Door To Doom Has Opened

Michael Hartnett warns that the breach of 5% on 30-year Treasuries and extreme AI-led tech valuations signal a market 'melt-up' nearing its end. With inflation rising toward 5%, risk assets face a historic VaR shock and potential significant downside.

Key Takeaways

• 1.The 30-year Treasury yield has breached the 5% 'Maginot Line', signaling a potential VaR shock and ending the 'boom loop'.
• 2.US CPI is on track to exceed 5% by the November midterms, a level historically associated with negative S&P 500 returns.
• 3.The semiconductor (SOX) index is showing extreme bubble behavior, trading 62% above its 200-day moving average.

Table of Contents

• US CPI on course for >5% by November midterms
• Another outsized $4tn gain in household equity wealth YTD
• Past bubbles 35% vs 200dma at peaks...SOX now 62%
• Nikkei annualizing 81%, 10Y JGB yield on pace for +150bps
• Nasdaq annualizing 45%, 10Y UST on pace for +80bps
• Financials vs S&P 500 now below GFC and CV-19 lows
• 2020s rule is you can't govern from center in a democracy

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