Market Volatility & Midterm Opportunities — Full Breakdown & Transcript

[00:00] Hey everyone, me Tevin here. The futures market is throwing some sand in the face of the long-term investor sandbox. And it stings in them eyeballs, and I don't like things in my eyes, okay? I just finished yet another cup of coffee, and yeah, it's the Luigi mug. Why?

[00:16] Because even though futures are red, I personally feel really green about where this economy is going to go, especially after midterms. Keep in mind, people get really nervous going into midterms, and even J.P. Morgan told us that going into midterms, you tend to have volatility.

[00:33] Duh. There's an opportunity there. There's a play there. We're going to talk about that. J.P. Morgan reported that three months after midterms, historically, looking back the last 50 months, markets, or sorry, 50 years, markets go green in like 75% of the time, and they are green 100% of the time 6 and 12 months later.

[00:53] So in other words, this is an opportunity to take advantage of dips, in my opinion. Except there's a specific kind of dip we can take advantage of, and I'm going to talk about that right after we look at what's actually going on here.

[01:07] So three things have just happened. First of all, futures are red, that's one. Anthropics says they're going to be profitable for the second quarter. We've got to talk about that. There are some problems in this, both good and bad. And then a lot, this is a big one, well, actually, another thing.

[01:21] So futures are red in part because of, in my opinion, Iran delaying this meeting with neighboring countries on behalf of the neighboring countries who wanted a little bit more time to get consensus.

[01:35] I think a big deal is brewing to be determined. And I'm going to explain how I think Donald Trump can kind of separate himself from the Iran situation in just a moment. But you've got to know that within the next 72 hours, and this is the big thing, a lot of change is possible.

[01:53] We might have the first interest rate hike with a now 86% chance that we have seen in the last three years and two months. Like, Trash EPP came out three years and four, six-ish months ago?

[02:08] Yeah, three years and six-ish months ago, broadly, for consumer release. three years and two months ago was the last time we had an interest rate hike and so there's going to be some nervousness going into oh my gosh we're actually about to

[02:20] start a hiking cycle again and we might get Alan Greenspan here. He started in 1998 going through 2000 he was kind of credited with marking the top of the bubble with his final blow, his final rate hike. Markets are now pricing in

[02:32] three to three and a half hikes by April not ideal, obviously but if priced it, I actually hope we get fewer than that potentially only one or two rate hikes, and we start getting some evidence that inflation is coming in

[02:45] as this war comes to an end, hopefully. Maybe that is too optimistic. So there is a strategy around this we'll touch on in just a moment. But of course there going to be volatility between now and these rate hikes actually happening Is Kevin Warsh actually going to have the balls to put the pants on or is he going to get on his knees and bow

[03:03] down to Donald Trump? We shall see. So, to me, the worst case of rates has been priced in. To me, the worst case of oil is 107, at least in your term figures, and that's roughly

[03:17] where we sit at now. Obviously, we already knew this because we thought oil prices go the 107 on Thursday because of the Saudi pipeline, fueling facilities or pumping facilities getting struck. The pipeline's actually slightly buried, so you generally target the fueling facilities

[03:32] or the pumping facilities that are adjacent to the pipeline. And futures are also red in anticipation of some of this volatility this week. NASDAQ down 1% at the moment, S&P down about half a percent.

[03:44] I sure think a lot of this will end up recovering over even just the next few days, but almost certainly by the election. No guarantees. I can't give you personal advice. But there are some reasons for this.

[03:56] But first, I'm going to tell you how I think you can take advantage of this. I'm not trying to tell you anything. I don't even have a coupon code to pitch you. I'm just going to be blunt with you. I think that volatility is actually going to rise substantially going into the Fed rate hike.

[04:08] That creates an opportunity to sell puts, which is a bullish option on things that have higher implied volatility. Like right now, at the money sold put on Meta,

[04:20] you can get about an 8% yield backing into one of these sold puts. So we'll be talking about this a whole lot more in the course of the live stream, but I just wanted to throw that out as an option for people who are wondering, like, hey, how can you take advantage of that volatility?

[04:34] That's one way where if you want to own the stock anyway, it's an option, quite literally. It's an option to get a little bit of a discount on it. You're basically buying it for like $598 if you get assigned.

[04:46] And worst case, obviously, you collect the premium or you hold the stocks. Okay. Side note on that, I do think it's very interesting how much advertising is going on on the platforms right now.

[04:58] I was just looking at the advertising going on on the App Store. And if you type in, like, Grokobot or Gemini or something like that, well, you'll actually find it.

[05:10] Anthropic and Gemini and these other platforms running ads essentially against each other. Yeah, Gemini's running ads, Anthropic's running ads. I'll pull them up. And I think it's just hilarious because the ultimate beneficiary of that is Apple.

[05:25] And I've been a big fan of arguing that companies even like Meta are going to benefit from these LLMs plowing money into advertising. That's just sort of another longer-term kind of thesis that I have.

