Alpha Chasers The week ahead March 16th PIRVATE

Hey everybody, today's video is absolutely packed. Um, a lot of this stuff you're not going to see anywhere else. A lot of it is actually me conveying what I think are going to be the most important factors in research today. I'm going to go through fast, but there are 13 slides out of about a 60-page uh report that was done by this gentleman, Torsten, that is the chief economic uh guy at Apollo. And Apollo is pretty much the ax in this stuff, so I want to go through it. I have my opinion on it, and what he's doing is just showing you the data and then telling you about what they're doing, so you can see corporate capex spending in recent weeks. We were exploding because everyone's going to buy, and then everyone just basically said, whoa, this is not the best time for us to expand, and let's go from there. Um, and then you can see some of the Kansas City Fed, Philly Fed, New York Fed—they're all dropping. Interestingly enough, uh CEO economic Outlook is down, but it's not like falling off a cliff, and I thought that was worth pointing out. It's still expanding. Do that what you want. Consumer inflation expectations are significantly off what is happening in the market. I think this offers a huge opportunity. I'm going to discuss some of that today, uh but the idea on where they see inflation expectations ticking up with the way CPI and PPI just came out, with the way that we just saw the uh consumer sentiment data coming out, is clearly telling you here uh that this is something that we have to pay attention to because I personally think um that this is where the opportunity is, and I'll get into some of that today.

Uh, more people are worried about their jobs. Should they be? Shouldn't they be? I don't know, but I do think that some people should definitely be worried uh if they're in government, because we're seeing it, and I'll show you some slides on this. But if we look here, this is the most they've been worried about their jobs uh in 10 years. And the last time you were here was 2012-13, and it was not the worst time to be looking at buying stocks long term. The problem is you're still going up, and we don't know when the down is and how long they're going to be worried. But when you're worried about losing your job, you you tighten your bow, you don't buy things. I mean, we all we all know this, we've all been there. What I think is fascinating and what I think you should be taking away from all this is what does this look like later? And I'll explain. Well, what do you mean later? Like what does this look like a year from now or 3 months? So when you have uh changes in trade policy, and this is US economic policy uncertainty, and I've shown this before, but his is much better, the way that he did his, so I'm going to use his. But how did this look buying this level a year later? You absolutely slaughtered it. How'd you look buying here? A year later, you slaughtered it. How'd you do here buying a year later? You know, if you bought here and it was 12 months later, how did you do here? How did you do? I, you could actually make the argument, there's an argument to be made here that the higher the uncertainty, when it corrects itself, the more money you make, and you can see that in these turns. But you have to be looking 12 months out, and there's some long-term swings here and some long-term investments that really are starting to make sense uh even in some of these high-beta names, and we're going to get to that. So uh IG spreads are disconnected from the economic policy uncertainty index. So I just want to show you something, and this is really what I'm seeing. I'm seeing a huge disconnect here between reality and fear, and somebody's wrong. And I'm going to just say this: the bond market's never wrong, it just is. The bond market, it's just not wrong. Economic Policy uncertainty is driven by human beings. When people have to put money to work, that's what you have to pay attention to. And what he does with these slides, and he's so beautiful the way he does it—maybe I'm a nerd for saying that—but like there's no judgment. This is this is what it is. What do you think of it? And when I look at it, and let's take '09 for example, and why was '09 so bad? Well, bond spreads are going up, and people don't want anything to do with bonds, like they can't puke bonds out at all, right? They're just dumping bonds left and right, and people are looking at the economy are like, ah, the economy is fine. The economy was not fine. We we had the great financial crisis, and everyone's telling you everything's good, hence why why I got so out of hand. Why expectations versus reality? Right? These are your expectations of uncertainty. This was reality in the bond market. They were puking things out. GE didn't know how they were going to make payroll, and everyone's like, ah, it's fine, don't worry about it, they they'll figure it out.

Um, and then you have here with the pandemic, bond markets telling you one thing and uncertainty is telling you another. You have the highest disparity here that you have on this chart between corporate bond yields and economic policy. So who's right? The people that are buying bonds that are putting billions and billions of dollars to work, or what people think about the economic uncertainty going on right now? Only you can make that decision. Only that it's up to you. I have my opinion on it, and I would buy green when green's over. I'd be more interested in buying than when blue's over. And I think that anybody looking at this market would feel that way. When they see green over blue, they're going to say, oh, I need to look. When blue was over green, we saw what happened in '18. I didn't mean to make that rhyme, but you get where I'm going from that. And it boils down to the same exact thing you're seeing here, but what they're doing is he's doing it, and he's overlaying this and perfectly with what we have going on right now, and I think it's really worth paying attention to. I think there's a huge disconnect between reality and and expectations here, and I think it's presenting an opportunity for for us to buy, but understand the time frame. It's not buying on a Tuesday; it's buying long term. There's a huge difference between buying because of this week or buying longer term. And when I look at this and go, well, do we have all this uncertainty out there? What's happening with claims? Because claims, gosh, they got to be spiking now. They're dropping. Oh, um, that's interesting. Claims are dropping, all right? So people are finding jobs. Okay, now what those jobs are paying, and we can get into all that, and this is definitely important because jobless claims in DC versus jobless claims everywhere else, jobless claims in DC are going up. Jobless claims in DC are going to go up. I actually think if you're interested in real estate, looking at DC in the next year or two uh it's probably going to present a huge opportunity for people to buy there. It might be longer, but when you look at initial and continuing claims by federal employees, initial claims are through the roof, and continuing claims are through the roof. This was not really in nonfarm