>> AFTER 20 YEARS OF FINANCIAL PRESSURE, WERE BACK TO LIVE MARKETS. >> THE MARKET IS PROBABLY GOING TO TAKE OFF AGAIN. >> WE SEE A LOT OF UPSIDE IN U.S. VOLATILITY MARKETS. >> THE U.S. BOND MARKET IS STILL THE PLACE TO REACT. >> THIS IS "BLOOMBERG BR WITH SURVEILLANCE, WITH JONATHAN FERRO, ANNMARIE HORDERN. SON PATRICK: GOOD MORNING. -- JONATHAN: GOOD MORNING."BLOOMBERG SURVEILLANCE" BEGINS RIGHT NOW. INTERVENTION RISKS AND GOAL. SMASHING THROUGH $5,000, BUILDING ON A RECORD-BREAKING RALLY, GOAL ON A SIX-DA ...

Core Viewpoint - The threat of a mandatory 10% cap on credit card rates, as proposed by President Trump, is viewed as political noise unlikely to become law, according to strategist Ed Yardeni [1][2]. Banking Sector Analysis - Major bank stocks, including JPMorgan Chase & Co. and Capital One Financial Corp., experienced a notable decline following Trump's ultimatum regarding credit card rates [2]. - Yardeni characterized the ultimatum as a "trial balloon" from the administration, suggesting that it is intended to gauge public reaction rather than a serious legislative proposal [2][3]. - He predicts that powerful banking lobbyists will prevent any congressional legislation enforcing such a cap from passing [2]. Market Performance and Outlook - Despite political interference creating a "rocky path" for investors, Yardeni maintains an optimistic year-end target of 7,700 for the S&P 500, indicating a potential 10% upside from current levels [4][5]. - The current market is described as "earnings-led," supported by a resilient economy that has managed various shocks since 2020, with expectations of strong corporate profits in the upcoming quarter [5]. Bond Market Insights - Yardeni cautioned against further Federal Reserve rate cuts, arguing that the bond market does not indicate a need for them due to economic strength [6]. - He noted that "bond vigilantes" have already increased yields despite previous Fed easing, warning that unnecessary rate cuts could lead to an unsustainable stock market "melt-up" [6]. Stock Indices Performance - Year-to-date, the S&P 500 and Dow Jones indices have gained 1.44% and 3.09%, respectively, while the Nasdaq 100 index has risen by 1.03% [7]. - The SPDR S&P 500 ETF Trust and Invesco QQQ Trust ETF closed higher on Monday, with SPY up 0.16% at $695.16 and QQQ advancing 0.083% to $627.17 [7].

Core Viewpoint - Ed Yardeni predicts that the "Roaring 2020s" stock market rally will continue through 2026, but he warns that aggressive fiscal stimulus from the Trump administration poses significant risks to the economic outlook [1][3]. Group 1: Economic Outlook and Market Predictions - Yardeni highlights a potential conflict between government spending and the bond market, noting that massive taxpayer refunds could lead to increased liquidity that may upset "bond vigilantes" [2]. - He forecasts the S&P 500 to reach 7,700 by 2026, representing a 10% increase from current levels, driven by an AI-driven productivity boom that will enhance corporate earnings [3][4]. Group 2: Socioeconomic Divide - Yardeni describes a "Chick-fil-A Economy," where Baby Boomers are financially secure and spending freely, while younger generations face challenges such as housing affordability [5]. - He believes that Trump's policies are aimed at addressing the dissatisfaction among the "have-nots," although this may lead to volatility in the bond market [6]. Group 3: Market Performance - Year-to-date, the S&P 500 has increased by 17.67%, while the Nasdaq Composite and Dow Jones have gained 21.75% and 14.32%, respectively [7]. - Despite these gains, the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ) closed lower recently, with SPY down 0.36% and QQQ down 0.48% [7].

Core Viewpoint - The year is marked as historic for precious metals, driven by low volatility in the Treasury market [1] Group 1 - Precious metals are experiencing significant interest due to their performance amid a stable Treasury market [1] - The muted volatility in the Treasury market has contributed to a favorable environment for investing in precious metals [1]

