Latest / Financial Survival Network / Bond Market Warning: AI Stock Collapse Ahead? - Matthew Tuttle #6412

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Bond Market Warning: AI Stock Collapse Ahead? - Matthew Tuttle #6412 · Financial Survival Network

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  Speaker 1: You're listening to Carrie Letz's Financial Survival Network, where you
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  Speaker 2: Welcome you are listening to and watching the Financial Survival Network.
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  Speaker 2: I'm your host, Carrie leuts and today Matthew Tuttle is
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  Speaker 2: with us. And well, Matthew, we've got a pretty confusing
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  Speaker 2: macro backdrop. PC came in about we're expected job jobless claims,
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  Speaker 2: not a surprise, GDP disappointed. Yet the bond market is
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  Speaker 2: still selling off after the Fed held rates steady, And
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  Speaker 2: what do you make of that? The why? You know,
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  Speaker 2: if rates aren't going lower, why would bonds be dropping?
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  Speaker 3: Yeah, and you know, great point. I think a lot
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  Speaker 3: of people don't realize that the Fed controls real short
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  Speaker 3: term interest rates, but it's the bond traders that control
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  Speaker 3: all the others. And you know, interestingly, we saw three
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  Speaker 3: dissenters yesterday in the FED meeting, which I believe is
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  Speaker 3: the most descent we've seen in ten years. You know,
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  Speaker 3: we're calling it Waco. Walsh always chickens out. I think
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  Speaker 3: if if this had been Powell, he would erased rates.
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  Speaker 3: Worsh was in a tough spot. Worsh's Trump's guy. He
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  Speaker 3: saw what happened to Powell. Trump wants to lower rates.
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  Speaker 3: Worsh definitely can't do that. But you know he did
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  Speaker 3: the next best thing, which is he chickened out out.
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  Speaker 3: The bond market's calling them on it. You know, they're saying, no,
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  Speaker 3: you know, you should raise rates. We're going to do it.
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  Speaker 3: You know, we see higher inflation going forward. You know,
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  Speaker 3: oil prices or back up. This war is not over.
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  Speaker 3: AI is going to be inflationary, and we think rates
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  Speaker 3: should be higher. You know, stocks are ignoring it. Stocks
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  Speaker 3: are rallying today. We'll see whether it's just kind of
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  Speaker 3: a you know, a typical dead cap bounce in stocks,
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  Speaker 3: you know, longer term. If you're asking me who's right,
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  Speaker 3: the bond guys are the stock guys, I'm going to
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  Speaker 3: go with the bond guys. So I would be cautious here.
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  Speaker 2: So the bond vigilantes, as they're known as they were
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  Speaker 2: really on a bit of a hiatus for quite a while,
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  Speaker 2: but now they're back front and center.
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  Speaker 3: Yeah. I mean, you know, you do something they don't like,
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  Speaker 3: you drag them back in. And we're also watching golden
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  Speaker 3: in bitcoin. You know, golden bitcoin are both up the
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  Speaker 3: same day, which you know usually isn't weird, but lately,
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  Speaker 3: you know that that that's a strange thing as well.
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  Speaker 3: I think you're also seeing money flow into gold, money
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  Speaker 3: flow into crypto because people just don't trust that the
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  Speaker 3: Fed's got this covered. I don't think they do. I mean,
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  Speaker 3: I think they're gonna end up moving the goalposts and
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  Speaker 3: come out and say, yeah, you know, our target's not
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  Speaker 3: two percent anymore, it's you know, three percent, four percent
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  Speaker 3: whatever it is, which again is bad for bonds. You know,
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  Speaker 3: we we tell clients all the time bonds are uninvestible
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  Speaker 3: at this point, and you know, and I'm not seeing
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  Speaker 3: anything that changes my view there.
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  Speaker 2: All right, So I mean we're kind of like it
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  Speaker 2: at a bypass here. You know, they can't raise rate.
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  Speaker 2: They can't raise rates, he risks the ire of his boss,
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  Speaker 2: And they can't cut rates because bond prices will crash
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  Speaker 2: and the dollar will take a hit, and you see
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  Speaker 2: the uncertainty kind of filter off into the alternative investment space.
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  Speaker 3: Right, yeah, you are. Now what's interesting is the one
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  Speaker 3: thing that Trump watches and it's probably bestn't who is
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  Speaker 3: watching it in whispering in his ear our ten year
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  Speaker 3: and and out rates. So if those continue to spike,
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  Speaker 3: something's going to give. You know, the same thing happened
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  Speaker 3: during Liberation Day. You know, Trump came out, you know,
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  Speaker 3: all these tariffs, all of a sudden, you know that
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  Speaker 3: the ten year rate spike bessens in his ear, Trump
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  Speaker 3: backs off. So you know this, We've still got a
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  Speaker 3: lot that's going to play out here. You know this,
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  Speaker 3: this is not over by any means, but you know,
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  Speaker 3: we're telling clients in our our calls and in our newsletter,
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  Speaker 3: watch interest rates. Interest rates are going to take you
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  Speaker 3: to where you need to go. And you know, and
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  Speaker 3: that's going to be the driver, I mean not today,
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  Speaker 3: but that's going to be the driver of what happens
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  Speaker 3: in this market.
