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Take a look at this chart – it may just change how you think about artificial intelligence…

At first glance, it’s just a timeline of notable AI systems over the years. But buried beneath the surface is a signal most people miss: the number of parameters that each system uses. And that figure is exploding.

As Our World in Data notes, these “are internal variables that machine learning models adjust during their training process to improve their ability to make accurate predictions.”

Think of parameters as the brainpower behind an AI. The more it has, the more nuanced and capable it becomes.

Basically: the more parameters a model uses, the better – and more humanlike – it becomes. 

In a way, this chart acts as a portrait of AI’s exponential growth. And we’re not at the end of the curve – we’re at the base of a vertical spike.

Let’s put this in context…

How AI Went from Predictive Text to Project Completion in Just 5 Years

In 2019, GPT-2 struggled to write coherent paragraphs. By 2022, GPT-3.5 could navigate menus faster than a human. Just a year later, GPT-4 cracked problems in seconds that used to take five minutes. Today in 2025, Claude 3.7, Sonnet, and O1 are solving 20-minute tasks in the blink of an eye with an 80% success rate. Meanwhile, OpenAI’s o3 has crossed a new threshold, completing coding problems faster than human engineers.

As this AI Boom continues to unfold, we’re witnessing exponential capability compounding in real time. 

We’re just about three years into this new AI-driven era, and the chart is already curving skyward.

Now project that same pace out a few more years…

Instead of working out 30-minute bugs, these models could handle multi-hour, maybe even multi-day, autonomous workflows.

We’re talking about AI that doesn’t just autocomplete your sentence but your entire project.

Agentic AI: The Next Evolution That Works Like a Teammate (or a Threat)

We’ve officially crossed into a new era: that of Agentic AI.

Instead of a model that can offer a clever retort or write its own poem, this iteration of AI can:

• Set goals
• Design workflows
• Initiate subtasks
• Self-correct
• Call external tools
• Track progress
• Report back or even act on outcomes

This is AI not as a tool but as a colleague and collaborator… and perhaps in some domains, a replacement.

These agents will take a vague objective – “launch a product campaign,” “revise the codebase,” “generate a pitch deck,” “run a growth audit” – and complete the task end-to-end.

And it’s already happening. Just look to Meta (META), one of the world’s leading AI companies.

According to a recent Wall Street Journal report, Meta executives say the company’s internal “AI Marketing Engine” can already run A/B tests, generate visuals from brief prompts, and allocate ad budgets dynamically – with plans to replace 90% of manual ad workflows within the next 18 months.

Not just targeting… every single aspect: writing copy, creating visuals, designing campaigns, assigning budget, monitoring performance, generating reports…

That’s a full-on replacement.

A business that once required entire teams of marketers, designers, analysts, and managers will soon be run by autonomous AI agents with prompt-driven brains and reinforcement learning feedback loops.

And you better believe if Meta pulls it off, Alphabet (GOOGL), Amazon (AMZN), TikTok, and every direct-to-consumer brand on the planet will follow.

It’s an exponential economic transformation all powered by AI.

AI in Hollywood: The Death of Traditional Filmmaking?

Let’s tie this to another stunning development we’ve talked about recently: Veo 3, Google’s latest generative AI video model.

A couple years ago, AI-generated videos were meme-tier at best. Distorted faces, jerky motions and transitions… Pepperoni Hug Spot.

Now? AI can create a near-masterpiece from one simple text prompt.

An entire hyper-realistic scene in 1080p – cinematic lighting, lifelike animation, synchronized audio – within just minutes or less.

Right now, clips are limited to eight seconds. But we know how this curve works. First 8 seconds, then 30… a few minutes… and suddenly, we’ve achieved feature-length films.

And combined with what Meta is building in ad automation, it’s not hard to see the convergence:

AI would write the concept; generate, place, and target the ads; evaluate return on ad spend; rework the copy…

All without a single human touching the process.

Jeff Clark’s bright red warning flag… the reversal of bond yields’ multi-decade direction… three major consequences… on a bear market’s doorstep?… how to trade volatility

Sir John Templeton once said:

The four most dangerous words in investing are: “This time it’s different.”

Perhaps.

But master trader Jeff Clark offered a visual of why today is “different” compared to the last 40 years – and the takeaway suggests that investors should be careful.

Here’s Jeff:

Most folks under 50 years old have no idea what’s coming next. They’ve never experienced a rising interest rate environment.

Look at this chart of 30-year interest rates…

Long-term interest rates peaked in 1982, with the 30-year Treasury Bond yielding 14%.

Rates then declined for the next 40 years – hitting as low as 0.4% during the COVID crisis in 2020.

But look at what has happened in the last three years. The 30-year Treasury yield broke out above a 40-year declining resistance line.

This is a tectonic shift in the market

This reversal in the direction of treasury yields has three primary consequences:

• Tighter economic conditions for Main Street
• Tougher investment conditions for Wall Street
• Heavier debt burdens on Uncle Sam

Beginning with “Main Street,” Jeff notes that Interest rates are up 60% since 2022 – and 1,100% higher than their 2020 lows. Borrowing money now costs 11 times more than it did five years ago.

Here’s Jeff with the significance:

Most folks manage their debt by taking out new loans to pay off older debt as it matures. And, for the past 40 years we’ve been able to do this at perpetually lower interest rates. This allowed us to borrow even more money without incurring larger debt payments…

There were no consequences to borrowing money. Deficits didn’t matter.

Now though, with long-term interest rates recently hitting the highest level in 20 years, it costs more to borrow money. Any maturing debt must be refinanced at higher rates.

Nobody is refinancing their mortgage anymore and taking out a pile of cash to spend on their lavish lifestyles.

