Weekly Models Update - Rally Incoming After US Bond Market Implodes 💣

Weekly Market Model Update for April 12th

Welcome to the weekly report! This report is targeted at investors that don’t have time to monitor the ebbs and flows of the market day to day and still want to beat the market and avoid bear markets🚀. Just 10 minutes a weekend is all it takes.

I focus on the MAJOR themes and the MAJOR trends of the markets in this report. All the models I present are back tested with results so you can see that they work🤔.

This post is long - so make sure you read it on the Substack App or Website so you get to see the bottom of it - Email can often cut the message short. Let’s get into the weekly models!

What Happened This Week

This week we saw the bond market finally participate in the re-valuation of all US based assets lower. This got the attention of most of the Congress and Administration (and ALOT of Wall Street too). These Titans of Trading all took Scott Bessant’s advice and got leveraged long bonds ahead of Liberation Day. They took a 9% bath in a week or so on those investments as the rest of the world said, “hold my beer” and Japan lit up the bond market like the 4th of July. This is something that no one in the Oval Office anticipated occurring and it was pretty funny to watch the scramble afterwards. When stocks, bonds and the US dollar get this oversold, 75 to 80% of the time we are higher 3 weeks later - often because the government gets involved and starts to support markets. I expect no different here, but we do need to be a little careful because this admin does not have a good track record and could screw up the response. Still - stats say it’s bullish out a few weeks here.

Stocks Bonds and US Dollar this Oversold and 3 Weeks Later It is Usually Higher

Marge Taylor flipped long stocks again and bought a bunch of Restoration Hardware - now we know those in the inner orbit of MAGA are all long stocks. We’ll see if these stock trades go as well as those bond trades did for them. It is a lot easier to trade when Trump is NOT governing, that’s for sure. Magically, Trump decided to knock it off with the Tariffs (which has continued this weekend as it looks like “Big Tech” is getting absolved from Tariffs - mainly because Tim Apple went up there and read him the riot act). That’s got the Weekend Futures popping almost 1%.

Trump Says No Tariffs on Tim Apple and Futs Pop 1%

Next up is Auto Tariffs - will we see those walked back soon (or bailouts for Ford and GM)? The headlines are not good, and Trump has caved to Big Tech, naturally once you start handing out candy to one corporation, another one will want it too. Auto makers will be next up demanding relief. Farms back in 2018 got a big bailout once the Trade War in China started (this cost more than the 08’ bailout to banks). Perhaps we’ll see same here - the big problem is that it could nuke the bond market again since the US now suffers the same Moron Premium Britain does now. I don’t know if Trump and his minions are stupid enough to try to press that button again or not - they could send a trial ballon out there and watch and see if bonds sell, it’s certainly worth a shot. It looks like there’s about 2 months of car supply out there at the “old” prices, so it might take a few weeks on this one, but it’s on my radar now that the US is trying to extricate itself from the mess it has caused.

Next Up Auto Tariff Relief

So, now Tariffs that were supposed to make America BOOM and generate $700 billion in yearly revenue should generate maybe 15% of that (assuming nothing else gets walked back and demand doesn’t suffer due to the wealth effect from the market meltdown) and all it cost was 15 to 30 times that amount in wealth destroyed in the stock, bond and currency markets. What a great deal!

The good news is Trump is pretty much following the playbook from 2018 > 2019 in the Trade War which involves outrageous, non-sensical demands followed by a Bear Market and a clumsy attempt to walk it all back. Our models have done well navigating the re-run and that brings me to this week’s Show and Tell Chart.

Weekly Show and Tell

Each week I review a chart or model that I would normally keep behind the paywall, I hope you can make a couple bucks off of it! 🤑

This week we’ll show one of my Trump models we have been using to navigate the market this time around. We got both indicators coming off nice “Green” levels and we are seeing the market bottom here. The general idea with this model is to take all the stocks that did best the first time the Trumpster was in office and look for times when they start to perform really poorly. The idea is that everyone is wetting their beaks up there now + crony capitalism. Once these folks start to see bad results from the guy they paid for, they’ll jump on the horn and yell at Trump to knock it off and get in line. That’s what appears to be happening now, right on time.

Trump Model All Green Reflecting Intermediate Term Low