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  Speaker 2: Yeah. Well, you know, rates haven't been the going down
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  Speaker 2: really significantly as of late, and the dollars holding up.
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  Speaker 2: The market isn't doing so bad when you consider other
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  Speaker 2: than a couple of the down days.
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  Speaker 3: You know, well, yeah, and it's really you know, This
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  Speaker 3: is one of those times where you know, like people
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  Speaker 3: will ask me all the time, what's the market doing
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  Speaker 3: or what's the market going to do? And we're seeing
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  Speaker 3: a massive dichotomy between the let's say, the S and
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  Speaker 3: P five hundred and all of these AI bottleneck trades,
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  Speaker 3: you know, the memory, the photonics space and really anything
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  Speaker 3: to do with AI. They're selling off massively. You know,
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  Speaker 3: we just saw you know, a hedge fun guy go
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  Speaker 3: from being the next Warren Buffett to the next Kathy
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  Speaker 3: Wood in the space of you know, twenty four hours.
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  Speaker 3: You know that that's that's something I don't think I've
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  Speaker 3: seen before, you know, so this is definitely interesting.
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  Speaker 2: It just shows that you know, AI doesn't have a
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  Speaker 2: monopoly on on stock performance, doesn't.
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  Speaker 3: It doesn't. And you know, we still think you've got
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  Speaker 3: to own a lot of these names, but we also
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  Speaker 3: think you've got to watch your position sizing and you've
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  Speaker 3: got to balance them out with Yeah, and what we
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  Speaker 3: like is is halo heavy asset low opso lescence. We
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  Speaker 3: have an ETF for that h ALX, but we think,
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  Speaker 3: you know, it's it's the value stocks that either are
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  Speaker 3: additive to AI or just in areas that AI can't
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  Speaker 3: touch that. You want to kind of barbel your portfolio
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  Speaker 3: in and you know, and that's how you want to
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  Speaker 3: write it out. You don't want to do what Leopold
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  Speaker 3: did and be you know four x, I think is
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  Speaker 3: what their leverage was in all these AI names. It's
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  Speaker 3: great when they do it's going up. But leverage works
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  Speaker 3: both ways. I think the hedge funds are seeing that
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  Speaker 3: and the Koreans are seeing that.
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  Speaker 2: Yeah. Well, you know, leverage, it's the big multiplier. Like
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  Speaker 2: you said, when things are going good, leverage is wonderful.
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  Speaker 2: When things aren't going so good, then the leverage can
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  Speaker 2: really burn you. But perhaps Leopold's situation here is an
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  Speaker 2: analog for the whole sector.
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  Speaker 4: Yeah, I mean, every every great move one way or
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  Speaker 4: the other we have in mar Mars usually ends up
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  Speaker 4: with one or more poster children.
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  Speaker 3: So yeah, I mean, I think he is now the
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  Speaker 3: poster child for this AI stock sell off. And maybe
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  Speaker 3: he's the bottom signal. You know, Normally you don't get
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  Speaker 3: a bottom in a down move until somebody gets carried
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  Speaker 3: out on a stretcher. So we'll see, I mean, so far,
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  Speaker 3: so good today, and we'll see what the rest of
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  Speaker 3: the weekend. Next week brings.
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  Speaker 2: So you got a lot of ETF, so which ones
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  Speaker 2: do you think are most optimal for positioning right at
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  Speaker 2: this moment?
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  Speaker 3: So too, I like HLX, which I said, that's the
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  Speaker 3: halo trade. That's traditional value names that are not going
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  Speaker 3: to get taken out and crushed by AI. So it's
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  Speaker 3: either you know, energy and utilities, which AI needs, or
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  Speaker 3: things like roads and copper mines in things of that nature.
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  Speaker 3: I think you've got to balance out. And we also
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  Speaker 3: a couple of months back started up the Porter Permanent Portfolio,
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  Speaker 3: which is a reboot of the old Harry Brown Permanent
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  Speaker 3: Portfolio idea. It's twenty five percent stocks. He uses property
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  Speaker 3: and casualty companies to replace bonds. Again, I think bonds
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  Speaker 3: are un investable. It's got crypto, it's got gold, and
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  Speaker 3: then it's got T bills. But the stock portion of
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  Speaker 3: it is in. It's run by a guy named Porter Stansbury.
