Deal Uncertainty, Yields Up, Nvidia Stock Buybacks, NERVOUSNESS. transcript

I am with you. With you. Oh man, your boy Kevin just lost lots of money. Oh, that's okay. I am with you. Here we go. Come on. Push it. Buy the dip. Buy the dip. Here we go. Come on. Push it. Buy the dip. Buy the dip. Here we go. Come on. Push it. Buying the dip. Buying the dip. Here we go. Come on. Push it. Oh my god. What's happening? >> First of all, all this whining by Wall Street, it's making me sick. 140% of GameStop was short.

GameStop was short. Short. You can't allow Wall Street to short 75% of a stock. Crush these companies into the dirt. Thousands of stocks into the dirt. Then when the individual makes money, everyone's entrepreneurs. I have a kid who bought a house, paid $50,000, and bought a house. After decades of the short, you have to accept the fact that individual investors are playing the same game that you're playing, and now you're losing. >> Here we go.

Come on. Push it. Find the dip. Find the dip. Here we go. Come on. Push it. Find the dip. Find the dip. Here we go. Come on. Push it. Find the dip. Find the dip. Here we go. Come on. Push it. Oh my god. What's happening? Here we go. Come on. Push it. Find the dip. Find the dip. Here we go. Come on. Push it. Push it. Push it. Find the Here we go. Come on. Push it. Find the Here we go. Come on. Push it. Oh my god. What's happening?

There's a lot of power in organizations online. Three million people can get together in a subreddit. I think it's really funny that the Kop stock is going up and just affects the market in that way. There are 28,000 people live in a Discord who are spamming rocket emojis yelling go to the moon. Oh man, welcome on back. Uh, today we have the Monday trade concern. Will we actually get a deal out of Donnie T today? I don't know.

But um I'm certainly hopeful it's before the election because holy smokes, we don't want any more of this this uh five and 10 and 30year Treasury yield nonsense going crazy. You do have in the pre-market the Q's getting close to bouncing at 7:35. Starship launched this morning. It's cool. It did have a little bit of a an engine out there, but still going ahead with some tests. You've got uh Brent sitting at about 10583 right now.

It's actually a little lower than where it was just a few minutes ago. It seemed like it was around 106. I've got the bond market sitting at this is the problem here. Look at that. 5.23 on the five uh or sorry on the 10-year Treasury here. The yield curve is relatively flat, 31 basis points. So, not quite at that shock level yet, but you can see the 2-year Treasury today is knocking on almost on 5% here. Look at that.

The 2-year sitting at 4.92%. That's crazy. Uh, so you lock in your money for a 2-year Treasury period, you got 4.9% if you buy it today. Isn't that crazy? You hold it to maturity, you get your full 4.9% once, then twice. Not bad. So, pretty remarkable 10-year Treasury at again 5.23 right now. Big thing, a big question here is where's the deal, man. Donnie T obviously uh a little uh a little anxious this weekend, demanding more.

He just wanted some more. That's all he wanted. He wanted a little bit more out of the Iranians. He said the deal was was potentially something he would consider last year. Uh, which is also interesting that, you know, Donald Trump told us that last year he'd be open to uh to taking that deal, but this year, no, now he wants more. It's all right. And then, of course, you've got Nvidia's buyback news, uh, plus their software announcement.

I don't think a lot of people are paying attention to their software announcement, uh, regarding, uh, the management of agents. Pretty remarkable. Very smart by Nvidia. So, let's go ahead and get the bell and uh see how it goes. >> Congress was owned by the rails. They decided here's the winners. It was the first issue of cap the first time capture ever occurred. You took capture. Well, it was the IC that did it. And the ICC was owned by the big guys.

And that was the end of competition. They divide country up in the same way that Michael Polio divided well >> yes dinner with the seven families. Uh let's get the opening bell here at the big board on Wall Street. Of course, it is Graco, a maker of fluid management products. 100 years and since the founding, 40 since the listing at the NASDAQ in Time Square, Scholes Technologies Group, a maker of components for solar power and electrical infrastructure.

And at SIBO in Chicago, it's alpaca markets celebrating the recent launch of index options on its platform. >> Alpaca. All right. Okay. So, uh let's see what this is. This is an info piece here. Anthropic open AI fighting for enterprise spending. This is exactly what Meta pitched this morning essentially. And remember, we've talked about this regularly on the channel. The money in AI is from the enterprise. This is from businesses that say, "Look, I don't care if I need to spend an extra thousand bucks on credits.

It's cheaper than another employee or it's cheaper than XYZ, right? or I'm getting it faster then that's uh that's where the money is uh and that's what keeps anthropic and open AAI uh pumping at least with enthusiasm and spending. Now income and net income that's a whole another question. Uh so oh that's interesting. Take a look at this this comment here. Customers that reach their cap must buy must negotiate a new agreement or face higher prices.

The second you hit the cap, you get phone calls and emails from enthropic sales team at Enterprises saying, "Hey, we noticed you hit your cap. If we address this today with a new agreement, you could avoid overages." You know, they almost sound like a utility company at this point. Well, it's just coming to rob you of more more dollars. OpenAI seems to take a softer touch with Enterprise. Anthropics disc anthropic discounts on its models can be around 15%.

Yeah, if you buy in sort of bulk tokens, they do, you know, the 10 20 30% discounts, but you know, whatever. Uh, but they're basically making this argument here that Anthropic is a little bit more salesy than uh than OpenAI. But, you know, they've got the big test. OpenAI is taking the back seat waiting for Anthropic to IPO. They're going to be one heck of the canary in the coal mine and so far it's still singing. Christine Lagarde says that manufacturing is performing solidly.

Labor market remains robust. Outlook continues to be surrounded by high uncertainty though. We see higher inflation now, but no signs that inflation is becoming embedded. Actually, you know what? Some of these notes we should write down just so we could reference these again in the future. But uh this is, you know, these these folks talk to each other all the time. So when you hear Kevin Worsh or Christine Lagard speak, uh I think it's useful to pay attention to.

So no signs inflation is becoming embedded. That's good. That's very good. Uh we have uh high uncertainty. Okay. manufacturing good labor and manufacturing good. What else did she say here? Means that while the shock is too large to look through. Oh, here. Okay. This middle path for monetary policy. Middle path for monetary policy. Too uh much inflation to look through. But appropriate response rather than too much is basically what she's implying.

Okay. Yeah. I mean those that I expect the same of Worsh. Uh so I actually I'm going to say that I think Worsh is of the same mindset which you know has led to this idea that we're seeing too many raid hikes priced in. Let's go take a peek. Right now we are pressing in the World of Warcraft release of forever. No, no, no. We are pricing in when it comes to rates 3.83. All right. So, we got 3.83 3.83 83 rate hikes priced in between now and 716 2027.

Uh, okay. Uh, I don't think we'll get that many, but we really need an Iran deal before the election. Okay. Boom. Very well. Okay. So, that gives us that as far as the end of the year still pricing in. I should also make a note here that we are pricing in 1.5 1.5 rate hikes priced in between now and D9 2026 which is about a coin toss on a uh third hike this year. Okay, that gives us a little bit of color on where uh where markets I mean markets aren't getting like super aggressive at guaranteeing both rate hikes this year.

Q's uh softening at the launch here. Let's see if they end up uh bouncing over here at the good old 735 line. Oh wow, look at Meta at open. Meta lost that line like instantly at the open. And then you've got on the flip side though, holy moly, Nvidia right through blast off. It's pretty good. Although Nvidia is once again proving that they're taking over, man. Taking over software, taking over hardware, taking over everything.

And they're just cheap right now. It's actually incredible. Just a cheap cheap company right now. Pretty much everything else is red. Even Intel's down 3%, bro. ARM holdings is down seven. ARM. Wow, man. Everything down into the down it goes. It is red day. Uh then uh this we're almost back at Well, where is it? Where's my 82 line? I got a line over here. Oh, it's 80 817. We're actually curving up a little bit from it.

But, uh, if this pressure keeps going regarding not having a Ron deal, I still maintain we bounce at right around here, 818, 817. This is a slightly rising line. It's a diagonal up. Uh, and and the reason this is so important is because if you end up bouncing this, you confirm this line. That makes it very bullish that once we have a deal, we get to 102. But you got to make sure we don't fall through this. That's important.

And so far on the day chart, we're kind of rolling over a little bit towards it. Uh so bouncing here will be critical. Oh, is Nebius actually up? Let's go see here. Nibs. Yeah, look at that. Good for them. Nebas up uh up again. They've been up quite a few days here in a row. Pretty mid-range on their historical. You can actually see this convergence here. This is a pretty equal convergence on the stock. I will say from a technical basis that tells us absolutely nothing.

