5/2/25 Charts & Ideas: What Markets Are Telling Us

05/02/2025 | Unsubscribe

Good Morning!

Here are some important charts and ideas capturing the latest trends in US markets to help you understand what is happening from multiple different perspectives:

🔍 Bear Market Chart Lessons (2000–2002)

• ⚠️ Sharp Rallies Mislead: +8–21% gains happened often, but all failed.

• 📉 Steep Final Drop: S&P 500 fell 49% peak to trough.

• 🧠 Bull Trap Risk: Rallies lured investors before fresh lows.

💼 What This Could Mean for You

• 🟡 Don’t Chase Pops: Short-term gains ≠ recovery.

• 🧱 Trim Risk on Rallies: Rebalance if fundamentals lag.

• 🔄 Cash = Strategy: Patience often beats activity.

• 🔍 Trend > Bounce: Until the trend flips, stay cautious.

🔁 Other Views to Consider

• 🟢 Different Cycle, Different Risks: Today ≠ , the Dot-com era.

• 🛡️ Tactical Gains Possible: Rallies can work with timing.

• 🧩 Policy Support May Shift Game: Cuts/stimulus could change the bottoming process.

🔍 Foreign Buyers Are Pulling Back from U.S. Debt

• 📉 Shrinking Foreign Ownership: Now ~30% of U.S. public debt, down from ~50% in the early 2010s.

• 📊 Decoupling in Motion: China, Japan, and oil nations are reducing Treasury exposure (but slowly).

• 🏦 Domestic Buyers Filling the Gap: U.S. banks, funds, and the Fed are increasingly absorbing issuance.

💼 What This Could Mean for You

• ⚠️ Higher Yields Ahead: Less foreign demand = more rate pressure.

• 💸 Supply Overhang Risk: Rising debt + fewer buyers may weigh bond prices.

• 📉 Fragile in Crisis: Less global support could worsen selloffs in Treasuries.

• 📈 More Volatile Yields: The Market reacts faster to inflation, deficits, and Fed signals.

🔁 Alternative Takes to Watch

• 🟢 Domestic Stability: Less reliance on foreign money can reduce geopolitical risk (US sets the terms and is the reserve currency - so not really).

• 🛡️ Policy Freedom: The Fed has to become a bigger buyer of the debt.

• 🔄 Buyers May Return: U.S. assets still attract in global demand.

🔍 Speculators Have Fled the Oil Market

• 📉 Positioning at 4-Year Lows: Both net contracts and dollar exposure are at early 2020 levels.

• 🛢️ Market Is Bare: Investors are heavily underweight crude pricing in weak demand or no shocks.

• 🧭 Contrarian Signal: Similar past setups often led to sharp oil rebounds.

💼 What This Could Mean for You

• 🔁 Oil Near a Bottom? Extreme bearish bets may limit further downside.

• ⚠️ Spike Risk: Any supply/demand shock could trigger a fast rally.

• ⛽ Energy Stocks Appeal: Undervalued names could benefit if oil bounces.

• 💡 Diversification Edge: Commodities may offer asymmetric upside vs. stocks/bonds.

🔁 Other Views to Keep in Mind

• 🟠 Maybe Justified: Weak demand, EV adoption (limited impact), or high inventories could explain low interest.

• 🔄 No Guarantee: Low positioning ≠ automatic rally without a catalyst.

• 🧪 Need a Trigger: Watch for China, OPEC, or geopolitical events to shift sentiment.

🔍 Recent College Grad Unemployment Is Spiking

• 📈 Diverging Trend: Unemployment among new grads is rising, unlike broader labor data.

• ⏱️ Early Warning: Similar spikes preceded past recessions (1990s, 2000s).

• 🎓 Why It Matters: Grads face hiring freezes first — a “canary” for economic confidence.

💼 What This Could Mean for You

• ⚠️ Recession Signal Growing: Early labor softness could precede wider job losses.

• 📊 Margin Pressure Ahead: Weak hiring may signal lower business optimism.

• 🧾 Get Defensive: Favor staples, healthcare, and utilities.

• 🎯 Fed May Pivot: Softer labor data could support rate cuts if inflation eases.

🔁 Alternative Takes to Watch

• 🟢 Not Always Recessionary: Past slow rises didn’t always lead to downturns.

• 🟠 Structural Issues Possible: AI, tariffs, or policy shifts may distort hiring.

• 🔄 First Crack? Broader job losses may follow — watch closely.

🔍 Tariffs Are Hurting Consumer Spending

• ⚠️ 56% Pulling Back: 32% delaying, 24% canceling major purchases.

• 🧾 Most Affected: Young adults and Democrats show the highest impact.

• 🏡 Broad Hesitation: Both homeowners and renters are cutting back.

💼 What This Could Mean for You

• 🛍️ Demand Weakness: Hits sectors like autos, housing, and durable goods.

• 📉 Retail Risk: Consumer cyclicals may face earnings pressure.

• 🏦 Fed Caution: Soft demand may delay economic rebound and rate cuts.

• 💼 Shift Exposure: Staples, utilities, and real estate may offer safer ground.

🔁 Other Views to Consider

• 🟢 Front-Loaded Buying: 17% advanced purchases — not all demand lost.

• 🟠 Partisan Bias: Political leanings may skew responses.

• 🔄 Temporary Impact: Clarity post 90-day tariff pause could revive confidence.

🔍 Sentiment vs. Reality: Big Data Divergence

• 📉 Soft Data Crashing: Surveys indicate a deep contraction (< -4%).

• 📈 Hard Data Holding Up: Real activity still shows 2–3% growth.

• 🧠 Confidence Shock?: Policy/fiscal worries may not yet hit actual output, but the risk is rising.

💼 What This Could Mean for You

• ⚠️ Lagging Slowdown Likely: Soft data often leads — watch mid-2025.

• 🛡️ Avoid Cyclicals: Sentiment hits discretionary, small caps, and industrials first.

• 🧾 Fed May Wait: Strong data = fewer rate cuts, even if markets weaken.

• 🧭 Shift to Resilience: Consider staples, utilities, if real data weakens next.

🔁 Alternative Views to Weigh

• 🟢 Sentiment May Overreact: Fear ≠ fundamentals — resolution possible.

• 🟠 Q3 Slowdown Window: Historical lag = real risk ahead.

• 🔄 Growth Pillars Hold: Jobs, wages, and spending still support GDP… for now.

That’s it for today!

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Best Regards,

Ultimate Alerts Team

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