IT’S GOING DOWN…

There is nothing like uncertainty. The markets hate it because it’s like a broken light in a dark room. The smart money pays attention to the bond market because it sniffs out market inefficiencies.

Just pay attention to the 10-year yield. It’s hovering around 4.431%. Then turn to the 30-year fixed mortgage rate, which at the moment is at about 6.90%. In 2024, the Feds decreased the Fed funds rate from 5.25% - 5.5% to 4.25% - 4.5%—a full percentage point, and instead of mortgages dropping the rates went up.

Now, you might be asking yourself, what is the correlation between the 10-year treasury and mortgage rates?

Well, typically mortgage rates follow the direction of the 10-year treasury as a benchmark, and in this case, when it doesn’t, one has to believe the bond market knows something we don’t.

In my opinion, mortgages in a more visible market should be hovering at a five handle not close to seven.

This speaks to two mechanisms that may be taking place, (1) investors are selling bonds because they believe that the economy is healthy, therefore leaning on risk assets like stocks.

Now in English, bond prices and bond yields have an inverse relationship so when investors sell bonds, the price goes down, but the yields go up and when investors buy bonds, yields go down.

Now place yourself in the shoes of an institutional investor. What does an institutional investor have to believe to sell his safety net?

Government treasury bonds are risk-free, so if you are guaranteed a 4.562% rate as long as you hold the bond to maturity—why would you put billions of dollars at risk in equities?

The answer is…they would have to believe that the stock market presents more opportunity than risk. So that is a bullish stance based on the economic activity indicated by a 2.3% GDP, low employment of 4%, and strong manufacturing.

Both the Manufacturing PMI and the ISM manufacturing were in expansion—51.2 and 50.3, respectively. Whenever the PMI and ISM manufacturing numbers are over 50, this means manufacturing is in a period of expansion.

So, if manufacturers are producing more this means economic activity is up, and although manufacturing is only about 9% to 10% of the economy, it’s a very important watched data point.

Now add in a strong earnings season and a pro-Tariff president. This presents an environment for the famously titled “Risk on Trade”. Hence the reason institutions may be selling their bonds, prices are dipping, and yields are pushing higher.

And (2) if you are reading the mortgage rate tea leaves rates are telling a totally contradictory story.

Banks seem to be padding mortgage rates with a risk and uncertainty premium, which would describe why rates are approximately 100 basis points too high. Both the bond and mortgage market are pricing in rising inflation and the rising frequency of tariffs.

This is not only affecting bonds and mortgages but it’s spilling into the board rooms of every CEO and Chairman as a word of caution.

This will impact stocks because Wall Street needs transparency and a clear path to predictability.

This means that if companies are cautiously holding back their guidance due to the unstable economic environment going forward, this will cause analysts to revise their earnings estimates down.

This could have a domino effect as the market begins to reset the market multiple or PE. Now, you might be asking, aren’t we having a great earnings season? 

My answer is…the market doesn’t put as much weight on what a company has reported; they care about what they will guide or report in the future.

The unwritten rule in the markets is, nothing supersedes rising stocks like earnings, so if earnings estimates across the analyst’s community are trending down and the boardrooms reflect the same sentiment, the market will have no choice but to follow the momentum down as the money exits equities.

TARIFFS ARE THE BIG PINK ELEPHANT IN THE ROOM…

Let’s face it, tariffs are the big, bright pink elephant in the room that can have a huge, negative impact on the economy.

Look at the average retail profit margin, which measures the percentage of revenue captured as profit after all expenses have been accounted for—across retail gross margins can be anywhere from 50% to 65%, but the net profit after accounting for all expenses can be anywhere from 0.5% to 9%.

Now go ahead and factor 25% tariffs on your goods. If you are a country like Canada, that only has a 2.1 trillion dollar GDP; this can be hugely crippling to small businesses that rely on international sales.

Think about it—Canada has a population of approximately 40 million, so trade is a huge part of their GDP, and when you factor in that the United States is a whopping 67% of Canada’s GDP, this is pure extortion.

The U.S. imported approximately 412.7 billion in imports in 2024. Since this is such a significant part of Canada’s gross domestic product, I would say that the reality of 25% tariffs puts them under a huge amount of economic stress.

Mexico is in no better shape. Not only is their GDP of 1.78 trillion less than Canada’s GDP, but 76% of their GDP plus having three times more population (128 million) is driving significantly less output per person.

They are our biggest trading partner, importing over 500 billion in goods in 2024. So the question might come to mind, why treat two of our biggest trading partners with such contempt?

If we are calling a spade a spade, these are bully tactics based on the leverage we have over their economies, because leveraging tariffs isn’t a threat that we will cripple their economy…it’s a promise.

The impact on Canada and Mexico could be so severe that it places them in a recession due to a slowdown in economic output caused by inflation.

So in reality, based on the data, Canada’s choices are limited, and although Chrystia Freeland, who has a shot to be the next Prime Minister—she stands in staunch opposition against Trump.

