#1016 - Can Stocks Withstand Higher Rates? | With Tony Greer

0:00It's crypto summer, which means it's festival season. At Real Vision, we're getting ready for the next festival of learning in partnership with Kraken. It's taking place April 18 and 19. And the theme is don't F up alts, memes and NFTs. Yep, there's a big world of digital assets beyond Bitcoin and ETH with lots of opportunity and lots of risk. We'll be bringing a ton of timely and actionable knowledge from speakers, including Raul Pal, Sergio Silva, Kevin Kelly, OSF and more. It's completely free to attend. Just go to realvision.com slash festival of learning to get the details and save your seat.

0:40We'll see you there.

0:49In the stock market withstand higher rates. Hi, everyone. Welcome to the Real Vision Daily Briefing. I'm Maggie Lake. With me today is Tony Greer, editor of the Morning Navigator newsletter and a partner in our marketplace. plays. Hey, Tony. Hello, Maggie. How you doing? So we're going old school today, folks. I'm sorry for the delay, but technology is failing Tony Green today rather than not have him. We're going to go old school. And I feel like maybe true to your roots though, Tony, you're a music guy. I feel like you sort of embrace the life of a DJ. I've got a face for radio, Maggie. I love it.

1:24No problem. Since we do the show all the time with you, we know that's not true. So we're going to rock it today because, listen, there's a lot going on in the market, right? We had Fed Chair Jay Powell speak today. We're at the start of earnings season. Geopolitical tensions running high. So what's top of mind for you as you look across the markets today? What's on your radar? From 30 ,000 feet up, we've had three weeks of higher yields. We've had three weeks of lower NASDAQ prices, two weeks of S &P sell-off. Last week, every sector that I watch of the 27 sectors that I follow in the S &P settled in the red last week, which is something that you don't really see too often, but kind of sends a message that, you know, there are sellers out there.

2:09The market was overextended. What I'm really, like, what I'm really, really just struggling with is that there's no agnostic selling. You know, there's no like there's no day where where everything has to get sold and the S &P really has to back off much. You know, we're just below the 50 day moving average of 5100. I feel like we're due for a pullback to about 4800 or so in the S &P. That would bring us down to the 200 day moving average, shake out a lot of the late longs. It would get the sentiment from greedy to, you know, a little bit fearful. And those are the kind of washouts that I'm really, really looking to buy.

2:45And as long as I can live with higher yields, as long as the curve doesn't go flying away on me. And I'm talking about two cents steepening dramatically, which it absolutely is not. Every move in the curve lately has been across the curve kind of uniformly. And with a stable two cents curve right now, I'm really not afraid to buy a steep equity dip. I just haven't seen one. You know what I mean? So like there's no nothing is on sale yet. Enough for my liking. Yeah. And to that point, we had J-PAL come out. We've seen those yields moving higher. Everyone woke up to that strong economic data, and it's been pretty consistent.

3:24And J-PAL came out today and kind of confirmed everyone's fears, saying rates are going to have to stay higher for longer. And yet we saw stocks rally. To your point, we see the major indices, at least last time I checked. I should check again because those last few minutes while we were biting with your computer are usually pretty telling. But for the most part, and yeah, okay, so they dipped, but it was right at the end. And it's mild. It's not, only the Dow hung in there. It's not that kind of washout that you might see when you get a sort of sentiment capitulation, or at least a short-term one.

3:56But you don't have that. No, you know, on a day that NVIDIA is up a percent and a half, we're not going to be able to call this a risk-off day. You know what I mean? Like, semiconductors rallied behind NVIDIA. The big tech stocks are all up. Momentum stocks are back up today. You know, it looks like a market dynamic bounce, quite honestly. You know, the S &P is in a little bit of technical danger here, like literally right between the 50 and 100 day moving average. You've got the 100 day down at S &P 5K. Feels like we've got to test that, but it doesn't feel like we have to test that in sort of one way train traffic.

4:31It feels like we're going to test that the same way that I'm going to sort of look for a dip to buy and remain bullish, the S &P. We're going to test lower levels as a function of the largest stocks in the market backing off with higher yields. And the smaller stocks in the market, i.e. natural resources, rally. So that's the way the market's going to pull back. And that's the way I'm going to still position to buy the dip. and then maybe a little bit sideways. You know, once we find an actual dip where we get stocks on sale, it might take a little while to crawl out of that. But there's nothing that's been dramatically on sale enough to get excited.