[05:37] There they are. I searched for Gemini and the ads came up. But anyways, I find that very interesting. Now regarding so that an option for people but let now touch on anthropic and then the thoughts on Iran and election and all of that All right So we will probably in the next well maybe not probably but there a good shot within the next 72 hours not only are we going to see that first rate hike but we also end up seeing the anthropic S

[06:05] They are currently circulating the S-1 that was expected to get released last week. Let's say right here, expected to unveil its prospectus last week. Instead, the company shared its documents with a small group of investors and will field questions from them

[06:17] before making them public. So in other words, they're kind of like testing the waters with, hey, how does our, you know, rigged IPO document look? And the reason I say I think it's rigged is because even though the headline,

[06:29] you know, front page news of the Financial Times, Anthropic tells investors it will be profitable for a second straight quarter. When you actually look at the fine print, it's exactly what we've been talking about on the channel. The measure strips out certain costs,

[06:43] including stock-based compensation is going to get stripped out. so all the riches the employees getting assigned from this IPO distribution costs for basically paying AWS

[06:57] you know their commission or extortion fee or whatever it is or Microsoft or whomever it is and the cost of training the models so basically distribution costs

[07:09] the cost that got you to where you are and the cost to give your employees the lottery ticket for getting you here They're going to strip all of that out, and then they're going to go, hey, guys, we got 80% margins.

[07:23] Oh, finance is such a clown show. But, yeah, this is what a lot of people are nervous about because they look and go, man, can this company actually sustain its spending?

[07:37] If they can sustain their spending, this party, this bubble can keep going on for a lot longer. we will be very early in this party I actually just made an analogy I think it's good, I haven't said it on the channel yet

[07:51] but I've been thinking about it in the background and I'm like, I kind of think this is the analogy alright, so there's a house party going on okay, and the house party started at 7pm, you know it's the house party, we started at 7

[08:04] Michael Burry showed up early and it's kind of like, man, there's nobody here this party's a bust so you get Michael Burry who actually shows up earlier on time to a house party, and so he's like, man, this party stinks.

[08:19] Then, he goes outside, and so he stays sad, but the alcohol starts flowing, and the party really starts cranking around 9 p.m. You know, we might be up here at like 10 p.m., where people are like, oh yeah, we're feeling

[08:33] good, everybody's a little loose, you know, the lips are flowing, everything's going a little kooky-dooky. We haven't gotten to the vomitorium stage yet. The vomitorium stage is up here at like 12 p.m.

[08:45] That's when things start going downhill. That's when people start knocking over the bottles. They start doing stupid things right And then this is like the danger zone right This is like the 1 a oh I got drugs in my drink oh my gosh the cops are showing up the cops are showing up they shutting down

[09:01] the party, meanwhile, like, this right here, this was a freaking blast, the music is pumping, the party is going, and you got the losers still standing outside going, yeah, they don't even know

[09:16] that the party's going to end. No shit, the party's going to end, but not yet. Why you got to be a loser about it? I don't know. I actually think it's a pretty good analogy.

[09:29] But anyway, so, like, this is like a pro and a con, this IPO document coming out, because it's like, are they going to be sustainable or are they not going to be sustainable? I don't know. To me,

[09:41] it's going to look like they're losing a lot of money and it's not going to be about the IPO doc. That will increase volatility, but it's going to really be about their second, third, and fourth quarter earnings after IPO, so we can see trajectories.

[09:53] That's when we'll know if their software is really taking off or they're getting commoditized away by the open weight. Open weight obviously has compliance risks, so there are a lot of firms that have to use U.S.-based companies and can't use open weight. And a lot of firms don't want to use their own error price hardware.

[10:07] They don't want to make the investment in that. They just want it to work, right? So, this is a pro and a con, but it is something that's going to increase volatility, along with this delaying of this Iran negotiation.

[10:20] I think, and this is just, like, pure speculation at this point, but I do think, A, Donald Trump will have some form of a deal to announce, even if it's a worse deal than the JCPOA or the Memorandum of Understanding,

[10:33] so he'll have some kind of deal before the election because he needs to have that. the second option is Iran strikes a deal with the Saudis Bahrain, Kuwait, Oman and everybody in the region and then Donald Trump just goes

[10:45] looks like they figured it out you know what, they're going to make sure Iran doesn't have nukes we're just going to pull our troops out of there and we win, we win nobody's going to call it a victory

[11:00] but it would be an end to the conflict and the straightforward moves and red sea for the Saudis would likely open and so that's where I actually think we rock it hoots midterm between now and

[11:12] I don't know what day we rock it but between now and midterm buying the dip buying short puts you know back in my way back in my way and I'm optimistic maybe I'm too optimistic but that's where my head is on anthropic

[11:24] that's going to increase volatility the Fed that increases volatility the late meeting with the run increases volatility that's okay more time to buy baby I don't know how to advertise these things that you told us here.

[11:37] I see that nobody else knows about this. We'll try a little advertising and see how it goes. Congratulations, man. You have done so much. People love you. People look up to you. Kevin, pass right there. Finance Alarmist and YouTuber. Meet Kevin. Always great to get your take.