Group 1 - UK holdings of US Treasuries have nearly doubled in the past five years, reaching $865 billion (£648 billion), surpassing China as the second-largest holder of US debt [1] - The shift in foreign ownership indicates a growing dominance of hedge funds over central banks as buyers of US Treasuries, with London emerging as the largest hedge-fund hub globally [2] - Hedge funds are characterized as more volatile investors compared to traditional holders, which could lead to increased market fluctuations in response to US fiscal policies [3][4] Group 2 - The demand from hedge funds makes US Treasuries more susceptible to significant price swings, especially if there are indications of increased government spending [4][5] - The risk of a crisis due to speculative trades by foreign hedge funds in the UK debt market has been highlighted, with potential regulatory measures being considered to limit hedge fund activities [6] - Foreign investments in US government debt have surged by $630 billion since April, despite the US administration's tax cuts and increased spending [7] Group 3 - Foreign ownership of US debt has increased by over 50% since 2015, surpassing the $9 trillion mark for the first time in March [9]

Group 1 - The market anticipates that President Trump will announce Kevin Hassett as the new Fed Chair early next year [1] - Prior to Thanksgiving, the probability of Hassett being appointed was notably high [1] Group 2 - No relevant company or industry-specific content is present in the provided documents [2][3]

Group 1: VIX Index and Market Volatility - The current market environment is characterized by a focus on volatility, with the VIX index being a key indicator for hedging long portfolios or speculating on rising volatility [2][4] - There is a notable seasonality effect in October, with potential risks such as government shutdowns contributing to expectations of increased volatility [3][4] - A bullish position in the VIX is suggested, with a specific trade involving buying a 20 call and selling a 25 call, requiring the VIX to remain above 25 for profitability [5][11] Group 2: Toll Brothers and Homebuilder Sector - The homebuilder sector, including Toll Brothers, has been downgraded to neutral by Evercore ISI due to a lack of improved activity and affordability in the market [12][14] - Toll Brothers has seen an 11% decline in the month, with ongoing margin compression as builders buy down mortgage rates to stimulate demand [13][15] - A bearish outlook is presented for Toll Brothers, with a proposed trade involving buying a 125 put and selling a 115 put, indicating expectations of a significant market pullback [18][19] Group 3: Treasury Bond Market - The bond market is facing bearish sentiment, with concerns over fiscal irresponsibility and the potential return of bond vigilantes amid ongoing government shutdowns [26][28] - A trade in the 20+ year Treasury Bond ETF (TLT) is proposed, involving buying an 88 put and selling an 83 put, reflecting expectations of lower bond prices and higher rates [29][30] - Technical analysis indicates a downward trend in TLT, with key support levels identified around 88 and 87, suggesting potential for further declines [31][33]

Geopolitical & Market Optimism - Markets showed slightly higher optimism due to potential peace deal progress, particularly benefiting European equities [3][4] - Global markets outside Europe stagnated, indicating optimism is not universally shared [5] UK Inflation & Bond Market - UK inflation remains significantly above target, raising concerns about undermined UK data [6] - Long-end gilt yields are rising, mirroring a global trend in rising yields, including Chinese yields [7] - Bond vigilante isms are creeping back into the market, potentially accelerating after Jackson Hole [8] Bond Yields & Jackson Hole - Higher bond yields are seen as a potential problem for global stocks in the coming weeks [9] - Expectations are that Jerome Powell will aim to say very little at Jackson Hole, avoiding validation of a September rate cut unless data is very poor [9][10] - A slightly hawkish stance from Powell is anticipated, potentially disappointing the market [10]

Group 1 - The divergence between stock prices and bond prices indicates differing market outlooks, with stocks reflecting optimism and bonds showing pessimism about the economy [7][27][28] - The iShares 20+ Year Treasury Bond Fund (TLT) has decreased by 8% over the past six weeks, while the S&P 500 has increased significantly, suggesting a potential misalignment in market expectations [3][14] - The U.S. national debt is approaching $37 trillion, with a debt-to-GDP ratio of 123%, raising concerns about fiscal sustainability and potential economic collapse [15][16][18] Group 2 - The "Bond Vigilantes" are reacting to perceived irresponsible fiscal policies, particularly the proposed $3.8 trillion budget bill by the Trump Administration, which could exacerbate the national debt [10][12][13] - The Federal Reserve is likely to maintain its current stance on interest rates due to ongoing economic uncertainty and inflation concerns, influenced by trade policies and tariffs [25][26] - The stock market may present opportunities despite the debt concerns, as historical trends show that market performance can thrive even amid rising national debt [20][21][22] Group 3 - The upcoming "Liberation Day 2.0" economic framework under the Trump Administration is expected to favor sectors such as tax, tech, and energy, potentially benefiting specific stocks [32][33] - Companies like Kohl's Corp. are identified as potential losers due to their lack of pricing power and vulnerability to rising input costs from tariffs [34][35] - The market is advised to focus on identifying winners and losers within the context of the new economic policies, rather than adopting a binary view of the stock and bond markets [30][31]