Usually if you have like you know at least a tilt on the lines you can predict oh okay this is going to break up or break down. But when it's so equal uh you know they're basically perfect inverses of each other these lines unfortunately you don't get much of a tell. You just know something's about to happen. Uh let's see here. Where is Meta? Did we have a down trend on or was it Palanteer? We had we had a trend on one of these guys.

Yeah. Yeah. Here. See, for example, this on Palunteer was a really obvious line set. And this is actually part of why we bought Palunteer before this explosion. It was like at 118 or whatever. Uh but uh you have this convergence coming down and you can see it's not a sideways convergence. It's straight down which means you expect it to break up. Uh which is exactly what happened here. That line's been there forever. But anywh who look at this Nvidia move.

Is it going to hold though? It's already kind of rolling over a little bit. 233. All right. Well, we'll watch. Okay. Let's go to uh let's see a few sources here. I'd really like to get some White House scoops honestly. So, a little bit of political insight into what's going on with Hormuz would just be fantastic right now. The Supreme Leader had some yapping to do this morning. Supreme leader says Iran's military has driven the enemy from waters off southern uh Iran into the Arabian Sea and will be kicked out of there as well.

You got to escalate the the you know negotiation uh I don't know whatever you want to say but LG traffic picks up in Hormuz despite the war. You know I think it's funny that right as they're like oh yeah we kicked the enemy out. It's h well actually data is showing where is it no visible transit that's fine but what about the undetected transponders off let's see many vessels make it through via dark transit when they turn off their transponders right this is why when you look at those transponder maps you kind of have to uh adjust them for how much is going through dark basically Okay.

More Qatar energy linked LG has traveled through the straight of Hormuz last week despite the Iran conflict. See, that's almost like the perfect irony. It's like here they are. Oh yeah, we kicked the enemy out. Meanwhile, they just turned their transponders off and they're floating right on through. Profound miscalculation by US to ignore Iran deal for Hamuz. I mean, I think it's remarkable to think that Trump is trying to ignore it.

He's not trying to ignore it. Okay, that was regarding the UK base. Let's see what else. So, military refutes Iran's claim of full control over her moves. Claims that Iran has full control over her moves are false. Iran has no navy because we sank it. Gosh, that's rough. That's rough. Oof. There it is. Claim. A senior Islamic revolutionary guard corpseman said today that Iran has full control over the straight of moose.

This is false. They have no navy. Iran does not control the straight of Hormuz as evidenced by thousands of ships that have passed through freely along with more than a billion barrels of oil over the past few months. Thousands of ships. I mean, I guess if you have 50 a day, how what does it take to get to a thousand? 50 a day. Just 20 days. Yeah. Yeah. So, I mean, really, if you get 50 a day, if you get 50 a day and you get 60 days worth of that, that'd be 3,000.

Yeah, that would be thousand. Interesting. At 50 a day, how it how it adds up, huh? Yeah, we'll sneak them out. All right, let's see here. Ayatollah, we saw that. Yeah, this was the Nvidia piece which I still think there there are some imp implications to this to the cyber stocks which are trading quite expensively. But anyway, so Nvidia introduced a new double layered artificial intelligence security system that says it would have prevented recent high-profile attacks on hugging face.

Today over 100 industry partners introduced the NVIDIA open agent safety platform bringing together open shell and sentry. Artificial intelligence is extraordinary technology blah blah blah semiconductor John blah blah blah blah designed to control what agents can access in real time and shut them down when they break the rules. It's almost like a little circuit breaker software, you know. But uh look at this. Nvidia increased the size of its buyback plan by $150 billion, increasing the total remaining amount for buybacks authorized to 235 billion.

The buyback beats Apple's record 110 billion set in 24 for the largest uh corporate buybacks in history. Got to get some more of that coffee flow. My coffee. Oh, look at that. Nvidia keeps going. That's barely trying to stem the the loss here though on uh the Q's. Look at that. Q's still down 80 basis points. Still holding still holding on to 835 though. Apple's green. Nvidia's green. SpaceX is green. Let's just put all the greens at the top.

Yeah, we'll we'll sort of segregate the reds and the greens here. There we go. All right. What else do we want to bring up here? Ion Q, LAR. Oh, look. GameStop Hood turned green. Crowd Strike green, PaloAlto Networks. Wow, it's actually surprising on the Nvidia announcement. VIX up. Yeah, and that's exactly what I thought would happen on Apploving. We talked about this this morning in the course member live stream. I'm like, there's no catalyst that justifies this.

This is like somebody buying in the pre-market. It's gonna probably disappear as soon as the market opens. Boom. Market opens. Yeah. Okay. Fine. Then let's go see what else is cooking. I wonder what the suits are saying. Let's try uh let's try the FT2. Let's do that. Okay. So, the FT is talking about Nvidia. Hyperscalers are transforming debt. Yeah, that's true. And that's that's kind of the problem is it's harder to track.

ASML CEO on why there's no AI bubble. All right. Yeah, let's take a look at that, too. So, here's the data. Silicon Valley tech giants fan across the world in search of cash. Meta will top the Euro bond market. Overarching narrative is anywhere and everywhere fundraising binge is changing the way the world borrows money. Many companies are now being forced to tiptoe around hyperscalers timing their bond issues to avoid clashing with those of tech giants and investors often borrowing for shorter periods to avoid the market's glut of long-term debt.

Uhhuh. staff at ECB have expressed concern about big t tech borrowing, which could make it harder for others to access financing. Sure. Sure. I mean, that's that's the thing. It's like, hey, if Google's going to pay you, Google's doing I think a 6 something. Let me see where the convertible. They're doing a Google convertible preferred. It's like a 2029. It's a convertible preferred. So, they pay you a dividend. So, which is very interesting because they pay you a 6.25% dividend on this, but it's only until 2029 and then you get the stock at a premium with Google.

So, they're selling you stock for 2029 at a premium. In the meantime, you get paid for 3 years to wait 6.25% per year, WHICH IS HONESTLY, I MEAN, THAT'S NOT BAD, BUT it shows you like, man, if Google's having to pay that, you know, it's like, all right, yeah, like people are fighting for money. I mean, it's not that much more than the 10-year Treasury yield. You know, maybe a year ago, 6.25 would seem like a lot. Now, with the Treasury at 5.2, it's like, man, six, seven, that doesn't even seem like that much.

Uh, but, you know, those are still good yields because, uh, dividends are typically tax preferred as well. So, you effectively get more of a yield here than you would if you had if this was 6.25 two 5% interest, which is great because the company's technically already gone through its taxation on this, hence qualified dividends, which gives investors even more of a yield. So, that was the Google money raise. The scale borrowing has shattered precedence.

Let's see. Overall, Goldman Sachs investors provided about 500 billion of financing to AI link group so far. Yes, that's kind of remarkable. Hyperscalers account for 200 billion of the total expected and are expected to issue more than 1 trillion over the next few years. Meta did now respond to requests for comments. Such outsized demand has created a credit market that could support larger debt than ever before. But it also brings new risks of course making it hard for pension funds and insurers who buy the debt to assess their true levels of exposure.

Yeah, imagine being a pension fund like buying up data center debt plus AI chips. It's like you are the definition of concentrated, baby. The definition of concentrated. Interconnections between borrowers and the new section trajectory are still unclear. Spark concerns that if one falters, it could be dragged down with it inevitably. Blah blah blah. how much can we issue blahy blahy blah whatever I mean I don't think there's anything really so far useful in this to avoid overwhelming the market some hyperscalers have given investors assurances they will not issue debt this will be the last time SpaceX needs to raise a lot of debt man I I don't know when they're going to start issuing their debt but I feel like they need to they're going to hop to it so let's see here new deals have revitalized some smaller markets say bankers.

Okay, let's see here. Say alphabet sold sterling. Okay, this is honestly kind of boring. What if something breaks? Here we go. As if the AI related share of the credit market grows around the world, so do the risks of a downturn. Although the majority of AI debt needs are being met in the safer investment grade market, the sector has more speculative names such as Cororewe venturing into the market. Such riskier riskier issuers are deeply intertwined with the rest of the AI system.

Iran's Aragoti to meet mediators in New York on Monday, but US representatives won't be present at the meeting. Oh, great. That's sort of like their their stuff. Hey, we gave That's just classic I feel like Trumpian style negotiating. Hey, we told you what we wanted and and then you like purposely don't show up. But uh we should write that down. Let's see here. We write that down. JR politics on eiti uh meeting with mediators today.

US um will not be present per uh the Iranian news classic I already told you my demands Trump style. Okay. So, I wonder what that's going to do to yields now. Let's see here. Ah, it actually hasn't really moved them worse. The 10ear is still sitting at 521. Oil markets. Yeah, oil still ticking up a little bit. Let's see. We saw the meta higher. Trump seriously considering the diesel export ban. Yeah, that would not be ideal.

