oh f**k me

Is it possible that your boy meet Kevin is just wrong and he's about to lose lots of money? Uh yeah, uh it is. Now, so far, I don't think I am, but what I'd like to do is go through, humbly of course, how we could end up being wrong. First, let's just clarify the thesis briefly, and then we're going to get into some facts and some analysis, as well as some charts around uh-oh, is it possible? We still got some work to do. We're going to look at those in just a moment. So, first things first, this morning in our alpha report, when we saw the yield all the way up 7.5 basis points, we argued, "Hey, yields come down, stocks up." Really simple argument. But, my thought has been that we anchor around 5.27, and that the slope or the acceleration of the rise in the 10-year Treasury is actually slowing over the last 5 days. That, of course, is in contrast to the rapid expansion that we've seen when we zoom out over 6 months. My point is, when we zoom into the last 5 days, we don't have a spiky red line, we actually have a pretty flat green line. So, that was my basis this morning that, "Hey, don't worry about this. This is because of the SpaceX suckening, we could end up seeing these yields come down pretty rapidly." And guess what ended up happening? They did. Intraday, yields went from that spike, they went straight down, and the Nasdaq went from -80 basis points to -20. That's a recovery. So far, everything's going according to plan. But, is it possible it's all still damn wrong? Is it possible that Kevin's 527 is nowhere near the peak, and we're cooking way higher than this? Well, yes. And so, let's analyze this together. First, here's a particular chart, and they make the argument, this author makes the argument in good old Bloomberg. They say that 30-year yields have yet to peak. Now, they're looking at the 30-year here, which has also had a similar magnitude of a movement as the 10-year has. 30-year, obviously, much longer duration, but both of them relatively considered to move similarly. So, technical studies back it up, they say. What backs it up? We're going to look at that in just a moment. Basically, they're arguing, "Hey, we still got a lot of potential room to get a lot worse on Treasury yields." And when I read this, the first thing I thought was not "F this person, they have a different opinion than me." I actually go back to what one of y'all asked me this morning, and you said, "Well, Kevin, you know, what's that potential real downside here on TLT, and therefore, what's the high on the 10-year?" Actually, I think somebody asked me what the high was on the 10-year, like the next place it could end up going to. And so, what I did was I calculated how far we were from bottom this morning on TLT. Because when 2023, we lost on this 25-year duration bond ETF called TLT, we lost the 78.77 line, which we've held once, twice, three times, four times, five times. Okay, five times we held it. Now, apparently, we're at the second time losing it. The last time we lost it, TLT had another 5% to go. And so, if I take what we had this morning, which was, you know, 5.32, and I add another 5% in there, we get to about 5.6. That's potentially that similar floor where rates could end up skyrocketing up to 5.6. Now, that is not a perfect proxy for how the 10-year might actually move because this is an ETF, and flows affect it, the maturity of the bonds affect it. Again, this is about an average 25-year. So, point of this is not a perfect comparison, not meant to be. The point is, I immediately thought, "Okay, if we're wrong, where do we go?" Well, that's one logical place. And what is this analysis about the doomer saying there's actually much more to go and people are now running out of cash. Yeah, I know. We're going to look at both of these. Okay. So, the first is right here. Treasury's recent yield rise is far from technical technical exhaustion, it says. I disagree, but that's okay. I still want to understand how I could be wrong. I don't like to go na na na na it's only my way or the highway, right? Yields on 30-year bonds printed fresh highs since 2020 2002 again on Wednesday and the market's most reliable trend indicators say the move is not done. The 30-year touched 5.72 earlier in advance of nearly 90 basis points just this year. Though they did later trim much of the day's increase. That was our Alpha report play. A lot of people who don't know what the Alpha report is by the way, it's basically every morning before the market opens up, I put together a game plan. Hey, look, here's what's on deck today. Here's when the minutes come out. You already know that. Nobody cares about that. Here's what markets expect they're going to say. We already know that. Old news. But here's the actual play. Here's what I think the play is today based on what people already know and where the blind spots are going to be for people. That's the Alpha, obviously. It's not always right, but we've knock on wood been doing pretty damn well for for a good period of time here. That huge yearly rise may make bonds look cheap, but several of my colleagues have argued they're far from oversold and that yields are actually on track to test 6%. Uh and and uh and 6% beyond that. Wait, hold on a second. Uh on on track to test the 2002 peak of 5.87 and 