payrolls. This and next month's nonfarm payrolls is going to be reflective of, and you know, is he going to is some of this going to get rid of some really good people there? Yeah, there's no doubt, but you need to understand that when you look at this, like this is this is significant, and this is going to be a wait on nonfarm payrolls, which actually leads me to believe that when you're thinking that inflation expectations are going to go up after that Michigan consumer, I don't know how they're not when I show you this data on how they're not cutting rates. It's crazy. And are we going into recession? Well, we're going to talk about the relationship between oil and CPI, but product oil product demand is going up. Oil product demand is going up higher than any time that we've had since 2020. It's kind of interesting. Why would that be happening if we're going into recession or or if inflation's going to choke its head? Doesn't make any sense, right? Weekly economic conditional indicators in the big cities are trending higher. How is that possible? We'll see if this turns. If it doesn't turn, he's using every year here. Um, I thought it was interesting, the statement. I don't know that I agree with the Outlook, but I wanted to show how he's viewing. I don't agree with that, and I did want to just point this out. Uh, this is where everybody had to buy because GDP through Atlanta Fed was going to go through the roof, uh and if you can literally look at the turn two weeks later, you know, just so we're talking about this, this is the indicator that's throwing everybody off that dropped 700 basis points. When do you want to buy? Do you want to buy here or do you want to sell here? Do you want to buy here or do you want to sell here? Just something to think about. Announced job cuts in governments have spiked, so this is 100% what I'm talking about, and I think this is really going to skew data. Uh, you have companies like Booze Allen, for example, that have 98% of their revenue coming from government contracts. These types of companies, yeah, they're going to have problems. There's no doubt about it. This is a big deal, and this is definitely going to affect the economy, and it's definitely going to affect that part of the economy. What I want to show is this: you have the job cuts of the government which are going to affect the economy, and then you have job cuts taking out, and we're still over, but what they're not saying is are these companies that are linked to the government? Exact, for example, Booze Allen has 98% of their people or 98% of revenues comes from government contracts. Well, if that's the case and they're going to lose government contracts, then they're going to be affected by this. We're going to see this; it's it's going to happen; it's definitely going to be an issue. The point that I'm getting here is it's in one side of the market for now, and let's get into some of the other details that we have to. But what I see here and what you should take from this in the in the past eight minutes is I just kind of click through these again is that continuing claims are definitely affecting the US. They are definitely affecting government. To think that that's not happening is delusion. The claims overall are dropping, even though they're spiking in the government, which is telling you something. There's a huge disconnect right now in the bond market, and I believe the bond market, it just you can believe whatever you want. I've done this long enough that whatever the bond market's telling you is what's happening, and you can chart that through move as well, which is the volatility index, and we can see this here, and I just want to just go through this. People are worried about their jobs. Should they be in the government? Yes. Outside the government or tied to government contracts? Yes. Consumer inflation expectations are up drastically, but what just happened with CPI and PPI? Does that make any sense? No, they're way off here. The the consumer is way off here on what they're expecting, and I think this is really important, so I just wanted to do a quick recap. Let's get to it.

As far as research, Goldman Sachs data reflects US equities in 10 of the past 11 weeks, which takes net exposure held by fundamental long-short funds down to the first percentile. 99 is the most; one is the least on a one-year look back. I just want to just point this out. This means that hedge funds that are long-short, that that's their job, own 1% on an average basis. Like if you were to look at the portfolio, like they've puked out everything that they can, everything that that is there to puke out, they have puked out. Like, can it stay here? Yes, but they've sold a lot of names. CTA have been cutting length, call it around 80 billion. Okay, alongside all this, active-only longs have been significantly net sellers, single names for three weeks. Okay, so based on that mosaic, I'm inclined to think the fastest hands have already transferred a large amount of risk. Fancy way of saying if you wanted to sell, the quick have already sold, all right? Also point out that the market kept selling through Thursday. This is really important. The market kept selling off through Thursday, yet implied VIX settled in, and a momentum pair has stabilized, then again suggesting that big risk RM for uh from the leverage community has eased. Okay, if they wanted to sell and they were levered, they sold. That's why the VIX is uh falling down, and that's why you're seeing stability. And I think that you may see more stability. Does that mean you're going to go right up? No, it's not how any of this works, but we know that already. So therefore, the next arbiter of a broad market direction is likely to to be a different crowd. I keep an eye on the US retail traders as well as offshore structural holders of the market. So in other words, there's nothing really left for us to sell. Could we still sell down or could there be apathy? Yes, but the fastest hands, they're gone, they're out now. I thought this was worth sharing. Uh, so this is Goldman talking about their the the China desk. This is all research from the desk of trading, not from their research department, and what they're doing is highest-grossing event was in Asia Monday in the four years at go across Goldman's Prime book in the past four years. More selling then than anytime. Z-score of 38—38. So a z-score is standard deviation. One standard deviation is 67, two standard is 95, three standard is 99.7. You get it. So the chances of this happening and being sold that much are like 6% over the past year. That's like that's the odds of what happened. Happened 46 over the past 5 years, which takes it to like 99.999. Kind of chying to dominate the tape, long sales leading to risk off February, so risk on despite the reversal past two days. Markets remain positive year to date from a fundamental perspective. Got an update this week. Long-short are down 3% March the day that's closed. Drawdowns is neg 5%, not ideal. Year to date is now negative 1. Asia Focus fundamental long-short managed really well. Okay, Asia managers are up 0.9 year to date. Up. China managers are leading regional performance. Uh, Japan is