this tailwind fades – or reverses – it could drag Nvidia's growth down with it.

This pattern mirrors the dot-com era. In 2000, Cisco Systems (CSCO) and others used vendor financing to fuel demand. Their customers overordered gear. When end-user demand faded, the bubble burst – and so did tech stocks.

History doesn't repeat, but it rhymes. Nvidia's circular funding signals unease about future AI demand. And the market's response – forcing CoreWeave to scale back – suggests investors are catching on.

It's a good moment to stay alert and cautious in AI-land.

But let's end on one more positive note...

I (Corey) want to highlight something (in addition to gold) that is working: investing for the long term in one of the world's best businesses... W.R. Berkley (WRB).

Shares of the property and casualty ("P&C") insurer jumped more than 7% on Friday to a new all-time high on news that leading Japanese insurance company Mitsui Sumitomo has agreed to buy 15% of outstanding WRB shares.

The move puts W.R. Berkley up 22% year to date... while the U.S. benchmark S&P 500 is down.

Longtime subscribers should be familiar with the name, a longtime holding in the Stansberry's Investment Advisory model portfolio. Our founder Porter Stansberry first recommended W.R. Berkley way back in 2012.

The position is one of the Top 10 Open Recommendations across all of Stansberry Research, as you can find at the bottom of our daily e-mail.

Subscribers also know why our team has long been bullish on the P&C sector and the best businesses within them, which have the unique opportunity to invest their "float" – money paid in insurance premiums up front – to deliver returns for shareholders...

It's a setup that has fueled the success of Warren Buffett's Berkshire Hathaway for decades, as we wrote in our February 27, 2024 issue. Elsewhere, in a 2021 special report in which our Stansberry's Investment Advisory team re-recommended WRB, they wrote...

There's a unique set of companies in America, which the 1% use and are very familiar with... Yet the masses know almost nothing about them.

We call these companies the "Money Guarantors," because they quietly and secretly provide what is probably the most critical role in our financial system... guaranteeing that projects, deals, and developments get done.

They are not banks. They are not brokerage houses or financing firms.

Instead, this is a group of the most lucrative, most powerful companies in the world. They have pretty much unlimited and unfettered access to free capital – but it doesn't come from the government or banks... It comes directly from America's best businesses and wealthy families.

And this group of companies operates what I believe is the best business on Earth. No matter what happens to our currency or the economy, its services are critical... and will remain so for the foreseeable future.

Few in the P&C insurance sector are better than W.R. Berkley. I can't think of a better example than the company attracting fresh capital from a foreign business even in a time of heightened global uncertainty.

"Their first-class track record in the U.S. specialty market attracted us in making an investment," Shinichiro Funabiki, Mitsui Sumitomo's president and CEO, said of W.R. Berkley.

Once the Japanese insurer acquires at least 12.5% of shares outstanding, it will get one seat on W.R. Berkley's board of directors.

The Berkley family, which controls most of the company, says it won't be selling any shares and is "excited to have regular conversations... about opportunities to leverage their international presence to help the company drive sustainable stockholder value."

This is precisely why you want to own shares of high-quality businesses like these to protect and grow your wealth, in "good" times and "bad."

New 52-week highs (as of 3/28/25): Alpha Architect 1-3 Month Box Fund (BOXX), Brown & Brown (BRO), CBOE Global Markets (CBOE), Cencora (COR), Enel (ENLAY), SPDR Gold Shares (GLD), Sprott Physical Gold Trust (PHYS), Royal Gold (RGLD), Tradeweb Markets (TW), ProShares Ultra Gold (UGL), Vanguard Short-Term Inflation-Protected Securities (VTIP), Wheaton Precious Metals (WPM), and W.R. Berkley (WRB).

In today's mailbag, feedback on Dan Ferris' Friday essay on the "false promise of 'economic immortality,'" featuring bitcoin advocate Michael Saylor... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Gee whiz, so inspired by Saylor's generosity – burn money for the greater good! Hey, how about this heartfelt idea – knock off your kids to make housing more affordable in the future! Oh, my, I'm blushing with altruism just thinking about it." – Subscriber Gary S.

All the best,

Corey McLaughlin with Gabe Marshank
Baltimore, Maryland
March 31, 2025