🤔 America's Tipping Point: What's Next?

What’s on the Menu 🍴

This past weekend’s events are sure to shake up the markets…

And have Americans asking, “What’s next?”

In today’s dough, we explore some ways to prepare for the uncertain future ahead.

• America's Tipping Point: What's Next? 🤔

• What To Watch This Week 👀

• Two Things Can Be True At Once 📈

Today’s newsletter is a 5 minute read.

America's Tipping Point: What's Next? 🤔

The recent assassination attempt on former President Trump has pushed us to the brink of a dangerous tipping point.

The path ahead is uncertain, but one thing is clear: we must be prepared for anything.

Americans currently have three options:

1. Do nothing and rely on the government for protection and care.

2. Leave the United States in search of a safer home.

3. Stay and prepare, taking control of personal security, well-being, and self-sufficiency.

For those who choose to stay, preparation is key. It's about creating resilience, regardless of government actions.

Here’s a potential smart path to follow:

Step 1: Relocate from Troubled Areas

Consider moving away from cities plagued by homelessness, drug addiction, crime, corruption, and deteriorating infrastructure. Urban areas can become hotspots for unrest and instability.

Step 2: Invest in Sustainable Land

Purchase land with access to fresh water and fertile soil, suitable for supporting a family homestead. This ensures a degree of independence from unreliable supply chains and urban vulnerabilities.

Step 3: Acquire Essential Assets

Invest in assets that ensure self-sufficiency and security. Bitcoin and gold can serve as financial hedges, while guns and ammo offer protection. Stockpile seeds and other supplies to sustain your household independently of government systems.

Step 4: Develop Self-Sufficiency Skills

Learn essential skills for self-reliance, such as gardening, animal husbandry, and basic repairs. Build strong connections within your local community to create a support network.

Establish systems that enhance your family’s resilience in times of crisis.

Waiting until disaster strikes is not an option.

Preppers were once deemed paranoid, but recent events—from the pandemic to multiple grid failures and urban protests—have highlighted the importance of being prepared.

Remember, “There’s always a high probability that a low probability event will happen.”

Focus on what you can control and take proactive steps to protect your family and future.

Stay vigilant and resilient.

What To Watch This Week 👀

A failed assassination attempt on former President Donald Trump overshadowed all other major news over the weekend, but there’s plenty of financial market implications to speak of.

Bitcoin rallied above the $60K level as Trump’s odds of re-election soared in prediction markets and given his recent pro-crypto stance.

Stocks are also likely to view a Republican administration as more favorable towards low capital gains taxes, defense, oil & gas, and M&A activity.

This all comes on the back of a wild week in markets, after a slightly cooler CPI inflation print last week was the catalyst for a shift into small cap stocks.

The Russell 2000 index outperformed the S&P 500 by over 5%, and the megacap tech heavy Nasdaq-100 actually ended down for the week.

The question now is whether this is the start of a major regime shift in stocks or just another head fake.

We may find out this week!

The Q2 earnings calendar is just starting to heat up as well:

We’ll be closely watching the reactions to the big banks as well as tech companies such as TSMC and Netflix.

The macro calendar this week includes a Euro Central Bank meeting as well as the following:

• German economic sentiment (Tues)

• Canada inflation (Tues)

• US retail sales (Tues)

• UK inflation (Wed)

• US building permits (Wed)

• UK unemployment (Thurs)

• Japan inflation (Thurs)

• ECB rate decision (Thurs)

• UK retail sales (Fri)

After the events of the weekend we’ll be watching the VIX for signs of elevated volatility as well as the price action in crypto.

And then of course there’s the large cap to small cap rotation and bond yields to keep an eye on.

In addition we’ll keep an eye on the following assets & sectors:

📈 Rising Recently:

• Small Caps (IWM / IJR)

• Utilities (XLU)

• Real Estate (XLRE)

• Homebuilders (XHB)

• Solar (TAN)

• Retail (XRT)

• Regional Banks (KRE)

• Gold Miners (GDX / GDXJ)

📉 Falling Recently:

• Big Tech (QQQ)

• Internet & Software (IGV)

Two Things Can Be True At Once 📈

The time has come: interest rates will likely be cut soon.

There are short-term consequences of this that will likely start to be talked about shortly.

The data warriors are privy to a very obvious consequence of rate cuts: Equites historically fall when the Federal Reserve cuts.

Typically, there are reasons for lower interest rates that leads to weakness in stocks. It’s usually a sign that the economic data has taken a turn for the worse.

The interest rate cuts are a defense against a recession.

Economists are already starting to argue whether or not “this time will be different”.

Can we get rate cuts while avoiding a recession? It’s possible.

This is still a question that will remain unanswered for now, but, I have heard a few arguments that if we do get a recession, it’s likely to be mild. I tend to agree with this based on the data so far.

However, two things can be true at once.

We can see a temporary correction in risk assets from the Fed’s actions to cut rates, however, the longer-term trend of the stock market can keep going up as rates come down.

Said another way, it could end up being very temporary bearishness that the stock market actually needs.

1980-2000 was a great example of seeing rate cuts lead to short-term corrections, but the longer-term trend of the stock market was a strong bull market.

Perhaps the technology boom was a catalyst for this trend back then that artificial intelligence could be for today’s market?

Not only that, lower interest rates will likely push investors back into risk assets (depending on just how low rates go).

So portfolio positioning will be a big discussion if the stock market reacts to the Fed’s moves.

However, it’s important to decipher between the expected short-term correction and the long-term positioning and directional bias of the stock market.

Two things can be true at once.

Food For Thought 🧠

"In the midst of chaos, there is also opportunity."
- Sun Tzu

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.