5:09And it's been a very, very slow and orderly pullback. So I kind of expect more of the same. And if I get the S &P below 5K, I'll consider it a gift and I'll start sharpening my pencil on my shopping list. Yeah. The dynamic is interesting to watch with bonds. And so we started the show saying, can the stock market withstand higher rates? It sort of depends on what you think is going to happen to rates, right? We're back on that sort of watch. And it's been orderly there, as you said, as well, although it's been pretty consistently creeping up. What's your sense or how worried are you from here?

5:46Does it seem like bonds are vulnerable or does that the move we've seen already kind of price in the fact that we're rolling back those easings? So if you ask me, I understand that we are rolling back the idea of all of those rate cuts last year. We had been six priced in, and now we're down to a couple. And if then, if we get a couple at that, but if you look at the bond market, just look at the price of the treasury market. If you look at TLT or if you look at the long bond, whatever it is, we were surfing the moving averages lower. And now there's a big extension lower as rates kind of break range and start heading toward the upper quartile of the rate range, i.e.

6:30the sort of lows of the bond market that we saw in the last quarter of last year when rates were at their high. So it looks like unless we get some kind of easing of CPI, PPI, the headline inflation data, that race are just going to keep crawling up and the commodity trade is going to be intact and you want to stay long natural resources. And I think that that's what the market's telling you. I don't think that you have to overthink it too much. I'm not a fan of the people that show up in my feed that ask me when is the equity rug pull happening. I don't think that we're set up for a crash, a rug pull, any dangerous.

7:12I don't think we're set up for 30 VIX or anything like that. But we'll see what happens, Maggie. I think the market is fairly orderly. I think it's rotating. I think it's slowly reacting to higher yields. And this can continue. That's all. We're kind of due for a little bit of sideways action in the S &P, a little bit of a rotation. So that's maybe what we can expect. Hey, everyone. We're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision daily briefing. It's crypto summer, which means it's festival season.

7:43At Real Vision, we're getting ready for the next festival of learning in partnership with Kraken. It's taking place April 18 and 19. And the theme is don't F up alts, memes and NFTs. Yep, there's a big world of digital assets beyond Bitcoin and ETH with lots of opportunity and lots of risk. We'll be bringing a ton of timely and actionable knowledge from speakers, including Raul Powell, Sergio Silva, Kevin Kelly, OSF and more. It's completely free to attend. Just go to realvision.com slash festival of learning to get the details and save your seat. We'll see you there. Have you ever wanted to trade Bitcoin but haven't dared try?

8:26With Plus 500 Futures, you can trade crypto without the hassle of opening a wallet. With just a few clicks, you can register and start practicing with their free and unlimited demo. See a trading opportunity? You'll be able to trade it in just two clicks. Feel ready? You can move to real money with as little as$100 once your account is approved. And the great thing is that in addition to crypto, Plus500 gives you access to a wide range of instruments. S &P 500, NASDAQ, gas, and much more. Explore equity indices, energy, metals, Forex, and beyond. With a simple and intuitive platform, you could trade anytime, anywhere.

9:00Experience the fast, accessible futures trading you've been waiting for with Plus500. With over 20 years of experience, Plus500 is your gateway to the markets. Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus500, it's trading with a plus.

9:24Yeah, interesting that you talk about some great questions coming in. I'm going to get to some of them in a second. Interesting you talk about rotation because we saw there's something crossing right now. United Airlines results top estimates despite the$200 million hit from Boeing. United Healthcare did well despite a major cybersecurity issue. issue. What are you looking at in terms of sectors? And are we going to see, you know, I think that we've seen that sort of thought that we'll get a rotation. And then sometimes we just see big tech come back again. Does it feel like there is going to be a rotation in certain areas?

