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Hello everyone! This is Carter from Money Vest. So, another loss for the Dow Jones in the markets. The S&P 500 also rose slightly on the day . It rose by more than 43 basis points. The Dow Jones has regained over 500 points, but is still down for two weeks in a row. The Nasdaq also added just over 40 basis points on the day.
We have a lot to discuss in this market review as Ray Dalio has made comments on the debt crisis; the US national debt problem is becoming increasingly acute, and he actually recommends gold and bitcoin. Bitcoin also rose by over 22% in a week as investor optimism returned to this particular asset class.
Sure , the Dow first jumped 500 points on Friday, but the index posted weekly losses for the second time in a row. Meta is still in the process of litigation. Goldman says that in July, hedge funds had their worst performance relative to the S&P 500 in more than two decades, or 20 years of data. And this, again, was the worst indicator we observed.
So, before we continue, don't forget to like and, of course, subscribe to the channel. I would like to remind you that we have a 40 % annual discount available until the end of this month. Get access to all videos for members on Patreon. You can go here and see a bunch of content worth checking out.
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By the way , regarding trade alerts, I finally closed my Call option on Meta after a long time. I squeezed a profit of about $8,000 out of it for a long time, that's 95%, and also opened several Call options on BITX, earned $600 there , and then closed and opened new Call options on SoFi. So , essentially, I rolled over, locking in some profit, and opened a new Call option with an additional $680 net credit to SoFi.
So the net credit would be about $653. Once again, I remind you, , don't hesitate to contact us. I will be happy to help. Write to [email protected] or contact me directly at [email protected] and we can arrange a call if necessary. I'll look into it and we can talk in more detail. So, first, let's talk about Broadcom, where a debt deal worth over $70 billion is expected .
Broadcom is in talks to raise $70 billion to $80 billion in debt to finance a chip deal aimed at backing AI companies, including Anthropic. The senior tranche of financing, which will be repaid first, is expected to be about 45 billion, and the junior tranche is expected to be about 35 billion . Although the numbers may still change.
Bloomberg was the first to report the deal on Thursday, noting that the amount could reach $100 billion, and that Blackstone and Apollo Global Management were among the negotiators. Chipmakers are seeking unprecedented amounts of capital to fund AI development and meet the growing demand for new models and workloads.
Yesterday I released a video about Neo Cloud, specifically the NCLD ETF, and we concluded that by 2030, hyperscalers, private AI companies, cloud services, and government entities will collectively provide 200 to 230 gigawatts of cloud computing and AI capacity. The demand will be approximately 170โ180 gigawatts.
But due to network and power supply limitations, you won't be able to use 100% of the available capacity . So only 70โ80% of this supply will actually be available for cloud AI computing. Thus, we will see a fairly good balance between demand and supply. There may be some shortages due to problems with real estate and connection to the power grid, because the bottlenecks are not in the speed of chip development or finding capital, but in the speed of obtaining land and connecting facilities to the grid.
This is the main problem. It's not about AI, it's about energy. Energy and real estate are the main obstacles to launching these facilities. So, actually , this is one of the reasons why Broadcom has had some difficulties. If we look at AVGO, we see a slight sell-off: from its all-time high of $495, the stock has fallen by more than 26%.
So they are still trading in a somewhat bear market environment. But if the price falls below the 350 level, we have very strong support for Broadcom at the 324โ325 levels. Broadcom is also on our buy list on the Money Vest platform, which can be accessed at moneyvest.com. You can check out all the stocks and ETFs we've picked outโthese are quality ideas from our shopping list.
This list will be updated after Nvidia's earnings report, so we update it every reporting season. Right now, US intervention in the bond market is like paying for a mortgage with a credit card. This is something we have also already talked about. The US- Japan trade is also very important, as we will learn more on September 16 and 18.
So, we have two meetings scheduled 48 hours apart. These are the Federal Reserve and the Bank of Japan. The Bank of Japan is expected to raise rates next month, and the Federal Reserve is likely to leave them unchanged at its next meeting. This will narrow the gap and spread between US and Japanese interest rates.
Currently, this gap is between 2.5 and 2.75%. This gap is expected to narrow to 2.25โ2.5%. Again , the difference is small, but even a slight decrease in the spread can lead to a partial rollback of the carry trade, because we now know that in the US alone there are about half a trillion dollars of open carry trades placed in US stocks , debt and other asset classes.
