An Opportunity Like This Won't Come Again... (Emergency Update)

[00:00:00] Speaker 1: A record $3 trillion has just been wiped out of the US stock market in a single day. This marks the single biggest one-day loss since the Liberation Day tariff announcement. But there is something strange about this sell-off. While everyone agrees the losses have been painful, nobody seems to agree on what's actually behind this sudden move. Some are blaming growing AI risks, while others point to midterm election results. But to most investors, this sell-off seems to have come out of nowhere. Now, what if I told you that there's another market worth around $36 trillion that has been warning about this very move for months already? This warning has been hiding behind this one line right here. It tracks the same giant companies in the S&P 500 like NVIDIA, Alphabet, Amazon. But instead of looking at their stock prices, it tracks their corporate bonds. And while stock investors were celebrating record highs right up until very recently, the bonds of these very same companies had already been selling off heavily since the beginning of the year. In other words, while the stock market was still going higher, the bond market was quietly sending a major warning. And as I'm going to show you in this video, we can use this same market to understand what happens next from here. Now, when we look back over the last 30 years, we can see that this isn't the first time something like this has happened. Back in 1999, for example, bond investors were already starting to sell their positions in these giant companies, which pushed corporate bond yields higher. And that's what this chart shows us. It shows us the corporate bond yields of these companies, but in reverse. So in 1999, as stock investors were still celebrating the dot-com boom and pushing technology stocks to record highs, the bond market was showing signs of stress and bond yields were rising. Exactly a year after the bond market began to show signs of concern, the dot-com bubble popped. The market peaked and the S&P 500 eventually lost half of its value. In other words, the concerns that bond investors had were proven correct. And we saw the exact same thing happen again in 2007, right in the middle of the housing bubble. And then again in 2021, in both of those cases, you saw stress appear in the bond market in the lead-up to these major market peaks. So in every single major crisis that we've had over the last 30 years, we saw the bond market do exactly what it is doing now. And as I'm going to show you in this video, we don't think this time is going to be different. In fact, we have reasons to believe the situation might be even more concerning this time around. But the roadmap for how all of this is going to play out from here is not as straightforward as you might think. You see, the relationship between stocks and bonds is one of the most important relationships in financial markets. Unfortunately, most people only pay attention to stocks and think of bonds as this boring corner of finance. But there is a reason for why some of the biggest names in finance, from Ray Dalio to Warren Buffett and Jamie Dimon, have repeatedly said that the bond market is the place to watch when you want to actually understand what's happening. And the reason for that is because the bond market has a tendency to spot trouble before everyone else. And there is a reason for why that happens. Bond investors simply lend their money to these companies. So the most that they can get from their investment is their money back with some interest on top of it. They have to be constantly monitoring risks. Because if the companies that they lend to default, well, they won't get their money back. Stock investors, on the other hand, theoretically have unlimited upside. And so they have a tendency to ignore risk a lot more and pay more attention to growth. In other words, they are paid to be optimists. The problem is when enough bond investors are collectively worried, they have the power to demand higher yields to compensate for the risks that they see. And that's exactly what we appear to be seeing today, just like during those previous periods we discussed. And those higher borrowing costs can eventually become a serious headache for the companies themselves. Let's imagine Amazon borrows a hundred billion dollars of debt. If the interest rate is at one percent, that means Amazon would only have to pay a billion dollars in interest costs per year. But what happens if borrowing costs rise to five percent? Well, suddenly Amazon needs to pay five billion dollars in order to service that debt. That's an extra four billion dollars going towards servicing its debt instead of contributing to its profits. And remember, profits are ultimately what stock investors care about. So when these stock investors finally realize that higher borrowing costs could start to eat into those profits, well, they begin to get nervous as well. And that's when they might start selling their shares, often months or even years after bond investors first started showing signs of concerns. In other words, what's happening in the bond market right now is something that will absolutely have a real impact on these companies and eventually on their stock prices. But to understand how we need to look at why bond investors are starting to demand higher yields from these giant companies in 2026. After all, these are triple A investment grade companies that we're talking about. They are supposed to be the safest borrowers on Earth. And indeed, if we look at the data, these giant companies like Alphabet, Amazon, Meta, Microsoft and Oracle look very much like financially responsible corporations. For years, these companies were so profitable that they barely needed to borrow money at all. Back in 2010, they borrowed less than $10 billion from the bond market. And by 2024, just two years ago, that number had only grown to around $17 billion. In fact, throughout this entire period of almost a decade, their rate of borrowing never crossed above $50 billion. But then something changed in 2025. Suddenly, these companies went from borrowing