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Could it be that your Meet Kevin guy is wrong and about to lose a bunch of money? Uh, yes, that's possible. So, I don't think so yet, but I would like to humbly consider how we could be wrong. First, let's briefly clarify the thesis, and then move on to the facts, analysis, and graphs surrounding the question: oh, is this possible?
We still have work to do . We'll look at them in a moment. So, first of all, this morning in our Alpha report, when we saw yields rise by 7.5 basis points, we said, "Hey, yields are falling, stocks are rising." A very simple argument. But I believe we have settled in at 5.27, and that the slope or acceleration in the 10-year Treasury yield has actually been slowing over the last 5 days.
This, of course, contrasts with the rapid growth we have seen if we look at the last 6 months. My point is that if we look at the last 5 days, we don't see a sharp red line, we see a fairly flat green line. So that was my reasoning this morning: “Hey , don’t worry about it. This is because of the decline of SpaceX.
We can see these yields falling quite quickly.” And guess what happened? And so it happened. During the day, yields went straight down after the jump , and the Nasdaq rose from -80 basis points to -20. This is recovery. So far, everything is going according to plan. But is it possible that this is all so damn wrong?
Is it possible that Kevin's 5.27 is not a peak at all, and we are waiting for a much higher level? Well, yes. So let's analyze this together. First, here is a specific graph, and the author of this article in good old Bloomberg makes an argument. They say that 30-year yields have not yet peaked. They look at 30-year bonds, which had the same range of movement as 10-year bonds.
The 30-year ones, of course, have a longer maturity, but both instruments move relatively similarly. So, they say that technical studies support this. What exactly does it confirm? We'll look at that in a moment. Essentially, they're saying, "Hey, we still have a lot of room for the Treasury bond situation to get a lot worse." And when I read that, the first thing I thought wasn't, "Oh, [ __ ] this person, they have a different opinion than me." So actually, I'm going back to what some of you asked me this morning: " Kevin, do you know what the potential real problem is with TLT, and therefore what the maximum is on the 10-year bond?" Actually, I think someone asked me what the maximum was for 10-year-olds, like what level they could go to.
So I calculated how far we were from the bottom this morning by TLT. Because we lost this 25- year bond ETF called TLT in 2023, we lost the 78.77 mark that we had held once, twice, three, four, five times. Yes, we held her five times . Now, perhaps, we are losing her for the second time. Last time we lost it, TLT was supposed to drop another 5%.
So if we take what we had this morning, which is , you know, 5.32, and add another 5%, we get about 5.6. This is potentially the same level to which rates could soar—up to 5.6. This is not a perfect indicator of how 10-year bonds may change because it is an ETF that is affected by bond flows and maturities.
Again, that's an average of 25 years. So the point is that it's not a perfect comparison, and it was n't intended that way. The thing is, I immediately thought, "Okay, if we're wrong, where are we going?" Well, that's one logical place. And what kind of analysis is this from pessimists who say that there are still many falls ahead and people are running out of money?
Yes, I know. We will consider both of these issues. Good. So, the first one is right here. The recent rise in Treasury yields is far from technically exhausted, it said . Eh, I don't agree, but that's okay. I still want to understand how I could be wrong. I don't like to act like my opinion is the only right one, you know?
On Wednesday, 30- year bond yields again hit their highest since 2002, and the market's most reliable trend indicators suggest that the move is not over yet. The 30- year bond hit 5.72 earlier, adding nearly 90 basis points this year alone. Although they later cut most of the daily growth. This was our prediction from the Alpha report.
By the way, for those who don't know what an Alpha report is, it's an action plan that I create every morning before the market opens. Look, here's what's on our agenda today. This is when the minutes are expected to be published . You already know that. This doesn't concern anyone. This is what the markets are expecting to hear.
We already know this. Old news. But that's the point of the game. This is what I think today's move will be, given that people already know where their "blind spots" will be. This is "Alpha", of course. It's not always flawless, but knock on wood, we've been showing pretty good results lately. This huge annual growth may make bonds attractive, but some of my colleagues argue that they are far from oversold and yields are actually heading towards 6% .
Uh, and even more than 6%. Wait a second. Uh, heading towards the 2002 peak of 5.87% and even above 6%. So , they are saying that not only do they expect growth, but that we will soon be very close to 6%. To analyze this statement technically, I tested a set of technical indicators, blah blah blah, and they gave this fancy indicator that says, "Hey, yeah, we might actually test 6% soon ." They stated that their research on 30- year bonds not only remains relevant but is accelerating in their world of technical analysis.
I agree that profitability is increasing, but I don't think it is accelerating. In fact, I think it's slowing down. I was showing you the graph. I showed you the slowdown, but it's nothing. This is normal. We may have different opinions. At the same time, these people are also talking about the markets running out of cash.