now, and this is kind of important, Japan Focus managers are flat, and we know Bank of Japan. We're going to get into that. I continue to like A shares versus H shares trade. Please reach out if you want our rationale again, take a look. So there's something called H shares that you could look up, but here's FXI and here's China's large cap. What they're saying here is that you would go long A shares and then you would be shorting like the H shares or this, and then China actually does have H shares and you can find it, China H shares, and you just click it. And what they're suggesting is that the trade is really to buy the A shares and sell the H shares. I I have no interest in doing that, explaining what the guy's suggesting. I just thought it was interesting. I also find it interesting that retail is completely utterly blowing off the fact that they're being sold to institutions right now. Um, to me, I think that's a little scary. If you watch the volume that's just completely dissipated on Baba, I think that's scary as well. Does that come back in if it breaks out on huge volume? This is very interesting. Other than that, it's very clear that institutions are selling to retail in China, and I think that part is worth talking about. To put it into perspective here, you on Asia growth flows and you can see where you're at on a daily notional basis on what they're doing. Uh, it takes you back to levels that you haven't seen. What are they doing with Asia in general? From February when it peaked to March, they're just selling to retail; that's all they're essentially doing. Goldman raised their chance of a recession. Um, I just want to point something out. I think it's really important to get because we're hearing recession fears; it's all over the news. Recession, recession, recession. GDP is going to drop. Recession, recession, recession. Here's the consensus 25. We're at 20 at Goldman. Here's March 23. We were at 60 on the consensus and Goldman was at 35. You were two or three X a year ago and the or two years ago rather, and you look at where you are now and you wonder why there's so much fear. Where are they putting money, or where did they start putting money? Starting March 10th, interestingly enough, they started putting money back into North America more so than Europe or domestic in Asia or emerging markets in Asia. North America since around March 10th is becoming where Goldman Sachs Prime brokerage, the big hedge funds, are trading. I thought this was fascinating, so I want to share it. Uh, communication services, which had long sales of negative here, and then utilities are here at short cover, so there's that sector flow, which is pretty interesting. But if we really get into the data and look at it, what I thought was just fascinating, like the the long selling in the XLC names, these are standard deviations. I want to be clear about this. This is these are standard deviations; this is not percentages. So this is like the chances of this happening are literally like 99.9999%—% chance of this is not happening. Do you know how that usually goes? It reverts to a mean, and that mean means that you're probably going to see some bounce in communication services. Communication services are XLC; they are your Netflix, your Meta, your Google. Those names are probably setting up for some kind of bounce. We'll get to that. Uh, consumer discretionary 288. I thought that was interesting. Almost did a third standard deviation there on selling, so these people are puking everything they have. What I would say here is that they're not shorting communication services; they're shorting ETFs, but more importantly, they're shorting commun; they're shorting the discretionary side. So they're still worried about discretionary. They're like, yeah, not only are we going to get out of these names, we're going to short them. You're not really seeing that for for puking the communication services side; they're not really shorting the Googles and the Metas, right, and the Netflix's anymore. These numbers were a little higher about two weeks ago. Now what are they doing? Consumer discretionary; they're still leaning on that. I thought this was worth sharing.

Now, today's video is absolutely packed, and it's a lot to process, so I'm going to do some charting, not a lot. I want to show you some long-term things that I'm saying, but there's other things obviously woven into all of this, and one thing that I would really focus on here is Bitcoin. Um, you're trying to lift. Do you lift? Do you not? Friday's level, you were closed at roughly that 84, maybe you lift, maybe you just sit here. I don't know what's going to happen. What I would say to you is your first real level that you would consider anything is 93 as a target, and then if we continue to get through there, 12, 22, and the 55. To me, me, it's really that on Bitcoin as a target. If you look at RSI, you do have a divergence here. I think you'd be remiss to not know that you have a divergence. It doesn't mean that you go straight up, but is it possible that the 77 becomes some kind of bottom that holds? It's getting there. Yeah, I do think that hitting this level, holding in here, uh holding here, having this RSI, I do think it's worth mentioning. Um, you can see it here as well, even clearer on the 4-hour, and you can see that that is becoming the weight on our backs up here at 93. Do I I don't think you need to sell it. I don't think you need to buy it. I think you're basically in a trading range. Dips are meant to be bought. Now I feel the same way about names like MSTR, um, and I just want to point some things out that are definitely happening here with MSTR. I was pretty clear that I was carrying a position uh over the weekend, but this kind of stuff is starting to show itself now. Whether or not this stuff works or don't work, I don't know, guys. I'm you're trying to th you're trying to like thread a needle when you're buying dips and not waiting for them, and the reason you're doing that is cuz the returns are so excessive, so you don't mind if you have a lower win rate down here, but you have to size according. Something like this is just absolutely fascinating to me on how obvious this becomes. You watch this on MSTR, and people are saying, oh, we're already getting overbought. You can stay overbought forever, guys, like forever. You can stay overbought, so the goal is to flip and then go from there. For me, looking at this, I would be looking at Vaps more than anything else. Where can they get to? Very clearly, the main target is like 350. Could you get up there? 