Goldman was expecting the S&P to sell off around a half of 1% if non-farm payrolls were below 75,000 today in fact they were expecting a much larger than expected selloff if non-farm payrolls was less than 20,000 in the neighborhood of 1 to 1 and a 12% down on markets of course the S&P was up a half of 1% today but the bigger problem is really not the stock market at this point it is the bond market as Michael a Gade onx says what's going on in bonds is absolutely terrifying and seemingly no one cares that
is because 10-year treasury yields were up 10 basis points today as basically the bond market is imploding as yields go higher that means bond prices themselves are selling off now this is not normally a huge problem because normally bonds are acting rationally they're acting in regards to inflation expectations they're reacting in regards to what the government is doing as far as the fiscal policy they're reacting to what the FED is doing not right now the bond market is reacting to none other than who knows in fact we have no idea why the bond market is
going up 10 basis points a day lately and and yeah this is a big problem at a certain point the bond market becomes unhinged and derailed from reality and I I think we're already at that point now and uh what's to stop that from leading into equities this move today was especially concerning because sure we had 12,000 jobs added 44,000 of which of a loss in manufacturing Wall Street is saying is a contributed to Boeing and another maybe 50,000 from the hurricane make up whatever number you want but we still would have missed estimates okay
this was still not a good report no matter which way you want to sugarcoat it so why did 10year treasury yields go up that's a big problem like a the biggest problem we've had in a long time let's just put it that way and as I said in the last video this is really the Trump trade that is getting priced into markets now I don't agree with this trade whatsoever I think under a trump presidency you're going to have um probably an recession right there's going to be less government spending longterm that's great for America
but shortterm probably leads to a recession recession that leads to lower interest rates lower inflation thus I mean why would we why are we seeing 10year treasury yields going up well what Wall Street is expecting Wall Street is saying if Trump wins there's going to be a better economy there's going to be more inflation there's going to be more government and deficit spending that to me doesn't seem too obvious or or likely but that's what the markets are pricing in on the long end of the treasury curve but it's really not the just the long
end it's the short end it is the ultra long end on the 30-year treasuries the whole entire yield curve is becoming unhinged now there is really two different ways of thinking about this and whether you fall in that category or or or the other category you're going to take away different information from this video category number one you're a short-term Trader you don't invest in the long term you just trade on what's happening right now and what's going to happen over the next couple of weeks that's a that I hope you guys are not in
I hope you are to some degree Traders but also long-term investors so I hope not too many of you guys are in that camp but you're going to take away something if you are in that camp totally different than the other Camp which the other Camp is you're long-term investors and you trade every now and again or you're just long-term investors and you're you have a longer term outlook on markets whether that is 3 years 5 years 10 years 20 plus years if you're long-term investor I don't think you have a single thing to worry
about betting on America to fail you will always go go broke America will be fine either way I think a year from now we're going to laugh at the drama going on in the bond market we're going to laugh at the potential correction that we get over the coming weeks that's still my expectation is we get a 10% correction over the next couple of weeks but if you're a short-term Trader well there's some things you probably need to know first and foremost it does not H matter what's happening we could have an asteroid hitting the
Earth in 12 hours that was going to destroy the world and you would still have hedge funds and institutions making bullish calls and commentary and that's their job is to really calm down investors their job is to keep people invested in the markets even more so than it is to make them money like you might think a hedge fund or institution's job is to make money that's less than half of it because the money will come it's staying invested in markets which is really what you know Wall Street is is is trying to do Dan
Niles here someone I actually respect says with central banks cutting aggressively and government stimulating even more I think stock markets remain strong through the first half of 2025 it's a very kind of shortterm naive thing to say if we do have all of these headwinds ahead ahead of us now I think that's going to happen I think there's good chances that we have a good 2025 but there is also a very real risk that in the short term we go through a correction and then growth slows down even more that's the side of the equation
that Wall Street is not talking about now there's a magnitude of different ways you can position yourself for this you can you know get ready for this I like raising more cash I don't think you can go wrong with cash having more cash is usually better than having none and I actually think right now there's a fair balance of of risk out there right there's risk and reward if you will there's a there's a plausible path towards everything is just fine the economy does well maybe Trump does get an office like the bond market is
pricing in and there's less government spending not a dramatic amount but less government spending less Taxation and interest rates fall more than expected and we don't have another round of inflation in that scenario markets are going to be up 20 plus% 12 months from now mark my words that's not a super farfetched plausible outcome in my opinion it's also not a super far-fetched or improbable outcome that Trump or camela win really doesn't matter there's more government spending higher inflation uh maybe the economy continues to slow down you know that's also a pretty probable outcome in
