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The Market is Extended-What's Next? ( • 1) THE DAILY --- H.E.A.T. Torching Wall Street’s Obsolete Playbook. Delivered straight to your inbox 5 days a week. Subscribe Home Posts The Market is Extended-What's Next? ( • 1) The Market is Extended-What's Next? ( • 1) The 🔥 --- H.E.A.T.🔥 Formula : AI Driven Insights to Spark Your Portfolio Matthew Tuttle May 15, 2025 Subscribe now Share In Today’s Issue: Rally running out of steam AI energy winners and losers Modern warfare is reshaping metals demand and more…….. Next Webinar: Identifying and Profiting From the Top Themes in the Market 5/22 2pm EST GoTo Webinar dashboard.gotowebinar.com/webinar/6733673538207782492 Rally Running Out of Steam? Yesterday I suggested we were due for a down day soon, the bears tried yesterday but the market hung in. This morning so far it’s looking weak. PPI is this morning, it’s usually not nearly as market moving as CPI but you never know. Don’t disagree with Jefferies here….. ❝ RALLY RUNNING OUT OF STEAM: Jef-X yesterday highlighted risks of why the rally may fade and that seems to be a real worry for investors as SPX ended day + 10bps despite most of its constituents finishing the day lower. Major indices would have closed much lower were it not for the strength in megacap tech - AI projects investment news flow in Saudi Arabia buoyed Semis strength. -Jefferies Daily Macro There’s also the risk that we don’t have a deal with China and may not get one within the 90 days…. — # (# ) Rough day for the Bitcoin Treasury guys, but like MSTR they are going to trade with Bitcoin, which got extended. They are also going to be more volatile than MSTR. Another down day for Bitcoin, not surprisingly as I am seeing calls for massive numbers all over X, needs to stay over $100K. — # (# ) One theme we are on that shows no signs of slowing down ( EUAD )…. European defense stocks rally as Germany backs 5% defense spending target. European defense stocks were rallying on Thursday, as Germany’s foreign minister said the country accepted the 5% of GDP defense-spending target for NATO countries. www.marketwatch.com/story/european-defense-stocks-are-flying-again-germany-backs-5-nato-spending-target-67432962?mod=home_lead I did go back into TLT yesterday…. ❝ RATES MAKING MARKET NERVOUS RE THE “BIG, BEAUTIFUL BILL”? Trump and his admin including Bessent have all been expressed their focus on the 10Y being lower.  The aggressive initiation of the Trade war was seen by many as a means to drive 10Y lower.  Things did not pan out as planned with yields on 10Y falling and then soaring (as US risk premium increases). Walking back Trade War 2.0 created some relief.  However, respite maybe short-lived as House GOP pushes Trump's "big, beautiful bill" forward after all-nighter which if implemented, would raise the debt limit by $4 trillion ANOTHER U-TURN TO MOVE YIELDS LOWER? Some in the market are fearing that could we see another event risk whereby Trump admin tries to talk down the 10Y? The reason why this would be a concern, as it may mean a negative growth narrative being discussed to move yields lower and hurting risky assets. Also note, as per yesterday edition that 10Y US real yields around 2.25-2.30 starts entering the area where further rise in rates would be negative for risky assets. -Jefferies Daily Macro I went in small as it undercut some key lows but didn’t move back above. Would like to see it at least move back above the February low of $85.96 and will have a quick trigger finger if it moves down again. Focused a lot on adding shorts yesterday. As longer term readers know, the H in the HEAT Formula stands for hedges. I keep a static hedge in a strategy that will be in my soon the launch ETF OHNO. I always have SPY puts and calls on VIX, the ratios vary and we have a bunch of moving parts that generate income to offset the bleed. I then look to add more hedges as markets get overbought. I am a big believer that you should always have some hedges, and those hedges are not bonds. My XBI is finally starting to pay off…. Added REITs,,, I doubled up my ARKK short. Took some liberties here as I usually teach people to short on breakdowns at key moving averages. I also monitor 5 minute charts, and at least where ARKK is concerned I will sometimes take trades on breakdowns there. Especially when the market is overextended…. A little compilation on why the “smart money” really isn’t…. — # (# ) — # (# ) — # (# ) Back to AI this morning. The DeepSeek news caused me to cut a lot of positions, not because I believed any of the headlines, but I thought AI was in a bubble. I also thought it would raise some difficult questions about capex and US dominance. I have been slowly adding back to those positions. This morning, TD Cowen published a piece on AI infrastructure. The T in the HEAT Formula is for themes. I believe that asset class investing is stupid, you should be positioned in today and tomorrow’s top themes. Within themes you want to utilize second and third order thinking. It’s not just about identifying the winners, you also want the suppliers to the winners, and the suppliers to the suppliers. AI needs energy infrastructure to work. One of the ways I use AI in my process is to parse research reports that I don’t have the time