Got reminded of this phrase from the movie Sicario on a podcast recently — and it perfectly captures the bull market mood right now. What we’ve witnessed over the past few weeks is a full-blown melt-up: a face-ripping rally that’s forced shorts to cover and left bears across asset classes in tatters.
Equities, Treasuries, precious metals, miners, crypto — everything has been moving higher in unison. A rare, almost euphoric correlation across risk assets.
Equities
As September began, many (myself included) expected some seasonality-driven weakness in US equities. Instead, we got the opposite — a powerful rally across global markets.
Emerging markets are up about 8% since September, Japan and China have bounced strongly, and the US tech-semis complex has been on fire — the semiconductor ETF (SMH) is up 17% over the same period. The AI-CAPEX theme clearly isn’t done yet.From a technical standpoint, most major regional ETFs on our market dashboard (attached) are now near +2 standard deviations on a 3-month basis — overbought by any measure. A mild correction would actually be healthy here, giving new buyers a chance to enter.
Earnings have been solid, with AI infrastructure guidance still ramping up. Yes, there’s plenty of chatter about circular references — OpenAI, Oracle, NVIDIA — and parallels to the overbuild of the dot-com fiber era. But unlike then, these firms already have real revenues and free cash flow to fund this CAPEX cycle.
Could it all end badly one day? Sure. But that day doesn’t look imminent.Seasonality turns supportive into year-end, NVDA is within striking distance of new highs,Bitcoin is pushing $125K, China tech has gone parabolic, central banks remain accommodative, consumer spending is resilient, CTAs are chasing momentum, and major investment banks are hiking year-end targets.
It’s hard to find a near-term catalyst to stop this risk-asset train.
If there’s a crack forming, it might be in private credit. Publicly traded BDCs (ARCC, FSK) have sold off sharply post-earnings amid weaker deal activity and rising questions about underlying credit quality. Markets have shrugged off the recent Tricolor and First Brands bankruptcies so far, but it’s worth watching the subprime consumer space closely for early warning signs.
Macro & Fixed Income
The 10-year Treasury yield briefly touched 4% after the August payrolls print — a good level, in my view, to take profits on long duration.
Bigger Picture - developed-market long-end yields are higher than six months ago — led by Japan, Canada, and the UK — as markets reassess massive fiscal outlays on defense and infrastructure amid sticky inflation and ballooning govt debt-to-GDP ratios. More money printing is expected next year as fiscal spending is expected to accelerate globally.
The US still looks like the “cleanest dirty shirt” in the G7, but markets are pricing over 100bps of rate cuts in the next 12 months. That feels aggressive, given inflation still hovers around 3% and jobless claims might be stabilizing after September’s weak print. That said — never fight policymakers. If the government wants cuts, they’ll find a way to deliver them. No clear directional trade here for now. We are flying blind on economic numbers for now but the latest private indicators - ADP, ISM and conference board metrics show a cooling labor market.
FX volatility has been subdued, with major currency pairs remaining within narrow ranges. However, the Japanese yen could see fireworks next week as markets may be caught off guard by the outcome of this weekend’s LDP leadership election in Japan.
Metals & Crypto
Gold’s 48% YTD surge looks less like a tactical move and more like a regime shift. It’s behaving less like a hedge and more like a risk-on asset — a testament to its role as the original hard-money refuge in an age of financial repression. Silver (+65% YTD) has joined the party, approaching its 2011 highs near $50.Gold and silver miners have been bid relentlessly this year, with barely any pullbacks to buy into. If higher prices sustain, we could be at the start of a multi-year upcycle as miners ramp up investment again.Crypto, too, is breaking higher after months of consolidation. Bitcoin and Ethereum are both showing renewed momentum. While it’s uncomfortable to chase at these levels, the structural flows seem clear — long-term allocators are rotating towards real assets: gold, silver, miners, and even digital stores of value.
No wonder Morgan Stanley recently called for the new portfolio mix to be 60/20/20 — Equities, Fixed Income, and Gold — replacing the old 60/40 rulebook.
Bottom line:
Markets are in full risk-on mode. Fundamentals, flows, and psychology are all aligned for now.
Yes, this rally will correct eventually — they always do — but until then, perhaps the best advice is still:
Lay down and let it happen.
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