the longer term sense I lean more towards the bull case there but there's definitely some risk especially between now and midpoint of 2025 and I think no matter if the coin lands on heads or tails you want to be ready for either one of those outcomes now as Jim biano writes here on X the move index is the vix of the bond market it closed today at a new one-year High and the second highest level in 17 months the bond market is pricing in extreme volatility in the near future this is actually two standard deviations
above average so what that means is you're in the top 25% of instances of bond volatility okay and that's because bonds are not acting irrational and we have the election next week we also have the FED meeting next week now I can definitively tell you right now at least for the FED I don't know who's going to win the presidency or if we're going to get a sweep or or a mixed you know Congress or whatnot let me know what you think Down Below in the comment section but what I can tell you is that
the FED does not like the rise they are seeing in longer dated treasuries 10 20 30 year 7year treasury fiveyear treasuries they do not like the move higher in yields we are seeing the FED tried to accommodate markets to to ease the economy a bit instead it's only tightened the economy since September 18th when the FED cut rates 50 basis points the FED is going to sound super doish next Thursday if they don't then I think the odds of a recession go up a lot more because I'm sure bonds go up a lot more at
that point the bigger question is I think for the markets perspective right now is the election and I can tell you that if Trump wins and there's a new change of regime the markets may not like that at least initially because if we're pricing in larger deficits you know more government spending all these tariffs if Trump wins then that might might actually become kind of the reality for bond market and stock market in ERS if camela wins then you will likely see bond yields go down and I think that's actually the opposite of what should
happen I think theoretically you should see if camela wins bond yields go up or stay where they are and if Trump wins bond yields go down because I don't believe the whole Trump's going to cause inflation thing or larger deficits I don't buy into any of that because of tariffs are you serious he's not it's it's a negotiating tool so I think over the next couple of months no matter who wins you're probably going to see Bond volatility come down just like the vix goes up it doesn't stay up for that long especially when it
spikes and the bond volatility has spiked and it will probably come down over the course of the next couple of months if it doesn't then I mean yeah we have a big problem I mean we already have a big problem now but we would have an even bigger problem if that were to happen and I guess in another sign of the times this could be something to be a little nervous about especially if you're an older investor and you remember this but Nvidia is replacing Intel in the Dow Jones Industrial Average an index that only
consists of 30 Blue Chip stocks what's actually interesting about this is Intel was added to the Dow Jones almost at the peak of the Doom bubble in November of 1999 Intel shares were trading at $42.24 if you bought $10,000 in Intel then you would only have $5500 left today Nvidia upon this news in after hours is was up 2% today it was almost like Wall Street knew this was coming let's be let's be serious they knew this was coming I I I say that as sarcasm because I say a lot of the time that that
stuff is leaked and and some of you guys may be annoyed by that but it actually happens you you literally seen that today in video was outperforming seemingly for no reason and then the news came out here and after I was there they were being added to the Dow like somebody knew that somebody bought Nvidia ahead of time and now it's up another 3% in after hours call it corruption call it the perks of being a big money investor I don't care what you call it it does sound like things are getting a little uh
maybe not frothy is the right word but a little too optimistic especially when you look at history and conclude that when Intel joined the Dow in 1999 it was pretty much the peak of that Market at the same time Amazon's founder Jeff Bezos files to sell 16.4 million shares of Amazon an Insider selling stock really doesn't mean too much Bezos probably wants to buy another yacht or buy a new vacation house or something live life a little bit you know what are what else you going to do if you're one of the richest people in
the world so it's not a huge sign of of bad things ahead but it's not a great sign either and part of the issue in equities right now that at least I see one of the reasons I think we could get a 10% correction we've already fallen 3% from from highs uh from alltime highs is still we see what's happening in the bond market we understand the uncertainty around the election and around the economy and the 12,000 jobs report we just got today was really bad but yet we still have analyst notes coming out like
this one from oppenheimer's Ari wal that says SPX cap weighted and equal weight both making alltime highs signals ongoing Advance don't fight the tape we'd expect the advance to Target 6200 with near-term support just below the 50-day moving average it's actually interesting on the S&P or specifically on the Spy is this 50-day moving average is in purple what do you notice about the last three draw Downs that we seen in regards to this purple line really almost every draw down like like in recent history in the last couple of years anytime you hit this 50-day