or energy to read. I ask it to pull out winners and losers and rank them. If you are a long term buy and hold investor, then you could stop there. I add these to my watchlist, if they aren’t there already, and buy when the chart patterns are favorable. Here’s the report…. bbd15b98-4432-473a-94cf-b5517a66153e.pdf 551.14 KB • PDF File Download Here’s GPT’s evaluation….. Report Snapshot TD Cowen’s base-case for Trump 2.0 permitting reform is Incremental Progress , not a wholesale fix. Expect: Oil & Gas Permitting – meaningful improvements via expedited USACE/DOT (oil) and FERC/DOE (gas) rulemakings, but still subject to NEPA litigation and potential reversals post-2029. Electric Transmission – little to no federal permitting relief; continued state-level hurdles on siting, cost allocation, and interregional builds. Process Volatility & Legal Risk – executive actions (energy-emergency waivers) will spur lawsuits; courts will be the ultimate arbiter. “Think Small” Bias – developers will favor in-state pipeline expansions, compressor/add-ons, and distribution-level wires over sprawling, multi-state projects . Winners & Losers Company (Ticker) Why (per TD Cowen) Rating Kinder Morgan (KMI) Largest U.S. pipeline network; stands to benefit most from faster USACE/DOT approvals on oil & gas expansions and mid-stream add-on projects. 8/10 Williams Companies (WMB) FERC permit streamlining for gas projects (compression, laterals) cuts months/her barriers on its Appalachian and West Texas systems. 7/10 ONEOK (OKE) NGL gathering & intrastate pipelines suit TD Cowen’s “small federal nexus” playbook—avoids tribal/federal-land delays. 7/10 Quanta Services (PWR) Grid-upgrade and distribution-wire specialist; wins from the pivot to smaller, state-level transmission and interconnection work. 7/10 NextEra Energy (NEE) Transmission arm hamstrung by no anticipated FERC/backstop reforms—multi-state HVDC builds remain mired in siting fights. 4/10 American Electric Power (AEP) Heavy interstate-transmission pipeline; ongoing permitting bottlenecks and legal challenges on lines like the Cardinal-Edwardsport corridor. 4/10 Dominion Energy (D) Large-scale lines in PJM/SE ISO face persistent state-level pushback and no federal “expedite” lever—dilutes rate base growth. 4/10 Bottom Line for The --- H.E.A.T. Formula Permit reform under Trump 2.0 will help oil & gas mid-stream players and small-scale transmission/infrastructure services , but leave big-ticket transmission developers stalled. Position overweight on well-capitalized pipeline operators and specialized E&Cs, underweight on high-beta, multi-state transmission names. Modern warfare is reshaping metals demand, says mining veteran Surge in military consumption comes as growth of renewable energy supercharges demand for copper www.ft.com/content/6a72d0da-ec2e-4235-9adc-1500412614eb Modern warfare and industrial metals are two more themes I really like. I had GPT analyze this article and provide winners and losers…. Below is a quick scan of U.S.-traded names that stand to benefit—or suffer—from the metal-supply shakeup Robert Friedland highlights in the FT’s “Modern warfare is reshaping metals demand” briefing TradingView . Winners Company (Ticker) Thesis Rating Freeport-McMoRan (FCX) #1 U.S. copper producer—direct play on sharply higher military + renewable copper volumes. 9/10 Southern Copper (SCCO) Large North American copper miner with low costs and growth projects ready to be fast-tracked. 8/10 Newmont Corporation (NEM) Gold-heavy miner with sizable copper output; optionality if copper surges beyond forecasts. 7/10 MP Materials (MP) Sole U.S.-based rare-earth miner—exposed to scandium, gallium and other critical war metals. 7/10 Materion Corp. (MTRN) Beryllium and specialty-alloys supplier for aerospace and defense applications. 6/10 Losers Company (Ticker) Thesis Rating Lockheed Martin (LMT) Jet, missile and satellite builder—faces supply-chain pinch on copper, beryllium, specialty alloys. 4/10 Raytheon Technologies (RTX) Missile systems and radar prime—margin pressure if niche-metal backlogs persist. 4/10 General Dynamics (GD) Armored vehicles and munitions maker—brass/copper shortages could slow production ramp. 3/10 Bottom Line: Military re-armament and the green-energy build-out have put U.S. miners and specialty-metal producers in the catbird seat. Positions in FCX , SCCO and MP offer direct leverage to higher “war-metals” volumes, while traditional defense primes like LMT and RTX must navigate tightening supply chains or face margin erosion. How Did You Like Today's Newsletter Love it It's Okay Not Great Login or Subscribe to participate Before you go: Here are ways I can help ‍ ETFs : We offer innovative ETFs that cover all aspects of The --- H.E.A.T. Formula, Hedges, Edges, and Themes. Consulting: I'm happy to jump on the phone with financial advisors at no charge. I've built a wealth management firm and helped other advisors grow their practices through the use of substantially differentiated investment strategies. If you want to talk just send me an email at [email protected] Monthly investing webinars Rebel Finance Podcast https://www.youtube.com/@TuttleCap Wealth Management-Coming Soon Paid Newsletter Service-Coming Soon All rights reserved. Keep Reading No posts found View more caret-right 0