100%. And you can get up there fast if everyone starts to panic. So I think things like the MSTR are very interesting. I think COIN can hold, but you're not seeing any love here in COIN whatsoever, so we don't go near the financials until we see love. I don't have enough here with the hood to look at it. So when I go through this, what makes the most sense to me? MST. There are people talking about these huge short positions in Bitcoin. I don't think they're looking at that right. The one thing about a position is everyone assumes that it's singular. They're not singular. Someone could think that Bitcoin's going a lot higher, and they could be short Bitcoin. Why would you do that? Because MSTR trades at 200 vol of Bitcoin, so you short Bitcoin and you go long MSTR. They very well could be doing that, and you know what they're not going to do? They're not going to tell you exactly what they're doing. So when you see these reports, they're just reports; it doesn't mean anything. It it truly doesn't. So you have to have the whole story; you'd actually have to talk to those people and see what they're doing. I think there's something to this, and I'd be paying attention. I did go through this a little earlier, and uh you know, with the KACs of the world, we need to start looking at these names longer term. The LAMB research is aimed at someone needs to tell it uh that you know it can start rallying again. To me, I think this is pretty obvious that this is setting up uh a at here. Anything that's like down like this and then crosses that line, if you were to look at this over time, these are just as someone refers to them. I don't really look at it as valuation that some people will look at this as relative valuation, but when you cross over this, you're getting there. You you really are getting to that level of just outright puke on these. And so when you start looking at the SOX doing the same thing, you're really getting to that level of just outright puke where you've broken that level and you're crossing that level, and people do look at that and will buy when they see these turns. They will they will buy right off of this when the 14 and the 15—I use a 15; you should use what you're comfortable with—but when this crosses that moving average, they will just buy it. It's just it's almost like a system trade, and you can literally go and look at the index through that, and then you realize you're going into the Nvidia this weekend, and you see Nvidia giving you the same signal this week going into that. So I do like Nvidia here. I don't know how long I'll be in this trade. If I mark off the peak to there, the first area of interest where I'm going to have a problem is that 126 127. QBTS is another one. When I look at something like this and I look at the volume, I don't know. I have no idea where this thing goes, but it looks like it's going to be a rocket ship. So I closed at all-time highs. I'm pretty sure it's all-time highs unless there's something back here. There's this nonsense from when it went public, um, but if I get through this, where all these people are that have owned it for like ever, when it was obviously was some kind of SPAC, um, going into this Thursday meeting, this thing's huge. This could be absolutely huge, and this could be one just a monster here that could run. So I held it. IQ, similar, not the same, not even close to the same. Um, if you're looking at which one looks like it's going to rip everybody's head off, QBTS. I'm in both of those; I was very vocal about that on Friday, so I'm looking at those names now. This is going to be really an interesting conversation for me to have uh about Tesla, and you see this extreme selling here. You never broke that level, never broke. So I'm not going to tell you that this is a value play; far from it. I'm just going to tell you what I see. This is an extreme level. Whenever I see extreme levels, I just drop the market and go, okay, where am I? And I'm like, okay, here's a six, a seven, there's probably an eight or a nine coming. Am I going to get some kind of buy signal on this? Do I even care if I get a buy signal on it? To some extent, I kind of do. I'm more interested in my flip when this Cloud on a daily will flip to uh blue off of something like this. Uh, everybody has access to this Cloud, by the way, and if you don't, it's pinned in observations, RTE observations, um, but where does that really get you? Over that 256, 251 to me is the area. I just want to point something out that I think is really very important here that you be objective. When we're this low and we start crossing over and you look historically at this particular time when you see this, it is very hard to think that there's not some kind of rally out there on this move when you're this low. I mean, what you do is you look at relativism. I I do more on MACD than this, but and I know this video is packed, but there's a lot, a lot. So you're literally looking here and you're looking here, and are you going to get this or are you going to get this? And then it never looks back. I don't have a clue, but I would go and say I have to look at the levels that when we hit here, how did we do, and what happened? And some of these were absolutely huge that you in this trade for years. So the question really becomes are you at like peak hate here or are we going to get something like this that rallies us up from 180 to 205 and then rolls over? I don't have an answer; I I really don't. And I think you have to be very cognizant of that. What I see is that there is so much leaning on one side of the aisle now that for those that actually like Tesla and want to play Tesla, you know, I don't look at this. I want to be real clear about this. I know people that do, very smart people that look at this, and they create valuation models, relative valuation models off to RSI. I don't do that, and I'm not knocking what they're doing, but I know they're looking at this and saying on a valuation basis. I'm looking at it and saying, I have absolutely puked my guts out here. I'm not breaking that level. So for me, what I may do here is I may size small, much smaller than I normally do, and go out there and start a long-term swing on it, putting it in the long-term category and see if it holds. If it breaks below this bar and closes below this bar, I'll just get out of the way, and then I'll just wait for this to actually flip because if you flip this, like if you truly flip like this Cloud from here, if you ever look at how it acted from those flips and how it acts from there, like I mean, this flip in October literally got you what? 250 points or 100% just off that silly little Cloud. Um, I mean, when you see it turn on these, like May 23rd from here, you're in at 163. I mean, it's just so silly; it's so simple. Um, but the the way that this one Cloud is calculated, it's based on a lot of things that have to do with like parabolics and the VIX. It's there's more to it than just it just being what it is. Just understand that, um, but it's pretty clean, and this is really interesting to me uh to think like, hey, you might be near a bottom here with Tesla. Now, does more news come out? I I have no idea, guys. I don't know. That I can just tell you what I see going on. I do want to point this out: PLTR is flipping that Cloud, and that's a really big move for PLTR. So from my perspective, let's say PLTR pulls back, that bar is significant, and if you overlay this with some of this other stuff, that's right where the 55 is. So if I open down on Monday or Tuesday or any day and I get down to this level, like 82 is, and I could get involved, and then it doesn't close below there, there's a trade there that you may be able to get in and see if you can stay in this. The other thing is we can always look at the three, the five, and the eight, and they are starting to turn for these. I just want to see if I can get some retest there, but this definitely is very attractive. What's not bouncing yet are the financials uh at all. This one kind of is JP Morgan, I guess, a little bit. Uh, for me, in my perspective, what you do is just overlay the 200, and you'll see that you're holding the 200 on JP Morgan. You're probably doing it on Goldman. 