The yield curve has just un-inverted

This also happened in 1990, 2000, and 2008

All 3 ended in sharp economic downturns

Is this time different?

A thread 🧵 2/ The most closely watched version of the yield curve just did something incredibly rare: it un-inverted

Historically, these un-inversions have been near-perfect signals of a coming recession

Gold’s first ETF was approved in Nov 2004

After that Gold rose by 300% in the next 6 years

Now in 2024, the first spot Bitcoin ETF was approved

Is Bitcoin about to experience a similar run-up?

A thread 🧵 2/ In Jan 2024, Bitcoin’s first spot ETF was approved

To know what we can expect from Bitcoin now, let’s look at gold after its first ETF “GLD” launched in Nov 2004

From that point on, Wall Street could finally invest in gold without holding the physical metal

10-year Treasury yield has risen by 25% in just 100 trading sessions

Such sharp moves have typically coincided with market corrections

Buckle up

A thread 🧵 2/ What happens when you throw a dead cat out of a window?

It hits the ground violently and bounces

But eventually, it falls again

Are we witnessing a "dead cat bounce" in the stock market right now?

Yields have just gone from 3.6% to 4.5%

This could have MAJOR implications for the stock market

A thread 🧵 2/ The 10-year yield has risen sharply—from 4.1% in early December to 4.5% today

While this might seem small, it’s a substantial move in a short time

And it's actually in the context of a much larger move up from 3.6%

Tech has doubled since October 2022

Between 1995 and 1999, Tech doubled every 2 years

Are we following the same footsteps of the Dot Com bubble?

A thread 🧵 2/ Between 1995 and 1999, the NASDAQ 100, the US tech stock index, 2x in price every 2 years

Returns like that seem absurd, but here’s the thing:

The Nasdaq 100 has delivered similar returns recently

Big investors & corporations are hoarding cash like NEVER before

This is unlike anything we've seen

A thread 🧵 2/ Money market funds currently offer yields of around 5%

Which is one of the highest levels in the last 20 years

A 5% return may not sound spectacular

But in today’s environment, it’s compelling

Money market funds have now crossed $6.5 trillion

Such sharp rises typically happen before recessions

All bets are off if history repeats

A thread 🧵 2/ $6.5 trillion - that’s the staggering amount sitting in money market funds as of Nov 2024

Even Warren Buffett is holding a record $325 billion in cash

Why?

These funds offer steady yields on cash

Money market funds have now crossed $6.5 TRILLION

Such sharp rises has usually happened before recessions

This time is not different

A thread 🧵 2/ $6.5 trillion - that’s the staggering amount sitting in money market funds as of Nov 2024

Even Warren Buffett is holding a record $325 billion in cash

Why?

These funds offer steady yields on cash

Yields down = Markets up

This is exactly what’s happening right now

A thread 🧵 2/ The S&P 500 remains structurally bullish

With the same drivers from Oct 2022 still intact today

Warren Buffet’s cash pile has reached $325 billion

But why is Buffett building such a large cash pile now?

The answer lies in the book - The Intelligent Investor

A thread 🧵 2/ As outlined in The Intelligent Investor:

Buffett invests more when markets are cheap and pulls back when they are expensive

Warren Buffet is sitting on RECORD levels of cash

Is he preparing for a major market downturn?

A thread 🧵 2/ Warren Buffett's cash pile just hit another ATH, reaching $325 billion

That’s $325 billion sitting on the sidelines at Berkshire Hathaway

Which is a company whose purpose is to allocate capital into markets

Credit card defaults are rising at record levels

This is WORSE than the 2008 Financial Crisis

A thread 🧵 2/ From 1940s to 1970s, Americans used to save around 10% of their annual income

But today, savings relative to income is almost entering contraction territory

People are spending more than they earn

Inflation is falling rapidly

And the Fed has kept rates stable

This is exactly what fueled the 1990s melt-up

A thread 🧵 2/ Since mid-2023, the Fed has kept rates stable, even cutting them slightly

This consistency is fueling investor optimism as long as growth remains steady

That’s exactly what happened in the 1990s

Inflation is still very sticky

With Core CPI above the Fed’s 2% target

This could be a MAJOR problem

A thread 🧵 2/ Core CPI is an inflation measure that excludes food and energy

You might wonder: why remove 2 essential categories?

US government debt market collapse has begun

This has MASSIVE implications for the economy

A thread 🧵 2/ US government bonds have broken below a 40-year uptrend

After experiencing one of the most painful bear market since the 1980s

WARNING: Housing defaults have skyrocketed

This is unlike anything we’ve seen in a decade

A thread 🧵 2/ The Fed had been on an unprecedented hiking cycle

Taking rates from near 0% to 5.5% in just 1.5 years

Interest rates have now been above the 10-year Treasury yield for the longest period since the 2008 Financial Crisis

This indicates tight monetary policy

Elections marked a turning point in 1928, 1972, & 2000

Each instance saw a market melt-up followed by a crash

2024 is following this blueprint very closely

This won’t end well…

A thread 🧵 2/ In Nov 1928, Herbert Hoover won the US presidential election

Amid one of the strongest stock market rallies ever seen

The euphoria carried on for a few months post-election

But eventually gave way to Black Tuesday and the Great Depression

Leading to nearly a decade of market decline

Bitcoin has returned +45% in just 17 days

The next move will catch most off-guard

Buckle up

A thread 🧵 2/ Bitcoin has finally done it

After 6 months of consolidation, Bitcoin has surged past its all-time high

Bitcoin has risen +35% in just 12 days

But can this rally go even higher?

A thread 🧵 2/ Bitcoin has been the best-performing financial asset since Trump's election victory

Gaining over 35% since election day

Trump's presidency is seen as a bullish signal for Bitcoin

US government debt market collapse has begun

This has MASSIVE implications for the economy

A thread 🧵 2/ US government bonds have broken below a 40-year uptrend

After experiencing one of the most painful bear market since the 1980s

Elections marked a turning point in 1928, 1972, & 2000

Each instance saw a market melt-up followed by a crash

2024 is following this blueprint very closely

This won’t end well…

A thread 🧵 2/ In Nov 1928, Herbert Hoover won the US presidential election

Amid one of the strongest stock market rallies ever seen

The euphoria carried on for a few months post-election

But eventually gave way to Black Tuesday and the Great Depression

Leading to nearly a decade of market decline