This is interesting because we live in a time of " sucking out," which is pretty incredible. By the way, what's even more incredible is that a huge number of you signed up for Reinvest one and moved to a higher level. So I want to express my gratitude to you. When we raise the price on Thursday, thank you.
We are very grateful to all of you who joined Reinvest one. I think it's interesting to watch the demographics or, let's say, the distribution. About 12 % of you use Apple Pay, about 7.4% use “buy now, pay later” services , and about 1.1% use cryptocurrency or Amazon Pay. There were three cryptocurrency payments and about two via Amazon Pay.
Yeah, so that's pretty small. But the vast majority of you use credit cards, through Link or otherwise . But welcome aboard Reinvest one. We are very excited about what we offer now, we are constantly updating the product and adding more and more new features that we are building on the backend. So we are incredibly happy.
This is great for the company. It's just incredible for everyone involved. So we are very, very grateful. And we look forward to the opportunity to provide much more value here. By the way, many of you are asking about agents. And yes, I just want to be clear: our goal is to actively support agents and API calls within the next year, hopefully even much sooner.
So what is this talk about running out of cash? That 's a pretty disturbing headline, is n't it? So, they argue that repos now indicate that cash is becoming scarcer. That there is a gradual increase in the Federal Reserve's repo rates, which is an early sign of massive issuance of bills, that is, the draining of funds - not only by the Treasury Department, but also by Elon, Google, and whoever.
Broadcom, right? Everyone wants to raise money. This limits the cash available. So here we see that overnight repo rates against general assets were trading at around 3.95% this week. So, the firm rose to 3.9, bringing the collateralized financing line to normal, and so on. This indicates some pressure in the treasury financing department, which is far from a general deterioration in credit conditions.
In other words, don't panic, everything will be fine. But now we're starting to see all these auctions starting to have an impact. And even the money sitting in banks is starting to signal, "Hey, yeah, it looks like we're running out of capital here ." Now, what does this actually mean for us? Well, for us, that means, frankly, expecting more volatility.
And that's okay. Whenever such a drawdown occurs, we will see volatility. This drain usually affects people like Leopold, those with high leverage. So, as long as you don't have significant credit obligations, this is usually not a big problem. And, most likely , it even creates buying opportunities on the dip.
But, you know, all of these things accumulate, and when they come together, you get an increase in what's called shock risk. We like to measure this by looking at the 10-2 year Treasury yield curve . And whenever the 10-2 spread exceeds 50 points, we become susceptible to shocks. We now have 52 basis points.
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meetkevin.com/sylo. s i l o to start by the end of this month. You might be thinking, "Gosh, that sounds pretty weird ." Like, who even keeps track of these small changes? But Wall Street is watching , trying to figure out how people are coping with all this debt. And how does this compare to how people have dealt with it in the past?
So I'll show you this by putting a graph on the screen. We had a huge outflow because of Elon Musk around here, you know , early June, Google raised funds right here, at the end of May. A lot of it was relatively noise. You see the movement, if the average here is around 3.65, then you need to make a small window for that.
The average is around 3.65, and the peak was around 3.67 before the outflow, it reached 3.7. So nothing unusual. It's really jumping because we raised rates by 25 basis points. This is normal. But then we were hovering around 83 here, the idea is that we adjusted from that level to 83. And they claim that the upward trend is even bigger than that adjustment.
And if that continues every day, when you really dig into the details and look at it like that, right? We see that this pushes it up significantly. They argue that there is little cash left to continue absorbing all this outflow. Is this a problem? Yes. Yes. Both of these things contribute to the fact that I could be wrong in my belief that profitability will peak.
We will eventually make a deal with Iran. Of course, you know that this could also be a mistake. We may not make a deal with Iran. You know, there was literally just an article in The Atlantic, and I thought it was really interesting about Iran. Trump is considering a plan to strike Iran before the midterm elections.
Personally, I think this is just an open negotiation where Donald Trump is addressing his supporters and saying, " We have to make sure they don't get a bomb." You wouldn't mind slightly higher gas prices to ensure they don't have a bomb, would you? And everyone is happy and supports it. This is how Trump publicly bargains with Iran, because they consider it their divine right to enrich uranium.
And Trump says: okay, then we'll lift the blockade. The problem is that if both sides are stubborn, we wo n't get anywhere. So, in my opinion, this exclusive from The Atlantic about Trump considering a plan to strike Iran before the midterm elections ...I actually think that's part of the open negotiations too.
The idea is : listen, we'll come and deal with you over the next two weeks, because remember, Trump needs a victory in 20 days. Somewhere between October 20, 2017, he needs a win. Because it will be just before the Federal Reserve meeting and before the elections. So the window of opportunity for Trump to win is from the 20th to the 27th.