Now, you might recall that in yesterday’s Digest, we profiled the recent resilience of the U.S. consumer. But that resilience doesn’t mean that there aren’t risks today.

To explain, let’s jump to our hypergrowth expert Luke Lango. In his Innovation Investor Daily Notes from last week, he dove into the “pretty ugly” second revision of U.S. Q1 GDP, then turned to the consumer:

The more-important personal consumption number was revised significantly lower from +1.8% to +1.2%. That’s a really low growth number for personal consumption.

Going back to 1995, the average personal consumption growth rate has hovered around 3%. We are at 1/3 of that today.

The U.S. economy is not in a great position right now.

Tougher investment conditions for Wall Street

Back in 2023, I wrote a Digest that suggested the economic and investment conditions that helped Baby Boomers and Generation X generate wealth were fading.

Yes, those generations faced bear market and recessions, but overall, “buy the dip” was a winning strategy. I suggested one primary reason for their good fortune…

The slow, steady decline of the 10-year Treasury yield.

It created a perfect environment for stock investors.

I wasn’t the only one who had arrived at this conclusion. Here was the “Bond King” Bill Gross, co-founder of PIMCO, from back in 2013:

All of us, even the old guys like [Warren] Buffett, [George] Soros, [Dan] Fuss, yeah – me too, have cut our teeth during perhaps a most advantageous period of time, the most attractive epoch, that an investor could experience.

Since the early 1970s when the dollar was released from gold and credit began its incredible, liquefying, total return journey to the present day, an investor that took marginal risk, levered it wisely and was conveniently sheltered from periodic bouts of deleveraging or asset withdrawals could, and in some cases, was rewarded with the crown of “greatness.”

Perhaps, however, it was the epoch that made the man as opposed to the man that made the epoch…

We’re no longer in that epoch.

To illustrate, in our 2023 Digest, we showed a very similar chart to the one Jeff highlighted above, except we chose the 10-year Treasury, not the 30-year.

Our bottom-line mirrored Jeff’s…

This time is different…at least in the bond market.

To be clear, this doesn’t mean life-changing stock returns aren’t possible (we’re looking at you, AI/robotics/humanoids). But it does suggest that if this bond direction continues, it will be a headwind to stock returns that we haven’t faced in about 45 years.

Heavier debt burdens on Uncle Sam

Let’s return to Jeff:

The U.S. government – with $9 trillion of its $36 trillion national debt due to mature in 2025 – for lack of a better word… is screwed.

All of that debt will be refinanced at higher interest rates.

Stepping back for context, our government is already paying through the teeth on interest expense.

The U.S. Treasury’s annual interest expense passed $1.117 trillion last year, making it the second-largest government expense on record.

Source: Bloomberg / Joe Consorti

But the spending that’s on the way dwarfs this…

Here’s the Peter G. Peterson Foundation, a non-partisan thinktank:

Over the next decade, the U.S. government’s interest payments on the national debt are now projected to total $13.8 trillion — the highest dollar amount for interest in any historical 10-year period and nearly double the total spent over the past two decades after adjusting for inflation.

The government has two options to finance this hefty price tag: raise taxes or issue more debt.

We’re not raising taxes. As we’ve profiled in the Digest, the Trump Administration’s “big, beautiful bill” (which Elon Musk calls “a disgusting abomination”) has passed the House and is now in the Senate.

It aims to make the tax cuts from the “2017 Tax Cuts and Jobs Act” (TCJA) permanent, including provisions like the higher standard deduction and lower tax brackets.

It also includes new tax relief measures, such as no taxes on tips, a deduction for auto loan interest, and tax relief for seniors.

So, that leaves “issuing more debt” – which is what we’ve been doing for the last handful of years.

As you can see below, we’ve had an explosion of treasury issuance since 2020.

Source: MacroMicro

When new treasury issuance floods the market, the oversupply results in lower prices to entice buyers. And since bond prices and yields are inversely correlated, this means bond yields rise.

That’s not good for stocks or for the federal government’s debt service (and eventually, the value of your savings in dollars).

Back to Jeff:

Some of us wrinkled, gray-haired, old folks remember what it was like living in the 1970s.

We’ve seen how financial assets perform in a rising interest rate environment.

So, what do we do?

First, while we won’t dive into it today, we’ve been pounding the table for months: We invest in AI, robotics, and humanoids.

These stocks may face volatility and go through significant drawdowns, but the long-term upside is massive given the seismic tech shifts ahead.

Second, prepare for volatility. As we’ve covered in the Digest, Jeff believes a bear market is at our doorstep, with a potential bottom around 4,150 on the S&P this fall.

Most importantly, we seek out opportunity regardless of the market environment.

Even in bear markets, Jeff has shown how explosive rallies can deliver double- or triple-digit gains in days. And of course, there are also big profits in betting on downside moves.

Bottom line: double- and even triple digit returns – as the market moves up or down – are in play over very short timeframes. But let me show you.

Here are five of Jeff’s most recent trades in his service Delta Report, both long and short. Notice how quickly Jeff is in and out of these trades, as well as their returns:

1. OSCR long trade on 05/06/2025, closed on 05/07/2025 for a profit of 97.10%
2. WGMI long trade on 04/15/2025, closed on 04/24/2025 for a profit of 81.13%
3. DELL short trade on 04/09/2025, closed on 04/11/2025 for a profit of 89.79%
4. C short trade on 04/04/2025, closed on 04/09/2025 for a profit of 76.39%
5. MRVL short trade on 04/04/2025, closed on 04/09/2025 for a profit of 90.72%

Now more than ever, you should consider adding this type of shorter-term, bi-directional trading to your toolkit. If you’d like to learn more about how, mark your calendar for next week, Wednesday, June 11 at 10 am ET for Jeff’s Countdown to Chaos event.