This was the statement of James Sullivan, co-head of global fundamental research at JP Morgan. The Treasury is effectively buying up long-term bonds by issuing short-term bills, a strategy that provides temporary relief but leaves the underlying debt burden unchanged. He says it's like paying your mortgage with a credit card: it may work for a while, but eventually the imbalance becomes more apparent because you're trying to solve a huge problem with a very small, short-term solution.
So at some point we have to pay attention to the "elephant in the room." And that's a pretty big " elephant in the room" that we need to discuss, isn't it? So intervention may help control borrowing costs in the short term, but Sullivan's concern is that it does little to address the larger problem โthe growing wall of government and corporate debt that must eventually find buyers.
And governments' attempts to control markets are mostly not a very attractive story. And this challenge goes far beyond the United States. Sullivan pointed to the roughly $40 trillion in U.S. government debt, about $76 trillion in developed markets around the world, and record issuance of corporate and other bonds.
It seems to me that everyone is trying to get a taste of debt right now. Everyone, you know, gets a taste of this debt and they're like, "Wow, this is so great. Let's just borrow more and more and more." And this, well, where does it end? Now about debt: Ray Dalio, as we already know, is a big supporter of China and is not at all supportive of US fiscal policy, the way the US is accumulating so much debt and of course having, you know, fiscal deficits every year, increasing borrowing at higher interest rates, because this decision by Bessenbinder is a sign that a debt crisis is coming, and he recommends gold and Bitcoin.
This is a very, very serious recommendation. This is actually a huge event in the world of finance, because he is, you know, very respected. He is known for his insights and analysis, running Bridgewater Associates, one of the largest funds in the world. He says the broader pattern could signal a coming crisis, and the Bridgewater Associates founder noted that Bessenbinder's plan to increase government debt purchases could portend trouble for the US economy, along with the Japanese government cutting its holdings of US bonds, which is driving up long-term US bond yields, which is exactly what we were talking about.
We've discussed this in many videos before. Dalio said that investors should prepare their portfolios for increased risks by owning cryptocurrency and gold. I am confident that the government's financial situation is at a tipping point. This is what he wrote in a post on LinkedIn. If this is not addressed now, debt will grow to levels that will be unmanageable without major disruption.
This, this, this is massive. This, again, as I said before, this is not...Look, we might be overestimating the time frame a little bit, okay? So we may not have to face this problem for the next few years, 5 years, or even a decade, but it is a problem. This is something that will eventually have to be fixed , faced, or resolved, or something like that, right?
I mean, you can't just, you know, sweep it under the rug and never worry about it, because it's a big problem . Dalio noted that the Treasury Department has only limited capacity to buy back bonds, and the deficit continues to grow, spending about 40% more than it receives, leading to a budget deficit.
The US budget deficit topped $ 432 billion in July, and Dalio said it had likely peaked, which we also talked about in our update yesterday, but there is certainly no model, history, or evidence that this is actually the case. So, after years of excessive spending, Dalio said that debt now significantly exceeds annual U.S.
income. If the US government were a business, Dalio said, debt service payments would be about $11 trillion, about 200% of annual revenue, which again is simply incredible. I will elaborate on this in more detail. I'm sure it's going to be a pretty interesting report, but it talks about a three-pronged approach, because the US government needs to cut its spending, which again reduces your quality of life to some extent, right?
If you're in the US, it lowers the quality of life, the standard of living in the country , because they spend less money on infrastructure, defense, education, healthcare, and everything else. Secondly, he said that tax revenues need to be increased. This also creates a negative dynamic, because look, the only way to solve the problem of expenses and revenues is to cut expenses and increase revenues, right?
Think of it as your personal balance sheet. And the only way to start saving money and not get into debt or a deficit every month is to start earning more money and cut back on your expenses. In this case, the government can only do this by cutting government spending. So, again, it reduces your quality of life, and the money is made by increasing the number of taxpayers and raising tax rates.
This also creates a spiral in which everyone will obviously start protesting against higher taxes. But those are the two main paths, right? Finally, the New York native and Harvard Business School graduate said lower interest rates are needed. All three steps must occur simultaneously so that none of them becomes too radical.
If any of them is too large, the adjustments will be traumatic. So this is another point worth discussing. Bitcoin also jumped more than 22% as a result of this. I sold call options on BITX. I think today was a great day for that. It rose just over 48% last week. So, we see very good momentum for BITX.
