🎯 TUESDAY TARGET: 20+ Year Treasuries (TLT) | 👇 Reveal the Play
For a decade, Wall Street clapped like a trained seal every time a tech giant shredded its own shares. Buybacks built nothing and hired nobody, yet since 2000 they’ve supplied essentially all net demand for US equities. Now Microsoft, Meta & the other villains pour real money into real capacity, and the market treats them like teenagers who maxed out dad’s credit card. Reward the shredders, flog the builders. Charming incentive system.
Right on cue, the rescue squad arrives: BofA, Morgan Stanley, Goldman, JPMorgan, HSBC. All pitching the beaten-down spenders as the gutsy contrarian play, all in the same breath. A contrarian idea endorsed by every sales desk on the street is consensus with better marketing. And crowded lifeboats sink fastest.
Bond traders run the same rear-view logic: pricing Fed hikes off an inflation print pumped up by wartime oil, while wage growth, the signal that has led every inflation turn since 1985, topped out four years ago and real wages just dipped below zero. Disinflation is loading in the background while the anxious prairie dog insures against last month’s shock.
Below, as always, all you need to know and not a word more:
Hedge Funds Left Before the Fireworks
Goldman’s prime brokerage shows funds net sold US equities three straight weeks and dumped tech for a fourth, the most on record recently, while retail traded 65% above last year’s pace and long-only inflows hit an all-time monthly high of $180 billion. Cash allocations at private clients sit at generational lows. The smart money handed its inventory to the enthusiastic money.
The Broadening Gets Real?
Morgan Stanley’s Mike Wilson’s rotation call could have legs: out of chip stocks, into hyperscalers, consumer discretionary goods, transports, and biotech. The logic is straightforward; chips depend on hyperscaler checkbooks, and those checkbooks are being reviewed. Biotech historically annualizes near 20% returns when rates are elevated and falling.
Warsh Buries the Dot Plot
The new Fed chair is dismantling forward guidance itself. Waller calls it useful only at times; the June minutes will reveal how deep the philosophy shift runs. Markets built entire strategies around telegraphed policy paths. An adaptive Fed that moves fast without warning changes option pricing around every FOMC date; event risk premiums deserve to be structurally higher now.
Japan’s Bond Market Forces the Issue
Twenty-year JGB yields just printed a record 3.816%, they were zero in 2019. Japanese bankruptcies blamed on the weak yen hit an all-time high, concentrated among importers with no pricing power. The BOJ faces an ugly choice: keep tolerating currency collapse or tighten into a fragile economy.
Saudi Blinks First
Saudi Aramco slashed its Asia selling price by $11 per barrel, the largest cut in at least 26 years, as OPEC+ adds 188,000 daily barrels from August. Hormuz traffic runs near 30% of pre-war levels, yet crude sits under $70 with Brent in contango. Supply competition is overwhelming geopolitical risk premium. Cheap crude, though, hasn’t reached the pump: product markets stay tight.
THE WEEK: Minutes, Memory, Missiles
Wednesday’s FOMC minutes headline the calendar; the first glimpse inside Kevin Warsh’s inaugural meeting as Chair and the decision to scrap forward guidance. Fed speakers Williams and Logan follow Thursday, alongside China inflation data.
Taiwan Semiconductor posts June revenue Friday, and SK Hynix launches its $28 billion Nasdaq ADR listing. At the NATO summit in Turkey, Russia-Ukraine escalation tops the agenda after fresh strikes on refineries and tankers.
Tactics for this Tape
Watch the rotation, the bounce could fade into consolidation. Momentum remains crowded at the 92nd percentile despite the unwind, so only swing trade semis until volatility compresses.
Check out the broadening: equal-weight, discretionary goods, biotech, beaten-down software (if not too late). And observe quiet commodities like silver. A bottom may take time, but the AI buildout still runs on physical inputs.
Don’t guess. Reach out. Let’s build a capital-efficient yet risk-managed strategy from the option chain up.
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TUESDAY TARGET: 20+ Year Treasuries (TLT)
The prairie dog play:
The market prices Fed hikes off Warsh’s inaugural tough talk and an inflation print inflated by wartime oil; a lagging, distorted signal. Wage growth, the indicator that has led every inflation turn since 1985, peaked four years ago; real wages just went negative; payrolls printed 57k against 114k expected.
Institutional flow agrees: a large buyer just scooped 10-year Treasury calls expiring right after the July 14 inflation report. If disinflation forces hike pricing out, long-end yields fall and TLT grinds through 88. Defined risk, three months of runway.
This is not an official trade entry, just food for thought. Official trade entries are posted in the Trade Alerts section. Over there, we relentlessly innovate and deliver novel setups.
All our recent trades and the reasoning behind them can be found in the Trade Alerts section. Think of it as a behind-the-scenes look into our process, so you can decide if it’s worth adopting (or adapting) in your own strategy.
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Tuesday Target is written by Juri von Randow — founder of MacroDozer, professional investor, and trading mentor — delivering institutional-grade trade ideas, market insights, and strategy every week for serious1 investors.
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