Just more supply disruptions. Honestly, it's the last thing you want. But uh we'll write a quick note on that as well. Trump very seriously considering diesel export ban. You know, that's really just like a bandage approach. to um high diesel prices. We're thinking about it very seriously. That can often lead to a little bit of an increase in gasoline for gas. So, we're looking very seriously at it. We may do it. Oh, so even Donald Trump acknowledges that you might see gas prices go up as a result of that.

I mean, it's it's like it's a bad rejiggering of supply economics, but whatever. Okay, let's see here. Diesel prices. Diesel prices around 650 on average right now. Average diesel price Friday. Wow. I think we're like 750 over here, but that's Leave it to California adding their stupid taxes. biggest problem for a global oil system blah blah blah blah blah soaring diesel prices financial strain that's St. Petersburg Russia yeah and there was a note about Russia instituting their export ban and then this is in New York.

Okay. All right. That gives us that. Let's see what else we talked about. The hyperscaler debt. What is this? Go away. ASML chief. Anyone worried about short-termism of the technology sector, the bravado of so many tech bros and the very easy easy prickable bubble of AI should take the reality chip to the Dutch. Okay, let's see what else. ASML, arguably the most consequential yet lowprofile company in the AI ecosystem, employs nearly half of the town's population of 47,000.

Wow. In in the Dutch company where ASML is. So pretty much everybody in that town where That's crazy. It's like kids and family members don't. That's funny. Hovven, is that like world haven? Hovven to English. It sounds like World Haven. in English world field. Ah, close enough. All right, let's go to Feld Hoven. Oh, there it is. Oh, look at that little circular alignment or or building structure from like wartime era.

I just think it's so cool. You'll v visit these little towns. Headquarters to the manufacturer of high-tech lithography equipment, ASML. Wow. The equivalent back then of 1/8 of the population. Oh, makes sense that they would have a lot of cool stores though to go look at because they got to sell you uh they got to sell to the uh ASML people, you know. That's cool. It just looks like Europe. Looks like World War II artillery.

Yep. Looks and feels like Europe. That's cool. Route 66. Oh, that's a reference to the US. All right. What else do we have over here? Al Jazzer Qatari mediators reportedly still working with US Iran on possible deal. Well, of course they are. Uh and this also hold on a sec. Where is there it is? Okay. So here we also had the Ayatollah saying us will be uh ejected out of uh Hormuz. And uh then we have the IR or uh this here quote unquote fact check from Sentcom, which I actually think is accurate.

Senior IRGC commander said they had full control over Hormuz, mind you, the dark ships. Oops. Or the uh they just turned their transponders off. She could do that on an aircraft, too. It's kind of neat. They just disappear and then you get a little call from ATC. Hey, you just disappeared. Are you guys good? I told Sentcom calls fake news. Okay, what do we have about the Qataris? Qataris. So, that was the note. Where was it? here.

Alazer Qatari mediators continue the efforts with Iran to secure a deal to end the fighting and open up uh the straightforward moves with indirect talks expected later today. Scheduled for today. There was uncertainty over the weekend. SpaceX all 26 satellites on Starship rocket deployed into orbit. Nice. Nice. All right. Uncertainty over the weekend. President Trump rejected Terran's latest proposal. According to the draft text being discussed, the street would reopen in accordance with a separate deal that Iran has been discussing with Oman. uh more.

Okay, so this is more talk on the Iran Qatar deal we've heard about for about 60 days now. Always uh coming soon. We've heard that for a while now that that deal is coming soon. Okay. Despite Trump's public comments, the US has not officially rejected the current proposal. Interesting. Indicating his remarks may have been a negotiating tactic. H duh. US has not formally rejected the current uh proposal. That's useful to know.

A third official said the US is seeking Iranian concessions on its nuclear program. Okay. Well, that's where we already heard that they're open to uh weapons inspections again. including allowing inspectors to enter the country. Yeah, exactly. See, that's actually not bad. That's good. This This sort of reiterates the deal is closer. So, that's good. Good. Good. Good. Okay. So, we'll see what comes out of these unofficial official sideline talks.

All right, Q's are stabilizing. Q's are stabilizing at 737. SpaceX just rejected. Look at this line here. I got a line at 1598. Clean rejection. Uh, we got within 18 cents of it. 18 cents there and 20 cents right here. It's just like a little lid, you know? Little lid right there. All right. Let's go see what else it's cooking. Let's see the times over here. Oh, GOP plays. Wow. $52 million ad blitz this week to protect turf in Ohio and Texas.

Oh, the advertisers got start getting some dollar hollas. Do y'all hear about this terror plot? Planned terror attack near British military base with a large American president presence. I think we have um bombers over there. Five men on a suspicion of preparing terrorism after calls around 1:00 a.m. about three suspicious vehicles are heading towards it. Yeah, there it is. To deploy some of the US's largest bombers.

Let's see if they had any updates on it. Investigation remains ongoing. Just uh just what happened near the perimeter remains murky at best, but it's already raised some questions around security. Investigators arrested five men on suspicion of terrorism on the early hours of Sunday morning. Bomb disposal robot cautiously examined the three white vans. Local farmer told BBC that she called the police after seeing a large group of hooded and masked men in the fields near the base.

Wow. Leave it to Leave it to the farmer. farmer's like, "Yo, what's with all the masked men?" Who knows what movie that line is from where uh where the guy's like, "Oh, what did he say?" Uh oh, I can't remember the line now. It was something the effect of, "Isn't it an oxymoron to ask a masked man who he is?" A paradox, isn't it? What a paradox to ask a masked man who he is. Who remembers that line? Well, I guess you could just look it up, but that'd be cheating.

But that was a good movie. Timeline appeared to conflict with BBC called the police around 1:36. Police said they received their first call at 12:45. Well, that's possible. You could have gotten multiple calls on the issue. So, the locals locals foiled the plot. Yeah. All right. So, no no no real new details here. Okay. Let's go back to this. Yeah, there it is. Arb Ranger V from Vendetta. That was it. Uh, another Okay, so this is ASML.

As for the company chief executive, let's see here. What do we have here? 42-y old company. Oh, this is just going to be talk about how they have teamwork. Competitive global complex drawing physics. Our customers were asking themselves, if I only have one supplier, am I okay? Trust is essential. Our profits will grow, but we're not uh going to abuse the situation. ASML supply chains. The more complex the products become, the more advantage we got in terms of competitiveness.

Well, sure, because they have the supply chains already established. We understand some technology may be restricted for obvious and legitimate concerns. Blah, blah, blah. There's no real color in this. Nope. Nope. Nope. No color here. Okay. Uh, let's go take a peek then at the suits. See if they have anything fun for us. Oh, let's see. Okay, OA, we got Sock Jen. Let's see what they have. Sock Jen has us the great bull bear debate.

Oh yeah, let's pull that up. Quiet before the storm. Okay. All right, let's see what is cooking. Pull that up. Pull that up here. Give me a sec while I pull that up. Let's go. Listen to this for a sec. >> Memory chips. >> Oh, is that Sarah? >> Technology, the place, the parts of the economy that are booming and keeping growth really strong overall and keeping the market high. two things. Um, >> we'll trim that armor >> a financial conditions index both with and without equity market factors.

If you exclude where the stock market is, then you are actually quite tight based on the last couple of years experience. So, dollar's been strong, bond volatility is up, obviously yields are up. The place where it could all come together or not is the credit market. So, credit spreads have started to widen out, but they've not done so in a way that really seems like it would impinge on the main investment, you know, capbacks in terms of >> All right, sorry.

Where were we? Uh, it's hard to see a store coming in currency markets. Let's see here. We all know that when it's this quiet, something is bound to happen. Uhoh. Uhoh. I'm not naive enough to think that Thursday's international investment flow data will be the catalyst. But I do think that the current calm conditions are partly due to the fact uh that while the US has seen the biggest upward revision to 2027 growth forecast of any G10 economy, the US's administration's desire to avoid a strong dollar puts pulls in the opposite direction.

Okay. Oops. Let's see. Hard to see how the dollar could fall very far while the US is the strongest economy. But if high inflation does damage US growth, it's already damaging sentiment. Then the surprise may be that. But if we break out of the current claustrophobic currency ranges will be the direction of dollar weakness. Well, certainly if we reduce some of these rate cut or rate hike expectations. That's it. That's interesting.

Something is bound to happen. That's all they're going to leave us off with. Well, that's lame. All right. What do we have over here? This is not the big top. This is not the big top. That's funny. Rate shock. Fed rate hike. Diesel price shock. Historic hedge fund blow up. Sentiment is increasingly bearish and valuations reflecting macro shocks. Sentiment increasingly bearish. Yeah, this is when you go buy. Yeah, look at that.

The bears. So sentiment we are right here. So we are as bearish as this was liberation here. It's going to be a little harder to write. It's so tiny. They gave us such a tiny chart. Lib liberation was here and then war was here and then you can see where we are now. War and then Now, now, here we go. This gives us a little bit of a view that's a little easier to look at. There we go. Yeah, look at that. It's going straight up.

