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for University of Michigan respondents hitting an all-time low what was very incongruent about that was that the Democratic responses for current conditions is essentially unchanged since November. And the Republican responses are unchanged since like the summer. The only reason that overall number kept dropping is that it's reflecting a greater percentage of Democratic respondents.
And the survey itself allows a lot of latitude like if you look at the actual responses, I think it's 3,700 responses every month or between the two, you know, bi-weekly. It's but it's 3,700 total. If someone If you look at the inflation question I think 25% of Democratic respondents say inflation is currently running over 100% right now.
Hey guys, welcome to Everyday Finance. Bitcoin has fallen below its 7-day moving average to $79,920 due to a worldwide bond sell-off and the biggest drop in US stocks since March. This has caused a widespread liquidation cascade across risk assets. Interesting institutional and state-level developments are taking place amid this market volatility.
While Abu Dhabi's Mubadala sovereign wealth fund has demonstrated its long-term commitment to cryptocurrency by increasing its BlackRock IBIT stake by 16% to $566 million in Q1 2026, marking its fifth consecutive quarter of Bitcoin ETF accumulation. Bhutan has actively transferred over $1 billion in Bitcoin to various exchanges and trading firms over the past year despite formally claiming no sales.
The traditional and private markets are experiencing tremendous momentum in tandem with these macroeconomic changes as evidenced by SpaceX's planned initial public offering IPO trading debut as early as June 12th following an expedited SEC review as well as Tom Lee's audacious financial forecasts. After correctly predicting the S&P at 7,300 for December, Lee is now aiming for 7,700 by year's end and predicting that half of the top 10 banks in the world will be fully digital native within the next 10 years.
A lot of investors are surprised because the US is in the midst of a war that could be a long war. And oil prices are at record highs. And I think a lot of folks at the start of this year would say that this would have been enough to trigger a bear market or even a recession. But instead the S&P's at an all-time high and the groups that led last year like AI and semis are the ones leading again.
So, I think it's really speaks to me about the resilience of the US economy and maybe the continued very weak conviction of most investors. Early December, we typically look at the year ahead and we write down what we think are the key drivers and kind of what the contours of the market would look like.
So, December 2025 as we were thinking about this year, we just thought this year would look a lot like 2025, which is a difficult year for markets but ultimately very strong. And but in the middle of that, we penciled in the idea that the market would test a new Fed. And therefore, we would have a So, start to the year that would be strong.
7,300 was an aspirational number at the time cuz the S&P was in the 6,000s. But then we think that there'd be a pause and then the setup would still be positive because we think there were some structural tailwinds and so we thought we'd end the year 2026 at 7,700. So, I the year is tracking the way we expected although we're a bit above 7,300 right now, but if someone asked me today, well first of all, can the S&P make its way to 7,800 first before it dries out here?
I think anything's possible, but I think what I am mindful of is that stocks were a lot cheaper at the end of March, at the market lows. They're a lot less cheap now. So, a lot of good news is priced in, and I still think that there is potential for turbulence in the middle of this year, and with maybe more reasons for one being, of course, the market testing a new Fed.
The second is I think it's still hard for me to reconcile that oil prices are not reflecting the acute shortages developing for petroleum products around the world. So, I think that there's going to be some reconciliation maybe later this year. I'm penciling in my head just in a quote like unknown right now, because to me the current price of oil doesn't seem to reflect what will be the clearing price later this year, cuz we know inventories have been drawn down, and we know there's a supply shortage, and we know the straits aren't allowing normal traffic, and these are going to affect a lot of economies outside the US.
And so, I as much as I want to take some comfort from like the futures price of oil, I actually don't think that that reflects the price that's going to exist later this year. So, to me, I'm going to just put it as an unknown, because for now the market doesn't seem to be bothered by it, but it could be that there's a resolution before the shortages get too great, or the market will be surprised in a negative way.
So, I actually don't know. Well, the matter at different times, the market's going to care about something else. We've written about private credit recently. I do think that there is going to be losses, and software has a little bit of uncertainty, but I think the underwriting is probably better than most people appreciate for some of the private credit firms.