Jeff will dive into the details of how he trades. In short, it’s a “reversion-to-the-mean” trading strategy. Basically, when he sees that a stock or an index gets stretched too far in one direction or the other, he bets on the proverbial rubber-band snapping back.

Here’s Jeff:

We look to buy stocks that are deeply oversold, and we look to sell/short stocks that have pushed too far into overbought territory.

Next Wednesday, I’ll walk you through more details, as well as exactly what’s coming next… and how you can position yourself not just to survive but to profit in spades.

I’ll reveal 10 compelling opportunities flashing right now, as well as the powerful new tool I’ve built with TradeSmith to find them daily.

If you’ve ever wanted to turn volatility into your biggest advantage, join us for the Countdown to Chaos.

Stepping back, “this time it’s different” can be a dangerous assumption…unless it really is different

So, it is different today?

Back to Jeff to answer and take us out:

“Deficits don’t matter,” the younger folks shout at us older traders. “The national debt has grown from less than $1 trillion in 1982 to almost $37 trillion today, and nothing bad has happened.”

They ask, “What’s different this time?”

Take another look at the chart above…

This time, you’ll see the difference.

Have a good evening,

Jeff Remsburg

Hello, Reader.

Chaos.

It’s a five-letter word that, for better or worse, accurately describes the stock market in 2025.

The “for worse” piece of this equation is all too easy to recall…

In January, the launch of DeepSeek, the Chinese AI competitor to ChatGPT, led to a sharp selloff in the tech sector. The Nasdaq Composite dropped 3.1%, and the move erased approximately $600 billion in Nvidia Corp’s (NVDA) market value.

The administration’s tariffs on Canada, Mexico, and China sent the S&P 500 into correction territory in March. Then, in early April, President Donald Trump’s sweeping “Liberation Day” affected nearly all sectors of the U.S. economy and sent both the Nasdaq and S&P 500 into a bear market.

In May, after one court declared the trade levies illegal, stock markets fell following a different U.S. court’s decision to temporarily reinstate the tariff policies. And this week, stocks fell as apprehensions over renewed trade tensions with China resurfaced.

You get the picture.

In the midst of chaos like this, the idea of a “for better” sounds downright preposterous.

However, what many folks don’t realize is that volatility can be the best opportunity to make money as a trader.

This is my colleague Jeff Clark’s specialty.

I’ve known and respected Jeff for over two decades. And during this time, he has accurately predicted every major market drop this century… and handed his readers over 1,000 winning trades during those volatile times.

He predicted the 2008 financial meltdown… and helped his readers double their money 10 different times during the fallout, with winners like 490% in 25 days from Palomar Holdings Inc. (PLMR).

He also predicted the 2020 Covid crash… and proceeded to hand his readers at least 10 different chances to double their money that year.

In 2022, he predicted the tech crash that sent the tech heavy Nasdaq down 32% that year. But that didn’t stop him from making gains as high as 333% in only two days from Citigroup Inc. (C).

And he predicted the rough start to 2025 all the way back in September of last year.

Now, he’s stepping forward with another shocking prediction.

I recently sat down to interview Jeff about what he sees coming… and how he trades the market right now.

It all comes down to the “chaos pattern” he uses to accurately predict the direction of any individual stock or the entire market.

In our conversation, Jeff shares compelling new research that shows how chaos could soon be dominating the markets once again.

Click on the play button below to watch now. You can also read the full transcript below.

Next Wednesday, June 11, at 10 a.m. Eastern, Jeff is holding an important market update where he will detail everything you need to know about this “chaos pattern” and how you can use it to your advantage, even in bear markets.

Jeff has teamed up with our partners at TradeSmith to create a new powerful stock screener that looks for his “chaos pattern” every single day. His is unveiling this screener for the first time during the event, which he is calling the Countdown to Chaos (register here).

Based on his research, Jeff sees that dozens, if not hundreds, of stocks could soon flash this “chaos pattern” in the coming weeks and months. So, he will also share 10 different opportunities from his powerful new screener – for free – during his special event.

It’s free to attend. But Jeff asks that you register ahead of time by going here.

Regards,

Eric Fry

Transcript

Eric Fry: Hello, Eric Fry here.

Today I’m sitting down with a very special guest, one of America’s top traders, Jeff Clark. He’s a guy I’ve known and respected for more than two decades. In fact, many times over the years I’ve highlighted Jeff’s insights from my own readers and even some of his specific trades.

Our investment style is not that similar, but they are very complimentary, which is why I’m always curious to see what Jeff’s up to. For the past 40 years and counting, he has accurately predicted I think every major market event and helped his readers get in front of a thousand different winning trades. He even predicted the 2008 financial meltdown and helped his readers during that time double their money 10 different times, with winners like 490% in 25 days from Palomar Medical Technologies Inc. (PMTI). Similarly, in the Covid-19 crash of 2020, he handed his readers at least 10 different chances to double their money again in that year from his various trades.

More recently in 2022, he predicted the tech crash in advance of that event, which set the S&P 500 down nearly 20% that year, and sent the tech-heavy Nasdaq down 30%+. But even during that rough period, they didn’t stop him from giving his readers 12 different chances to double their money that year. And so, he captured gains like 230% in just three weeks from Pan American Silver Corp. (PAAS), 333% in only two days from Citigroup Inc (C).

More recently, he predicted the rough start to 2025, and he made that prediction all the way back in September. So during this rough period, he’s given his readers chances to capture gains like 97% in two days from Oscar Health Inc. (OSCR) or 90% in just five days from Marvell Technology Inc. (MRVL). His secret? It’s something he refers to as the chaos pattern, and we certainly have plenty of that around at the moment. So, this unique pattern is a setup which can tip you off to major moves in the broad stock market.

