Master of Obscurity @masterobscurity - Twitter Profile

about 2 hours ago

Today was one of those sessions where every single asset class got hit simultaneously and that combination tells you something specific about what just happened. The trigger was the May jobs report. The US economy added 172,000 jobs in May, coming in well above the forecasts that ranged from 80,000 to 105,000. On the surface that sounds like good news but in this market, it was the worst possible number. The Federal Reserve has been on hold for months, with markets hoping for rate cuts. A strong jobs report especially alongside PCE inflation running at 3.8% annually tells the Fed that the economy is not cooling fast enough to justify cuts. Instead, traders immediately repriced the probability of a rate hike in December from 26% to 43%. That one shift in rate expectations rippled through every asset class at once. Stocks sold off because higher rates mean higher borrowing costs for companies and more competition from bonds for investor capital. The S&P 500 dropped 1.65%, wiping out $1.14 trillion in market value, Nasdaq dropped 2.60%, losing $1.11 trillion, with semiconductor and AI stocks leading the decline after Broadcom left its full year AI chip targets unchanged the day before. Gold dropped 3.38%, wiping out $1 trillion. This seems counterintuitive until you understand that higher interest rates make non-yielding assets like gold less attractive, cash and bonds start paying more, so gold loses its relative appeal. Silver dropped 6.9%, losing $280 billion, and was already under pressure from a separate wave of Chinese investor selling earlier in the week. Bitcoin dropped 6.31%, wiping out $80 billion, crypto has been trading as a risk-on asset in this cycle, meaning when fear spikes and rates rise, Bitcoin sells off alongside tech stocks rather than acting as a safe haven. The fact that everything dropped together stocks, gold, silver, and Bitcoin is the key signal here. This is not a story about any one sector being overvalued or any company reporting bad results. This is a macro repricing event, where a single piece of economic data forced the entire market to recalibrate its assumptions about where interest rates are going. When rates rise, the discount rate investors apply to future earnings goes up, which mechanically compresses valuations on every asset that is priced on future cash flows which is effectively everything. The important context is that this does not change the underlying AI investment thesis, the $7.6 trillion capex buildout, or the fundamental demand for the companies we have been discussing this week. What it does mean is that the market is entering a more volatile phase where inflation and Fed policy become as important as earnings and revenue growth.

_Investinq's tweet photo. Today was one of those sessions where every single asset class got hit simultaneously and that combination tells you something specific about what just happened.

The trigger was the May jobs report.

The US economy added 172,000 jobs in May, coming in well above the forecasts that ranged from 80,000 to 105,000.

On the surface that sounds like good news but in this market, it was the worst possible number.

The Federal Reserve has been on hold for months, with markets hoping for rate cuts.

A strong jobs report especially alongside PCE inflation running at 3.8% annually tells the Fed that the economy is not cooling fast enough to justify cuts.

Instead, traders immediately repriced the probability of a rate hike in December from 26% to 43%.

That one shift in rate expectations rippled through every asset class at once.

Stocks sold off because higher rates mean higher borrowing costs for companies and more competition from bonds for investor capital.

The S&P 500 dropped 1.65%, wiping out $1.14 trillion in market value, Nasdaq dropped 2.60%, losing $1.11 trillion, with semiconductor and AI stocks leading the decline after Broadcom left its full year AI chip targets unchanged the day before.

Gold dropped 3.38%, wiping out $1 trillion.

This seems counterintuitive until you understand that higher interest rates make non-yielding assets like gold less attractive, cash and bonds start paying more, so gold loses its relative appeal.

Silver dropped 6.9%, losing $280 billion, and was already under pressure from a separate wave of Chinese investor selling earlier in the week.

Bitcoin dropped 6.31%, wiping out $80 billion, crypto has been trading as a risk-on asset in this cycle, meaning when fear spikes and rates rise, Bitcoin sells off alongside tech stocks rather than acting as a safe haven.

The fact that everything dropped together stocks, gold, silver, and Bitcoin is the key signal here.

This is not a story about any one sector being overvalued or any company reporting bad results.

This is a macro repricing event, where a single piece of economic data forced the entire market to recalibrate its assumptions about where interest rates are going.

When rates rise, the discount rate investors apply to future earnings goes up, which mechanically compresses valuations on every asset that is priced on future cash flows which is effectively everything.

The important context is that this does not change the underlying AI investment thesis, the $7.6 trillion capex buildout, or the fundamental demand for the companies we have been discussing this week.

What it does mean is that the market is entering a more volatile phase where inflation and Fed policy become as important as earnings and revenue growth.

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Master of Obscurity @masterobscurity

41 minutes ago

@WorldDomStudios @bf_crane How are you defining GenX, pray tell?

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