relatively little money to raising $100 billion from the bond market in a single year. And this increase has not stopped. This year, that number has more than doubled to around $250 billion. And it's not just these giant tech companies. If we zoom out and look at the entire S&P 500, the net debt level has risen from $3 trillion a decade ago to around $6.7 trillion today. Now, we know why this is happening. The AI boom that we're currently seeing has changed the business model of these companies from cash-generating machines to debt-generating machines, as they need to continue spending massive amounts of money to build AI infrastructure. So, on the surface, this entire story seems pretty clear. And so does the timeline. S&P 500 companies are taking on too much debt because of AI, which is leading to concerns in the bond market, which is going to limit these companies' access to funding, which in turn is going to lead to a negative feedback loop, which could pop the entire AI boom. This would be the same pattern that we saw in the lead up to the dot-com bubble peak, the great financial crisis, and the 2022 peak. In these cases, it took around a year before the bond market concerns eventually turned into stock market concerns. And in that case, we really should actually be seeing the market begin to roll over here, because it's been roughly around a year since this divergence began. But there is something different with what's happening today, which means that the usual timeline is going to be distorted this time around. And all of it rests on one single factor. But before we look at what that is, I have something big to announce. We're finally launching our new gold strategy today that tells you when to be exposed to gold or not. And I believe this is going to be the strategy that generates the most wealth for our clients in the coming months. UGL, a leveraged gold ETF, surged by 700% between 2023 and 2025. That's an 8x return on capital you could have caught by riding gold. With government deficits exploding and the global geopolitical order breaking, we believe many more of these moves are going to come. And our new gold strategy is designed to capture these. For the launch of this strategy, we're giving access to both our gold and stock market trading strategies for the price of one. This essentially gives you our full portfolio strategy at half the price we'll be asking for in the future. Plus, for the launch, you get our VIP onboarding service that usually costs $2,000 completely free. This gives you direct one-on-one access to our strategy team. We can only provide this offer to max 100 people. And once these spots are filled, the link below will expire. So if you're interested, click on the link below to see the offer and secure your spot now. So the one factor that is going to give us the timeline for how all of this plays out is something called the debt to market cap ratio. This is a measure that shows us how much debt S&P 500 companies have relative to their total market value. In other words, we're looking at how much debt these companies have relative to how much they're worth. And when we look at it this way, the picture actually looks quite different. Back in the early 2000s, and again in the lead up to the 2008 financial crisis, corporate debt had grown to the point where it represented more than half of the stock market's total value. So back then, you could understand why bond investors were getting worried. But look at what's happened since then. Despite all of the borrowing that we've seen in recent years, corporate debt has actually become smaller and smaller relative to the value of these companies. So yes, these companies are taking on more debt than ever before. But at the same time, their market caps have also been growing at an incredibly fast pace. Now, on the surface, this might seem like a good thing. But we actually think that makes today's situation even more dangerous than what we've seen before in history. Because in these moments, the market cap of the stock market was a lot more reasonable. And so the stress from the bond market quickly served as a regulator for how much debt these companies could actually take on. Today, the fact that these companies are unbelievably valuable means that they could theoretically take on exorbitant amounts of debt. And that's exactly what we're seeing right now. Because while we've already seen the debt pile of these companies ramp up in recent years, as we talked about earlier, things are about to get a lot more extreme. Goldman Sachs currently projects these companies could borrow as much as $420 billion just next year. So yet again, doubling the size of their debt burden, this is more than the total value of the economy of Finland that these companies are borrowing within a period of 12 months. And the reason that they're able to do this is because their large market caps lets them. And this could quickly push the debt situation to extremes that we've actually never seen before in prior investment booms. Now, all of this stops the moment that the pressure on the bond market becomes so great that these companies get crushed despite their large market caps. Now, usually this happens because the underlying companies begin to show signs of weakness. And so the bond market begins to break, which restricts lending and eventually the entire thing collapses. Today, these companies are witnessing tremendous growth, which has so far allowed them to continue piling on more debt. But as I'm going to show you now, these companies are now becoming victims of their own success. Because believe it or not, the very strong growth that these companies are witnessing right now is actually also the very reason for why the bond market is showing signs of stress today. And as we're going to see, this is all about to reach a breaking point. This line shows us how fast corporate profits in America are growing every year. When this line is going up, it means companies are seeing faster earnings growth. And when it goes down, it means earnings growth is slowing. If we go back to those periods when bond yields were rising, like in the late 1990s and 2006 