That brings us to today. Jeff has some compelling new research that shows volatility could soon be dominated in the markets once again. So, I wanted to just meet with him quickly and ask him a few questions about what he sees coming and how he views and trades the market right now. That being said, Jeff, thanks for sitting down with me today.

Jeff Clark: Thank you, Eric. I’m glad to be here. Thanks for having me.

Eric: That’s a very interesting term, chaos pattern. Tell a little bit about it. What is that?

Jeff: Exactly? Well, I wish I was the one who came up with it, but it was actually the folks in marketing. I utilize what’s commonly referred to as a reversion to the mean strategy, which basically is an educated person’s way of saying, I look for things that are a little bit out of whack and look for ’em to come back into normal.

If it was me telling the story, I’d say it’s a rubber band pattern. I’m looking for situations where that rubber band is stretched, where conditions are incredibly overbought or incredibly oversold and just waiting to snap back to where they normally historically are. This pattern tends to emerge during periods of chaos in the market, extreme levels of volatility in the market. You can go back to – you talked about what we did for readers back in 2008, 2020, 2022, and then going back to the dot-com bust back in 2001… This pattern exists during all of that time and that time tends to be fairly chaotic or have a lot of turmoil in the market, but that’s also where there’s a lot of opportunities.

And so oftentimes what happens is people get a little bit wigged out or they get fearful of volatility in the market. And really what I try to do is to tell folks that it’s not a fearful event. It’s something that you ought to embrace because that’s what creates the opportunity. And we’ve seen it so far in 2025. We had a wild market that didn’t exist a year ago. 2024 was what we call a non-volatile market. It was basically a one-way grind higher. The rallies weren’t huge and the selloffs were very, very mild. So every day it was just a little bit of a grind. That’s not my kind of a market.

Eric: Let me stop you really quick here. So, to be clear, you’re playing both sides of the market. So, if you see something out of whack, say on the overvaluation side or momentum is too high or however you categorize it, then you’re going to play that with a negative put option, right? And if you see something similar on the undervalued side or low momentum side, you’re going to put that with a call option. Is that correct?

Jeff: Exactly. I’ll trade both sides. But what’s interesting is when we go back to those periods that you talked about, 2008, 2020, 2022, yeah, we had a handful of winners betting on the downside of stocks. But our biggest gains, oddly enough, came from betting on the upside when conditions got remarkably oversold, not unlike what happened just in April. We have these tremendous oversold conditions back in early April, and then this wicked snapback move to the upside. Most of our gains for this year have come betting on the long side caused by that oversold condition.

Eric: Right. So, with your call options, typically how far out in time do you go with them? Are you buying a three month option or a six month? How does that work?

Jeff: Well, there are two ways to do it. When I’m buying an option, I like to buy a little bit of time, so I’ll buy 30 to 60 days. I rarely go any further than that because most of the time these movements, these snapbacks occur relatively soon. But I like to have a little bit of time because it is very uncomfortable if you predict a move, but your option expires before that move has a chance to play out. We’ve all had that situation developed where our option expires on one Friday, and sure enough, the next week the move takes off. I don’t want that to happen. So, I like the idea of buying a little extra time, 30 to 60 days, oftentimes in a very volatile market.

I also use the strategy known as selling uncovered puts, which not to get too complicated, but it’s basically a way of generating income by agreeing to buy a stock at a particular price. So, if you like the idea of buying Intel Corp. (INTC), you can sell an uncovered put that obligates you to buy Intel if it falls below a certain price in a very volatile market because option prices can inflate, oftentimes selling your uncovered put is a preferable strategy to buying a call option.

Eric: That’s also the same as selling a naked put, correct?

Jeff: Yes.

Eric: Okay. We call it a naked put both terms, so I just want to make sure that that’s what we’re talking about.

Jeff: Yes, that’s exactly what it is. And a lot of folks sometimes get kind of concerned because you’re selling a naked put, it sounds like an ominous type of a strategy, but it’s no more different than selling a covered call on stocks that you own. In fact, it’s the same risk reward parameter, but oftentimes in a period of extreme volatility in the market, because option prices are expensive, it makes more sense to sell an uncovered put than it does to buy a call option.

Eric: So, some of these things can sound a little scary and intimidating to a lot of investors. What percentage would you say of your trades during the course of a year are simply buying a call option, betting a stock’s going to go higher as opposed to any other kind of trade?

Jeff: Last year, because of the environment we were in with a low volatility, option prices were relatively cheap. So last year, I would say better than 80% of my trades involved buying options. This year, because option prices have expanded, they’ve inflated, I’d say it’s probably more of a 50/50, maybe 60/40, 60% is buying and 40% is selling. And I expect that’ll probably be the case throughout the rest of the year.

Eric: Do you feel that investors – because I know a lot of times people want to get comfortable with options, right? As they move into the strategy and get comfortable with your approach and so on… So, if they don’t touch any of the more, call it exotic – although it’s not those exotic trades like selling naked puts – are there still plenty of trades during the course of the year to get?

Jeff: Absolutely. One thing I want to clear up a little bit when we talk about options is that oftentimes people think risk right away. They think risk, they think leverage. They think gambling, and that’s common for folks to do. And oftentimes if you talk to people about their experience and trading options, it’s usually negative and it’s because they’ve probably done things incorrectly. Options were designed originally as vehicles to reduce risk, right? That’s what I use them for. I hate losing money. I’m 60 years old, I don’t bet the ranch anymore. I’m not looking for 3000% gains on a fly by night company. I’m looking for ways that I can increase my rewards when I’m right and reduce my risk when I’m wrong, and that’s what options allow me to do.