6% beyond that. So, basically what they're saying is not only do they think we're going to test a little bit higher, but that will basically be hitting 6% pretty soon knocking on that door. To analyze that claim technically, a back test of the library of technical indicators, blah blah blah, and essentially they produce this fancy indicator that suggests, "Hey, oh man, yeah, we might actually be testing 6% pretty soon." They said that their study in 30-year yields is not only intact, but it's accelerating in their little technical analysis world. I agree that yields are going up, but I don't think that they are accelerating. I actually think they are decelerating. I showed you the chart. I showed you the deceleration, but that's okay. That's okay. We can have a different opinion. So, at the same time, these folks are also talking about markets running out of cash. Now, that's interesting because we are in a period of the suckening, which is pretty incredible. By the way, what else is really incredible is we have had a ton of you all sign up for Reinvest One and upgrade to Reinvest One. So, I just want to shout that out. When we raise this price on Thursday, thank you. We are so grateful for all those of you joining over at Reinvest One. I do think it's interesting just the demographic or sort of like the breakdown. About 12% of you use Apple Pay, about 7.4% of you use buy now pay later, about 1.1% of you use crypto or Amazon Pay. There were three cryptos and like two Amazon Pays here. Yeah, so it's pretty small. But, the vast majority of you all credit card, either through link or otherwise. But, welcome aboard to Reinvest One. We're really excited with what we're delivering here and we just keep updating the product and adding more and more that we're building on the back end. So, we can't be more excited. It's so great for the company. It's it's just so great for everybody involved. So, we are very very grateful. Uh and we look forward to providing a lot more value here. A lot of you, by the way, are asking about agents. And uh yeah, I just want to be clear. Like, our goal is to be very supportive of agents and API calls within the next year, hopefully even a lot sooner than that. So, what's this talk about uh running out of cash? Because, you know, that's that's a pretty damning title, right? Uh and so, what they argue is that repos right now are suggesting or signaling that there is less cash to go around. That there has been a gradual rise in the Federal Reserve's repo rates, which is an early sign that heavy bill issuance, basically the suckening, not just the Treasury Department's suckening, but also Elon, Google, you name it. Broadcom, right? Everybody wants to raise money. That is tightening cash that's available. Bringing secu- uh and so, over here we can see that overnight general collateral repo rates traded around 3.95% this week. So, firm climbed to 3.9, bringing the secured funding line in line, blah blah blah. This indicates there's some pressure building in the Treasury financing department, far from a broader deterioration of credit conditions. So, in other words, don't panic. Like, things are going to be okay. But, we are starting to see at this point that all these auctions are starting to have an effect. And even money that's sitting over at banks is starting to say, "Hey, yeah. Um we might be uh getting a little low on capital over here." Uh now, what does that actually mean for us? Well, for us, it means, frankly, expect some more volatility. And this is normal. Anytime you get the suck going on, we're going to get the volatility. That suck is typically what can affect people like Leopold, people who are heavily leveraged. So, as long as you're not heavily leveraged, it's typically not that big of a deal. And if anything, you create some buy-the-dip opportunities. But, you know, all these things kind of compound, and when you get it all together, you get this increase in what's called the risk of a shock. We like to measure that by looking at the 10-2 Treasury curve. And anytime the 10-2 is over 50, we are shock-prone. We are at 52 bips right now. Which, you know what else is roughly 50 basis points? Hit it. This sponsor is brought to you by meetkevin.com/silo. Wait a second. Points for stocks? You may have heard about our sponsor Silo today. It's basically what Built did for rent. But this time, it's for investing. So, if you're not familiar with this, here it is. Silo is the first and only investing platform that gives you credit card-style points, but on your brokerage account. Every month, they give you points based on your account value. You get an annual multiplier of 0.5x points on your total account value. So, if you got $500,000 in an investing account, you would earn 50 bips. That's 250,000 points every single year. Dang, I'm missing out on some points. Points are redeemable for cash. You know, a lot of us are probably thinking that. Like, man. Wait. What? I want points. What can I do with them? Here you go. Points are redeemable for cash at 1 cent per point. Or, you could use their travel portal to book at 1.3 cents per point, depending on your membership tier. So, here's the big thing. They're also now launching their very first transfer partner. It may even be live by the time you're seeing