So, I think as a sort of as a our general view is I think private credit is a problem but it's not systematic and we've done a lot of work on the software stocks. I do think a lot of the bad news is priced in because on a relative price basis you're back to 15-year lows. So the entire software is eating the world thesis has been unwritten in just the last 6 months.
So I think a lot of positive reward now exists in software stocks. And then with regard to the Fed it's an unknown because um we've got a new Fed chair. He's got some very specific views about the sources of inflation that vary from existing Fed views and how to measure inflation also varies. So I think it's going to be now a time where markets want to understand how the Fed will interpret incoming inflation data and we know that looking at history 11 of the 13 new Fed chairs have seen a drawdown of of at least 10% in the first year.
So that's why I think later this year we could have some turbulence. I still think it matters a lot. I think credit is important signal often a leading indicator for equities. It's a long-standing debate because when I was at JP Morgan our credit teams whether it's high yield or even on the mortgages said they used to look at the stocks to decide what it would mean for their for the credits but I would tell them in the same said I was always looking at high yield to figure out what would happen with the equity markets.
At turning points and we've demonstrated this high yield leads equity markets. So at on downturns I think one of the best ways to always make a bottom call is when high yield spreads are widening but equities are still weak because that tells us the divergence is happening so that we already know a structural bottom has taken place.
You know, I know people are looking today at trying to discern what see like credit for instance CDS is saying about stocks like Oracle or Oracle CDS spreads have really widened. It's hard for me to say that that's actually signal because for instance, you know, Oracle if you look at where CDS stands now, it ranks 246 in the S&P 500.
So in other words, it's got the default risk of like the midpoint of the market. So I mean I think if someone's saying Oracle is bankrupt cuz the CDS spreads have widened in the totality of like the S&P that means like half the market has the same sort of credit outlook. I think it's important, but it's not always that clear-cut for me.
The financial week began with a bipartisan win when the Senate Banking Committee approved the Clarity Act 15 to 9. However, it ended with a sharp market correction brought on by a global bond sell-off, which caused US stocks to have their worst session since March and Treasury yields to reach their highest level since mid-2025.
The entire cryptocurrency market capitalization fell by about 2% on Friday as a result of this macroeconomic pressure, which also caused the Fear and Greed Index to tumble by 13 points in only 7 days, its fastest decline since February. Bitcoin suffered the most from this widespread measured selling, falling below both a crucial $80,563 Fibonacci retracement level and its 7-day simple moving average to settle at 79,920.
Investor nervousness over Kevin Warsh's planned QT for cuts, monetary policy, and a hot 6% PPI reading were the main causes of this bond market turmoil, which directly threatens institutional demand for Bitcoin by making fixed income more appealing than risk assets. Investors are extremely unsure whether the rate relief would be completely undermined by liquidity stress due to this unique framework, which simultaneously lowers interest rates and reduces the Federal Reserve's balance sheet.
A highly ambiguous development out of Bhutan exacerbates these macro concerns. According to Arkham Intelligence, wallets affiliated with the Royal Government of Bhutan transferred over $1 billion in Bitcoin to exchanges and trading firms over the course of the previous year. The market is left to determine whether this massive on-chain movement represents a routine custody migration or the most significant emerging market liquidation signal of 2026.
A few things I'd agree with you. I mean, one of the reasons we've stayed bullish at Fundstrat is that the market psychology isn't consistent with a market top. I think in general, as you know, when markets are nearing a top, bubbles form because investors become overly confident about continued gains.
And therefore, when markets decline, sentiment stays strong, and then of course, as you know, markets fall on a slope of hope. But that's not what we've seen. Every time I think the market falls 2 or 3% sentiment turns pretty bearish, and we see it both in sentiment readings, but also in positioning data.
In this most recent downturn, Goldman's prime brokerage data showed the level of short increases was at the fastest pace in almost 15 years. I think there's a few reasons for that. One is I think it's become easier for both institutional retail investors to position square their entire portfolio. Like, I think there's push-button liquidity, so now it's easier for people to quote rage sell and go to cash.
And because of that, I think it means people's conviction levels are much more loosely held because they know everybody else has push-button liquidity. The second is I do think there's a political divide. We've highlighted this, but when you look at data from either Pew Research or others, including YouGov, the equity market today, if you look at the professional money managers, uh roughly 60% are Democratic voters.