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  Speaker 3: We just do the operation. The stock part of it
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  Speaker 3: is what he calls Lindy companies. Those are stocks that
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  Speaker 3: have been around for like one hundred years. And I
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  Speaker 3: love the balance. So if you're going to own the
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  Speaker 3: sand disks and the mic runs and you know, the
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  Speaker 3: Lumentums in all of these names. Balance it out with
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  Speaker 3: the Halo stocks, balance it out with the Lindy stocks. Yeah,
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  Speaker 3: you're not going to be up a gazillion percent like
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  Speaker 3: Leopold was, but you're not gonna have a ninety percent
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  Speaker 3: draw down like I think he did either. And you know,
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  Speaker 3: I you know, what we tell people is you want
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  Speaker 3: a smooth ride, don't get fomo. Fomo is is the
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  Speaker 3: killer of portfolios. You know, a rising market makes everybody
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  Speaker 3: look smart. And I love the Warren Buffet quote. When
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  Speaker 3: the tide goes out, you find out who is swimming naked.
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  Speaker 2: Yeah, yeah, whether you want to or not.
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  Speaker 3: And a lot of people out there in my business,
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  Speaker 3: I don't want to see them naked, but we're seeing
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  Speaker 3: it right now.
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  Speaker 2: Yeah. Yeah, well it's the exposure. And yeah, so I
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  Speaker 2: find it interesting though. And on the side, how hard
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  Speaker 2: is it under current conditions to set up an ETF.
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  Speaker 3: It's not hard at all. You know, I've I've been
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  Speaker 3: doing it for eleven years. I could set up an
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  Speaker 3: ETF with both hands tied behind my back and beat
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  Speaker 3: me in blindfold. The hard part is the marketing. You know,
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  Speaker 3: you would think that all right, I'm going to create
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  Speaker 3: an ETF. It's better than anything else out there. People
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  Speaker 3: will realize I'm the buy it. No, that's not how
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  Speaker 3: it works. You look at some of the biggest ttfs
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  Speaker 3: out there, they stink it's it's all about marketing, you know,
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  Speaker 3: and that's the hard part. So you know, the challenge
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  Speaker 3: for us is, you know, because at this point in
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  Speaker 3: my life, i launch gtfs, I want to buy myself.
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  Speaker 3: So you know, it's coming up with an idea that
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  Speaker 3: I want in my portfolio, but also an idea that,
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  Speaker 3: you know, that that we can market and tell the
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  Speaker 3: story about. And people are gonna be like, yeah, you
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  Speaker 3: know what that that makes sense? And that's not easy.
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  Speaker 2: Yeah, well, it's like writing a book. I've written the
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  Speaker 2: seven of them as my later latest one, The Speeder's
• 12:09
  Speaker 2: Guide to Avoiding Tickets, And you know, writing the book
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  Speaker 2: is so simple for me. I've written on the eleven
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  Speaker 2: of them. But the promotion writing the book is twenty percent.
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  Speaker 2: Promoting it is eighty percent. And I guess nowadays, with
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  Speaker 2: all the tools available, it's like that in so many businesses,
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  Speaker 2: isn't it.
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  Speaker 3: Oh it totally is, And I'm doing I mean, I'm
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  Speaker 3: not as prolific as you. I've written two books and
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  Speaker 3: we have one coming out about our heat formula investment
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  Speaker 3: philosophy probably first quarter of next year. I have not
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  Speaker 3: gotten rich on the two books I already wrote, and
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  Speaker 3: I'm not planning on getting rich on my third run.
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  Speaker 3: But yeah, I just you know, the thing I like
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  Speaker 3: about a book is I want something permanent out there that's,
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  Speaker 3: you know, going to survive you. But yeah, I don't
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  Speaker 3: expect that I'm going to make any money on it.
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  Speaker 2: Yeah, yeah, you know, like I just enjoyed the act
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  Speaker 2: of writing. But I've sold, you know, like, over the
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  Speaker 2: past year over ten thousand books, believe it or not. Yeah,
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  Speaker 2: which is and that's with no PR and no publisher.
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  Speaker 2: That's just independent Amazon, Type and other channels. So I,
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  Speaker 2: you know, I just like it. It's just something cool
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  Speaker 2: about seeing people when they have your book on their
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  Speaker 2: desk or in their bookcase. I just like it. Hey,
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  Speaker 2: So your prediction as far as the market getting back here?
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  Speaker 2: Two things. The ETF trend unstoppable. Is there a point
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  Speaker 2: where people say these things are risky, then they're too risky,
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  Speaker 2: I don't really want to do it, or the sector
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  Speaker 2: gets hit, So.
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  Speaker 3: You know, I don't think so. You know, certainly you
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  Speaker 3: get people margin called out. So you know what happened
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  Speaker 3: in Korea. You had a bunch of Korean investors who
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  Speaker 3: got wiped out, but that was mostly in levered ETFs.
