Bear Traps Report Turning Point Final New III

IN THIS ISSUE Global Macro: Warsh delivers a rate hike that appears 01

Sunday, to satisfy the bond market. But the looming French budget crisis blew out European spreads on Friday, pushing yields up despite the Fed's efforts to control

September 20, 2026 the long end.

Rates/forex: Bessent’s bag of tricks is extensive, but 02 the most immediate tools at his disposal are a cut in coupon sizes in the November QRA, and the more frequently discussed possibility of announcing a phase- out of the 20-year bond. Mid-term election odds and implications for markets. 03 Credit: Sell signals! Convertible supply is already at a record, with more than three months left in the With Larry McDonald 04 calendar.

& Equities: Equities globally have been driven by earnings 05 “The Dr” Robbert van growth. Why is GM still near all-time highs?

Batenburg, CFA Technicals: S&P AAII investor sentiment, NYSE new lows. Unchanged since May, up just 3% since Oct, Mag 7s, stocks crossing below and above their 200-day MA. 06 Crypto: Why did bitcoin rally towards the end of the week despite two major setbacks: the failure of the Clarity Act vote and the FOMC rate hike?

We've never seen breadth this bad in almost 100 Trade Alert – Buy 1/3 LEN near $81. Tax loss basket.

years. The S&P 500 is knocking on new highs, but Trade Alert: Buy 1/3 KWEB near $25 there are (many) more stocks at lows than highs. 07 Emerging Markets: Lula’s odds collapsed in September The percentage of stocks in long-term uptrends is as two corruption scandals almost simultaneously have plunging. The only remotely similar setups were sunk his prospects ahead of the October elections. January 1973 and November 1999.- Jason Trade Alert: Sell 1/3 XOP as We Near $200 Goepfert Trade Alert: Buy 1/3 GIS Near $36 08 Energy: Intelligence gathering for you, a sitdown with a hall of fame commodities investor/hedge fund manager about the refining shortage, the soymeal rally, why copper tariffs are misguided, and possible diesel export quotas.

The Summer Bonds Broke Stocks It was the summer of 1987. I was working at my dad’s brokerage firm — my first year helping out. Every minute of every day I was terrified, but so proud to be there. They finally trusted me. We had solid business on Cape Cod. I’ll never forget that period. My dad and his key mentors — the Lords I respected most — they kept saying the same thing: “bonds were starting to offer equity-like returns.” That was the theme of the meetings, the conversations, the whole summer. I had no idea what that meant.

By October, during the crash, I was at the desk. We were slammed. My Dad said, “Larry, you have to take some of these orders — I’m too busy. Get on it NOW!”

I called the trading desk at First Albany and said: “I needed to sell 1,000 shares of IBM.” There was this long, obnoxious pause on the end of the phone. Finally, the guy on the desk came back and said, “To whom?” I begged for a bid.

“I need to sell 1,000 shares of IBM.” The trader said, “98 bid. “I said, “Well, my machine says $119.”

”He came back: “Well, sell it to your machine then!!!”

Back then, in early 1987, the 10-year Treasury yield sat at 7.25%. By April it had jumped to 8.00%. By May, 8.60%. By September, 9.40%. By October, 9.50%. A 200 basis point move in seven months. Stocks peaked on August 25 of that year. The crash came on October 19 — Black Monday — when the Dow fell 22% in a single session.

The Rule of 72 is simple. At 8%, your money doubles in 9 years (in a tax-deferred account). At 9%, it doubles in 8. Today, the parallel is very close. U.S. high-yield junk bonds are yielding close to 8%. French 10-year OATs sit near 4.70%, up from 360 bps in June. U.S. Treasuries are near 5%. Bonds are again offering equity-like returns, and that is the threat. Above all, it’s a FAR different game now. Debt to GDP in the Western World is double what it was then.

In the 1980s, economies ran hot and strong, and that strength pushed up energy prices until the dynamic became a supernova — the way a star burns up at the end of its life. Today the same heat is back, but with a twist: global trade has the SoH (Hormuz) closed for nearly 200 days. When the economy gets that hot, the rate of change of…