this integration. Now, what is really worth noting is that while I can't yet reveal the airline, I can say it is a Star Alliance partner at a one-to-one transfer rate, which is pretty neat because Star Alliance partners allow you to book flights with 26 different airlines including United, Turkish, Swift Air, Lufthansa, Singapore Airlines. And so, if you're clever with how you redeem and use these points, you could fly around with some uh you know, pretty nice seats, business class or even first class, simply because you had your portfolio with Silo and they were paying you basis points on your portfolio. And so, with the launch of their very first transfer partner, Silo is officially exiting beta and switching to their long-term points earning rate of 0.25% in November. But, anybody who signs up this month locks in those 50 basis points for at least the first year. And you might even get grandfathered in, but of course, check their program details. So, if you want to lock in 0.5x points on your stocks, 50 bips, and earn up to 250,000 points as a new member, make sure to use my link. meetkevin.com/ silo. It's easy. meetkevin.com/silo. S I L O to get started by the end of this month. Now, you might be thinking to yourself, man, this sounds pretty freaking arcane. Like, who's looking at these little itty-bitty changes? But, the suits do on Wall Street because they're just trying to understand, look, how are people handling all of this debt issuance? And how does it compare to how people handled it in the past? So, I'm going to show you that by pulling this up on screen here. We had the giant suckening from Elon Musk right around here. You know, so early June this Google raised like right around here at the end of May. A lot of this was relatively noise based. You know, you could see moved I mean if the average over here is like 3.65, you kind of have to put a little window in this. The average is like 3.65 and peaked out at like 3.67 over here before the suckering it peaked out at 3.7. So nothing unusual. Now it does jump up because we raised rates 25 basis points. That's normal. But then we were bobbing around over here at like 83's the idea that we adjusted from this level to about 83. And what they're arguing is it's trending up even more than just this adjustment. And if this continues to go on a daily basis where you really go in here and you really get itty-bitty bitty and you look at it like this, right? We see this meaningfully pushing it more. They're making the argument that there is limited cash to continue absorbing all of this suckering. Is that a problem? Yes. Yes. Both of these things contribute to potentially being wrong on my idea that oh hey, yields are going to peak out. We're going to end up getting a deal with Iran. Obviously, you know, that could be wrong as well. We might not get a deal with Iran. You know, I mean there was literally just a piece in the Atlantic and I thought this was very interesting about Iran. Trump is considering a plan to strike Iran before midterms. Now, I personally think this is just a wide open negotiation where Donald Trump goes to his campaigns and he's like, "You know, we got to make sure they don't get a bomb. You're okay with having a little higher gas prices to make sure they don't get a bomb, right? And everybody's cheering and stuff. That's Donald Trump publicly negotiating with Iran because they see it and view it as their Allah-given right that they can enrich uranium. And Donald Trump is like, all right, well then we're now we're going to remove the blockade. The problem is if both just dig in, then then we're not going anywhere. And so my take is that this Atlantic exclusive here about Trump is considering a plan to strike Iran before midterms. I actually think this is also open negotiation. The idea is, look man, we'll just go in and swoop you guys up within the next 2 weeks because remember, Donald Trump needs a win before 20 days from now. Between like October 20th and 2017, he needs a win. Because that will be right before the Federal Reserve meeting and right before the election. So the window for Trump to get a win is the 20th to 27th. That means he's only got about 13 days left to get any extra bend out of Iran. And so you think they're leaking this on purpose? Hell yeah, they are. Pentagon planners are weighing options. No final decision has been made yet. I can flip-flop at any point. After months of off-and-on again fighting, Trump warns that he might keep it going. White House and Pentagon are developing strike options against Iranian targets that could be exercised ahead of midterms per two administration officials. The size and targets of potential strikes and whether the administration will actually launch them are still being debated. The plans are being developed by CENTCOM, which is coordinating the war effort, a US official told us. Even the plans' advocates acknowledges acknowledge that limited strikes by themselves would not bring Iran to the negotiating table, restore travel, safe travel through the Strait of Hormuz, or lower gas prices before the election day. But those in favor say that the action, after months of ease uh uneasy peace, could allow Trump to demonstrate strength and potentially declare some form of victory. No, there's no chance Donald