For example, if you’re looking at buying the SPDR S&P 500 ETF (SPY), it’s trading around $570. So, if you wanted to buy a hundred shares of it, it’d cost you $57,000. I can create the same sort of a situation where you can profit off of SPY, just like owning the stock for $500. So the other $56,500 is sitting safe, locked up in a nice tiny little money market fund treasury bill. No worries on that. My $500 is at risk. Most people that buy the S&P 500 might be willing to risk 10%, 15%, or 20%. Well, that’s $5,700, $7,500, $10,000 you’re willing to risk owning that. I’m risking just $500. If I want to get things more exciting, I might buy two options. Maybe if I’m feeling really good, three. Rarely ever more than that.

Where people make their mistake is instead of buying $57,000 worth of stock, they take the entire $57,000 and put it in options. And then of course the option expires worthless, and they’ve lost everything. They’ve blown up their account. That’s the problem when people use options the incorrect way. The right way is to look at it as a vehicle to reduce risk. So anytime you’re taking on a new position, my first question is, how much can I lose? Unfortunately, what a lot of folks do these days is they say, how much can I make? And then they try to accentuate that. I take the opposite approach, and when you have a market environment like we’re having right now, there’s going to be lots of opportunities to make money. You don’t have to make a killing on one trade. Just have a consistent strategy that allows you to earn money on multiple trades as you go through this process.

Eric: Yeah. Okay, great. My final question is more of a timely one. Are you seeing any particular areas of interest right now, either on the buy side or on the sell side?

Jeff: Oh, absolutely. The problem is by the time this airs, it may be different, and that might be just a few days from now because the market is moving so quickly. Again, what I try to look at is I look for situations where we have incredibly overbought conditions or incredibly oversell conditions and just look for them to move back. A month ago, I would’ve had a different conversation with you. I was looking at semiconductor stocks, which is where Marvell Technology came in, healthcare stocks, which is where Oscar Health came in, and we did really well on those. Today I’m looking more in the oil patch for stocks that I might be interested in purchasing, and I’m looking at semiconductor stocks as possibly stocks to bet on the downside with, because they’ve completely flip flopped and they’re now overbought from an oversold condition.

So, it’s a dynamic philosophy and it’s really… I can’t oversimplify it enough. It really is no more complicated than looking at a rubber band and saying, okay, we’re overextended. Let’s bet on it snapping back.

Eric: Well, I think like you. I firmly believe that options – used well – are an all-weather strategy. But certainly in this environment where there is, let’s call it more volatility than usual, the opportunities both to capture short-term option gains and/or to hedge against short-term volatility are probably as numerous as they’ve ever been.

Jeff: Yeah, I agree. And that is the benefit of using options in a volatile market.

First of all, they tend to be short-term oriented, so you need to do something with the trade in a short-term basis. You’re moving in and out a little more frequently than if you just simply own the underlying stock. So, you’re encouraged to take profits off the table quickly. A lot of folks sometimes look at that and go, well, geez, I left too much money on the table.

There are always opportunities. You never go broke taking a profit. I’ll throw any number of cliches out about that. But the bottom line is what we’re trying to do is to generate profits on a consistent basis. We’re not trying to hit a grand slam every time we step up to the plate. I’m happy if readers and subscribers can make several trades in a row where they’ve doubled their money. Nobody’s going to complain to me about that. They are going to complain to me a little bit if I swing for the fence every time and strike out.

Eric: Absolutely.

Alright, well there you have it folks. Jeff, thank you very much for sharing your insights and giving us details about your trading tactics and your strategy.

As I mentioned at the top of this video, Jeff’s one of the premier options traders I’ve ever known, and he’s got a fantastic track record. So, if you want to learn more about Jeff and his unique strategy for finding big winners and/or hedging in an expert fashion, then I encourage you to sign up for his Countdown to Chaos event on June 11th at 10 a.m. Eastern time.

At that event, you’ll learn about Jeff’s latest market prediction and how it could help you double your money at least six different times over the coming 12 months. Simply click the link below this video to read more about what you’ll learn. And thanks again for joining us today.

Jeff: Thanks everyone.

What a difference a year makes… 

Not long ago, AI’s best attempt at video generation resulted in that cursed clip of Will Smith shoveling spaghetti into his mouth with his four-fingered hands.

But now the world has Google’s Veo 3 at its fingertips – the tech titan’s latest AI video generation tool. And the results we’re seeing are nothing short of astonishing.

This shiny new model can generate ultra-realistic, 1080p, synchronized audio-visual content based on a simple text prompt…

“A woman, classical violinist with intense focus, plays a complex, rapid passage from a Vivaldi concerto in an ornate, sunlit baroque hall during a rehearsal. Her bow dances across the strings with virtuosic speed and precision. Audio: Bright, virtuosic violin playing, resonant acoustics of the hall, distant footsteps of crew, conductor’s occasional soft count-in (muffled), rustling sheet music.”

And within seconds, there she is, in video so realistic, you can even see individual hairs on her head highlighted by the sun.

She’s almost tangible. The music is swelling. And no human lifted a single camera.

What we’re witnessing with the launch of Google DeepMind’s Veo 3 isn’t some gimmicky tech demo or mere novelty for nerds on X. This seems more like the starting pistol for the next great creative-industrial upheaval – and if you’re in the business of making or investing in content, it’s time to get serious.

Yes, Veo 3 may be limited to eight seconds today. But that’s not a wall; it’s a runway. And if you’ve been paying any attention to the exponential trajectory of AI development, you know where this might go next.

Longer clips, then full scenes, entire episodes… and eventually, complete seasons. Perhaps one day, personalized stories crafted in real-time based on what you like to watch.

It’s coming – fast. 