I don't really want to cover them up. Okay, so that's bearish sentiment. This is uh Fed tightening. Yep, we saw that. Diesel shock. Wages have risen twice as much as diesel since '08, but crack spreads can drop fast. Negative 60% in two months in 2022. That was after Russia Ukraine. So basically, they're they're trying to argue that uh you know, don't panic over crack. Don't panic over the crack. Oh, what is this talk?

See Aean, some conjecture about this our White House announcement today at 2:00. Some believe it might be related to an announcement of a steel plant in Iowa. Do you have much? >> Yeah, I have from a White House official just a short time ago that the president will announce the largest steel plant in American history uh to be built by Msabi Metallics uh in Iowa. Uh they say that Msabi recently invested $2.5 billion in a brand new 7.5 million ton per year iron ore mine in Minnesota.

That was the first new mine uh in the iron mine in the US in 50 years. So the president is going to use this opportunity to underscore >> accuser almost down at 735 again down about a percent. All right. Fed will likely stay behind the curve. Wage pressures half of 2022. So that's bullish. Inflation reverts in Q1. Yeah, this is the bull. This has to be the bull case. P caucus cuz this is like this is feeding right into my confirmation bias here.

Uh I need higher volatility in a yield chunk. AI productivity not specul AI maybe productivity real sales per employee is at an all-time high Xtech as well labor productivity trending higher right all boom end with bond shock yeah I believe that level of bond yield has rarely predicted shocks okay uh I don't know about that because what we were looking at yesterday is it's the rate of change is different I Does he say they said level on purpose?

Okay, that's fair. Okay, I could see that rate of change of bond uh can cause shock. We saw that last week in the 16 to 16 cases of um yields moving this fast, breaking something, right? Okay. Okay. So, rate of change is different than level keyword level. Okay. Long-term short-term changes in yield create credit events. There you go. Yes. Short-term changes. TTP, uh, Silicon Valley Bank, Rich County, Housing. Those give you the little spikes.

SP basically spikes break things. Okay. Not necessarily entire eco. I think that's probably the way to look at that. Okay. Yield long-term yield follow nominal growth. Right. But so if you have negative inflation, so deflation, you could actually have yields come down and have an economy grow. That's fine. Fiscal, capex, tech driving above trend. Yep, makes sense. Seven out of 10 are seeing real sales per employee rising.

That's back to the AI productivity argument. Allocation, this is their take. 60% stocks, 20% commodities, 20% fixed income. Nah, bro. Nah, bro. 85% real estate in low supply hoods. 15% cash and ston. Okay. Buy midcycle hike. Yeah, I I agree with that. I agree. Uh with this okay long commodities they're long copper geopol debasement. No, no. Bull peaked J. It was like Feb 2 20. Well, on Wars pick JN 302 26 and then I don't really have an opinion on copper. big turning point, free cash inflection for hyperscalers, aka ROI, uh, or I should say return to return slash ROI on AI in 2027.

Agreed. Cyber agreed. fiscal less um I don't think this cycle is a uh fiscal concern cycle. It's bad but not the problem now. AI is the focus. Okay. Look at market breath. Yeah. Yeah. There's Well, I mean there's very little that's up. Everything is collectively down, but we could look at that in a little bit. We'll go to the greed and fear pages and you can see it here. I'll pull it up right now. Hold on. Alazier has some updates.

Okay. Prepare for the worst case scenario from new US attacks, warns Iran police chief. Told officers to prepare for worst case scenario from renewed attacks. We must anticipate and be prepared for the worst case scenario. This is more negotiating. The Iranians are like, "All right, guys, buckle up. We're going back to war." This is so classic. It's exactly what you would say right before a deal. Starfire strength. Wow.

Yeah, the new highs. Nothing's basically hitting new highs. Oh, look at that. Oh, wow. Yeah, dude. It is off a cliff, huh? Really? Just in the last two weeks? Yeah. People are pissing themselves. People got wet panties. We're like so close to all-time highs, too. It's like this is ridiculous. Bees may have deflated with rising bond yields, but equity is expensive relative to the long bond. Sure. Sure. The um equity risk premium is low.

AKA in in English in English rising long-term EPS expectations sustaining valuation. Yes, aka growth. Whole economy profits share GDP greed inflation. Greedflation. What is this? I don't really understand. whole economy profits domestic non-financial growth as a share of GDP. Oh, okay. In in other words, as a percentage of GDP, how much are companies profiting? Okay. Yeah, that makes sense. Yeah. Basically, pricing power due to uh inflationary expectations.

SpaceX opts to end Starship's first orbital mission hours earlier than planned. Okay, there goes the stock. Ah, it is down. It's actually not that bad, but that's probably why it it fell. I just saw that note. Tesla down three. Boy, we're going to have a violent rally once this deal comes through. Rampid oil inflation. Let's see here. Despite low cost push inflation, prices have surged. Profit baby. Chinese credit. Okay.

Bull market will end, but why and when? Equity valuations still look stretched. Stocks still look expensive relative to bonds. Yeah, relative to bonds. Uh what could pop the bubble? And tightening cycle has started and 11 out of 14 times it ends in a recession, which is more than half. The biggest risk is that the Fed discovers or thinks it's behind the curve. Yeah. Right. I I I believe this because if Fed is convinced uh they're behind, they may uh hike too aggressively.

Uh Greenspan hiked too aggressively. final hike was the straw that broke the dot bubble and in mid 90s they hiked from 3% to 6% then backed off and cut to 5.25 because they went too far. So where am I going to put this? right there. Breath is very poor. Never have stocks owed so much to so few. Yeah. Yeah. I mean, we just saw that on the greed and fear page. Technical measures of breath are deteriorating rapidly. Yep.

Companies taking advantage of this to boost profits. Fine. Okay. Okay. It's an interesting piece. That's a cool color there. Good. Good. Good. Would you buy now if you were all cash? Buy what now? Real estate or stocks? I guess you can answer both those. Yeah, I' I'd buy real estate. Uh, but I'd buy a little, you know, I don't think there's anything wrong with having a little bit of ston at these. I' I like buying the dip in the stons right now.

Mostly because I think we're going to get a deal. And then people are like, "OH MY GOSH, WE GOT A DEAL." OH, TREVOR, it's going to be like it's going to be like April 2.0. That's when you have to start worrying about the bubble. All right, let's see here. So, let's go look at this one. Okay, we already looked at that one. Okay, fine. What else? Let me go find out. Let us go see what else we have. So that was some little bit of color from the soccer Jenna.

Okay, let's see. Goldman, what do we got here? Greet Fear. They usually do a good piece. small. Let me see what else here. PT. Oh, something's got to give. Ooh, let's go take a peek at that. All right, Kevin, did you realize Wendy's is going bankrupt? I don't pay attention to Wendy's. You could probably look at the financials and see it coming though if that's true. But I don't know. I don't know. I don't pay attention to Wendy's.

I I I don't I think a lot of the food companies I don't I honestly I don't understand how they survive with the margins and the inflation that the economy is facing right now. I mean, look at like the bailout financing Red Robin got saved their butt. Cheesecakes operating on like three or four percent net margins. It's crazy low. The stock's actually done decently probably because they've avoided that fear of you know going bankrupt and then people are rewarding.

It's like oh they didn't die but it's like from a fundamental point of view stupid. All right. What is this? So this is something's got to give is what they're calling this. Uh, you've got last week mirrored. Okay. Two breath metrics triggered unseen since 2000. Oh, let's see what this is. Under 50% of the S&P 500 are above their 200 day moving average. And there are more 52- week lows for than highs for nine days straight.

Wow. Both with the indices near highs. Who blinks first? Like 2000, could breath and equal weight improve while the SPX sells off? Short-term direction hinges on Iran deescalation. Correct. We all agree with that. While a deal won't fully reverse recent damage. I don't know about that one. Uh hardest hit sectors. Discretionary financials reads utilities will likely rebound while tech AI lags. I don't know about that.

Big picture credit markets show increasing signs of stress. CCC spreads have widened. We are seeing divergences in high quality tech. Widest since 23. I don't know that that really matters. 2023. Let's see here. Breath keeps widening. Last seen in 2000. I highlighted that. Not seen since 2000. I saw that. What happened in 2000? From July through February of 2000. The S&P 500 or sorry, the SPW. That's SPW. SPX is the S&P 500.

SPW. Is that the equal way? I can't even pull it. Uh, SP dub is the equal weight. Oh, okay. All right. I usually look at the RSP for that. RS Pisle. All right. Here you go. There's your equal weight. So, if I look at this on a zoomed out basis, even equal weight has been rolling over. So I could go to SPY, right? S&P 500's actually elevated whereas the equal weights rolled over a bit. Okay. Then reversed possible. Okay.