moving average that's not when the selling tends to stop okay the selling tends to get worse after you hit the 50-day moving average sometimes you can bounce at that moving average like here almost almost a textbook bounce like literally almost perfect August 1st 2024 you bounc right at this moving average you did sell off intraday you closed above that 50-day moving average next day you were down 2% day after that you were down 3% that was 5% to days after uh hitting this 50-day moving average and you did not bounce right at the 50-day moving
average so to assume we're going to get support at the 50-day moving average with this much uncertainty ahead of us I think it's kind of a Fool's game I mean here you didn't necessarily bounce the 50-day you fell below the 50-day by 1% that's not a huge deal you fell below the 50-day moving average here here in August by about 6.3% here once you broke the 50-day moving average you ended up falling about 3% right when you break below or at that 50-day moving average in which we just did over the past two trading days
you actually tend to break down further from there you don't tend to actually get some solid support coming in for markets until you hit that 100 day moving average and if you get a larger correction that two 100 day moving average tends to be where you find more material support that comes in but it's not the 50-day moving average and maybe analysts are saying this from a lack of knowledge maybe they're just obsessed with the you know bull case right now ignoring all the risk again half of a hedge funds manager's job is to keep
investors invested in the fund not necessarily make money right it's all about just keeping people invested that's why a lot lot of the time when things look great when stocks continue to go up there really starts to be a lack of risk management in the short term again as I said in the beginning of this video if you're a long-term investor you have nothing to worry about buy as you do every week every month keep doing what you're doing but if you do realize the risks out there if you if you are tactical in the
near term while also investing for the long term there's specific moments and time you can sit here and say there is elevated risk of a correction and that is one of these moments I mean especially because you're already seeing this in the bond market like bonds have absolutely imploded in recent you know days really since again September 18th bonds have imploded bonds have actually already fallen almost 10% about 10% almost exactly from September 18th like you've already seen a correction in bonds is it far-fetched to get a correction in stocks absolutely not I think the
biggest risk in the near term is if Tuesday's election next Tuesday's election comes around and we don't know who the president is and there's uncertainty about who it is going to be so really in conclusion here I think the near term is full of risks I think the easiest thing to do to hedge your portfolio is to raise some cash maybe get some cash ready in your brokerage account to go shopping diversify a little bit if you're on margin that extra cash on the sidelines is going to make it so maybe you don't have to
sell your stocks the the most important thing is you don't sell your stocks you don't want to panic and try to time the markets you want to stay in the markets okay that's the easiest thing to do there is an opportunity to hedge once you can confirm that the markets are going to freak out whether it's a contested election or whether it's something else maybe the bond market is just truly broken if that's the case then it's going to get much worse from here and it will start to have a serious impact on equities and
probably Banks I mean every day those bond yields go higher bond prices go lower unrealized losses at Banks continue to grow there's also a risk that there is a sweep with the election and and maybe we don't have a split Congress makeup and maybe that leads to more fears about inflation and deficit spending and doom and gloom outlooks right that's possible that's already what the bond market is saying but it's possible that could continue for a while until we're proven otherwise vix is at 2.88 that's high that's really high and I can also say that
after the election no matter who wins you're probably doe for a pull down in yields you're probably due for a correction downwards in yields I can also say the fed's going to be very doish Thursday and I can say that yeah today's jobs report was not great but Wall Street gave it the benefit of the doubt that Boeing impacted it the Hurricanes impacted the jobs report that maybe it's not until the next jobs report where we really get Wall Street that that panics about the economy if we get another bad jobs report like if if
if we get a a revision that takes October's jobs report negative and we get a maybe a really low jobs report for November I mean that's when the markets could freak out a little bit more but I could totally see in the near term uh relief rally for uh you know bonds I could see the vix coming down as uncertainty ends which could lead to stocks rising and honestly if I told you I had any idea what's going to happen with certainty I don't the only thing I know is we are in a higher risk
environment certain asset classes are not behaving in a rational way you could say they're unhinged or derailed or you could say that we're at the start of that honestly might be a little bit of both definitely we are in a higher risk environment and being prepared for that obviously your Situation's different than mine and yours is different than the next guys but being prepared in your own way is what you want to do right now I called out this 10% correction when markets were at all-time highs we are now down 3% from alltime highs and
odds start to grow that we could fall closer to that 10% level especially again if we break that 50-day moving average average and actually close below that history tends to tell us in recent years that's not when the selling stops it would correct likely further from there but with all of that said let me know what you think about this information Down Below in the comment section hit the like button as well as subscribe to the channel if you have not done so already you guys have a great rest of your day and I will
see you in the next one
