WARNING: BOND YEILDS JUST HIT 20 YEAR HIGHS
In a Nutshell
Markets are flashing warning signs with 30-year bond yields at 20-year highs, rising inflation, and a weakening labor market, yet stocks remain overbought and irrational. Nvidia reports earnings tomorrow, but the speaker is holding existing shares under $100 and avoiding new buys at current levels around $220 due to poor risk-reward. The advice is to stay patient, avoid leverage, and hold cash to buy good deals during potential sell-offs.
These notes were generated by AI and may contain inaccuracies.
Markets are slightly in the red but beginning to show signs of possible support. Markets have consistently shown signs of lower lows and lower highs for the second day in a row. There is a really big day tomorrow with Nvidia reporting earnings. Markets are incredibly overbought on the 4-hour time frame with huge downside potential. Markets have been irrational despite terrible news including a weakening labor market and rising inflation.
The US 30-year Treasury bond yields have risen to 5.18%, the highest level since July of 2007. This is the highest level in nearly 20 years. There was also an update that Iran's proposal to the US includes a list of demands that Trump is not going to accept. Markets continue to push higher despite these red flags.
Nvidia is reporting earnings tomorrow with market expectations of $1.75 earnings per share and revenue estimate of 78.82 billion. Nvidia is a challenging stock to bet against because it often exceeds market expectations. However, even when Nvidia reports better than expected earnings, the market reaction is not always positive. The question to ask is whether it is a good enough deal to buy before earnings for potential upside, or if it is overbought enough that it is not worth the risk.
The speaker is invested in Nvidia at less than $100 per share and does not want to buy more at current levels around $220. With all the red flags including bond yields at elevated levels, rising inflation, weak labor market, and tensions in the Middle East, the speaker is okay sitting on the sidelines with existing investments and holding cash to pick up good deals if markets sell off. The goal is not necessarily to short the market but to invest when good deals present themselves, which is hard to find in tech right now.
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