So basically saying is it possible that the equal weight rises as as the S&P 500 sells off whatever. Who knows? Still no high correlation selloff. There have been 213 days since the last 80% plus down volume day. Average calendar sees 21 such days and we have never seen a year with fewer than five. While the constant rotation has kept us from seeing a correlation one-off, we still think the clock is ticking and we should see one sooner rather than later.

Basically a big red day aka big red. I mean, geez, today looks pretty dang red. May maybe maybe that's what they're writing about. By strong intraday correlation, crude has traded sideways since March while 30-year yields have risen. Yeah, and this is the weird thing. Oil uh sorry, oil Yeah, oil sideways. Bonds up. Uh, okay. Discretionary hardest hit areas. Let's see. Uh, discretionary could rebound the hardest. Oo, if there's any sort of resolution in the Middle East, it's also the group that likely rebounds the hardest.

Interesting. Bounce candidates. Burlington Code Factory, Golf, Eat, Yeti. Interesting. Oh, there's a real bet on the consumer. Breath divergence keeps widening. It's no secret that breath has been weakening for the last couple months. Who blinks first? Okay, then they just give us some charts. Still no high correlation selloff. Yep, these are just all charts on what they've already talked about. Okay, that's interesting.

All right, let's go back. Let's see. How are things cooking? Apple's still holding on to green. Nvidia's data p Oh, look at the bounce within 31 cents. Whoa. Whoa. Oh, man. Okay. Then Alazer. How's Alazer cooking? Al Jazer. Okay. Uh to meet mediators. Meet mediators in negotiations Monday. Qatari delegation. Mediating team will discuss the latest proposals in the current situation. There are no plans for direct negotiations with the United States.

That's fine. People already expect what to expect. All right. Let's see what else. Let's see if the journal has anything today. It's just a quiet quiet Monday. Everything's red. Top AI researchers call for urgent oversight over self-improving systems. They're taking over. Possible next house intel chair aims to probe nakedly corrupt dealings. What politicians corrupt? Say it ain't so. What did Sarah say? >> Plus, could mortgage rates actually be headed toward 9%.

We'll talk to one housing economist who is warning about just that. And we'll get to >> what a lie. That's the first word. Could mortgage rates go to 9%. That's hilarious. That is such a And then they go to commercial. That was like the perfect point to turn the audio on for. Lol. Uh, okay. Iran pressed to make nuclear. Okay. Here's a little bit of color on Iran. I want to take a look at this. This is what we saw, I think, with the uh what's it called? uh the IAEA over the weekend.

Every household in this rural town gets $10,000 if a data center gets built. Wow. It's like you get a stimulus check if you let us build a a data center. It's a big stimulus check. Okay. Iran. Okay. What do we got here? Tried to go to Wendy's a few times. They keep the inside closed most of the time because they don't want to have to clean the tables. Lazy bums. What is this? Super random. Do you watch Oblock? The Runescape guy.

I've se I'm pretty sure I've seen shorts of his his pking. It's I'm just like, "Oh my gosh, that guy's good." Now, obviously, I mean, it's the selective clipping, but still, holy smokes. It's really impressed and his um his ego about it too is hilarious. Like his commentary just makes it hilarious. Uh but anyway, peace negotiators are pressing Iran to make uh concessions on its nuclear program. Okay. Mediators involved in talks say it's a longshot bid to get Iran to plate Trump on issues he cares about most.

We don't like the talk of long long shot bids. Trump has tried to reframe the conflict around his original war goal of preventing Iran from obtaining a nuke. In a speech to the UN, talked about annihilating. Little indication they're ready to talk about the nuclear program. Well, I don't know about that. This weekend, we saw some. No, I haven't played old school in a while, but uh I play a little bit of Dragon Wilds with Jack.

Iranian leaders are also confident that they can withstand a long-term US blockade. Yeah, I I don't know about this. How long ago is this article written on Sunday? Iran's foreign minister said Iran was open to negotiations, but said tan would respond to any kind of aggression. It's up to President Trump stayed. Uh let's see. Okay. Qatar is one of the main countries passing messages along to make peace. The conflict is very complex.

No clear master strategy. Okay. Trump itself is skeptical. Diplomacy will work. Told staff he sees a renewed bombing campaign is likely. Yeah, this is always what they do. Right before a deal. H US has become more confident in its naval blockade. Right now, a concession uh at this time by any party would be considered an expression of weakness by the other. Makes sense. Iran wants to make a return to the memorandum of understanding, unfreezing billions in uh Thrron's money.

The agreement has widely been seen as favorable to Iran. Trump no longer wants to return it. Oh, that's a little bit of detail we just got there. There's some new detail. Trump no longer wants her. Oh, so now right before the election, TRUMP OH, THERE IT IS. Now we know this is exactly what Donald Trump doesn't want to do is seeing come across as giving Iran some dollaras some greenbacks right before um right before the election.

Aha. Okay. Peace tone willing to make a compromise. However, the official said Iran would be given assurances that Israel wouldn't attack again. That's another problem. Ah, look at that. all the way buried at the bottom of the Wall Street Journal article, you get a little hint here on what the negotiation is clearly toying around about cuz Iran said that they're now open to IAEA negotiations or inspections rather, which is very interesting because we have not heard that before.

It appears now Donnie T wants to make sure they don't get the Dallas. Okay. That's very interesting. Okay. How are the sticks? How are the things surviving? Kids are barely holding on. Barely. Okay. Next. Okay. Next. Capital. Okay. What is this? There's a capital piece we can look at. We'll see what that is. Dalahas AIO. All right, let's take a look at these two here. Let us find out. Here we go. Many fintech companies are offering higher yields on deposits in the banking sector.

Yeah, that's that is that is true. There's Revolute, SoFi, Wealthfront, FDIC national averages. Yeah, it's just pathetic. Well, I just figure if you're going to leave money there, why pay you a yield? All right. Uh, let's see here. By the end of the first quarter of this year, the difference between US residents. Okay. Uh recent article world here observation exchange rates dollar uptrend the impact of the AI revolution on domestic investment across the world.

Partial unwinding of globalization blahy blahy blahy. The more the world invests in the US, the stronger the dollar gets. But is the tide turning? Oh, that should be a square. There we go. That's it. Oh, that's boring. Boring. All right, let's listen here for a moment. >> At the open, we had Service Now the biggest S&P lagard off of these session lows. Squawk on the streets back in a minute. >> Service Now down three and a half right now. >> Let's try the doomers.

The doomers have anything for us? A quiet day. Quiet red. Waiting for an Iran deal. It's just not nice. >> With the Commonwealth acquisition, that wasn't just a scale acquisition for us. That was about changing the culture of our firm. That is a forwardleaning firm that delivers an experience to advisers that is differentiated in the market. >> Yeah. You know, we we didn't acquire the company >> because we thought it would help with profits. >> We acquired the company because our culture actually sucks.

And we thought if we acquired the company, you know, our culture would suck less. That's basically what I just heard. That's sad. All right, get off of that then. All right. Entire yield curve is oversold. See what this guy's on about. Why is it not going to load? All right. Whatever. We got We got the point, guys. Buy the dip. It's oversold, man. It's oversold. Inversion. We're not close to inversion. We're at like 30 bips.

Iran says it won't soften demands. That's fine. How to beat oil. JP Morgan traders flip to bullish view ahead of jobs report. Ah, interesting. Do they JP Morgan has flipped its views? Oh. Oh. Oh. Flipped its Yeah. too bullish from neutral saying economic data and earnings will underpin a persistent market boom. Damn, that's my opinion. Why are they copying? They've been watching too many meet Kevin videos. Stronger than expected economic activ.

This is following the uh PMI report we got last week. They dropped their cautious stance leading up to Friday's job report. more favorable setup for markets. Yeah, but you need the Iran deal. Let's see here. As the calendar flips to October, historically the most volatile month for stocks, Wall Street is grappling with a series of risks. Short-term catalysts include jobs print. Let me go see what the expectations are for that. because this should be I I don't know probably 50k at least.

Let's go find out. It is Let's see. Jolts report comes out tomorrow. Nobody cares. 80p expectation this week. 74. Oh, that means we won't get an ADP weekly. Ah, okay. Let's write that down. No ADP weekly, 74K on month for September. That's interesting. They're issuing that on the 30th. The month isn't even over yet. Okay. Challenger job cuts, initial jobless claims, nonfarm 87K. 87k or sorry non-farm payroll is at 90k.

Private payroll is 87k. Wow, that's better than expected. 90k non-farm 97k private expected. Oo, juicy with 0.3% on wages. Okay. What about participation? Is there 4%? No. Stable. Okay. All right, so that's jobs. Economists estimate the US employ Oh, it literally says it right here. It's okay. I got extra detail anyway. Within technology, there is likely to be a broadening for max 7 AI theme is likely to persist. And we like owning the theme.