This could be the beginning of the end of Hollywood as we know it…

And the start of a new era of AI stock dominance in the content world.

AI Video’s “iPhone Moment” Is Here – And It’s Called Veo 3

Obviously, this isn’t the industry’s first attempt at AI-generated video. Runway’s Gen-2 was a cool prototype. OpenAI’s Sora looked great in a lab. But Veo 3 is different. 

It’s the first model with:

• 4K visual quality
• fully integrated audio
• cinematic camera movement
• deep prompt adherence
• and, crucially, a launch partner with billions of users and a roadmap to global rollout

In our view, Google has aimed a shotgun full of GPU clusters directly at Hollywood’s business model.

And Veo 3 is just the tip of the spear. Behind it are entire pipelines – Gemini-powered plot generators, scriptwriting agents, motion planners, and real-time editors. 

Google is compressing the entire TV and film production supply chain into a single generative stack.

Do you know what happens when you take a years-long, $100-million content pipeline and squeeze it down into a GPU-powered prompt that costs pennies?

You break the game…

Why Veo 3 Could Mark the End of Old-School Hollywood

If you work in video production – or the hundreds of satellite roles orbiting it – AI just kicked in your trailer door with Veo 3.

Think about it. With this quantum leap in AI’s video generation capabilities, actors could soon be replaced by photorealistic avatars and voice clones. No need for makeup artists; glam will be digitally rendered in post.

Goodbye, set designers; hello, infinite virtual stages.

Cinematographers? AI models now handle camera movement with humanlike precision.

Now, writers, you’re still needed… but you’d better learn to prompt.

This might feel like sci-fi, but it’s more so basic economics. 

Studios are always hunting for ways to reduce cost and time. And AI doesn’t sleep, unionize, forget lines, or demand a four-figure payday.

That’s why we expect that over the next five to 10 years, AI will eat the technical backend of filmmaking the way Amazon ate retail – and with the same ruthless cost-efficiency.

Editor’s Note: After the furious rally in the wake of easing trade tensions, the market may be a little overbought right now, folks.

And if history is any guide, now is the time to pay close attention to Jeff Clark.

Over the past two decades, Jeff has consistently thrived in the most chaotic market conditions. From the 2008 financial crisis to the Covid crash of 2020, and even the rocky start to 2025 – he’s seen it coming and helped his readers capitalize.

Now, Jeff says we’re entering another period of extreme volatility – and he’s sounding the alarm.

This isn’t just another prediction. It’s part of a pattern Jeff has spent 40 years tracking and trading – what he calls the “chaos pattern.” And it’s flashing again right now.

In fact, Jeff believes you must get your financial house in order by Wednesday, June 11. That’s why he’s hosting a special event with our corporate partners at TradeSmith to reveal exactly what he sees ahead – and how it could unlock double- and triple-digit trading opportunities for prepared investors. Click here to sign up now!

Look, anytime I get the chance to get a different perspective from a respected market veteran like Jeff, I’m going to take it. In fact, that’s why I sat down for a one-on-one discussion with him – be sure to look out for that video in Thursday’s Market 360.

In the meantime, I want you to hear directly from him today – before the next market shock hits.

Read on to discover what Jeff sees in the market… and stay tuned for later this week to hear why he thinks this could be one of the most profitable trading windows of the decade.

***************************

The second stage of this bear market will be brutal.

Of course, most folks are skeptical we’re even in a bear market. That’s understandable.

After all, the S&P 500 has recovered nearly everything it lost during the February-April decline. The index is within spitting distance of a new all-time high. So we can’t blame anyone for thinking stocks can only go up from here.

Except…

We know this is what bear markets do. The first rally phase in a bear market is designed to punish bearish traders who’ve held on to short positions for too long, and then coax reluctant bulls back into the market.

In other words, it makes folks question if we’re even in a bear market at all.

Then, the bear takes another swipe.

We don’t have to go too far back in time to find evidence of this action. Think about the bear market that occurred in 2022. Here’s the chart of the S&P 500 from back then…

The S&P 500 peaked in early January 2022. It then suffered its first decline phase – falling 16% in two months.

We then got a stunning, “V” shaped rally. The S&P recovered most of its first phase decline.

V-shaped rallies are dangerous. Investors who sold at the bottom regret their decision. They buy back in at higher prices. And, this time, they vow not to get “bluffed” out of positions on the next decline because apparently, stocks only go up.

During the second decline phase, these investors hold onto their stocks and endure larger losses because they’re convinced they made a mistake selling the first time around.

It takes a larger downside move to convince these investors otherwise. That’s why the second stage of a bear market is often the largest decline phase.

It happened in 2022. And, for reasons we’ve written about here in Market Minute over the past two weeks, it’s about to happen in 2025 as well.

Could I be wrong?

Absolutely. Maybe the stock market will keep pressing higher and the S&P will make a new all-time high in the days/weeks ahead.

But, if I am wrong, since the market is already in an extended condition – with the various moving averages expanded far away from each other – we’re not going to miss out on a huge move higher. There’s not much fuel remaining for that sort of a move.

If I’m right, though, then the next move lower could be significant.

This is not the sort of environment where it makes a lot of sense (at least to me) to pay 23 times earnings to buy the S&P 500.

Best regards and good trading,

Jeff Clark
Editor, Market Minute

Is the iPhone dead?… Luke Lango profiles the next big thing… the U.S. consumer continues to power the economy… why Louis Navellier isn’t concerned about inflation… last call for “Liberation Day 2.0”

Is the iPhone dead?

Our technology expert Luke Lango just dove into what’s coming on the tech front, and it’s not great news for Apple’s biggest source of revenue.

However, it could be fantastic news for investors who see the writing on the wall.