So, the market basically leans Democratic on the equity side. In the fixed income side, it's actually opposite. I think it's closer to 80% are Republican. And as we all know that the current White House is quite divisive and I think there is something you know, there's many people who might have TDS.
And so, that I think has colored people's views of both actions taken by the White House and how investors unfortunately interpret the data because instead of being unbiased and evidence-based, I think a lot of people still have their own subjective overlay and how they see information. So, for instance, when this war started, there's a lot of our clients who said like, "Well, this is Armageddon." And they were um not even just worried about like with stock market being down, they were worried about their own personal safety.
So, I do think that there is an overreaction in markets. The University of Michigan, I think has also become notoriously partisan. We've highlighted this that if you look at uh the composition of respondents, the University of Michigan went to no longer doing a phone survey. So, it's online only, I believe.
So, every respondent now only responds online. And the response rate now is roughly 66% Democratic versus 33% Republican. That's not a fair breakdown of the US overall because in general, the size of Democratic response and Republican are about equal, both 30%. I think or 35 and then independents are in the middle.
But that's not how the surveyed respondents reflect. So, the record low sentiment, for instance, we highlighted this in a recent report for University of Michigan respondents hitting an all-time low. What was very incongruent about that was that the Democratic responses for current conditions is essentially unchanged since November.
And the Republican responses are unchanged since like the summer. The only reason that overall number kept dropping is that it's reflecting a greater percentage of Democratic respondents. And the survey itself allows a lot of latitude like if you look at the actual responses, I think it's 3,700 responses every month or between the two, you know, the bi-weekly it's but it's 3,700 total.
If someone if you look at the inflation question, I think 25% of Democratic respondents say inflation is currently running over 100% right now. I mean, we used to have a lot of things that I think are really interesting. I mean, first and foremost just on uh financial education, I think that it would be a really national benefit if secondary schools like high schools taught basic financial education.
Like you said, dividend, power of compounding, balancing a checkbook, budgeting, because I think that that fiscal responsibility pays dividends cuz you know, the idea like how a business works is actually how people need to run their lives because if your own career is a small business anyways and a small and a family is a small business.
But on the surveys, I agree. That's why I've been finding a lot of value in alternative inflation series like Trueflation. Trueflation measures I think 7 million products. It's all automated through APIs and it's capturing real-time price move. In fact, Kevin Warsh in his testimony to Congress was talking about how he wants the Fed to move forward with their billion data set price analysis and they want to just basically say inflation is the 500 millionth item, you know, the median of all that and I think it reflects the idea that surveys may not if they're not conducted properly are really polluted then and the Fed and markets actually get really bad insights.
I mean, you Mish is a great example because if someone was trying to manage money off the University of Michigan survey, both on the inflation survey, which is showing chronically high inflation expectations, or the sentiment, they would have gotten the stock market wrong because it's giving you very bad signal.
Starting with Bhutan's sizable $1 billion Bitcoin treasury, the complex interaction between institutional rebalancing, regulatory milestones, and sovereign wealth initiatives is transforming the contemporary macroeconomic landscape. The government maintains that there hasn't been any actual spot selling because it was developed through a groundbreaking national mining program powered by domestic hydroelectricity.
Instead, recent large wallet migrations to exchanges are seen through Tom Lee's contrarian framework as strategic custody transfers, over-the-counter desk lending, or options hedging that haven't yet registered as actual exchange net outflows. At the same time, Abu Dhabi's $300 billion Mubadala investment company, which revealed a 16% increase in its BlackRock IBIT holding to $566 million in its Q1 2026 13F filing, is highlighting institutional conviction.
This intentional positioning by one of the most advanced sovereign wealth funds in the world, which recently negotiated $600 million deals with the Trump administration during a state visit, represents its fifth consecutive quarter of systematic accumulation and is more than just conjecture. However, as Elon Musk's SpaceX gets ready for a huge $340 billion IPO, this long-term risk appetite meets acute short-term competition from the traditional finance sector.
Large-scale portfolios typically rebalance capital away from risk assets and digital ETFs to accommodate the enormous liquidity demands of a premier mega-cap public debut. This historic listing, which is scheduled to start trading as early as June 12th following an accelerated SEC review, is poised to momentarily challenge Bitcoin's institutional inflows.
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