That's fine. We like tech in the near term. Okay. All right. Huh? Okay, fine. What else? Uh, idea. You know, I've seen so too little I feel like on Israel for because we, you know, they really need to be part of this otherwise you're going to have the same problem as you've previously had. How is How are we doing over here on Elbondos? Wow, dude. 6.6. Oh my gosh. It's like, bro, how are we at five and a quarter on the 10?

This is nuts. Uh 1066 on Brent. Oh no, the devil's number. Last time we had a devil's number that we talked about on the channel, it was meta at 666. Oh, look at the cues around the line. No way. Right there. Oh no. Oh no. You know what I what I hear? I think I'm hearing >> reaming spree selling spree triple reamed. What's sad is now in the days of AI, people probably think those are AI. >> Big L. >> Don't sue me, bro.

Fetch me. I love this. Yeah, look at that. Almost down half a percent over under the 130 or 735 line right now. Not ideal. Need deal need a deal. UK counterterrorism police five men are being what? They're releasing them on bail. What? What? No, that just seems like they seem like the kind of people you wouldn't release on bail based on what was going on. I just am I reading this right? I guess so. Wow. Okay. There's another note right here.

It says uh considering if individuals could have been knowing or unknowingly working on behalf of a foreign state. Let's listen here from a >> you know worst case scenario being you know deaths of I think a billion people like Bill Gates just said or it's going to kill us all. When you have things like that out there in the ether I'm not quite sure what you say to sort of ease some of those concerns completely or take them off the table.

Well, this is a market that's very good at taking narratives and running running with them. The one this morning seems to be what can Meta do with a new enterprise product that it's offering? Basically, all these software stocks, I mean, hey, Meta is falling too, but Salesforce, Workday, Data Dog, Service Now, all of them are falling this morning. How should we think about this new business plan from Meta to get more into an enterprise offering around its AI products?

Well, I think what's really interesting is that this really shows how Meta is now sort of the center of gravity in the market. MongoDB is down 20% right now. >> Reviews have been so strong, adoption has been so strong. >> Oh, and the cues just fell off the cliff >> moving on this product, whether they think that they're going to be disrupted by it or if they're going to see some kind of growth tailwind related to it.

So, the fact that Meta is moving into enterprise software, it's sort of reminiscent of the so-called SAS apocalypse that we heard about earlier this year when you did have all these new AI models coming out. People were concerned, are people going to be uh, you know, replacing these legacy software providers with these new AI native products, whether it's from Anthropic or OpenAI? But now we're seeing Meta is sort of one of those companies that's in the pole position and sort of able to make waves across the market >> and it's hired someone from a different tech fund in order to do that.

MongoDB CEO CJ Desai Meta has snapped up for this project. MongoDB falling 20%. You can see there Ryan is is the talent war still alive and well in AI. >> It certainly seems to be that way. There was a lot of sort of surprise about this news this morning. MongoDB has an investor event tomorrow and one of the analysts I was reading said, you know, we there was a lot of things we were expecting out of this event and a CEO change was not on the list.

So certainly a big surprise there. Some people say, hey, maybe this is a buying opportunity for MongoDB. But certainly just speaks to sort of the level of disruption that's out there, the level of concern. You have CEO changes, you have potentially new products. What does this mean for growth? What does this mean for everybody's outlook? All that stuff is very much in the air. And that's why we're seeing so much volatility both uh to the upside and the downside.

And I guess that you just can't enforce non-competes these days. Ryan, thank you so much for joining us. That's Bloomberg's Ryan Vistella on the latest around tech and AI. Coming up, precious metals are selling off as the US Iran standoff over the straight of Hormuz keeps energy costs higher. We're going to discuss with Nikki Shields of MKS PAMP for our metal spotlight. That's coming up next. This is Bloomberg Open interest. >> All righty.

All righty. Let's uh let's uh summarize some of uh all this crap going on here because there's a lot and uh we've gone through a lot already here. So, let's uh let's go through uh what's cooking. What is cooking this morning? All right, here we go. Well, markets are pissed and you've got a lot of institutional analysts suggesting something's about to break or at least give is the wording. We're going to go through exactly some of those in just a moment.

But let's also get a quick catch up out of the way of where we stand in the face of terrorism. Uh the United Kingdom has decided to release its five terror suspects on bail. That was not on my bingo board. Uh but when it comes to Iran, which was really what we wanted to focus on, Aragoti is meeting. He's the foreign minister of Iran. He's a little bit more of a hawkish guy compared to the president of Iran. He is meeting with mediators today.

The United States will not be present, which has some people nervous, although we, you know, this is my anticipation that Donald Trump has sort of already kind of put his demands out there and now it's on negotiating a response from the Iranian side. Now, the Wall Street Journal at the bottom of one of their articles gave us a little bit of a hint as to what's left in this negotiation because there are three core things that Iran wants.

They want the naval blockade gone. They want their uh seized Iranian billions of dollars uh and uh they want sanctions relief on oil and air travel or otherwise, right? So that way they could actually keep their economy functioning. Uh the United States wants nuclear inspections and this well at the end of last week we heard the Iranian president say, "Hey, look, we're open to nuclear inspections." And then the IEA IAEA came out and said, "Hey, we could restart inspections pretty quickly.

We're ready." They got all perked up and excited. But Donald Trump said while the Iranians agreeing to open the straight of four moves within seven days in response to the blockade and sanctions and monetary relief would have been an acceptable deal last year. DONALD TRUMP NOW SUGGESTS I want more. Basically, the Wall Street Journal is hinting what that more is. The Wall Street Journal says right here that Trump no longer wants to return it in response to the unfreezing of billions of dollars of Tron's own money.

I think Donald Trump is looking at this from the point of view of I don't want to look like Obama. Obama gave them their own money back. I don't want to be that guy who gives them their own money back right before the election. Uh so, you know, it feels in a weird way like we're getting closer. I know that sounds crazy to say, but I mean, when we hear good news on the willingness to have weapons inspections, uh, get Pickax Mountain inspected, gosh, that would be a game changer.

That' give me a lot of confidence, uh, that, hey, hopefully we're not going towards the direction of trying to build a bomb. And what we're talking about now is releasing their own money back to them. That's the hold up right now. It gives me confidence that we're closer, but it certainly doesn't feel that way, right? It feels a little delusional to say that on a day like today where the market is falling off of a cliff and I understand that.

I get that. But not only that, look at the 10-year. THE 10EAR IS UP 7.8 basis points. We just shot through five and a quarter. The entire market, I mean, the 2-year yield is also up eight basis points. The yield curve is flat at 31 basis points, but bro, the two, the one, and the 10-year Treasury are all up eight basis points today. So, I like I get it. It sounds like maybe I've gone full Not to be offensive regarding that word, but it sounds like, you know, like Wall Street Bets would say, this guy's gone, you know, full off the looney bins here. when yields are up nine or uh eight basis points, the market's falling off a cliff.

Uh by cliff, we mean the 735 line right here on the cues. Well, it looks like we're trying to come back to it. Boy, that was a little bit of a sharp decline. And then to say that, well, it seems like things are actually getting a little closer, but it does seem that way when we actually look at the details. Now, when we look at what the institutionals are saying, it's the following. we say that something has to give when it comes to the levels of where things are right now with yields, but not necessarily just the levels, it's the rate of change.

Uh, and this is where we look at a few sock gen pieces right here. So, let's go through some of these piece by piece here. First of all, it is easier to be bearish today than it is to be bullish. They argue that this is not the big top yet and that markets are overall really bearish right now, more so than what we've seen historically. I marked a liberation day right here in terms of the bearish sentiment. The higher this line is, the more bearish people are.

The initial war sentiment right here and where we sit right now. So, we have been straight up on bearishness on this market. The market's relatively bearish. A lot of people get nervous about diesel crack spreads. And what's interesting here is Sockgen actually reports that crack spreads can plummet really quickly. Sometimes negative 60% in the span of three months. So sometimes less of something to panic over. Maybe not something so incredibly bad and something that can recover quickly.

They also argue here that the Federal Reserve is likely to stay behind the curve leading now to this feeling of peak hawkishness and we are seeing true labor productivity that has trended higher since 2022 with retail sales per employee at an all-time high for the S&P 500. However, the level of bond yields as in the height of bond yields rarely predicts any kind of shocks to the economy. What does predict shocks to the economy were like what we saw last week which is that something always breaks.

There's always when we get these spikes in yields that first derivative the rate of change when those yields come up rapidly just like they are right now historically 16 out of 16 instances as we talked about last week something has broken. Here's just another example of where you could see those spikes. How you got to the Orange County uh uh default that was in the mid '9s. That's when the Fed had to U-turn and go back to oh we hiked too fast, we went too far.

