Hello, my friends.
I just want to share a bit of my thought on the market, on the current conditions.
The 10 years now competes with stocks for the same money. We have reached an impressive price, almost similar to 2002.
It pays 5.3% which is insane imo.
And at that price, it cannot be positive for stocks. Why take risk when you can have a guaranteed 5.3%?
https://preview.redd.it/tz5sms210oth1.png?width=1456&format=png&auto=webp&s=0777baf6c7b5ce5777a53e4ba70630b56f6d3bb8
We can now feel the effect also on the stock market because every company is repriced based on this fact.
For example, chips rose because they profit and grow so much, and the hardware is paid for by the AI firms with a lot of cash flow, so the high rate doesn't affect them. See Nvidia price. For how long?
https://preview.redd.it/v2rsvxh01oth1.png?width=1456&format=png&auto=webp&s=fb0f62196da8c073da20281495cd6c7e4f599431
You can notice that when a sector is very speculative, profits will not be there for a lot of time. Profit is many years away therefore they are exposed to a higher rate. See air taxis things like that.
Also, I like to checkthe currency market because usually currency moves before stocks. It is clear that the dollar is beating every major currency.
But we can see that currencies tied to global growth felt the most last month. Take for example New Zealand Dollar who went down almost 5% in a month. Don't think that it is bullish for the market.
What are your thoughts?