Let’s go straight to Luke:

The iPhone was built for the Age of the Mobile Internet. And we’re no longer in that era.

We’re now fully entering the Age of AI—and AI doesn’t want your thumbs. It doesn’t want your screen.

It wants your eyes, your ears, and your intent. And to serve that, it needs a new form factor.

So, what replaces the iPhone?

Glasses.

Why does Luke believe that?

Alphabet just announced a $150 million partnership with Warby Parker to launch AI-powered smart glasses. OpenAI just acquired Jony Ive’s AI hardware startup for $6.4 billion (we explained why this is so significant in a previous Digest).

Next up is Meta, which is going all-in on its partnership with Ray-Ban. Meanwhile, Amazon continues to ship Echo Frames, and Apple Glasses are in the works.

Back to Luke:

The smartphone won the 2010s because it was perfectly tuned for the Mobile Internet Era: app icons, touchscreens, notifications, browsing, scrolling, clicking.

But AI doesn’t thrive in that world. AI isn’t an app you tap. It’s an agent that observes, listens, and acts. It’s ambient. Contextual. Proactive. Invisible.

The next device isn’t a better phone—it’s a layer between you and the world.

The investment implications here are enormous.

Luke writes that, “just like with the iPhone, fortunes will be made—not just from the device, but from the ecosystem that helps it see, hear, think, and respond.”

So, how do we invest?

There are the mega-cap stocks that Luke just highlighted. But the competition there will be intense. And those mega-cap companies are already so enormous that 100%+ returns will be challenging.

But for smaller components makers that play an integral role in coming AI products – the “ecosystem” as Luke just called it – we have moonshot potential.

Back to Luke:

Whoever wins will likely rely on custom chips from Arm Holdings (ARM) or Qualcomm’s Snapdragon processors (already in Meta Ray-Bans). Nvidia (NVDA) will probably power much of the on-device AI.

Sony Group (SONY) may lead in camera sensor supply—its tech is already best-in-class. Lumentum Holdings (LITE), STMicroelectronics (STM), and Himax Technologies (HIMX) could supply optical sensors, LiDAR, and gesture-tracking modules. Ambarella (AMBA) might deliver the computer vision chips. Corning (GLW), a longtime iPhone supplier, could provide smart lens glass and optics.

SoundHound AI (SOUN) is vying for a spot in voice recognition APIs, though competition is stiff and Big Tech may prefer to build in-house. Twilio (TWLO) wants in, too.

Unity Software (U) is another wild card. AI glasses need a spatial OS—not just a pixel OS. Unity’s real-time 3D rendering engine is tailor-made for spatial rendering, gaze tracking, gesture recognition, and environmental overlays.

Then there’s Okta (OKTA), which could carve out a niche in identity and security management for AI-driven ambient systems.

Of course, the AI glasses ecosystem is still forming. But the field is full of strong contenders.

(Disclosure: I own GLW.)

As a reminder, Luke just created three proprietary AI indices that help investors identify the best AI stocks to buy today as this megatrend transforms the global economy.

First, there’s the “AI Foundational Five.” These are the five big tech leaders building and hosting the core AI models.

Second, the “AI Builders 15.” These are the 15 top hardware and infrastructure companies powering AI’s rise, building the critical backbone.

Third, the “AI Appliers 15.” These companies are the innovators using AI to transform how we live and work, building apps and tools on top of the infrastructure.

If you’re an Innovation Investor or Early Stage Investor subscriber, these baskets are available to you right now.

To review the specific holdings, click here to login as an Innovation Investor subscriber, and here as an Early Stage Investor subscriber.

To learn more about joining Luke in his flagship Innovation Investor service, click here.

It’s exciting stuff. And the investment opportunities – and wealth potential – are enormous.

Here’s Luke’s bottom line:

The smartphone era was about touchscreens and apps.

The AI era is about ambient intelligence and agents.

And that demands a new form factor.

The iPhone is dead. Long live AI glasses.

At the end of the day, it’s all about the consumer

They’re the workhorse of our economy, driving roughly 70% of U.S. GDP.

They decide whether to open their wallets… which drives corporate sales… which controls earnings… which rules stock prices (eventually)… which determines our portfolio values and investment wealth.

One of the biggest economic stories of the last several years has been the resilience of the U.S. consumer. The consumer-led recession that was supposed to materialize never happened.

Today, while threats to the consumer remain – the risk of higher prices from tariffs… the risk of reduced employment opportunities from AI… lingering elevated interest rates that squeeze family budgets – Main Street America continues to spend (despite various sour sentiment surveys).

Louis Navellier’s favorite economist, Ed Yardeni, unpacked this yesterday:

Trump’s Tariff Turmoil (TTT) continues to weigh on so-called “soft” economic data, such as surveys of consumer and business confidence.

So far, however, it has barely affected the “hard” data, which continue to depict a remarkably resilient economy.

To illustrate, Yardeni cites the revision of Q1’s real GDP estimate. After backing out a 42.6% spike in imports driven by efforts to front run Trump’s tariffs, he concludes:

Excluding these tariff-related effects, the underlying strength of the economy remained intact.

Yardeni also points toward hourly wages, which have risen to record highs in both nominal and real terms:

Aggregate hours worked, reflecting payroll employment and the average weekly hours in private industry, rose to another record high during April.

This, combined with record real hourly wages, is pushing real wages and salaries in personal income to record highs.

Then there’s personal consumption. Yardeni writes that it remains “on a solid uptrend in record-high territory, led by spending on services.”

Now, there are some signs of stress. Yardeni points toward rising delinquency rates on credit card payments, car loans, and tuition loans. But he pivots to a source of spending that could more than make up for those stressors…

Retiring Baby Boomers.