Uh the uh Tekken media top. Then you had peak housing. You had Silicon Valley Bank. And then of course we've got this other sort of rapid rise over here in yields. Uh and so this could lead to something breaking. So basically a credit event though they argue that the underlying economy is still seeing increasing productivity. And here are some of the themes that sock genen brings up uh which is in addition to this note right here that while right now uh overall this feels like a quiet before the storm they do say the US economy has seen the biggest upward revision in 2027 growth expectations and so while it feels like there's a lot of bearishness right now the underlying economy seems to be holding up uh at least on these aggregate levels.

When you look at aggregate labor force productivity, when you look at aggregate um you know wage gains, when you look at aggregate retail sales, people continuing to spend money is actually all pretty remarkable. Now, in fairness, there was a jobs report coming up Friday that a lot of people were looking at going, "Huh, yeah, well, is it really going to hold up?" Well, let's take a look at some of the expectations for that and then go back to Sockgen's piece here.

So, on Friday, we have ADP uh or sorry, on on Friday, we have the jobs report that's expecting to come out with 90,000 non-farm payroll jobs uh on Friday. That's well above the pace of somewhere around 20,000 per week, which we've been pacing at probably closer to about 15,000 per week on average with the ADPs. And so, at 90,000, you're sitting at around 22 23,000 per week, which is pretty good pace. Private payroll is expected to be 87,000 and wage gains expected to be.3.

So far, as much as we can believe the government numbers, that seems pretty good. ADP weekly won't be issued this week because we'll actually get the monthly ADP report on Wednesday the 30th, which is weird because it's still September, but we're going to get the September data. Anyway, we're expecting a 74,000 read on uh the monthly for ADP on Wednesday. So, two jobs reports this week's uh the private read on Wednesday and that'll be at 5:15 in the morning.

Is it 5:15 or 5:30? It's one of those in the morning. It might be 5:30, but anyway. Uh and then on Friday, we'll also get the jobs report at 5:30. Yeah, I think that's what it is. It's 5:30 in the morning for the jobs report Friday and then 5:15 for ADP on Wednesday, California time. Anyway, going back to so those are the some of the catalysts this week that should reiterate that the economy in on an underlying basis is doing well at least from the jobs point of view.

This has now led JP Morgan to copy your boy meet Kevin and flipping bullish on the view of US stocks predicated obviously on a deal with Iran. You need a deal with Iran. Until you get a deal with Iran, you got pain. We already know that old news. But JP Morgan flipped to bullish from neutral, citing stronger than expected economic activity, dropping their cautious stance, probably because of those PMIs that we got last week.

Uh October is a historically is historically the most volatile month for stocks and the AI theme is likely to persist. Going back to stockgen here, here are their allocation opinions. They argue that you could be right now 60% stocks, 20% commodities, 20% fixed income. Now, I don't blame the take on stocks. I'm a big fan of buying this these dips that we've been in. You know, we've been buying the dip at 700, buying the dip at 710, buying the dip at 715 on the cues.

Uh even the 735 line by the dip. You know, right now we're at 732. So, it's sort of like a, you know, it's a DCAing process, I suppose, uh, leading into a hopeful deal with Iran. If we don't get a deal, we're all screwed. But anyway, uh, my opinion on allocation is that this is still a little bit rich. Even though I'm bullish on the stock side, I I think it's a little bit rich stocks and commodities, especially copper, very correlated to the state of the economy driven by the AI spend.

So, I actually feel like these are very correlated bets right here. stocks and commodities. If you're looking at copper, which they do mention copper right here as one of their longs, uh I'm I'm as you know, more like 85% real estate and like 15% cash and ston. Uh and that's not to be overall bearish stocks. I think over the next six to 24 months this will look like a buying opportunity in the stock market. But I do think that the risks are greater that the stock market is is closer to a top than uh than the low build real estate area.

But that's okay. You don't you don't have to believe that. I think the the low inventory low building real estate areas are closer to their bottom. Florida and Texas still have some work to do. But anyway, uh they argue by the dip on the midcycle hike. I agree with that. On long commodities, they're long copper. I don't really have much of an opinion on that other than I think it's correlated to AI and they say buy the debasement trade, so long gold.

I personally maintain gold peaked under Worsh and Worsh is not going to be a money printer. There are a lot of people that believe Worsh is going to be forced into quantitative easing. That's possible. But I think he's going to be the guy that looks us in the face and says, "I got a task force working on this. And there's going to be a lot of suffering between crisis and quantitative easing because it's going to take a lot to convince this guy to print money.

And that's going to be hard for gold. This is actually just deflationary, not inflationary." But anyway, cyber security should continue to compound. Nvidia obviously had an announcement this morning on software for uh Agentic uh supervision. I I really think the cyber security play should be all over that. Uh so obviously Nvidia also pitched their buyback which has helped Nvidia get over the 227 line but uh Stockgen believes we could see a return to ROI for uh free cash flow for the hyperscalers in 2027.

We were actually analyzing Microsoft a little bit this morning and some of the strengths and weaknesses. Uh, and there are some hints inside of the Microsoft analysis that we were doing this morning for what's going on with um for other software companies. Now, when it comes to rate expectations, it's it's um worth looking at some of these rate expectations. So, the Federal Reserve unfortunately, and let me pull this up right here.

The Federal Reserve is unfortunately well I should say bond markets on behalf of the Federal Reserve are unfortunately still pricing in 3.83 rate hikes between now and next year. Uh which is not great. Uh that would mean we are pricing in nearly five rate hikes. I mean the economic data that we've gotten has been pretty solid. So I I get the desire for rate hikes. But I will say, you know, the odds right now from the market are that we are definitely getting our next rate hike before January of 2027.

So, we're going to have another one, whether it's October or December is about a 50/50 take right now. But if you want to take the short on that and you think, hey, Iran's going to strike a deal with the US or Trump's going to uh paper over a deal. And you want to bet that we don't get another rate hike this year? Here's a place you could do that. Take a look at this. Cali next Fed rate hike with $7.4 million of volume.

You could take the no on before 2027. So next Fed rate hike before 2027. You could actually take the no on this, which right now is trading at a 100% potential. Uh, so, you know, market's kind of arguing, hey, we're definitely going to get a rate hike. Uh, you could also jump on over to number of rate hikes. This would be another place to do it. And, uh, you could say exactly zero, which it looks like this is just listed at no.

We should really have the opportunity to bet here, but exactly one rate hike has a just a 6% chance. Uh, but that's because we've already had one rate hike. So that's probably why um we've got exactly no zero because this is not additional rate hikes on this one. This betting market only $79,000 of volume. So a little bit lower over here. I generally like them when they have more volume. Uh so be careful because sometimes small small bets even on low volume plays can lead to really big swings when you're on these markets.

But you could even make a bet over here about Treasury yields. Uh not only where they stand for the rest of the day, which I think is a little bit more speculative for the day, but where they stand for the rest of the year. Let's take a look at where they the betting markets are placing a rate hike odd for October. So for October right now, Fed funds, we are sitting at a 68% chance of a hike. This would put you right before the election.

This might be an easier place to take a no if you think that the Iran deal is going to come because you've got 3.7 million in volume and uh you could take a no over here which right now only has a 32% shot. Markets are pricing in about a 50% shot. So there's a little bit of a disparity here where we're pricing in 1.5 hikes between now and the end of the year. market's more confident that's going to happen December 9th for um uh for the actual bond curve.

Let me get you the uh real numbers here. So, if I pull the estimates I've got uh or yeah, I guess that's actually it's it's somewhat similar. It's a 70% chance of October 28th. Uh but that's not fully priced. December 9th coming in at 86% chance. uh uh that you will get that second hike and that averaging out there for to about 1.5 hikes expected for the rest of the year. So I think a lot of this is coming down to what's cooking with with Iran.

But let's keep looking at this sock genen piece. Uh I do want to take a quick moment though to mention that if you want to join uh those betting markets and make a bet, you can always use that link in the description below ki.com/rme. They're an affiliate and sponsor of Reinvest. You get 25 bucks when you sign up for Cali and make your first trade. Uh I always like to say look for the bigger volume. I remember I actually got a letter from Predicted that I have some unclaimed money over at Predict back when I u played with the betting markets back in like during the COVID days uh and and even going into the governor campaign in 2021.

And it's really interesting because Kouchy and Poly Market have really kicked their butt uh and and I think Kouchy uh just overall very nice uh user experience. But anyway, go check that out as a sponsor of the channel. Just be clear about that. Okay, let's go back now to uh this piece on from Sockgen. So that's right here. Sockgen arguing that the big turning point here is essentially ROI on the capex trade. This morning we're looking at Microsoft.

They still for the year have about $15 billion of free cash flow, but one thing that was really remarkable about Microsoft was that they don't actually have enough money to pay their bills right now for the year. Now, their cash flow will offset that. But I find it really remarkable that if I jump into their balance sheet, let's see here. Here I got their income statement, balance sheet right here. I've got about $95.8 billion in deals or bills, not including their deferred revs.

