Let’s Talk a Red Nasdaq Read (And Yellow Board)Everyone, everywhere, now an expert in momentum and mechanical buying...
I’ll Be Live - HERE - at 8:30 am Everyone’s invited to discuss what’s happening in the markets today. Here is the daily PDF if you don’t feel like reading all the analysis and charts…
Good morning: A few things on the macro front before we dive into the traditional numbers… Momentum is shifting from semis short… and software long… because why not. And I’m sure that will flip at some point as well. The market appears to be in a mid-rotation from AI hardware and now back to software. The story here is that AI token costs are crashing. They’re down nearly 50% thanks to cheap Chinese models. The commoditization trend is very clear, and it remains a full threat to the premium concept of this AI buildout. This is factoring into debt worries. That said, there are two major stories that require our attention. The first is the Bank of Japan. We’ve gotten to the point where the Bank of Japan HAS to hike because the market has moved to a full expectation of these hikes. Not doing so could destabilize a number of positions across the market that are expecting and positioned for a hike. That said, it drives up the cost of Japan’s absurd interest bill. If we think that the U.S. is bad, consider that Japan sits at 204% debt to GDP, with a population that is aging. The carry trade remains in the middle - with amplified swaps and lots of other derivatives that can shift quickly. Recall that we live in a world where people lever up in order to collect nickels. And why not… the system encourages moral hazard… The other story is “debasification” - a term that keeps popping up around Iran’s strategy to hit U.S. targets. A prolonged war isn’t in the best interest of anyone - especially around oil, which is now at $92 a barrel. The 30-year bond just hit 2007 highs, but we have to be careful about the comparisons we make. Markets were less passive, less mechanical, and in a way, less momentum-driven then. Which actually makes the situation worse because everyone heads for the exits at the same time. The situation where everyone HAD to buy… becomes a situation where everyone has to sell… and that story has mainstreamed through the banks and desks… while I sit here on a farm just nodding along because it’s what we’ve followed since COVID. I’m seeing people writing about this for the first time who were long-time fundamentals and value authors… writing about market structures and acting like they’ve discovered plutonium. If you haven’t read my piece from last year… the February 21, Ominous Fifth Anniversary, I ask you to. We’ve been at the heart of this evolution and tracking the momentum, and what turned into the forced buying and selling of markets since the COVID selloff… It’s been a long puzzle… but it makes sense when you see the pattern. I don’t think though that they’ll be able to figure this out though… I will be doing a video on our platform, how it works, and what benefits exist for Elite members too…
We’ll keep expanding our platform to benefit traders and investors in the future with a handful of new tools in the fall. Thanks for being on this ride… Continue reading this post for free in the Substack app
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