2. What do we do with this? And I'm going to wrap it up here. You could look at them. I'm more interested in thinking what are the high betas that just put in bottoms that I'm not going to get be able to get near, like maybe Spotify did, right? We don't know yet. There's not a lot of volume there, but these names are starting to really stick out to me, like absolute puke level: PLTR, uh Tesla, Nvidia even, but Nvidia might just be moving up on that talk, and then we are going to have to start going through the like the bigger ones. Meta didn't really see any love. Netflix, on the other hand, you bounced a little bit. Google, yeah, Google's holding in here, and Google's been holding this doge for a period of time. Um, I don't need to be in a hurry here, so I'm looking at the ones that I need to be in a hurry here. Me looking at the indexes and saying, look at this, it is is a waste of our time. You can very clearly see where the bottom is on those levels. If you break them, if we stay here, you're going to get death crosses and all kinds of stuff, so we're going to have issues. So we're going to have to get moving fast, and we have a lot of data that could move us fast, but this is the hand that we're dealt, and I'm thinking about some of this stuff in a much longer-term perspective now. I was reminded of something this weekend, and I wanted to share it with you. I think it's really important for people to get this because we are having this debate on inflation, and nothing nothing determines inflation like the price of crude oil, like literally nothing. And one of the things out there is we have the saying with the C administration of drill baby drill, and I thought it'd be a great time to just throw this reminder out there. One of the the easy ways to see where inflation is going is just look at crude oil, and the way to do this, too, is look at crude oil futures at different times. So if you look at crude oil futures right now, what you'll see, and I'm just going to just move this all around so you can see the different positions, but if you were to look at this at different times, you're going to see where crude oil futures are; they're all going down. The further out I go, the further they're dropping, so it's telling you that inflation's going to drop. A lot of people use this, and it's a longer-time way to say, where's inflation really going? If crude oil ticks up, then they feel inflation is going to tick up. If crude oil ticks down, then they think inflation is going to tick down, but what they do is they go and take a look at the price of oil um and the price of oil in the futures market compared to where we are now on several U strikes is dropping. So where is inflation going, despite what we're hearing about tariffs and and the all the fearmongering and everything else? This is really important for people to get. So when you look at something like this and you say, wow, here's the spike in oil, well, where was the spike in inflation? Oh, it happened when uh yeah, it happened about 2-3 weeks later. Oh, oil dropped. This is obviously the the closest future. Oh, okay. So what happened to inflation? Oh, it dropped. Okay. Well, then you can see very clearly right here, oh, oil bottomed. What happened to inflation? Oh, it upticked. Oh, oil rolled over. Say it with me: what happened to inflation? It came down. Everything is tied to crude oil futures; it it's very simple to do, and it's a really great indication of looking at this and saying, okay, well, what's going to happen? Well, when I'm looking at about I put in five different uh expirations in here. When I'm looking at this, it is very clear that they're pointing down. Now, can they start pointing up? Could something happen? Of course, something could happen, but this is telling you right now that inflation is going to drop. So this idea going forward that inflation is this thing that we're supposed to be worried about, it's just not accurate. It you're not really seeing any signs of that besides the fearmongering with tariffs, and we

Who knows, uh, but this is a really big one, uh. Bank in Japan debate economic risk from Trump trade war; rid scen steady. So what's nice about Bank of Japan, and what would be great if they could take a a CU from it here in the US, is just state which way they're leaning before they do it. Um, what we tend to do in the US is this kind of like surprise: we're going to raise rates, or surprise: we're going to cut rates. Like Bank of Japan actually talks to them, and not in just, you know, language speaks so they look like they're smart; they actually, the guy literally comes out and says, hey, we're not going to cut rates, or hey, we're going to cut rates, or hey, we're going to raise rates. It's actually very refreshing, um, instead of like this surprise kind of thing. And they're not going to do anything; if they did something, it would be a huge shock to the market, I'll just put it that way, there because they've come out this weekend and said they're nothing. And this is 18th, 19th, uh, Wednesday board likely to keep rates exactly where they are; they've issued a statement about it. Uh, this is really good news for equities, meaning they don't have to worry about the uncertainty; we don't have to worry about people unwinding the Yen carry trade. It's one less thing to worry about, as we now have to focus on our own FOMC regards to our interest rate this week. I think this is pretty important. I, I actually think we're heading for some kind of a perfect storm, and um, I'm, I'll explain it. No one thinks they're going to cut rates; everyone says we're having inflation; everyone's worried about Europe, Japan, these two wars, and there's a lot baked in here for negativity in the market. And I'm not saying it is or it isn't, and we'll get to that in one second.

What we have to view, if we're taking a longer-term approach, and this is for the people that want a longer-term idea, if you, if inflation's dropping, which it, it is, it's dropping off a cliff, and we got some really negative data out there, which we did, if we go and take a look at something like what, what do we tend to notice, then I'll tell you what I tend to: the chances of rate cuts that they're factoring into this market are abysmal compared to what could happen, and I think that this spurs very well for the economy. I think it spurs very well for the economy because eventually it's going to spur very well for the consumer, even though they're puking out the consumer. I don't think it spurs very well for the Walmarts and the Targets, and I think that's why they're coming in, because their corporate profits are going to go down as far as on the gross market side, and eventually they'll make it up in volume, is where this is going to head, but it's going to take time to get so.