Trump’s tariffs are like landing in the jaws of a saltwater crocodile and being crushed by 3,700 pounds of pressure per square inch. She is talking about going tariff for tariff, but it’s like a fly on an elephant’s back that sooner or later gets crushed. We will see. In the meantime, make sure to buy plenty of popcorn.

LET THEM EAT CAKE…

Imagine a world where everyone rents and owns nothing…the producers that make the products that the consumers need, squeeze them regardless of affordability—at every angle, in order to maintain a healthy profit.

What if the news was prefabricated to produce a preprogrammed response?—so that whenever the desired narrative was spread, it disguised price increases with headlines, like the “potential” of tariffs making premeditated moves, therefore increasing profit margins purely based on hearsay?

After all, how do you know that this so-called “Risk Premium” is not actual usury?

You may not have a clue, but you absolutely feel like you are in the jaws of a beast, while your excess free cash flow is being treated like a rag doll—devoured by excuses and the constant manipulation of macro headwinds, in the disfavor of your financial stability.

And I know what you’re thinking…does anyone care to save you from this economic misery?

The truth is simple. If a person will push you out of the boat to save their own skin or their family, then there is no question that a non-feeling entity, such as a corporation will keep raising the rent on life to satisfy the owners and shareholders.

And while there is nothing personal, the fact remains that you own nothing and need them for everything.

It just feels very Maria Antionette-ish…

For those who are unfamiliar with this particular period in history, Marie Antoinette, born in 1755, was the last Queen of France before the French Revolution. Marie Antoinette was seen as a symbol of luxury and excess, which fueled public discontent and rage.

During this period there was a deep economic hardship. The rumors of her indifference to the poor people she served were magnified by the phrase, “Let them Eat Cake!”

It showed how disconnected she was from the actual realities of the people suffering a true economic travesty. It was this lack of compassion that led to both she and her husband, Louis the XVI, being imprisoned during the French Revolution, which led to them being tried for treason and executed.

Now, although this is a bit dramatic, it does show how disconnected Wall Street is from Main Street. And while this trend seems to be the general consensus, these are the feelings that civil wars are made of, or at least a change in sentiment.

How long can Wall Street keep screaming to Main Street, “Let them eat cake!” before Main Street decides to make their own cake. It’s as simple as growing your own food, building your own communities, and creating your own resources and businesses that service the people, and not the machine.

As the young kids would say, you can’t keep playing in the face of the population. One day they may grow to understand that they outnumber you

WOLVES EAT AND SHEEP GET SLAUGHTERED

Was it just me or did Bill Ackerman attempt to manipulate the narrative to the upside in Uber by announcing Pershing Squares ownership of 30.3 million shares?—considering Bill Ackerman’s history of using the media and social media to pump his positions.

Now I’m sure his true intentions have nothing to do with manipulation. Just because Generation Z primarily gets their stock picks from social media doesn’t necessarily mean they will pile into Uber head first, feet last.

And if you believe that I have some used flying pigs to sell, the real question is…what did he expect to gain from releasing the information?

Sure, any shrewd investor could have found the information for themselves if they poured over 13F filings, which are filed within or by the 45th day of the quarter closing. Although a 13F may seem like pertinent information as it discloses the positions of all fund managers who maintain assets over 100 million, the fact of the matter is that the information is old.

Here is what I mean. The 13F simply states what the fund manager owned at the end of the quarter. It doesn’t state that they currently own the position, as the fund manager could have sold it before they filed the report.

This is why it’s important to always take a wider view when looking at data.

For example, if you tracked the four most recent quarterly 13F filings, you could establish whether, in fact, a decrease or an increase in position actually happened based on a big-picture view. Just simply relying on the information that a fund manager owned a stock based on one report does not establish real-time ownership.

And given the fact that most fund managers can’t beat the S&P 500—is this a tree you want to build your first treehouse on?

I understand the action, the allure of Wall Street, and being in the know. It reminds me of a line I used to tell my clients when I was pitching for new accounts—by the time your broker has had his morning Danish and coffee, I’ve read the Wall Street Journal, the Investors Business daily and the Barron’s financial News.

The key is understanding who are the major players on Wall Street and why it matters—simply showing up like sheep whenever someone announces what may be or may not be considered a play is the quickest way to get played.

This is why taking your information from news outlets and social media is so deadly because you are making a real-time financial decision from super-processed 10th-generation old information.

Remember Bitcoin?

The crypto wave was at its highest fever pitch in May 2017— 20k per coin before dropping 70% by December 2019.

Now if you were there in the infancy stages when Bitcoin was .09 cents in 2010, you were a fanatical believer in Bitcoin by the time it hit $26.90 in 2011.

Unfortunately, more people buy at the peaks than they do at the bottoms, mainly due to the lack of information.

I personally didn’t hear about Bitcoin ‘til 2017, which was when everyone was talking about it—and rightly so—it went from .09 cents to 20k, minting millionaires and billionaires virtually overnight.

To my point…when the pitch or noise was the loudest, Bitcoin had already started to trend down and didn’t recover until the end of December 2019 to the beginning of January 2020.