10:00What looks attractive to you? Yeah. You know, I'm excited that the home construction market and home builders are pulling back. You know, they've been in a secular bull market. We got some weak economic housing data today, which finally sort of tipped home construction over with higher yields. So I'm hoping for that to continue and get a pullback to the 200-day in a sector like that, but I think it's in a secular bull market and really not that phased by higher yields. You buy home construction on a dip when yields are at their highs. And once you get that sort of relief that cpi isn't going to be a runaway train and the economy isn't going to be a runaway train and rates back off then you have the home construction sub sector come to life again and so i'm really liking the setup there um and i'm really liking the breakout to new all-time highs in exploration and production stocks baggie you know i think you have to respect that with you know oil near you know kind of hanging around its highs today we've got to pull back an XLE to the breakout zone.

11:02But with oil kind of sitting on its highs here, the threat today came out of Biden selling SPR again. And I guess he's got very little left to sell there. But to me, that's a really bullish thing. Once we empty out our SPR and really show how vulnerable the Biden administration is going to make our country, that's going to be a really, really big tell. And it'll be important to see how the market takes that. Yeah. Were you looking at financials at all? Because of course, banks are the first ones out of the gate here. Yeah, you know, they've been a week, right, Maggie? It's been interesting to see JP Morgan and Goldman Sachs reported the stocks are still dragging a little bit.

11:38Sector looks like it's having an orderly pullback, just like everything else. And, you know, that's probably something I would, you know, kind of treat like home construction, where you can buy the dip while rates are raging. And then, you know, if rates soften up a bit, the financials will get back on their feet. But, you know, I'm not really sure. That's not a sector that I really love trafficking in a much more comfortable in natural resources with a little bit more of an edge, you know? Yeah. This is a great question from G. Blackburn. Is the risk of long treasury trade dead? So is, you know, the idea of treasuries as a safe haven, you know, and I think people, a lot of people were looking at this when we had those headlines crossed over the weekend that were pretty terrifying at first, you know, it was contained by the time the market rolled in Monday, But is that no longer the case, that long treasury trade, Tony?

12:31You know, that's a very fair question because, you know, it's really difficult to tell how the market is pricing geopolitical, global political risk, I like to say. It's really hard to tell, right? But there's been no flight to safety in the Treasury market that we used to see in days of old whenever there was any kind of kinetic activity on the TV screens kind of thing. So we're not seeing that, but that's a function of the U.S. Treasury market backing off because the whole world is really wise that are runaway spending now. And it seems like that's going to be a weight to the Treasury market where the gold market looks like that's the one.

13:14And maybe Bitcoin is the one that's waking up whenever there is an issue overseas or an issue with economic data or something like that. So it's a little bit tricky. It's tough to tell. I feel like gold has taken the lead in the kind of like we're screwed securities. When you want to express a fate against what's going on politically or something like that, It's like reach for the gold stocks and reach for gold right now rather than just buy treasuries in a flight to safety rally. So, yeah, man, I'm not going after – I'm sure treasuries right now. So I think race can still go a little bit higher, and that's how I'm positioned.

13:56Yeah, and we have some folks out there really concerned and putting – we know some people have been talking about 5%. I saw a forecast for 6.5%, which is obviously on the outside, you know, high end of that. But yeah, there's a lot of concern. And gee, Blackburn, if you didn't catch my conversation with Jacob and Marco yesterday, there's a lot of concern. One of the risks they're both really worried about, Marco in particular, is a bond market riot. You know, the sort of Fed and Treasury losing control of the bond market and yields moving higher regardless of what they do. um and i i you know we're starting to see a lot more concern about that bubble up um and not so much in mainstream media but among some really smart analysts and newsletters i've been reading so it doesn't mean it's going to happen but it just means that's on the radar um and i know yeah and that and i know the same with you tony you got to kind of pop up and pay attention when people start talking about stuff like that um question about so mitt's speaking of gold asking when is this gold rally going to end?

15:03And sort of what's been driving, and I think Tony just pointed out, some of it has been that maybe in a world where it's hard to find a place to hide. And there's a lot of cross currents. Gold has been benefiting and a lot of people are worried about currency debasement. But a lot of people sort of have ridden that and are looking to get out. We talked about that last time, right? When it's rallying and everyone's looking for the exit. But Mitt's asking when's it going to end, and Dan saying, Tony, gold and silver, D Mark 13, is it time to take off the gold trade? Or with war and inflation, will they defy gravity and keep plowing upward?

