Meet the New Boss, Same as the Old Boss....Bonds👔

The flinches happened last month. And they had to. President Trump likes a good scare, but doesn't truly want markets to crater. He says it's Main Street's turn, but you can't really help Main Street while nuking Wall Street.

So things haven't gone as planned. He wanted the 10-year bond yield to drop and it has done little but rise. Bonds aren't feeling great but stocks... do? Is this a disconnect? Yes, to some extent it is. The 'smart' bond money is voting with its feet. They've been both running away from US debt and just not even showing up anymore apparently: this week's pathetic 20-year bond auction was a clear sign of that.

Stocks prefer going with the "TACO" market: Trump Always Chickens Out.

No disrespect, but he does and did. But with stocks giving him cover by rallying massively to near all-time highs in some cases, he may have felt emboldened to start round TWO of the process of turning the screws on countries with tariffs. Threats of 50% on the EU... Apple being told to make phones in the US, or pay 25%.

He says he won't negotiate. We've heard that before. 50% on the EU will push them into recession. Won't happen. Stocks pulled themselves back from a good morning drubbing yesterday before closing only slightly lower.

But how long can stocks hold up with renewed global growth threats and high yields that are also not thrilled with new and bloated budget efforts. Wasn't spending supposed to go down? What did DOGE really achieve? We're not sure yet, but Bitcoin is making new highs on fiscal largesse. Gold has started to recover as well. I am looking to fade that.

Fraying US exceptionalism is back on the menu after a lovely 4 week break. And that's what stocks have to deal with. All eyes on bonds. A move higher in yields could be foreboding for stocks. My personal belief is that it doesn't last. I am looking at bullish TLT positions - I believe we will be getting cuts sooner rather than later. And AI? It's on again and good for productivity and slowing inflation. I'm sticking to my guns on that one. Timing is always tricky because markets will do market things.....

Now.... there's also that little issue of Nvidia earnings this coming week. Given that AI was a big part of the comeback theme, I think this NVDA report is perhaps the most important in the past year. I think GPU demand is just fine. This next leg up in AI with inference and edge-led monetization and productivity wins will be making its way into all corners of the economy. Slowly, then very rapidly. It's going to be big.

I cover my views on it and option LEAP intentions in this training:

TRAINING VIDEO

Hans