and 2021, we can see that in all three of these periods, bond yields were rising as corporate earnings growth was slowing down. And that tells us that bond investors were worried for a pretty straightforward reason. They were seeing the earnings of these companies slowing down and becoming increasingly concerned about whether those companies would be able to pay back their debt. This quickly created a negative feedback loop where the higher bond yields put even more downwards pressure on earnings and eventually caused the stock prices to fall. But now look at what's happening today. We're actually seeing some of the strongest earnings growth of the last 30 years. And believe it or not, that is also what's causing the stress in the bond market. We saw this to a much smaller extent in 2018 where strong corporate profits also caused some stress in the bond market. The reason this can actually happen has to do with something called opportunity cost. You see, as we talked about earlier, when you invest in bonds, your upside is capped. You can only earn the interest that you've been promised. And so again, imagine you lent Amazon $100 billion at 5% interest. You're happy with that return because you expect the business to grow by maybe 7% or 8% a year. But then, for whatever reason, Amazon's business actually starts growing at 20% per year. As a bond investor, you might start thinking, "Wait a minute. Why am I lending Amazon money at just 5% when I could potentially make much more by owning the stock instead?" So you decide to sell your bond and buy the stock. And if enough investors do the same thing, bond prices fall, which can push corporate bond yields higher. In other words, investors aren't necessarily selling their bonds out of fear right now. They're selling because stocks suddenly look like a better opportunity. But that still pushes bond yields higher and it still puts real pressure on the underlying companies. Regardless of why yields are rising, the consequences for these companies are still very real. Higher yields make it more expensive for these companies to borrow money, making it harder for them to expand their businesses. And it also makes it more expensive to service whatever amount of debt that they've already taken on. As we discussed at the beginning of this video, if borrowing costs remain high, they can eventually start putting pressure on corporate profits. And we can get a very good idea of exactly when this is going to happen by looking at the impact that the bond market stress that we're seeing today is having on something called the corporate bond yield curve. This is a fancy name for an indicator that essentially tells us how tight or loose financial conditions are for corporations. In other words, how easy or difficult it is for these companies to borrow money. And we can clearly see just how much of an impact this can have on corporate earnings. This yield curve has been one of the most powerful predictors of corporate profits. For example, when the yield curve is falling, it means financial conditions are getting tighter for corporations. That can be a result, for example, of higher bond yields in the corporate bond market. Historically, corporate profits have often trended lower over the following year to year and a half. Again, we saw this dynamic play out in the late 1990s, in the mid 2000s and in 2022. But when the yield curve starts rising, it signals the exact opposite phenomenon. Financial conditions and liquidity are beginning to improve for corporations. And historically, that has helped corporate profits accelerate higher. This is actually one of the key reasons for why our allocation strategy on the stock market pays such close attention to both the yield curve and corporate profits. By looking at these indicators together, we can get a very good sense of where the macro picture is heading and so adjust our positioning accordingly. Now, if we look at today's situation, we can see that the yield curve has been rising since 2023. And indeed, so far, these favorable conditions have translated directly into the higher corporate profit growth that we're seeing today. Now, take a look at what happens when we shift forward the yield curve by around a year and a half. It shows us that corporate profits could actually continue to hold up through till around July of 2027, which is exactly why in the near term, despite all of the doom and gloom that we're seeing on the financial media, we actually think these companies can continue to post strong growth. And that would actually allow them to continue ramping up their debt exposure and taking this AI euphoria to even greater extremes. But now take a look at what's happened even more recently. The yield curve has actually started to drop once again. So in other words, we are seeing financial conditions for corporations begin to tighten once again for the first time since 2022 as a result of the stress in the bond market that we've talked about in this video. So in the next few months, we're actually fairly constructive on stocks because the bond market stress that we're seeing is actually being driven by strength in these stocks. The problem is that all of this is mean reverting, and this strength is causing financial conditions to tighten, which will eventually weigh on stock market profits probably as soon as 2027, where we actually have a much more gloomy outlook for stocks than anything we've talked about in the last few years. And this, by the way, is precisely the type of environment where gold can absolutely melt up. The last real recession that we had was in 2008. UGL went up by 400% within just a few years. That's a 5x return while the stock market was struggling. Now you can't hold an ETF like UGL forever, but it can build incredible wealth if you're able to trade it properly. We think in the next year we're going to see massive opportunities for investors who are positioned in the right assets at the right time. This is why we've built our entire company around trading the stock market and trading gold in the most efficient way to capture these kinds of moves. 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