So I've already subtracted their deferred revenues, which means we are sitting at $95.8 billion in actual current liabilities that need to be paid over the next 12 months. And they have about $76.8 billion in cash. So, you're really relying on that free cash flow to actually pay your bills, which is kind of wild, frankly, for Microsoft. Anyway, continuing with the sock gen piece over here, the sock gen here argues that price toearnings ratios may have deflated with rising bond yields, but they say that equities look expensive relative to bonds.

Sure, and this makes sense, especially how much bonds have risen. What it's essentially saying is if we expect that the stock market is going to return let's say 7% let's just say and you could get 5% risk-free on the treasury your equity risk premiums only 2% there you're only getting compensated an extra 2% to take the risk on stocks why would you do that so in other words while price to earnings ratios are really low you are in a little bit of a pooper duper right now where unfortunately because bonds are so high it looks really desirable to go buy bonds right now.

That's possibly why we're seeing so much pressure in stocks right now because yields are indeed so high. The odds are something does end up breaking in the form of a credit shock. But does that take the entire economy down with it? Probably not. Not yet. And keep in mind, one of the reasons I'm personally positioning, I'm bullish on stocks, but with a smaller portfolio, is because I do think that when the economy goes, not in the next 6 to 12 months, but when the economy goes is really going to suck for the stock market.

Uh, but anyway, rising long-term uh EPS expectations, sustaining valuations, and this is true right now. we still have a lot of growth built into uh expectations for stocks. If anything, one of the reasons why you've seen a little bit of a slowdown in some of the memory names like a micron or SanDisk, well, that's not memory, that's nan flash, but in some of these related names, these more previously commoditized names that people are like, well, now this time's different.

One of the reasons you've seen them kind of soften a little bit is because well, you've got micronics coming up tomorrow, but there's this fear of, oh, you know, what if high bandwidth memory prices peak out in 27 and more supply comes on and and then all of a sudden, you know, you don't get the pricing power anymore you used to have. Fair. People want to see growth, but you are seeing a lot of growth at a lot of corporates.

In fact, you're seeing so much that Sockgen is calling it greedy. They're basically saying, hey, people have in high inflation expectations, so why not raise prices? So profits rising as a percentage of GDP, indicating that people are raising prices uh more so than cost pushing cost push inflation. Cost push inflation, here it is. Cost push inflation is this red line right here. That's what it costs you to make your goods and your services.

But what you are charging is the blue line. And so the more you see this spread right here, the more you see that disparity, the more companies will say, "Oh, well, this must mean corporates are being greedy." So anyway, the bull market will end, but when? And I agree with this. I I at some point the AI bubble will roll over and it's going to suck. And the reason I say it sucks and I always like to be really clear about that because, you know, I'm relatively high on the Bearbull scale right now, but I'm also not delusional.

Like I'm high on the bear bull scale because I think that all this this shock in the 10-year right now. Gosh, it's up almost I mean according to Bloomberg right here, it's up almost 10 basis points today. That's crazy. Yeah, 10 basis points on the day to 5.27 is the little buy line right there. That's crazy. Uh my take is that those sort of shocks create short-term fear, panic, the Iran fear. There's so much bearishness right now.

You look at CNN greed and fear for the uh breath indicator. To me, all of this is screaming opportunity. I mean, look at this. Your extreme fear on breadth. It's fallen off a cliff in September. Put call options indicate fear. John Bond demands agreed. But, uh, stock price breath, stock price strength at fear. The number of companies hitting lows on the New York Stock Exchange. Breath is extreme fear. Momentum is at fear.

You're in the fear indicator over here. Lots of pain. Basically, to me, those are buying opportunities. So, I I think you've got this buying opportunity that'll lead us into this beautiful, glorious, V-shaped recovery almost for the next 6 to 12 months. But that's actually what pushes us into the real bubble. That's the euphoria you set your trailing stops on and then you take your tendies off the top. Not now. And unfortunately, that's what makes me so bearish on gold because I think that Kevin Walsh is just going to cut rates, not print money.

That's my take. Like based on my studying of Kevin Worsh's history, he's a cut rates guy. He's a zero rates kind of guy. He is not a money printer kind of guy. And that has really big implications for well bullish real estate and bearish gold just by definition. Uh okay, why does that work? Well, because if gold is a debasement trade and they're not printing money and you're not debasing the currency, then that trade doesn't work.

And if you have disinflation that you're only fighting with interest rates and not money printing or worse deflation which is economically generally bad then what happens is bonds and bond market yields have to come down even more to compensate for the lack of money printing which actually drives interest rates lower than they ever have been before even at the zero lower bound of the Fed. So, in other words, you could go to zero at the Fed and you think, oh, well, that's the level.

No, market function, 10 year Treasury could go even lower. I know that's crazy to think about right now with it basically at, you know, the highest level since 2002. It seems a little loony bin, but that's okay. That I just always like to be as clear as possible with with my opinion. So, what could pop the bubble? Well, a tightening cycle has started and over the last 11 out of 14 times that has ended in a recession.

The biggest risk is that the Fed believes that they are behind the curve. Uh if the Fed is convinced, I wrote they may hike too aggressively. Greenspan hiked aggressively and the final hike was the straw that broke the dotcom bubble's back. And in the mid '90s, they hiked from 3 to 6% and then they backed off by cutting to 5.25 because they went too far. But you still had four years to go before you actually had a market crash.

So, it's not always a sign that they're, you know, you're you're ready to fall off a cliff immediately, which is good. Now, we did talk about at the beginning of the segment, something's got to give. So, let's touch on that. This something has got to give not only hinges on the direction of the Iranian deescalation, which we've talked about, but they also say the following here. Uh, we have not seen uh let's see, where is it? right here.

We have not seen two metrics since the year 2000 where less than 50% of the S&P 500 names were above their 200 day moving average. That's what we have right now. And there are more 52- week lows than highs for 9 days straight. Both of those issues have not been seen since 2000, which they argue is definitely a sign of stress. Now, they seem to be of the belief that something you could buy on an Iran deal would actually be consumer discretionary, buying names like EAT, Golf, Burlington, uh, and Yeti, which could all be uh beneficiaries of a big bounce back.

But we do have a risk of a big red before that, which given that this was, you know, posted over the weekend, who knows? Maybe that big red is is all the sea of red we've got in the stock market right here. On Bitcoin, mind you, it's really important we hold this line right here and we keep trending closer and closer to it. That is the bounce you want to see to get Bitcoin up to its 102 level. And uh broadly looks like we are Oh wow.

Now we are rejecting 735. Shows you how important that line is. Now perfect bounce on this line by the way on Thursday. And now we are rejecting it. So pretty important mark 735 if you don't have that marked yet. Okay, let's take one more peek here at the treasury yields just because it's it's it's so bad. It's almost like shod and fo, you know, it's like oh look at that. It's settled down again a little bit. 0.78. That's roughly where we were earlier in the segment about that eight basis.

Yeah, there it is. Eight basis points. 5.26 over five and a quarter on the 10ear. pretty freaking remarkable. And so with that, I have just one favorite thing to say. >> Oh man, your poor Kevin just lost lots of money. Oh, but that's okay. I am with you. With you. Oh man, your poor Kevin just lost lots of money. Oh, that's okay. I am with you. Here we go. Come on. Push it. Buy the dip. Buy the dip. Here we go. Come on.

Push it. Buy the dip. Buy the dip. Here we go. Come on, push it. Buying the dip. Buying the dip. Here we go. Come on, push it. Oh my god, what's happening? >> First of all, all this whining by Wall Street, it's making me sick. 140% of GameStop was short. GameStop was short. Short. You can't allow Wall Street to short 75% of the stock crushing companies into the dirt. Thousands of stocks into the dirt. Then when the individual makes money, everyone's entrepreneurs.

I have a kid who bought a house, paid $50,000 and bought a house. After decades of the shorts, you have to accept the fact that individual investors are playing the same game that you're playing and now you're losing. But here we go. Come on. Push it. Find the dip. Find the dip. Here we go. Come on. Push it. Find the dip. Find the dip. Here we go. Come on. Push it. Find the dip. Find the dip. Here we go. Come on. Push it.

Oh my god. What's happening? Here we go. Come on. Push it. Find the dip. Find the dip. Here we go. Come on. Push it. Push it. Push it. Find the dip. Here we go. Come on. Push it. Find the dip. Find the Here we go. Come on. Push it. Oh my god. What's happening? There's a lot of power in organizations online. Three million people can get together in a subreddit. I think it's really funny that the K-pop stock is going up and just affects the market in that way.

There's 28,000 people live in a Discord who are spamming rocket emojis yelling go to the moon.