US vs China: The Economic Reality You Need To See

Guys, don't I have an update for you? What's going on, guys? It's Ricky with TechBud Solutions. Here is your weekly market update and what to look out for. Let's go ahead and jump right into it. There's something very unique that is happening right now, and I wanted to make sure that you understood why it's happening because it can also get misunderstood. So, Nasdaq market relatively kind of flat day, trading sideways. It was slightly in the red for a very short period of time, gapped right back up. I don't know how the market can even try to elevate itself today when the 60-day US and Iran ceasefire is supposed to end. We'll talk about that in just a little bit. But with that being said, be very careful at these elevated levels. On the 4-hour time frame, again, we've talked about this. You have every right to do whatever it is that your heart desires. We are overbought and overextended. Even if you bought last week. Okay, Ricky, you said that last week it was at 724. Cool, we're at 7 you know, 730. Very little progress with when you take into consideration how much downside potential there is. Over 10% based off of recent lows. So again, when we reach these overbought levels, it's not that you can't make money going long, it's that the risk for it to sell off is significantly greater than any potential, you know, 1, 2, 3% gain that you're set to possibly make. So again, just something to take into consideration. When overbought, just like you've seen with crypto and just like we've seen with memory chip stocks, never be afraid to trim and or just to stay cash. So if markets do pull on back, it excites you, you look for deals, and you're able to take advantage of the dip by by actually waiting for opportunities and not forcing on FOMO trades or investments. Just my two cents. But I want to provide you guys with these updates. So, oh man, why does it always do this? We had a great live trading session with my LPP team this morning. I was very happy to be able to start my week off with them. Again, I trade live every morning. If you ever want to tune on in, it's the second link in the description down below, and we have a discount going live right now. So, again, second link down below, feel free to take advantage of it, and it's a one-time payment lifetime access. So, the first thing that I want to highlight is that the US 30-year yield just hit 5.29%. Remember, Trump always cares about the bond market, and the reason he cares so much is because it directly affects the rate in which the US government borrows at. So, just like you and I, we don't want to borrow at high interest rates. Why would we borrow at high interest rates? If we pay interest, then that means that we pay more in interest. The US government is no different. As of right now, we're expected to pay $2 trillion a year on money that we borrow as we hit $40 trillion in our US national debt. With that being said, we hit 5.29%, the highest level since June 2007. Long-term borrowing costs are now back to where they were in 2008 financial crisis. Now, two things to be said about this. Yes, it's always a negative like sentiment when we are being compared to what levels were back in 2008, right? Because that's when there was the housing bubble crash, and yes, the US is printing a bunch of money, they're spending a bunch of money, more money than we're actually bringing in. Those are all true and all signs of uncertainty, but it's for growth to some degree, right? Also, when you look at this, and then it's being compared, "Hey, well, what the heck? The Chinese bond market is super low." You're telling me that we're borrowing, the US is borrowing at 5%, and that's what the US has to pay on money they borrow, but China pays 2.1% on their 30-year yield or 1.2 on 2-year, 5-years 1.3, 1.6. I mean, you're reading this correctly. Like, yes, while global yields are surging, cuz it's not just the US that is paying high in yields, China's are plunging. China can now borrow at 60% cheaper than the US. So, that is true. Does that give the Chinese government some edge? Possibly, no question about it. But, you have to think about kind of the back end. Yes, yields are dropping. But, the one thing I want to share with you is that the stock market in China is still down 36% from 2007. And if you actually look at the real estate market, it's even worse, right? When you actually look at the real estate market uh in China, property values are diminished. Money is piling in to the government bonds in China because there is nowhere else to put it. At least when you put it in China, you're at least going to make the, you know, 1.9 to 2.1% that they possibly, you know, can offer you. But, with that being said, there's no other option for you to try to make an attractive return because their stock market and property market is so terrible. That is not the case in the US. So again, I think I'm all about giving the US their flowers when they've earned it. The reason our government has to offer such an attractive rate or such a high rate is there is uncertainty. There is so much spending, like no question about it. I've been very vocal about I think we are headed down the wrong