Donald Trump’s “Liberation Day” is finally here

Will this mark the end of extreme uncertainty?

A thread 🧵 2/ Uncertainty around economic policy has surged to levels not seen since the 2020 pandemic

While this will eventually subside, there is no guarantee that uncertainty won’t increase in the near term

Tech stocks pose a significant risk to the market today

Just 10 companies make up 37% of the S&P 500

This won’t end well

A thread 🧵 2/ High market concentration has largely been overlooked due to the focus on tariffs

Today, the top 10 stocks in the S&P 500 represent 37% of the index

Recession fears are back now

Goldman Sachs increased its recession forecast to 35%

But the bond market is still NOT confirming these fears

A thread 🧵 2/ Recession fears have dominated headlines all year

But the most effective way to evaluate whether those concerns are justified is by analyzing the bond market

It offers a more reliable picture than headline-driven narratives

Uncertainty has just spiked to levels seen only once since 1995

Right now, 3 KEY factors will decide if the market crashes or hits new ATHs

A thread 🧵 2/ The US stock market has staged a sharp rally off recent lows

This comes immediately after some of the most oversold conditions seen since 2020

Given that level of selling pressure, a relief rally was almost inevitable

This indicator has predicted the last 3 MAJOR crashes

Is it about to signal a 4th one?

A thread 🧵 2/ The S&P 500 has finally seen a small bounce after its biggest drawdown since 2022

But this comes after the index broke below all key moving averages

Like it did just before the 2022 bear market

Credit card defaults for small banks are near RECORD levels

This is HIGHER than even the peak of 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 near 0%

Gold has just hit new all-time highs

History shows this is a MAJOR warning sign

A thread 🧵 2/ In the 6 months leading up to the 2008 financial crisis, gold prices surged 50%

This was a major warning sign, as investors rushed to safety right before the near-collapse of the financial system

Personal savings have now fallen off the cliff

And everyone’s expecting a housing crash next

But this is why home prices can keep getting MORE expensive

A thread 🧵 2/ personal savings as a percentage of GDP are at their lowest levels since the 2008 financial crisis

If Americans have little savings, how can home prices continue to rise, right?

This is why a recession is NOT imminent right now

A thread 🧵 2/ Concerns around a recession are rising as Google searches for it have shot up in a straight line

But, this doesn’t really align with real economic data that has been coming in recently

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

History is repeating

Buckle up.

A thread 🧵 2/ The S&P 500 recently broke below a major price channel that had been intact since Oct 2023

To many, this is similar to early 2022

When the index also broke a major 2-year price channel, kicking off a bear market

Every real market recovery saw THIS one trigger

If you missed it, you’d end up chasing a fake rally

Right now, it’s sending a sign you can’t afford to ignore.

A thread 🧵 2/ The S&P 500 is finally bouncing

After its biggest drawdown since 2022, we’re seeing signs of relief

But this comes after the index broke below all key moving averages

Like before the 2022 bear market

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

Ensuring tight monetary policy in the process

All major market recoveries had ONE thing in common

In fact, this tool can tell if a market bounce is real or fake

And right now, it's saying something every investor needs to know

A thread 🧵 2/ The S&P 500 is finally bouncing

After its biggest drawdown since 2022, we’re seeing signs of relief

But this comes after the index broke below all key moving averages

Like before the 2022 bear market

Gold surged by 50% before the 1973 & 1980 recessions

And did the same thing before the 2008 crash

Today, gold is making a similar move once again

Buckle up.

A thread 🧵 2/ In the 6 months leading up to the 2008 financial crisis, gold prices surged 50%

This was a major warning sign, as investors rushed to safety right before the near-collapse of the financial system

The chances of an economic downturn have collapsed

This does NOT happen right before a recession

A thread 🧵 2/ Throughout 2024, the probability of a recession was elevated, based on the Fed’s model

Which uses the yield curve to calculate the chance of an economic downturn

Now, with a major decline in the probability, this is something we want to pay attention to

Credit just became easier to assess for businesses

This is NOT what you see heading into a recession

A thread 🧵 2/ This is the US Federal Reserve's recession probability model

It estimates the chance of a recession within the next year

And it has just fallen off a cliff

This signal has flashed only 2 times since 1960

Both times, stocks rose by +20% first, then crashed

Things are about to get absolutely crazy

A thread 🧵 2/ This is the US Federal Reserve's recession probability model

Which estimates the chances of a recession occurring within the next 12 months

And it has just fallen significantly, similar to only 11 times since 1960

Recession fears are now at levels seen in 2022

We all know how that ended up…

A thread 🧵 2/ Rising unemployment is a key recession signal

Every past US recession occurred alongside a surge in initial jobless claims

In fact, claims tend to rise before recessions even begin

It’s happening again

Buckle up.

A thread 🧵 2/ The S&P 500 just broke below a major price channel that had been intact since Oct 2023

To many, this is similar to early 2022

When the index also broke a major 2-year price channel, kicking off a deeper decline

Investors are concerned about a MAJOR economic downturn

But these 2 indicators are still not confirming the arrival of one

A thread 🧵 2/ Bears argue that bonds still have room to rise and stocks have room to fall as markets start pricing in a real recession

Historically, the average S&P 500 drawdown during a recession is 30%

Which could take the market down to 4,400 points