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  Speaker 3: You know, I think your average US and we do
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  Speaker 3: a lot of levered ETFs. They're trading vehicles. You know,
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  Speaker 3: if you've got an opinion on a stock for like
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  Speaker 3: a day or two and you've got a strong opinion, yeah,
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  Speaker 3: buy a two x ETF on it. Don't hold it
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  Speaker 3: long term. But you know, I think in in normal investing,
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  Speaker 3: you know, AI is a game changer, you know, I
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  Speaker 3: just I think you've got to be careful. There are
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  Speaker 3: good ETFs out there, and there are ETFs that are
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  Speaker 3: designed purely for marketing. And I think you've just got
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  Speaker 3: to watch your position sizing, and you've got to be
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  Speaker 3: continually watching the technology and looking for the bottlenecks, you know,
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  Speaker 3: and by bottlenecks, I mean you know AI can do
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  Speaker 3: X today. We know in the future it's going to
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  Speaker 3: be able to do so much more. What's keeping it
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  Speaker 3: from getting there and what companies are fixing that? And
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  Speaker 3: that is not a Hey, I look at this once
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  Speaker 3: and buy these companies and hold on to them forever,
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  Speaker 3: which is again why I like having the Lindy stocks,
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  Speaker 3: because you know you can buy Hershey's or whatever and
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  Speaker 3: hold on to that forever. Uh, you know, the AI stuff,
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  Speaker 3: You've got to keep your head on a swivel. But
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  Speaker 3: ETFs are still the best way to access it if
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  Speaker 3: you don't have time to be watching individual stocks. You
• 15:44
  Speaker 3: just got to pick the right ones. You know. If
• 15:47
  Speaker 3: if you're trying to get into a theme, look at
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  Speaker 3: the holdings, because a lot of ETFs will say, hey,
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  Speaker 3: we invest in this theme. And then you look at
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  Speaker 3: the holdings, You're like, wait, what didn't make any sense?
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  Speaker 3: You know, you've got a whole bunch of other types
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  Speaker 3: of companies in there, and you know, and also watch
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  Speaker 3: your overlap, like, you know, you don't need Navidia in
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  Speaker 3: ten different ETFs. You should own Navidia. You don't need
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  Speaker 3: to own Navidia ten times.
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  Speaker 2: Got it? So all right? And then your your thesis
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  Speaker 2: for the remainder of the year. What are you thinking?
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  Speaker 3: So we're bullish, but watch yields. If the ten year
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  Speaker 3: goes above five percent, then I most likely change my mind.
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  Speaker 3: If the FED engages on a hiking cycle, which also
• 16:41
  Speaker 3: probably means the ten year goes above five percent, I
• 16:44
  Speaker 3: might change my mind. You know, we could theoretically see
• 16:49
  Speaker 3: a repeat of twenty twenty two, which remember twenty twenty
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  Speaker 3: two created a massive buying opportunity, so you know, just
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  Speaker 3: have hedges in place. One of the things we teach
• 17:03
  Speaker 3: investors head your portfolio. Bonds are not a hedge At
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  Speaker 3: the moment, I am bullish, but watch interest rates because that.
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  Speaker 2: Could be a game changer, all right, And the best
• 17:17
  Speaker 2: place to find you your work tubblecap dot com.
• 17:20
  Speaker 3: Correct tubblecap dot com. You'll see a pop up. We
• 17:24
  Speaker 3: do a free newsletter every day. We write about market themes,
• 17:29
  Speaker 3: you know, so feel free to subscribe to that. If
• 17:31
  Speaker 3: you don't like it, feel free to unsubscribe. I'm you
• 17:34
  Speaker 3: won't hurt my feelings.
• 17:36
  Speaker 2: All right, excellent? Well, hey, really appreciate you coming on.
• 17:39
  Speaker 2: Questions for Matthew myself. Shoot me an email kl Atcarrie
• 17:43
  Speaker 2: Lutz dot com and take a look at the substack.
• 17:48
  Speaker 2: You find it at Financial Survival Network dot com. Matthew,
• 17:52
  Speaker 2: we will talk to you in a little bit. I'm
• 17:55
  Speaker 2: looking forward to to seeing where the market's going to head.
• 17:59
  Speaker 2: And whether the volatility we're seeing now is kind of
• 18:03
  Speaker 2: just another stepping stone on the way to hire returns,
• 18:06
  Speaker 2: or whether this is truly a turning point. But thanks
• 18:10
  Speaker 2: again and we'll talk to you soon.
• 18:12
  Speaker 3: All right, great, Thank you very much, Thanks for.
• 18:14
  Speaker 1: Listening to carry Letz's Financial Survival Network, your solution to
• 18:19
  Speaker 1: today's trying times. For the latest, go to Financial Survivalnetwork
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  Speaker 1: dot com. Financial Survival Network now more than ever,