path of overspending into our deficit where we're $40 trillion in debt. But, you also have to view it for investors, why do they have to offer us 5.2%? Cuz we get the option to invest, right? Just like everyone else, and make 5.29% if we're okay with investing on those 30-year yields, right? But, why would I do that when I can just invest into QQQ, which is the Nasdaq or SPY, the S&P 500, and outperform the 5.29%? Do you see what I'm saying? Or property values. Yeah, property values right now, maybe it's definitely more of a kind of like buyers market than it is a sellers market cuz it's kind of diminished with higher rates and that all plays a role, but it's nowhere like what it is in China or other parts of the world. We are so fortunate in the US and it's kind of like a double-edged sword for the US government. Everything else is thriving so good that to compete with the stock market You know, when markets get pretty elevated and things begin to be pretty uncertain, money does get pulled out of the stock market and pulled into the bond market. And the reason why is cuz it's almost guaranteed that you're going to make money back you know, by investing in these US Treasuries. With that being said we we have so many different options at such an attractive rate. If markets were to begin to drop, the US yields might actually begin to drop as well. And the reason why is they don't have to offer such a competitive rate of 5.2 5.3 or you know, in the fives. They can begin to offer maybe in the high fours. Lowering the rate because they don't need to compete or offer as an attractive rate because the stock market might not be as attractive. Does that make sense? So yes, there is uncertainty especially with what's going on in the Middle East. And I want to talk about that. Uh but that being said, it's also important to understand the back end. It is great for the Chinese government that they're able to borrow 60% percent cheaper than the US. But there's a reason why and it's because nothing else is thriving in their economy. And that is not the story for us. Again, it's important to understand kind of like the dialogue, right? Now, talking about the Middle East BS. Trump says that he will soon bomb Oman as soon as the country gets in the way of the US blockade. Remember, the Strait of Hormuz is in between Iran or controlled by um Iran and Oman to my understanding. So, if they get in the way of the US blockade and Iran ships in the Strait of Hormuz, the US says that again, we will bomb the S out of them. He said minutes ago on a phone call. So, I it's just embarrassing, but it is what it is. That's how Trump likes to negotiate. Iran directly rejects all reports that the US ever had supposedly a 60-day ceasefire, which again was supposed to end today. There's no such thing as a 60-day ceasefire according to Iran as they've never aided by abided by any single one of the MOU terms. Therefore, there's nothing to extend. The issue is the 60-day ceasefire is completely void and irrelevant. Iran adds that they are supposed to be in a period of like there was no there's not supposed to be any hostility for 60 days. If they were actually trying to meet this deal, but they did not succeed and that's why they've still been open to the idea of attacking one another, but the US blew it and has no serious talks, but supposedly according to Trump again, like clockwork, anytime bond yields in the US begin to creep up higher because they don't want to pay in, you know, a higher rate, he begins to say that there's talks on the back end. They're actually, you know, looking to negotiate. They're begging for a deal. It's the same BS over and over again. Unfortunately, markets eat it up, right? As of right now, markets are trading sideways. I don't really see there to be any reason on why markets should be trading at elevated levels. Nonetheless, they still are holding up. I think they're waiting for more um more things to solidify if things are actually going to begin to drop. And the only other thing to kind of look forward to this week is if I'm not mistaken, let's head on over here. Let's go to our economic calendar. I believe it's Wednesday that we're supposed to have the FOMC minutes report. That's going to be at 2:00 p.m. Eastern time. So, just something to look out for. That can influence the market because the idea of a rate hike or a rate pause is something that we're paying very close attention to for the next meeting for the Federal Reserve. So, I'll do my part in continuously keeping you guys up to date. For the Nasdaq market, it looks like a relatively flat day. For chip stocks, that is definitely not the case. Very elevated, very overbought, and especially if you zoom out, again, they pushed up very quick, so we'll see if they begin to peak and then begin to pull on back. Uh I'll do my part in keeping you guys up to date. Again, if you want to be able to join us for tomorrow's live session, like I said, that's going to be that second link in the description down below. If you have any questions, feel free to comment down below. I appreciate you guys' time. I hope that we're going to thumbs up like always. Let's make sure that we end the year on a green note. Take care, team.