Alpha Report Issue #97

• Current read is 53 on the fear greed index vs 64 last week.

• I think this should be closer to 70, so still greedy IMO.

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

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

• I like to be bullish when there is extreme fear

• I like to be bearish when extreme greed.

• So right now, I am being VERY careful!

• Opportunity will come. BE PATIENT!

• 30 year fixed mortgage rate falls at 6.11% Today, vs 6.46% last Sunday.

• 10 year treasury bond yield falls to 4.07% Today, vs 4.23% last Sunday.

• 2 year treasury bond yield falls to 3.50% Today, vs 3.62% last Sunday.

• Interest rates came down quite a bit this week.

• This is largely because of the weak jobs data and rate cuts are implied to help support the economy.

• Remember, as interest rates/bond yields DECREASE, stocks become MORE attractive because bond yields go DOWN which makes the risk free bond look LESS attractive.

What’s up everyone!
Hope you’re having a great weekend!
Let’s break down what’s going on right now!

• This week we got another clear sign the economy is cooling.

• Jobs data came in weaker than expected, and the market immediately priced in more Fed rate cuts.

• Yields dropped across the board, and that’s usually the first domino that sets up everything else.

• When rates fall, people tend to celebrate.

• Stocks rip higher, borrowing gets cheaper, and mortgage rates start to come back down.

• But it’s not all sunshine.

• Valuations are already high ish in some sectors which means the margin of safety is shrinking.

• The more stretched things get, the more careful you need to be.

• Weak jobs data isn’t bullish at its core, it just means the Fed might have to step in with cuts to keep things from slowing too much.

• Here’s how I’m looking at it:

  1. Lock in fixed returns while you can. Even though yields are down from the peak, you can still get solid risk free income in Treasuries, CDs, or high quality bonds. If the Fed cuts aggressively, those opportunities won’t be around much longer.

  2. Refinance window may be opening. If you bought a home in the last year, chances are you locked in a mortgage rate near the highs. With rates sliding, refinancing might become one of the smartest money moves you can make this year.

  3. Stocks are priced for perfection. The S&P is still near record highs, and big tech continues to carry the market. If earnings growth slows or the economy dips harder than expected, stretched valuations leave little cushion. Stay invested, but be careful chasing at these levels.

  Outside of jobs and rates, we also saw:

  • Energy markets cooling off a bit as oil prices pulled back. That’s good for inflation, but another reminder of global demand slowing.

  • Earnings season winding down. Results have been mixed. Tech has held strong, but many industrial names are guiding cautiously, which lines up with weaker labor data.

  • The dollar dipped as traders positioned for rate cuts, which could give a tailwind to international equities.

  Bottom line: the Fed is walking a fine line here. Too many cuts, and they risk fueling inflation again. Too few, and the slowdown gets worse. For investors, the playbook is simple: lock in safe yields while they’re still attractive, keep your equity exposure disciplined, and don’t ignore the refinance opportunities if you’ve got debt tied to rates.

Quick Market Valuation Recap:

• Market is a little pricy now.

• Rate cuts help support the valuation.

• Be careful with leverage even more now cause of downside risks.

• This does NOT mean a dip MUST happen, but the risks are building the more expensive the market gets.

• I am allocating my portfolios appropriately to capitalize on upside, downside, and generate cash flow while things are a little lofty.

• Please, take some time to understand this chart below.

  

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. Be patient!

I have a few spots left to become a client at my financial advisory firm.
(currently booking about 6 weeks out)

• Investing.

• Cash flow.

• Asset Management.

• Insurance (life, disability, etc)

• Estate Planning.

• Taxes Strategy.

• Private Equity.

• Private Credit.

• Plus some super interesting things that really could made sense given current state of the market.

Click the button below to set up a FREE meeting with my team and I👇️