Tuesday Target | 14/52
Valuations High, Society Higher
It seems like the long-expected second leg of the downward-trending U.S. market is finally making its move. Pension funds pouring in with retiree money slowed it a bit — but gave anyone managing their own cash a chance to get out or slap on some short-term hedges.
What’s happening? Not much — at least, not if you’ve got a baseline sense of emotional awareness or understand human behavior. A bit more if you overloaded on US equities post-Covid or pre-AI and are fogged up by political narratives.
The story is simple. A kid could walk us through it — no market baggage, no political fog, just fresh instincts. The US tapped deeper into the post-Covid debt honeypot than, say, Germany. Its top six companies — now 30% of the S&P — rode the AI wave and election wind. Germany’s top four, 40% of the DAX, are only now picking up speed — finally sticking their own heads into the debt jar to rearm and rebuild. “Das ist super.”
Does any of this reflect what’s really happening in the economy? Not really. Germany’s Mittelstand is under pressure (MDAX flat forever), and in the US, dysfunction runs deeper every year. Homelessness, drug epidemics, obesity — all buried under the shine of AI-fueled stock valuations.
Some might point to recent unorthodox U.S. policy moves, blaming Republicans for shaking market confidence. Maybe. But a retrace — off already bloated valuations — isn’t the end of the world. Cleaning up debt bloat, reshoring supply chains, and nudging businesses toward real productivity over financial engineering could be a long-term win. Even if it stings short term.
Markets swing. Indices diverge. Narratives flip. You can’t gauge economic strength from nichey charts or emotionally loaded headlines. None of this hits real people — unless they’re trapped in leveraged ETFs or crypto-BS. This correction? Long overdue.
Below, as always, the minimum we need to know to get a feel for what’s cooking:
Reciprocal Tariffs: Shock and Flex
A 10% global baseline sounds tame — until you hit 25% on autos and 50% on outliers. Not policy; leverage. No balance, submission. Tariffs are the tool, not the goal. Markets spiked, then tanked. Expect more of that.
Europe: Posture or Fold
The EU’s trapped. Fight back and risk escalation. Cut a deal and admit irrelevance. The dream of a unified response? Good luck. Some will trade pride for carve-outs. Others will grandstand. Either way, the fractures are the tell.
Talk is Cheap, Steel Isn’t
Tariff evangelists promise rebirth. Maybe. But real industry hates input shocks and margin squeezes. Without investment, it’s just nationalism in a hard hat. For now, slogans outperform productivity. Let’s see how long that lasts.
Credit Cracks, Hedge Fund Stress
While headlines chase tariffs, spreads are widening. Quietly. Hedge funds are exposed. If the macro slips, redemptions force selling — anywhere and everywhere. That’s when this trade war gets financial teeth. Watch the tape, not the noise.
Get Rich Overnight with Options? Yeah Right...
TUESDAY TARGET: When the second leg down needs a Trump speech to get going. You can retro-fit a narrative — or just try understanding herd dynamics.
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