Did China make Trump blink? Or did the bond market? Or was it all Trump’s ‘Art of the Deal’ at work?
Strike me pink…but I have no idea. US shares soared overnight. The ASX will scream higher today.
Is it just a bear market rally?
The mind spins. My mind, anyway.
Suffice to say, trying to make sense of extreme volatility like now is a nightmare, let alone trading it.
I’ll suggest an alternative.
The greatest wealth creation happens when you identify transformative changes before the crowd.
Make the right moves early.
And stay the course.
Often, times of market upheaval are the perfect camouflage to make these moves…picking perfect entry points into historic investment opportunities.
The future belongs to those who can see beyond today’s headlines to tomorrow’s reality.
That’s the essence of what we’ve been talking about this week with Musk’s Shocking Next Move.
“I’ve been waiting 40 years for a moment like this,” says James Altucher.
Tomorrow, in Fat Tail Daily, he explains in full what this moment is.
For now, James gives you a little appetizer
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“AI’s blast off phase is at our doorstep, and when it ignites, I predict this un-paralleled technology will not only make our lives better, more efficient and more creative in countless ways…
“But will lead to the creation of an untold number of new businesses and investment opportunities set to change the financial fortunes of thousands of people for generations to come.
“This new upgrade of generative AI is shaping up to be Elon Musk’s pinnacle achievement. And, man, is that some claim. We’re talking about a guy who single-handedly mainstreamed EVs, reinvented wireless Internet and changed how we send rockets to space.
“Love him or hate him, Elon does NOT mess around.
“Which is why you need to get a handle on how he plans to disrupt the AI disruption in the coming months.
“Get ahead of this, and make the right investments while everyone else is freaking out or selling…and you could be thanking yourself for years to come.
“See, Team Musk has been working on a powerful iteration of AI that could make everything we’ve seen so far look like baby-steps. And it has the potential to leave the gains we’ve seen so far in AI stocks in the dust.
“That’s because AI is shifting from a fun sort of toy, interesting to play with but not a real game-changer, to a truly world-altering technology that could help us solve our biggest problems – like curing genetic disorders and cancer, extending lifespan, bringing self-driving cars and many more things we haven’t even considered yet.
“What’s coming, perhaps in the next few months, will not only help us make sense of the vast quantities of data generated in the world each day but also give that power to intelligent machines with much greater “mental” resources and abilities to make sense of it.
“And this new era of turbocharged AI is about to be unleashed thanks to the world’s most prolific and successful entrepreneur: Elon Musk.”
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What is this disruption?
Make sure you don’t miss our special Fat Tail Daily exclusive tomorrow…
Best wishes,
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Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator
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Murray’s Chart of the Day
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| Source: Tradingview |
It looks like Trump blinked after watching markets get so close to a crash yesterday afternoon.
The biggest scare was when the US 10-year bonds started selling off aggressively in the overnight session (our day session).
There was talk of the basis trade blowing up. That is when large investors buy bonds and sell futures to pick up pennies when there is a mispricing.
But they leverage up the position massively because it is supposed to be pretty much risk free money.
But when markets dislocate they are forced to unwind those positions quickly.
There were also people saying the bond selling was China giving a two finger salute to Trump.
Perhaps it was forced liquidations to raise cash levels for funds that were getting margin calls.
Whatever the reason, a crashing bond market as well as crashing equities is not what Trump was after and he must have decided it was time to retreat.
That could be offering a second bite at the cherry for investors who would like to gain exposure to US bonds.
The bond yield chart above (which moves inversely to price) gave a sell signal on yields (a buy signal on the bonds) a couple of months ago.
That bond buy signal remains live and the jump in yields yesterday just took bond yields up to a key resistance level.
Over the last day bond yields have dropped from 3.50% to the current level of 4.27%.
Just a few days ago they were 3.90%.
If things are going to settle down from here I would expect to see bond yields falling again with an initial target to 3.70%.
The iShares 7-10 Year Treasury Bond ETF [NASDAQ:IEF] looks interesting at these levels.
Regards,
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Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps
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