The emotional stability of those who go in at 20k when it plummeted to 6k was nonexistent. I remember everyone was pushing me to buy some coins for my son. While this was not a bad idea, what was a bad idea was it had peaked at 69k by November 2020 and bottomed out at 18k per coin by November 2022, and the herd of sheep was screaming, “Buy!” from the top of their vocal cords when it was the absolute worst time to buy.

This makes social investing dangerous, not to mention that the only reason Bitcoin goes up or down is based on the hype machine of more buyers than sellers or more sellers than buyers, and the conspiracy theory of a disenfranchised segment of society that believes the U.S. dollars is a fiat currency that will meet its end soon.

And while the dollar is losing its value every year based on inflation, it’s the world’s reserve currency which the entire U.S. system sits on, which means the U.S. dollar is going absolutely nowhere.

In social investing there is no such thing as taking one for the team as the team doesn’t feel it when you lose money—you do! So, to bring it home, Bill Ackerman is a billionaire investor. He is not doing you any favors by disclosing his ownership in Uber.

What he is doing is throwing cheese on the ground so the rats show up by the millions so he can sell his position and make billions. He did it with the pandemic and he will do it again because everything is for greed or money.

There are no free meals on Wall Street, so if you keep showing up like sheep with your hands out looking for something to eat, be careful…you might just end up on a plate because wolves will always attack and sheep will always get slaughtered.

I LIVE WITH PURPOSE ON PURPOSE…!

My greatest fear is that I won’t make it to my children’s 18th birthday. My wife gave birth to my first heartbeat in 2018, my son, K.J.—and my second heartbeat in 2024, my daughter, Khloe.

Starting a family late—I guess you could say was an understatement, considering I am 58 years old.

There is not a day that goes by that I am not aware of my own mortality. My son is autistic, and although high functioning, the systems that must be in place for him before I make the final curtain call, have to supersede my existence and provide the best quality of life for not only my son, but also my wife and daughter as well.

With childhood friends and associates passing left and right, it’s left me with a sense of urgency to make every single waking moment count. At the moment, it’s 5:39 AM Eastern Standard Time.

I have been up since 3:00 AM researching for my next meeting and writing next week’s newsletter. I am fully engaged with the success of my family and the legacy I need to provide.

This is why I retired at 50 with a plan to build a financial fintech organization to educate, entertain, and help families like mine build generational wealth.

For me, this is a 25-hour 8-day operation, which means putting my son to bed between 7:30 p.m. and 8 p.m. pm every night, if not he will cry until he goes to sleep. So I find myself on my extended hand - my iPhone and laptop, in the dark working on either researching or writing or both.

I get about four to five hours of sleep a night with the goal of leaving as much of a road map for my wife and my children so they can continue what I started. I created my family trust five years ago a year after my son was born.

I made sure that all roads from my businesses, insurance renewals, and life insurance to bank accounts, and investment accounts led to our trust. I set up two custodial accounts— one for each of my children, which I deposit monies in every month as many times as God will allow me to invest in their accounts.

I have distinct goals and targets, and a plan for sustainability. During the pandemic in 2020, we launched a very successful investment coaching business helping families get it financially right for the people they love. In 2021, I commissioned the building of the app, Investment Dojo.

After three and a half years of hard work, we launched our stock simulator on April 13, 2024, on all platforms—Apple, Google, and the web.

It’s the world’s first moderated, social stock platform where we engage all levels in the stock market, while we provide a masterclasses simultaneously during each trading competition.

We intend to build a coaching and educational platform that disarms the fears that most people have with investing, and brings an entirely new and fresh perspective to building wealth—just like Instagram, making it a household name for where to start your financial journey with your entire family.

The masterclasses are centered around getting our financial houses in order and understanding every financial aspect of our lives.

We start with the psychology of money, and spending habits on the structure of all financial products in your life—from life insurance to retirement accounts, down to the emotional makeup it takes to be a successful investor, and how to navigate the turbulence and noise as new or old investors. We teach from a big-picture perspective the importance of understanding the macro-economic environment as well as the micro-economic landscape, combined with fundamental analysis.

The goal is to leave individuals and families better off from a financial information standpoint than they were before they came in contact with Investment Dojo.

I started The C.R.E.A.M. Report with the intention to teach the news, not tell it. I felt that most of the stories Wall Street was telling were built around selling a narrative, so I decided to level the playing field by creating one of my own.

I wanted an ordinary person with no financial footing to be able to understand the stock market as a mechanism and more importantly, how they fit in.

There is not a C.R.E.A.M Report that doesn’t educate or teach the end reader.

But I must admit…my purpose is more selfish than altruistic. I want my children to be able to read all the work and gain as much knowledge from the tools I have left behind, so that at least they can say, “My dad’s generation was the generation that ended the poverty mindset and spread prosperity not just for us, but for thousands if not millions of other families.”

I even wrote a book in 2018 called, “Who’s Your Daddy?” so that my son would have a road map to wealth as well as instruction, and now my daughter as well. One of my favorite sayings is, I live life with purpose on purpose!

I don’t know how many days I have left, but one thing is for certain—I will not waste one day in complacency—not while there is a world to build for my children.

Welcome to my journey!

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