Trump wants more strikes. In fact, you know how we can tell that they don't really want more strikes? We have had 13 tankers struck in Hormuz. Smaller strikes, but still strikes. Over the last week and a half, since September 29th. How many have we counterattacked? Zero. Donald Trump does not want bombs flying right now, and Iran knows it. But, what he's doing is he's taking the strategy of acting like these are just little fleas. So, it's like, you know, he's marching through the swamp, and these little mosquitoes or fleas are attacking him, and he's just like, just going to pretend to shake it off here. Pretend like it doesn't bother me. And that's pissing off the fleas and the mosquitoes. They're like, "Oh, what the hell, man? You should be responding to us. Show some respect. Fine, we'll do more." And he's just like, market's up. Yields are okay. I've still got some time. >> [laughter] >> Hey, hey Pete, tell them we're going to throw some more bombs at them. Maybe that'll that'll get them to lay off. That's my take. You know, again, both of these things could be wrong though. I mean, think about it. My 527 could be horribly wrong on the tenure. I don't think it is, but it could be wrong. It could be wrong to the degree of 5% like we saw on TLT, or it could be way wrong, like what what these people, the suits here, are arguing. I'd like to counter trade the suits though, so I don't think so. Uh I also don't think Donald Trump is going to launch a single rocket. >> [laughter] >> Not a single missile uh between now and the election. No way. It has been way too freaking quiet. Notice that all news headlines are about the Houthis and Yemen and the displacement and the destruction over there or people dying in Gaza or Lebanon. All those things are horrible, but they have nothing to do with the United States military right now. I mean, obviously you can make the stretched argument, which is not really that stretched, that the whole Houthi situation is happening because of the United States and whatever. Then you can make the argument, "Yeah, but Hamas started all of this with it." Like we can make a million different arguments. But my point is in the near-term, the branding is "Well, that's not us." That's the branding. Huh? We're sending oil through Hormuz. We're not fighting the Houthis. Huh? Israel's striking and uh the Hezbollah's uh conducting uh attacks. We're not involved. Our bases are good. Our tankers What strikes? We don't see any strikes. 13 strikes? What strikes? We're not countering anybody because we haven't been bothered. Now, by the way, we might ramp up strikes. It's all a game. It's all a game. That and it's it is a clown show of a game. But look, people running out of cash to keep funding the AI build-out, it's a problem. Duh. But I think it will be ultimately covered by more financing. More debt. The it'll the bubble will continue to inflate. It Let's be clear. We we expect that this is a bubble, but we think the party is still just getting started. It is too damn good. >> [laughter] >> Party's still cooking. Uh but again, we are now in shock territory on the 10-2, the spread between the 10-2. That's not good. Uh I think so far we've been really accurate with our calls uh in the Alpha Report and I'm really excited about that over at Reinvest One. And uh if you don't want to join Reinvest One for whatever reason, maybe you don't like my guts or you can't afford it, uh like whatever, okay? Whatever your reason is, you're also, and this is different, obviously, but I encourage you to at least get the free daily digest. So, when you go to Reinvest One, you can just go up here and click free daily digest. It's kind of cool. It's just an email. You can also get this in the Meet Kevin app under the daily wealth tab, but you can type in your email over here. Just make sure if you do type in your email over here, meetkevin.com/digest works, or just go to reinvestone.com. Make sure that after you put your email in, you go check your spam folder. You're going to have to click the confirmation button in the email, and you're going to have to re-capture. I know, giant pain in the bootay. But then you'll actually get the emails, because if there's no re-capture, then it's going to go to spam all the time, and you know, then what's the point of signing up? Again, that's free. This costs dollahollas. This is going to be so exciting. Like we're we're turning this into a research product for everyone, where you just get the bottom lines you want, price targets, valuations, the data you need when you need it. Your agent can crawl it in the future, okay? I want to be clear about that. We're not ready for the agent part yet. Um but that's going to come. That's going to be really cool. So, we're excited. Anyway, thank you. Have a wonderful evening, and we'll [music] see you all soon. Goodbye and goodbye. If you like that video, check this one out. I think you're going to love it. Why not ever >> has these [music] things that you told us here. I feel like nobody else knows about this. >> We'll We'll try a little advertising and see how it goes. >> Congratulations, man. You have done so [music] much. People love you. People look up to you. >> Kevin Paffrath, there, financial analyst and YouTuber, Meet Kevin. Always great to get your take.