And, of course, Bitcoin is jumping sharply here too . It rose just over 24% last week. This is simply incredible: Bitcoin has jumped above 78 again, to almost 80 thousand dollars. Okay, back to the market: The S&P 500 is starting to pull back a bit. When it comes to gold and Bitcoin , I have a very small allocation, namely BITX.
As for gold , I have some of it too, don't I? So, I have very small holdings in gold and Bitcoin. Do I plan to increase these shares? Perhaps. I could increase the gold portion a little. Maybe I'll even increase Bitcoin a little, but I'm already in the red on it. So yes, these two could eventually become a bigger part of the portfolio.
But another thing is real physical assets, assets that generate income. So , real estate is an important part of this. I shared this in my full portfolio update video. So be sure to check it out. Yes , stocks and options are fantastic. They are wonderful. This is what provides my main income. But my strategy is also to continue investing in other asset classes.
Gold and Bitcoin will not be a large part of the portfolio. They will still be a decent size, but real estate assets that generate cash flow, rental income, and appreciation along with tax benefits are what I also actively invest in. So, the S&P 500 has very strong support at 7,550 to 7,600. We have resistance at about 7,800 points below the S&P.
Nasdaq is rolling back a bit and starting to break through support at 26,000. The next major support will be around 25,000. And, of course, we have resistance all the way down to 26,750 for the Nasdaq. Apple, on the other hand , is consolidating sideways . So, you have resistance as low as $317-318.
The support level is located approximately below $300. Again, there is a lot of consolidation in this range for Apple. Amazon continues to roll back. The support level will be at 256-257. We have resistance as low as 278 for Amazon. So, again, a huge gap that needs to be filled. On the downside, if it sinks further, the next support for Amazon will be as low as 236.
So, again , lower highs and lower lows continue. Again , a lot of consolidation. We got a huge gap up, the price went up and immediately fell back down. And this will be the support level to watch . Tesla, on the other hand, had a big gap down, dipped, but bounced right off that support at 297. So, it's pushing higher again.
Very strong day today, up over 5%. Resistance will remain at the 368-369 level. And very strong support for Tesla at 337. Moving on to Nvidia. So, semiconductor stocks, Nvidia is rolling back here. 213-214 will be this support. If you get a breakout below that level, the next target for Nvidia would be at 190.
So, again, lower highs and lower lows, continued sideways consolidation. We got a small breakout and now we're moving sideways again with support at 213. Advanced Micro Devices is also in this range inside a pattern of lower highs and lower lows, I would say. Very strong support for AMD all the way down to 422.
So this will be a very strong support area. If it sinks further, the next support for Advanced Micro Devices will be at 271. Broadcom, on the other hand, is rolling back here. So, a little dip below 400. Next support for Broadcom is at 351. So, again , a little oversold situation for Broadcom, so it looks a little more attractive.
Lateral consolidation, resistance, and future targets for Broadcom remain at $404 to $405. Moving on to Meta Platforms, and Meta has a very strong demand area here. So, inside this green rectangle, there is very strong support, and resistance reaches $603โ604. And if it breaks above this level, $683 will be the next level to watch.
I closed my call option on Meta, but I'm actually planning to open a new one. But right now it is very oversold and is actually trading at the support level, so there is no point in opening it now. So if you see momentum pushing the price above 600, I might also consider a call option on Meta with a strike of 700 for the future.
Netflix, on the other hand, is also showing a very nice, consistent, and linear recovery. The support level will remain at $78 to $71 per share. For Netflix, resistance continues to be seen in the range of $90 to $91. Google, on the other hand, is also consolidating in a sideways trend within this range.
The resistance level remains at 373. For Google, there is very strong support at 334 and up to $318. So, again, there is significant sideways consolidation in this range for Google right now. Microsoft is also moving sideways, getting a small pullback from this resistance at 490. There is also very strong support for Microsoft at 467.
And finally, Palantir is moving up, almost to $180 per share. Palantir has a big target and resistance at 198, almost $200, with very strong support at 162. Last but not least, SoFi, which is also up more than 5.5%, resistance will remain at almost 19, around $20 per share, with very strong support within that green rectangle.
I hope you enjoyed this video and the complete overview of the markets. Links will be below if you want to explore our platform. Again, the Money Vest index, volatility dashboard, shopping list, earnings and economic event calendars, Patreon videos, Discord accessโall of this is now 40% off with an annual subscription until the end of this month.
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