🗞 Your Refund is On Its Way

WHILE YOU POUR THE JOE… ☕️
Between the Lines

Well, the Fed kept interest rates unchanged as expected; however, one comment stood out to us as to what Powell might be thinking. ☁️ 

He says that asset prices overall are elevated…

So, keep in mind stocks, real estate, and others. Not bonds though, bonds are clearly the undervalued safety play here as we say from Monday’s price action out of dollars and into bonds.

If you read this post explaining why Buffett has been selling, then you’d understand what’s happening in the broader sense. 📉 

Speaking of prices being too high, let’s get on with today’s email 📧…

RECORD PRICES
Welcome to the Pawn Shop

What you see above are the equity risk premium yields, which are close cousins to the equity risk premium spreads that we always cover and show you here.

The point is that they all tell the same message: that stocks offer very little incentive for investors today over higher-yield assets like bonds.

By comparison, we’re at the lowest premiums since the dot com bubble of 2000, meaning the S&P 500 and NASDAQ 100 stocks are likely way too expensive. 📉 

If you read our post from Wednesday, then it would go hand in hand with knowing how the $IVE / $IVW spread setup, a downside warning really, plays out nicely with these low risk premiums.

Now as you know, we are also very bullish on bonds, especially the $TLT ETF. 🔥 

Some on Twitter still argue that inflation will occur in the coming months and quarters, though there is very little evidence to support that.

Therefore, this flow report from J.P. Morgan Chase shows a new high for bonds.

Simply put, we’re not having a soft landing or inflation, and the only other alternatives are stagflation or recession.

We took the time to break down why stagflation won’t be it either.

And that leaves us with recession, in which case bond yields need to come down for the wrong reasons, and in case you missed it President Trump said he’d immediately ask for lower interest rates. 📉 

And as always, we want to remind you that the spreads between the dollar index and the $TLT bond ETF are also at a cyclical high.

In fact, they’re exactly where they were back in October 2023, when the S&P 500 and other equity indexes started to come off the highs as well. 📉 

Knowing that most of the indicators we follow, both leading and current, signal a potential decline in financial markets, we want to remind you of a little Easter egg that’s hiding in plain sight. 👀 

If you remember this chart, you know that the manufacturing sector is about to go on a new breakout here soon, making some of those domestic manufacturing names underwater volleyballs today. 📈 

In case you missed it, we have a full 37-minute YouTube video breaking down some of the themes and trends that we thought added to this thesis in the manufacturing PMI.

Before you watch it though, make sure you download your Free Excel & PDF guide to follow along the PMI report. ⬇️ 

Well, now you have a better chance of not only covering your downside but also exposing your portfolio to some crazy good returns for the better part of 2025.

More to come in that regard, which leads us to our stock pick today. 🫰 

TRADE OF THE WEEK
Sam Ain’t My Uncle

Tax season is upon us, and unless President Trump can erase the personal income tax in time, as he has proposed, Intuit stock is set to receive a lot more business. 📈 

Which is why it has made it among the top finance apps downloaded in the Apple App Store, which is a good sign ay day.

Taken as a sign for a potentially bullish quarter, there are other factors in this stock that make us want to look into it as a potential swing by the time earnings are released. 📈 

Here’s one of them, and actually one of the most important ones (timing wise).

If you’ve been with us for a while, then you recognize this as the market/volume profile. There’s a specific level right now that makes us believe higher prices are coming.

You notice that we’re in the volume cutoff level for 2024, which also has seen zero to no volume for 2025 so far.

This combination could mean that responsive buyers might react to those cutoffs and start accumulating some positions, as has typically been the case every time we pitch you a stock with this sort of setup. 📈 

That being said, we think that any entry between $590-$585 is going to provide a reasonable risk/reward ratio for us. 🎯 

And based on this profile, we’d set our initial exit points at around $675-$700, though some Wall Street analysts think the stock has more room to go higher. 💰️ 

NOW GO AND MAKE IT HAPPEN
The Father of Perma Carefulness

Nassim Nicholas Taleb is known for many things, but one of them is his book describing some of the ways that life throws us off every once in a while.

These events also happen in markets, such as Monday’s sharp price action due to the DeepSeek and Nvidia debacle. Today’s book recommendation 📖 could serve you as a reminder to always keep your guard up when it comes to the markets.

To your success,

G. 🥃