15:44Well, Maggie, I got to say that gold to me looks like it's in its own world, right? It's a secular breakout. It's breaking out against a roofing dollar, right? I think you have to respect the fact that the dollar index literally will not back off the highs for one moment, and neither will gold. So that's why gold is like in its own world now, and I think you're running to trouble looking for a correlation to something else. People asking, what is the gold rally going to end? I mean, I don't have any reason why it should. It feels like we've got technical tailwinds. we've got the tailwinds of runaway spending that seems to be going it seems like the spending is going higher or you know we're we're spending faster as time goes on you know what i mean like it's just accelerating and accelerating so i feel like gold can continue you know silver's a little bit sketchier where it just traded right to the old eyes here and so maybe that's a sale and i really so i've been believer that silver has been along for the ride and not really where the actual trade is the whole time.

16:49But I'm rooting for silver to go up just like anything else. I mean, I'm long physical metal. I don't have a trading position on my pad. I do have gold on my pad. And so I'm focusing on that because that's at all time highs and won't back off. So when you see that price action that we saw last week where everybody is high-fiving in gold above 2400 we get a spike top on gold where it goes 2400 2430 and then backs off to 2350 right has a big pullback like that and then doesn't curl over to me that's a sign that gold is absolutely not going down like i i think you know in my opinion we should gold at 3k you know way before we see gold below 2k kind of thing so i think it's got a lot of legs and i don't i don't see any reason for it to stop at all.

17:37Super interesting. I love asking you when you come on about your Slack channel, because for the subscribers of The Morning Navigator, you have a Slack channel, a kick in Slack channel that you guys do. What's been some interesting incoming? What are people most concerned about or sentiment or are they looking for opportunity? Because it feels like we're in that volatility again. And that is either it gets people scared or it has them looking. What's the sentiment you're picking up? Scared is accurate. I think scared is accurate because we just started a World War III channel in my Slack channel.

18:10Yeah, because all the headlines, unfortunately, you know, you got to bucket them somewhere and you wind up clogging up, you know, the trading channels with, you know, relevant information about, you know, geopolitical events that you have to be following right now, right? I mean, if you trade in oil, if you trade in gold, if you trade in a single commodity or stocks, you have to have an eye on what's going on between Iran and Israel. And while over the weekend, it looked like a lot of coordinated showtime, it looked like a lot of saber rattling, it looked like a lot of in advance warnings of attacks.

18:44And if you know, the reality is that's not how real attacks take place, is that nobody gets an advance warning when it's a real attack. So there's skepticism about what's going on. There's real concern that things can get a lot worse. You hate to bring it in, Maggie, but it's another other case of, you know, a politician with imploding public approval that's starting another war to change the subject. You know, it's just where we are. And it looks like it's going to get a lot worse toward the end of his term. Yeah. You're talking about Netanyahu, right? I'm joking. I know you're talking about that.

19:17Yeah, exactly. We're talking about Benjamin. I'm talking about the guy in El Salvador, Maggie. So that's so interesting. And we're right there with you, Tony. I mean, we started out with shows on bookending the beginning of this week on geopolitics because it was that kind of weekend. And you do. And these have huge macroeconomic implications and implications for the markets. They always do, but particularly right now. So you have to pay attention to it. But that is so telling and terrifying that you actually look at a channel that's called that right now. They talk about the sign of the times, man.

19:53And it's not something we want to be doing. We don't want to be talking about this. We don't want this interfering in our trading world. You know, you don't really want trade through a global conflict like that with people dying alongside the trades that you're putting on. You know, it's an unpleasant, unpleasant event. But it's the world that we live in right now, unfortunately. And like we said, before that, before this administration comes to an end, it looks like we're going to see a lot more of it. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

20:28As we said, we're going to stay on that, on the geopolitical and mop it up. And we had so much to get through. Samuel sat down with Dee Smith today for another installment, just taking a look at both the situation, but also sort of broadening it out. We talked a lot about the U.S. election with Jacob and Marco yesterday. I know Samuel and Dee touched on China, which is the elephant in the room, always in the geopolitical conversations. So be sure to check that out on the platform. I know a bunch of you have recently come over from YouTube, so welcome. This is the kind of stuff that you can access once you get on the platform and not just viewing it from YouTube.