From a longer-term perspective, I, when I look at stuff like this and it's like a 2% chance of a rate cut, and they're probably not going to cut, I mean, let's be honest, it would be a shock to the system if they did, which means that the event this week is really just about him speaking and saying how things are going to go, and hopefully he doesn't, you know, drop the ball again on a, on a call, as he's been, you know, prone to do. But then you go out a little further and you look at May, and you're like, oh, we're at 27%, and then you realize a week ago we were at 36. So if, if we are to look at how this is skewing the data, is getting worse; in other words, CPI is dropping, PPI is dropping; Michigan consumer sentiment was one of the worst readings ever; Atlanta Fed says, you know, the sky is falling, the sky is falling, I mean, you know, Chicken Little on steroids. And what do we have? The chances of a rate cut are dropping in May; like it just doesn't make any sense whatsoever. So to me, this is really setting up a perfect storm where, for years, and from '23 on, in October '23, for those that were in the room, we were promised seven rate cuts; we got none, and until it took forever, I think it took a year before we got one, and then what, what, what do we have now? We're promised none, and then what do we see happening here? And I think that this is what's really important; I think that they're way off of the amount of rate cuts that you're going to get there. And when you look at something like this and they're like, oh, well, in June you might get one, you know, we're going to go up two basis points for one there, but we're going to reduce uh, two cuts; it's, it's kind of crazy when you look at it, and you go out to September, which is really where I'll end this, so we don't have to go through all of them, but it gives you a level here and going, okay, so the chances of a rate cut by here are up 27%; you're up 1%, for two rate cuts by then, and you're down on three rate cuts by September. I think that this is really skewed, and I don't understand it; like, I, I just think that people are way off on this, and I see inflation coming down; I see it falling off a cliff. This is just my opinion, with way the data is coming out; I have the worst Michigan consumer sentiment data I think I've had in 10 years, um, and the market went up on it, and you're telling me that we're not going to cut rates, or the chances of a rate cut are not going to go up because of tariffs. Tariffs only matter if people are buying things; people aren't buying things, then you don't have to worry about tariffs, right? I mean, it's not like they're going to tariff a blueberry.

So the question then becomes, how is this truly going to affect us? And, and to me, I think it's going to affect us that we're going to see more rate cuts this year than we are tariffs. 100% are going to affect things at the store, if you're going to a Target and Walmart, and, and that thing is from China, and, and uh, they want to keep the same price point at Walmart or Target, 100%, it's going to affect them. Is it going to affect companies? 100%, it's going to affect them; there's no doubt about it. And we'll get, I'll give you an example how I see this playing out on a couple names. I think they are way off on this, and I would expect that institutions are going to start saying it too pretty soon. And this is like a perfect storm for us with tech stocks, if this plays out the way that I think it will. We have to get through some of the other hurdles; the two biggest things that people don't think are going to happen that aren't in the market to me are peace talks with Russia, Ukraine; the floodgates just open. So I'm going to take a moment to weave tariffs into this, but I, I do want to go through this because it's definitely on my mind, uh, this EU defense trade that I'm, and we're in, um, I, I think this thing has massive potential; I do not think people get that this is a completely new demand that has not existed. I, I think the idea that names like PLTR, uh, Lockheed Martin, this kind of thing, that are not going to be involved in this, I find this very hard to believe, and I want to get that out because it's in my head and I don't have it in my notes, but this idea that they're not going to go to Lockheed Martin, to think that there's not going to be some reciprocity for tariffs in the future, where if you're buying, you know, US-made, in US Lockheed Martin F-35s, that you're not going to get some reciprocity tariff on the other side of that, you know, relief is just silly; you're going to, he's going to do that; it's very clear where his agenda is; his agenda, uh, the current administration's, is towards driving jobs to, to develop a middle; it's very clear. I don't care if you agree with it, if you think he's going to be right or successful; it's very clear that this is where he's going. So I think there's going to be reciprocity here that we just don't, we won't see yet for some time. That said, I don't know that we have to run into these names right now; I think the easiest play out there is this EU defense fund. Now you could also go DFEN, uh, for defense, and to think that this is not going to go up along with it, to me is silly. And then there was another one that was just brought up, SHLD, and actually this one was brought up by, uh, Stephen, and I did work on this, and you know, he is right; I like the other one better because it's more focused on Europe, but he is right about this, and we should talk about this.

