Alpha Report Issue #93

• Current read is 59 on the fear greed index vs 50 last week.

• This index moves very fast and I feel like it should still be on the high side of the greed category… (somewhere around 70)

• The market is still lofty and greedy IMO.

• Market Fearful = Potential Opportunity/Deals. (buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (buy puts/sell calls/sell shares)

• Remember, I like to be bullish when there is extreme fear & bearish when extreme greed.

• So right now, I am being VERY careful!

• Opportunity will come. BE PATIENT!

• 30 year fixed mortgage rate falls to 6.48% Today, vs 6.58% last Sunday.

• 10 year treasury bond yield climbs to 4.28% Today, vs 4.25% last Sunday.

• 2 year treasury bond yield climbs to 3.76% Today, vs 3.71% last Sunday.

• Interest rates went up a little this week which puts downside pressure on stocks.

• As interest rates/bond yields INCREASE, stocks become LESS attractive because bond yields go UP which makes the risk free bond look more attractive.

What’s up everyone!
Hope you’re having a great weekend!

As always, let’s talk about what matters in the market right now to make some money and capitalize on all the craziness.

• Market’s a bit pricey right now – about 10% over fair value in my opinion. Earnings have been solid this season, but the market ran faster than earnings, which means valuations have crept higher. (be careful)

• Earnings season so far: Most big names have delivered strong numbers. AI-heavy names (NVDA, MSFT, AMZN, META, GOOG) continue to dominate, while consumer dependent companies are mixed.

• AI impact on jobs: The labor market is still strong for now, but cracks can come quick. Layoffs usually hit in bulk because no CEO wants to be “the first” to cut – they like cover from peers. AI is a real job killer now. When people quit, retire, or get laid off, those jobs aren’t being refilled at the same pace. That’s going to be a bigger issue in the next recession.

• Winners vs Losers in the next downturn:

  • Winners: MSFT, AMZN, AMD, NVDA, TSM, AAPL, META, GOOG, TSLA – companies fueling or benefiting from AI.

  • Losers: Visa, Mastercard, Home Depot, Best Buy, Walmart – all heavily tied to consumer spending. If people don’t have jobs, they don’t spend.

• Inflation watch: CPI and PPI data this week will matter. I expect a bumpy path for the next few reports, but the overall trend is still lower. That’s good for the Fed’s cutting outlook.

• Rates outlook: If rates go down, bond prices rally. I’m eyeing more BLV as both a rate cut play and a hedge in case equities pull back.

• Nvidia/AMD update: NVDA apparently just got the green light to ship some chips to China. AMD likely to get similar approval soon. That’s a potential tailwind for both.

• Fed & policy: I think JPow is out by next summer and a new Fed chair will be more aggressive with cuts. Market has already priced in some cuts, so it’s not a total surprise play anymore.

• Warren Buffett signal: Buffett sitting on record cash and not buying back BRK says deals are scarce. For us, it’s different – we can make moves in smaller caps or niche plays without needing a multi-billion dollar target.

• My Current Positioning:

  • Portfolio = 100% long equities.

  • Leveraged options exposure = low right now.

  • This is a cautious offensive stance. I’m ready for upside but keeping ratios in check to capitalize on potential downside.

• Long-term view: 5+ years out, I’m very bullish. The AI revolution will create massive winners – but also massive losers. Short-term (under 5 years) will be a volatile ride.

• Key mindset: Market will hit new all time highs again over time, but you’ve got to be mentally and financially prepared for the dips. Buy great companies at good prices. Keep your ratios in check. Don’t YOLO into hype.

Bottom line:
We’re in a lofty market with good earnings momentum, a potential Fed tailwind, and an AI driven economic shift that will reward the right companies. But cracks in the labor market or a spike in inflation could change the tone FAST. I’m positioned for growth but with enough caution to survive whatever the short term throws at us.

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