This means he has only 13 days left to get some concessions from Iran. So you think they leaked it on purpose? Of course, that's right. Pentagon planners are evaluating options. A final decision has not yet been made. I can change my mind at any moment. After months of shifting battles, Trump warns he could continue them.
The White House and the Pentagon are developing options for strikes on Iranian targets that could be implemented before the midterm elections, two administration officials said. The scale and targets of potential strikes, as well as whether the administration will actually carry them out, are still up for debate.
The plans are being developed by the US Central Command ( CENTCOM), which is coordinating the military effort, a US official told us. Even supporters of these plans acknowledge that limited strikes alone will not force Iran to the negotiating table, restore safe shipping through the Strait of Hormuz, or lower gasoline prices by Election Day .
But supporters say such action, after months of shaky peace, would allow Trump to show strength and potentially declare a certain victory. No, there is no chance that Trump wants more strikes. In fact, you know how we can understand that they don't really want new strikes? We had 13 tankers attacked in Hormuz.
Small blows, but blows nonetheless. Over the last week and a half , starting September 29th. How many attacks have we repelled in return? Zero. Donald Trump doesn't want bombs flying right now, and Iran knows it. But he chose the strategy of acting as if they were just small fleas. It's like he's walking through a swamp, and these little mosquitoes or fleas are attacking him, and he's just, you know, pretending to just shake them off.
He pretends it does n't bother him. And this really annoys these fleas and mosquitoes. They're like, "Oh, what the hell, dude? You have to answer to us. Show us some respect. Okay, we'll do more." And it is this : the market is growing. Profitability is normal. I still have time. Hey, Pete, tell them we're going to drop a few more bombs on them .
Maybe this will make them fall behind. This is my opinion. Again , both of these assumptions could be wrong. I mean, think about it. My prediction for 527 could be horribly wrong on the timing. I don't think so, but it could be wrong. It could be 5% wrong, as we saw with TLT, or it could be completely wrong, as these people in suits claim.
Although I would like to play against them, so I don't think so. I also don't think Donald Trump will launch a single missile. No rockets from now until the elections. No way. It was too quiet. Notice that all the news headlines are about the Houthis, Yemen, the displacement and destruction there, or about people dying in Gaza or Lebanon.
All of this is terrible, but it has nothing to do with the US military right now. I mean, of course, you can make the argument, which is not so far- fetched, that the whole situation with the Houthis is happening because of the US and so on. Then you can make the argument: " Yes, but Hamas started all this." We can give a million different arguments.
But my opinion is that in the near term, the position is: "Well, it's not us." This is the position. Ha? We ship oil through the Strait of Hormuz. We are not at war with the Houthis. Ha? Israel strikes, and Hezbollah carries out attacks. We are not participating. Our bases are fine. Our tankers...What strikes?
We don't see any hits. 13 strokes? What kind of blows? We do n't answer to anyone because we have n't been touched. By the way, we can strengthen the blows. It's all a game. It's all a game. Besides, it's just clowning, not a game. But listen, people running out of money to fund AI is a problem. Of course.
But I think it will eventually be covered by new funding. More debts. The bubble will continue to inflate. Let's be frank. We expect this to be a bubble, but we believe the party is just beginning. This is too cool. The party continues. But again, we're in a state of shock right now because of 10-2, the spread between 10- and 2-year bonds.
This is not good. I think we've been very accurate in our predictions in Alpha Report so far, and I'm very happy about that at Reinvest One. And if you don't want to join Reinvest One for whatever reason, maybe you don't like me or you can't afford it, well, it doesn't matter, right? Whatever your reason, I still encourage you to at least subscribe to the free daily digest.
So when you switch to Reinvest One, you can just go up here and click on the free digest. It's pretty convenient, just an email. You can also get it on the Meet Kevin app in the "daily fortune" tab, but you can enter your email here. Just make sure if you enter your email here, meetkevin.com/digest works, or just go to reinvestone.com.
Make sure you check your spam folder after entering the mail. You will need to click the confirmation button in the email and pass the captcha. Yes, I know, it's a big hassle. But then you'll still receive emails, because without a captcha they'll constantly end up in spam, and then, you know, what's the point of subscribing?
Again , it's free. And that costs money. This will be so exciting. We're turning this into a research product for everyone, where you get only the insights you need, the target prices, the valuations, the data you need, when you need it. In the future, your agent will be able to analyze this, okay? I want to be clear on this matter.
We're not ready for the agent part yet. But it will appear. This will be very cool. So we are in foreboding. In any case, thank you. I wish you a wonderful evening, and I'll see you soon. Goodbye, all the bes has what you've described here never happened? .
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