So again, I want to just go through this because it's all, it's not really, I want to cover it, but not some of the names here. If you total these up, you're about 60, 65%. What SHLD has that EUA does not have is concentration. So when I show you EUA, you'll see 95% of it is 10 names; pardon me, that's what I'm looking for; I'm looking for concentration. What EUA does not have that this SHLD does have is the number two position is PLTR, and then you have RTX, Northrop Grumman, and then you still have some sprinkled in here where you have obviously this is Italy, uh, but then you have General Dynamics, base system, Lockheed Martin. So if you're looking at this and saying, you know, I want defense, and I'm looking at defense and it doesn't have enough oomph in it, and it doesn't really have any exposure to Europe, and I want exposure to Europe and the US, this is, this does that. I, I think I'd like to see some kind of pullback in it. What I want, what I'm going to see, are two different things; people are just catching on to this, um, I like the idea of the concentration, but this can, this can work as well. And this is a really good time for me to point things out. When you have ideas like this, please present them to the community; it's a real community, and I mean this, if you've been in the community for a year or two, you know this; if you're new, if you have an idea, present it; I don't know everything, so, and I don't have time to look at every single ETF and every single metric, and I, and we have people in here that are literally experts in fields from, you know, surgery to making medical devices to making AI chips; it, it runs the gamut in the room. So if you are specialized in something, have at it; let me know, uh, you'd be surprised what that adding that knowledge can do to us, to finding the right idea. And this does make sense for certain people to look at, if they're trying to get Europe and US exposure, and I want to point that out; I'll show you the difference. So clearly this one is, you know, rocket fuel, and you can see the difference in the move, but what we're going to do is I just want to drop in the top 10 here so that you can see the difference, and I think that'll, um, and again, to me, you know, there's different names here and there's, and you might say, I don't want that name, I want the other name, so, um, you know, when you see the top one in, um, the, the shield, it's very different than what you're seeing here with Airbus, Safran, Rolls-Royce, right; you don't even get there to the fifth one, but when you look at all these 96%, I thought it was 95, 96% is the top 10, you have no US exposure in here; you have European aerospace and defense, and that's it, and it's on like Donkey Kong, and to me that's, that's really like the, you know, the high test, I guess is the way to put it. But when these contracts, and I do believe that the EU is going to want some reciprocity for some things in tariff relief, um, and I think they're going to do that through tit-for-tat; it's going to come in the form of SHLD, and it's going to come in the form of, oh, you want to buy, you know, 100 F-35s? Yeah, that's great; we will reduce your tariff exposure to this. I do believe there's going to be mechanisms like that; it just makes sense, um, you're not going to be able to do that with PLTR, I don't believe; maybe there will be, maybe there'll be some kind of mechanism there for just on a revenue basis, uh, but I think it's going to be the guys that can actually put the work together, you know, the guys that want just an honest wage and do their job for the day; I think they're the people that are going to really, that's where my head is with it. But I would be remiss to not point these out.

Let's get to the where I was supposed to go with this, which is tariffs. So there's a bunch of symbols like this, but I, I think companies like Volkswagen, Porsche, you can see all this stuff; it's kind of hard to see from this direction, um, but they'll show you how like some of these like things are trading; they're all derivative, uh, on it, but, and I'm just using a weekly chart to say it, but a lot of this stuff, STL, like this stuff's in major, major trouble; Maserati, you know, things like that, you know, I, I'm going to try to figure out a really nice way to say this, but I, I am very fortunate to know some of what I consider some of the best traders out there, um, in finance, and I've known them for years; guys that work at companies, buy-side, sell-side, and they buy fancy things; I have never heard more people complain about tariffs on cars that are coming in my life, like ever, um, and do I think that there's a difference? I think if you were going to buy, and I know people don't think this, but I think if you were going to buy an expensive Ferrari, and you were going to spend half a million or 300,000, and now you're going to spend 400, yeah, I think you're looking at it differently; I do, I think you're looking at it a little differently, and I, and I'll leave it at that. So I think companies like this could have really big problems, um, unless they can figure out how they're going to carve off the luxury market. And so when I look at something like a Louis Vuitton, um, are you going to have a problem there? Is that, is someone going to not buy that $1,000 wallet because it's $1,250? I don't know; I, I don't know that that's going to be the area that that kills you, right? Like, I, I don't know if you're going to spend 800, are you not going to spend a thousand? I don't think that's the area that gets hit; now maybe it does because of, you know, uh, middle-class America, and they're like, I'm not spending that for it; you hit a price point where you're like, what am I doing? And I, I noticed that even with Apple, where when the Apple phones got to a point, even if I could afford it, you're, I'm looking at this going, why do I need this, you know, $1,400 phone? Like this is ridiculous, um, you know, it does the same thing. So I do think there's price points with that, but I do think that the high-end luxury market, like the Airbuses of the world, I think that these things eventually catch on fire, and I'm going to tell you why, and I'm not saying it's now; I think Louis Vuitton and a ma, and those names catch on fire; I don't know it's going to happen on the ultimate or the ultra high-end car market of like the Porsches that are already trading over, you know, retail when they get here; I don't know that's going to do that. And I'm going to tell you why I feel this way: 49% of all consumer spending is by people that make the top 10% of the money; in the '70s, it was not like that; it was literally like 50% for 50%; it was not as skewed as it is today, and that's why you're seeing such outrageous prices to do things, because it's so skewed to a certain class, and right or wrong, I don't care how you feel about this, but as that drops, more luxury goods are going to be bought, and that's what starts to happen here, and that's why this is so important. I don't know if it's going to happen now, but I do think that the luxury goods market, eventually the high-end luxury goods market is going to present a huge, huge opportunity for us to buy these names. Is now? No; I like buying Airbuses; I like buying Louis Vuitton when they break their 200-week moving average, and then they get back over; I need the higher high, and I, this is a really good time for me to point this out about something else in a minute. But when I look at something like an Airbus, I'm not even near it; like it's not even worth it for me to try the long-term build here; this is where I would try the long-term build, right? And we did one name like this, and we're still in it; people are shocked that we're still in it. But when I look at those, I need this kind of blow-up, and if I don't get it, I don't get it; on to the next one. And this leads me to this, and I don't want to seg into too many things 'cause I want to tie this all to research, but I really want to tie it also to like how I view the world with