21:06So we're psyched about that. And also, while you're navigating around, for those who would like to subscribe to Tony's newsletter and get access to that great Slack conversation he has all the time, you can find an easy link to do that in our marketplace where you also get a discount if you're an RV member. So be sure to check that out. Tony, we have a couple people asking, more than one, asking about uranium. I feel like we always have people asking about uranium, but specifically when you're on, because I know you watch the commodity space. But both Roger and Doug saying, have uranium miners washed out enough to start adding?

21:42It's a good question. There's a big pullback in uranium today in the last couple of days. And judging where they failed on the upside, the uranium miners, I'm going to say that no. I would much rather see a little bit of a steeper pullback than this, quite honestly. You know, URA is trading around 28, but it's with a double top at 32 in the rearview mirror. So it looks like this thing can trade down to its 200-day moving average around 26 and three quarters, 27. And I'm talking about URA. Obviously, the uranium bulls are getting a little bit of religion because the commodity that they swore could not possibly pull back is now pulling back.

22:26Right? So all of a sudden, you know, the cure for high prices was guess what? high prices. There's a reason those chestnuts exist, right? Yeah, there's a lesson. There's a lesson for the uranium bulls, right? It's like, guess what? I know there's no uranium, but it doesn't mean that the price can't go down. And so there's a little bit of a pullback in uranium, spot uranium, pullback in spot, sprout uranium trust, pullback in the miners. And it just looks to me like that the miners, the miner bulls are trapped in a situation where they're in the miners because they expected uranium to go up forever.

23:04And they're going to learn that if uranium doesn't go up forever, then uranium miners have downside risk and lots of it. So it's like, that's how I see it playing out, Maggie. And if physical uranium, which is the trade that I'm in and not the miners, if physical uranium pulls back further, I'm interested in buying that, if uranium miners pull back further, I've got to be honest with you, I'm a little bit worried. I don't know where I would dig into that trade just because they look later. The chart looks different. The URA chart does not look like a uranium chart. That's so interesting. Yeah, it really is, right?

23:42And when you noticed a long time ago that spot uranium was sailing higher and higher through the third quarter and first quarter of 2024, and the miners were not making a new high, you have to have more respect for the commodity there, and you have to be skeptical about the miners when they can't keep up. And then if there's a situation when there's a sell-off in the metal, which has been leading the trade, then you have to think, man, these miners are probably vulnerable on the downside because it doesn't look like anybody really got out of them. And if there's a big pullback in the price of uranium, they're going to have to get out of the miners.

24:19So I'm looking for a much steeper washout. I think that market is still long and wrong right now. Long and wrong. In the miners, I'm talking, in the miners. Yeah. You know, we've been talking a lot about gold. Are you in the, you're in the gold commodity, not the miners there too? Is it a similar situation or is that completely different? Exactly the same situation, Maggie. You know, look at gold miners. Gold miners aren't trading all-time highs, are they? Absolutely not. Newmont is the same price it was when I was in high school and nobody cares. Nobody cares, right? Yeah, I mean, the gold bucks care and that's fine, But the trade is gold.

24:54Gold is trading all-time high. Central banks, there are no central banks buying gold stocks. So if you want to be in the trade that's going on, be in the metal, similar to uranium. That's where the story is. That's where the shortage is. There's no shortage of mining companies. There's no shortage of mining stocks. There's no shortage of regulations that they have to deal with to pull metal out of the ground. There's no shortage of geopolitical risk that they have. There's no shortage of increasing input costs that they have. Like the miners have a tough road to hoe with gasoline prices exploding and energy prices.

25:26So as bit as they are. So, you know, I just don't have any interest in owning the companies that are going to struggle with everything else around the gold market, except gold. So the only thing that gold miners have going for them is what they pull out of the ground. You know what I mean? Like, so like, It just doesn't get me excited to be in that trade, while the gold trade does get me very excited to be in. There's a half a million contracts of open interest. That can go up to$600 ,000 ,000 ,000 ,000 if we see any real speculation pile into this market. Total ETF assets still on the decline, and yet the price of gold is going higher.