🗞 Time to Be Responsible

WHILE YOU POUR THE JOE… ☕️

The American consumer is cooked…

You have 25% of Buy Now Pay Later (BNPL) users financing grocery purchases today, and 41% of them are incurring late fees now.

Which means the average person is now seeking help to even buy groceries, and even with that help they can’t even afford the payments. 🙃 

For groceries…

I am honestly tired of posting with a bearish lean, I can’t remember the last time I was genuinely bullish on the market, so can we please just get the big correction so I can be a bull again? Thanks.

Being bearish on the S&P 500 and the United States economy doesn’t mean I am going net short, far from it.

I still think there are great buying opportunities in some areas of the market, which will be posted later this week as we get PMI reports and other economic data.

But even then, it would be irresponsible to go fully risk-on (net long) on a portfolio.

In my opinion, backed by years of performance data, a long/short approach is the best way to navigate markets like this one.

Why?

You remain uncorrelated and market neutral, so you can shrug off what the S&P 500 ends up doing while your portfolio works itself out based on both statistical arbitrage and fundamentals.

Both of these factors can take hours to explain, so I made a little gift for you:

• A free 5-day email experience breaking down the entire long/short process.

At the end of it, I hope you are able to pitch me a proper idea!

Sign up for The Sovereign Trader Playbook (did I mention it’s free?) ✅ 

Speaking of being responsible, let’s get on with today’s email 📧…

ECONOMIC WARFARE
Atlas Shrugged

UK’s 30-year Gilts were all over the news this week, for good reason.

But it’s not just the UK, yields all over Europe started to rise in tandem:

• France

• Germany

• Italy

• Spain

Now we all know price and yield are inverse in bonds, so here comes a chicken or the egg scenario.

Which drives which? ⬇️ 

Price, it’s always price. And price is driven by supply and demand.

All these nations (US included) are spending money like there’s no tomorrow. The EU on healthcare and other social benefits, and the US on tax cuts and defense along with the onshoring of AI data centers.

Whether that’s good or bad, well that’s up to bonds to figure out right?

For the US, the 30-year yield is now flirting back with 5%.

And I think there’s a pretty good idea as to why this is:

• Uncertainty

Awareness is growing to the fact that the S&P 500 is trading at all-time high valuations, past any previous speculative territory. 👀 

Then you have internal conflicts, like whether tariffs are legal or not and that money will have to be refunded.

Think about it…

If you’re a business owner, how do you even manage inventory spending in this environment??

1. If you stock up now (in fear of tariffs) you might end up with oversupply and see your margins collapse along with earnings

2. Don’t stock up and you will lose an entire season, which could be arguably worse since you don’t have cash reserves to react accordingly

Which is why 90% of comments in the latest PMI survey were bearish: 🐻 

This is exactly why remaining net neutral to the market is so important today.

If you’ve made good money this year by being a net buyer, I would tell you to take profits and start de-risking your portfolios, whether that means selling or start to look for hedges.

However,

Most people have no idea how to hedge or how to even look for short ideas properly.

No, it’s not simply saying “$PLTR looks overbought and expensive, let me short it.” It takes a whole lot more than that.

While our free 5-day email experience can initially guide you in this path, it’s only 10% of what the work truly entails.

Which is fine, because the other 90% is what we teach inside our flagship program The Sovereign Trader. ⬇️ 

• You get supported in every idea and portfolio you run (by me and other alumni)

• Data updates on economic indicators and idea-generation avenues

• The ability to monetize by selling your pro-level ideas do investors

And much more.

Reinvest your earnings into this skillset, and I promise you will end up with a tenfold return on it, not to mention protect what you’ve built when volatility comes back to the market.

Sign up here. ✅ 

Mass Mania

If you’re a money manager and see all of the uncertainty in developed nations going on (hence the bond dumping), along all-time high valuations in stocks and real estate.

What do you do? 🤷‍♂️ 

Usually, these managers would start to buy dollars, but this time we even have uncertainty in the currency market, so the only option left is:

Gold, which is now past $3,600 per ounce. 📈 

Governments themselves are starting to dump bonds and go into gold (like India and China, even the US).

And there’s a reason for that, everything else is being seen as risky and uncertain.

Especially with all the manic behavior going on in things like:

• Anthropic raising $13 billion in an $183 billion valuation (no profits yet)

• Hot IPOs all over becoming a pump and dump (like $CRWV recently)

• Credit delinquencies on the rise, economic data suggesting an outright depression.

I’ve said it before, but those who are betting on the Fed cuts this September bringing another rally may have another thing coming to them.

Reserving my views to neutral, I don’t plan to trade either a big rally or big selloff, but rather stay market neutral and exposed to areas that may benefit.

Such as mid-caps and a massive sector rotation backed by EPS expansion.

We gave you a 62% profit potential setup for long/short in this newsletter post.

Next one is coming up later this week, so stay tuned my friend. 👀 

To your success,

G 🫰 

GO AND MAKE IT HAPPEN
Join the Desk

We’re revamping our community in WhatsApp.

There’s a free channel you can join below, and by being part of it you can see what some pretty smart people are saying about the current state of the economy.

I see ideas pitched in commodities, stocks, and even crypto every day, and it helps cover blind spots that I may have missed.

By being there, you will have access to an even deeper community launching soon where we will pick the best ideas and properly model them in a way that can be executed - a la Goldman Sachs. ⬇️ 

To your success,

G. 🥃