trading and how I do things. So when I see something here where I'm holding the 200-week, and every single time that I'm down in this area that I'm holding, like we are with the ASML, I don't get out of the trade; I don't see a reason to get out of the trade; I'm doing this and hoping that I can hold this for a year or two. And why I'm saying that is going to tie into something else; we're not stopped out of this; all that selling, we're not stopped out. Now there's rumors of an ASML killer out there; China's going to do it; just good enough, look, man, when it comes to ultra high-end tech, just good enough's not going to cut it. If you're, if you're trying to put something in a computer, maybe; if you're trying to develop the, the highest-end technology systems, I don't think it cuts it. Does this trade work or does it not work? I don't know; I never know. Here's a rule of thumb that you should be thinking about for everything here: you are January 3rd; you should be looking at every single stock out there and going, did I break the year-to-date level on any stock that you're interested in? Did I break the year-to-date level? So when you look at something like an Nvidia, they're like, yeah, yeah, you sliced through it like butter; okay, so Nvidia is weaker than ASML. If I look at something like KAC, and I just go to January and I go, let's just go find that January right here, am I lower than that? No; I held year-to-date. So what is this? When you do this, and I don't want to go too into this because we're going to go, we're going to get into it in a moment; I want to give you an exercise to do, 'cause I do this exercise, and what it is is you just go through any name that you're interested in, and all you're doing is going, well, you, you held it too. All right, so when I go Lam, KAC, ASML, and I look at all the semiconductor capital equipment manufacturers, and every single one of them is doing what, I mean, at someone should tell them that there was a stock correction, right? So they're all holding; go look at AVGL and look at what these are doing. Here's December, but that's fine; January. So you can see where I'm going with, okay, do you see this? So what names are we buying? Well, I'm buying all; I'm buying AVGO; I'm buying this; I'm buying Nvidia. What, what are they telling you is coming? They're telling you that this entire season is going to ramp up; that's why people are buying KAC, AMAT, Lam Research, ASML; you follow me? When they pulled back, what did they do? They bought those; did they buy AVGO? They buy Nvidia? No. So sometimes you have to look at this stuff from 34,000 ft, and the exercise to do is to look at your ideas, whether it's the Spotify of the world, and just mark off that Jan first level on any idea that you have, and just drop a pen right on it. So like you're right here, go, there's January 2nd; okay, we never even got back to year-to-date, right? So this is what I'm just telling you; it's a very helpful exercise when you're trying to wait what names you should be looking at. What I just pointed out is semiconductor capital equipment manufacturers are outperforming; look at January here; you're outperforming anything that is just basic to ramp up is outperforming the actual chips themselves, which is kind of interesting if you think of, but tying this all back to the tariff thing, I think eventually those names are huge buys; we just have to get through the cycle; the immediate buys in Europe right now, to me, are the DAX; like this is just EWG on an inflow basis; I don't have anything like it from a, from a European standpoint; the next to me that makes the most sense that we're already in is EOLE. I was very clear about this; I, I have my own metric in the room, and don't take offense to it, but whenever I get all these hymns and halls about an idea, like, why that idea, that's what people, whenever I get that, whenever I hear that, I'm like, a, this is going to be such a great idea because no one gets it yet, uh, but there's a perfect example: all-time highs on EOLE, uh, I think Argentina, why I'm at it; I think this is going to set up the ramp again because he's not going to put tariffs on anything they do, so I, I think that this is, there's things to this, but on the tariff side of it, it's really the big box stores that are going to take it on the chin; the Targets, the Kohl's, the Walmarts, and that's because they've squeezed people so long, right? Like either their workers or whoever, that's not going to work anymore because there's no more left to squeeze; what they're doing is they're, the tariffs are going to fix that, and whether, I'm not saying yes or no to like this; it's not a political statement; these are just facts; they're going to fix that because what's going to happen is you're going to drive corporate profits down for these, and as corporate profits drop on this, the, that money is going to go to other places; it will go to manufacturing in this country because you're going to have to create that good here; that's going to take time, and we started all this, and I'm going to go back to it, is there's no way that we're going to get like just two rate cuts this year at the way this is going; I think we're going to get substantially more, but I want to show you how you should be looking for long-term ideas right now. We're going to wrap this all together; hopefully you got that one part about how you should mark off year-to-date and just look at semi, semi-cap equipment manufacturers, and I think the idea of looking out longer right here is, is the way to go. When I start looking at some of this data, let's do it; this was a long one.

As far as economic data, we have the, we have the, the Fed this week; nothing else matters; like, we, we can talk about it, but really the Fed matters. I'll go through the daily stuff on the daily stuff, but there's no reason to do it; QIN's going to be very interesting obviously in how that plays out; that's a financial name in China; people are going to want to watch that. I do just want to go through some of these names that I think are, that are interesting, uh, that are worth your time, uh, XPE; I don't really play, but you do get some of these China names this week, as you can see, and maybe they move, maybe they don't; I personally think that you're going to see more movement on the other side here with the, the quantum names and the, uh, Nvidia conference; I think that's going to take center stage here more than anything. I think Williams and Son is definitely worth watching; so is Signify; talking about the economy, same with Five Below; you're going to get some retail love here; General Mills, maybe, maybe there's a movement there; J Jill could be an absolute disaster. So you're getting the retail stuff and the China stuff this week; maybe there's something to it; ASO is always a good one; a lot of people are going outdoors again; Accenture on spending; we want to listen to what they have to say; are people going to Olive Garden? Are they not? Do we really see things here that are going to move the market? Not really; Micron's going to, we're going to get there, but we're really getting a sense of what the consumer's doing or what the consumer is not doing, and I think that that's really important. Other than that, there's not really much more to say about it; I mean, I don't really see the sense in, in anything else; Micron, Nike, FedEx, UPS was a dumpster fire, so I would think FedEx has got a lot of explaining to do; what's going on in the home market; Lennar is going to tell us; I think you're getting to the point where they're kind of washed out, and then we want to watch Carnival Cruise and what they're saying about the cruise space, um, I actually think oil prices dropping is going to be great for the cruise line, but right now the consumer is probably looking at this and going, you know, do we really need to go on a cruise right now? Maybe we just, you know, batten down the hatches, but is that going to be reflective in those numbers? Maybe not; maybe it's reflective and guided; is it?