TL;DR: Violence cycle continues in society with market implications. Treasury auctions show record-low dealer participation signaling strong demand. S&P 500 leadership dominated by AI/data infrastructure plays, not just Mag 7. Gold miners breaking out.
📄 SUMMARY
Violence Cycle and Market Context
Matt Dines and Cameron Otsuka open discussing yesterday's tragic violent event and its broader implications for society and markets. They frame it within historical cycles of violence escalation, noting "at some point there's an escalatory ladder and you wonder who is in control" (0:58). The hosts emphasize this isn't clickbait but rather understanding historical patterns and their market impacts, comparing current societal upheaval to major historical transitions.
Treasury Auctions Signal Strong Demand
This week's 3-year, 10-year, and 30-year Treasury auctions showed dealer takedown at all-time lows across all maturities. Matt explains this indicates overwhelming demand from banks, insurance companies, and pensions rather than dealers having to backstop auctions. "When dealer takedown is low...that means everybody else in the market is coming in they want to buy there's demand for treasuries" (16:47). Despite CPI ticking up, bonds rallied slightly, showing the market's muted response to inflation data versus the aggressive selloffs seen in 2022.
S&P 500 Leadership Beyond Mag 7
Analysis of top 25 S&P 500 performers reveals broad AI/data infrastructure theme, not concentrated in Mag 7 stocks. Only Broadcom appears from Mag 7 at #15. Leaders include data storage (Seagate #1, Western Digital #4), data processing (Oracle #5), fiber optics (Corning #14), sensors (Amphenol #8, Jabil #20), and semiconductor designers (Lam Research #21, KLA Corp #22). Matt notes "this is where the economy appears to be headed...this trend if everybody's worried about a 2001 or a 2008 we're getting frothy...everything else tied to this is actually coming along" (50:10).
Energy and Logistics Riding the Wave
Energy companies in favorable geographies with right supply types showing strong performance: GE Vernova #6, NRG #7, Vistra #17, Constellation Energy #25. Logistics tech companies Uber #16, DoorDash #19, eBay #24 also benefiting, though notably Amazon absent from top performers despite the trend.
Gold Miners Breaking Out
Newmont Corp ranks #3 with 110% YTD gain as only gold miner in S&P 500. GDX (gold miners ETF) just broke above resistance from 2011 highs and upward trend channel. Matt observes "what we've seen since August...was that kind of acceptance from the market that these new gold prices $3,000, $3,500 whatever this new level that's here to stay" (59:15). Unlike 2020's false breakout during Fed easing, current move shows genuine capital rotation into miners.
🔑 KEY TAKEAWAYS
- Treasury market dynamics suggest excess savings seeking yield despite inflation uptick - watch for yield stabilization after September rally
- S&P 500 leadership shows broad AI/data infrastructure buildout beyond just hyperscalers - dispersion increasing across sectors
- Gold miners finally confirming gold's multi-year breakout with new capital flows - watch for more miners entering S&P 500
- Two dominant trends driving markets: AI/information technology transformation and gold/real assets
- Violence cycle escalation bears monitoring for societal and market impacts
- Current market doesn't resemble 2001/2008 crash setups given broad value creation across emerging technologies
🔗 LINKS
- 🎧 Subscribe to the Build Weekly Roundup: https://open.spotify.com/show/7bvfjkPjQ67Eugg8EYdoe5
- 🌎 Build Asset Management: https://getbuilding.com
- âš“ Build Bond Innovation ETF: https://bfix.fund
- 📈 Build Secured Income Fund I: https://buildbitcoin.com
📱 SOCIAL MEDIA
- Build Asset Management: https://twitter.com/BuildMarkets
- Matt Dines: https://twitter.com/LeveredUSTs
- Cameron Otsuka: https://twitter.com/CameronOtsuka
- Dave Martin: https://twitter.com/DaveMSocial