Back to Yardeni:

We still believe that one of the major drivers of consumer spending is retiring Baby Boomers. This age cohort has roughly $80 trillion in net worth, accounting for about half of the household sector’s net worth.

As they retire and no longer earn labor incomes, their personal saving rates will turn negative as they spend more on health care, restaurants, cruises, hotels, light trucks, furniture, and renovating their homes.

Altogether, this is very encouraging – and bullish.

Now, you might think: “Wait – what about the threat of tariff-led inflation still ahead? Might that not derail everything?”

Yardeni just illustrated how this isn’t happening today. But our Federal Reserve remains concerned about this possibility tomorrow – and this is where Louis has a problem.

Let’s jump to Friday’s Growth Investor Weekly Update, where he answered a subscriber question about tariffs and higher prices:

The Federal Reserve may still be worried about the “inflation boogeyman,” but the reality is that the CPI and Producer Price Index (PPI) are now at their lowest levels in four years and five years, respectively…

And falling consumer and wholesale prices are actually creating a more deflationary environment.

Now, an inflation hawk could still push back: “Louis, this data is backward looking. What about looking ahead? Won’t tariffs finally bite?”

That’s where the legendary investor would point toward the dollar:

I am still in the camp that the Trump administration’s 10% baseline tariffs will largely be offset by a stronger U.S. dollar.

Yes, the U.S. dollar lost about 5% of its value against other major currencies following Trump’s so-called “Liberation Day.”

But the fact is the U.S. dollar is finally starting to get its “mojo” back – and a stronger currency should help offset the baseline tariffs.

Below, we look at a chart of the U.S. Dollar Index since December.

After its early-May top, it fell until the last week of May, almost retesting its low from late-April. It’s since been consolidating and is now beginning to climb again.

If this bullish momentum snowballs as Louis anticipates, the dollar could be in for a swift move higher.

Here’s Louis’ bottom line on inflation risk:

The Fed needs to consider the actual inflation data – which shows that prices are cooling off – rather than anticipating an inflation boogeyman that isn’t likely to materialize.

The next FOMC meeting begins two weeks from today. According to the CME Group’s FedWatch Tool, there’s a 98.7% probability that the Fed will not cut rates.

We’ll keep an eye on this and will update you as the odds shift.

Before we wrap up…

We’re about to take offline the free replay of Louis’ Liberation Day 2.0 Summit from last week.

“Liberation Day 2.0” is the name that Louis has given to a series of new moves from President Trump with radical implications for taxes, domestic energy, and technology.

In the free replay, Louis dives into how to position your portfolio to profit from these sweeping changes. According to Louis, Trump’s $10 trillion economic blueprint is going to unleash a tidal wave of capital – an enormous opportunity for investors who get ahead of it.

If you’ve been meaning to watch the free replay, this is last call.

Have a good evening,

Jeff Remsburg

Editor’s Note: Every time the markets have plunged into chaos over the last 25 years – 2008, 2020, 2022, even 2025’s tariff shock – veteran trader Jeff Clark was one of the few to sound the alarm before it happened… and each time, he was right.

Now Jeff is issuing another urgent warning: A fresh wave of market volatility could be just weeks away. But here’s what most investors usually miss – volatility isn’t just risk. It’s also opportunity. And nobody has turned chaos into consistent profits quite like Jeff.

He’s closed over 1,000 winning trades amid turbulent markets using his proprietary “chaos pattern” strategy, a method based on divergence and mean reversion.

Together with TradeSmith, Jeff is debuting a groundbreaking tool that scans the market daily for these chaos patterns. It’s the same system Jeff already uses; but now, for the first time, you’ll be able to access it, too.

He’ll reveal all next week, Wednesday, June 11 at 10 am ET during his Countdown to Chaos event, including 10 real-time opportunities the screener is flagging right now.

Don’t miss this. If Jeff is right again – and history says he probably is – this could be your best shot to profit while others panic. Reserve your seat now.

Today, we’ve invited Jeff to share some insights about what’s building behind the scenes right now to help prepare you for what’s ahead.

If you’re looking for financial advice, seek out someone with wrinkles and gray hair.

Most folks under 50 years old have no idea what’s coming next. They’ve never experienced a rising interest rate environment.

Look at this chart of 30-year interest rates…

Long-term interest rates peaked in 1982, with the 30-year Treasury Bond yielding 14%.

Rates then declined for the next 40 years – hitting as low as 0.4% during the COVID crisis in 2020.

But, look at what has happened in the last three years. The 30-year Treasury yield broke out above a 40-year declining resistance line.

Rising Interest Rates, Soaring Debt, and a Looming Refinancing Crunch: What to Watch

Interest rates entered a new, long term bull market – meaning Treasury Bonds entered a bear market. Rates are 60% higher today than they were in 2022.

They’re 1,100% higher than they were at the bottom in 2020.

In other words, the cost of borrowing money is 11 times greater today than it was five years ago.

Most folks, most companies, and most governments manage their debt by taking out new loans to pay off older debt as it matures. And, for the past 40 years we’ve been able to do this at perpetually lower interest rates. This allowed us to borrow even more money without incurring larger debt payments.

People could buy bigger homes. Companies could pay premium prices to buy out competitors or buy back their own shares. Governments could spend money recklessly without feeling the pinch of fiscal budget restraints.

There were no consequences to borrowing money. Deficits didn’t matter.

Now though, with long-term interest rates recently hitting the highest level in 20 years, it costs more to borrow money. Any maturing debt must be refinanced at higher rates.

Nobody is refinancing their mortgage anymore and taking out a pile of cash to spend on their lavish lifestyles. Companies can’t borrow cheap money to buy back expensive shares.

You may not realize it yet, but the smartphone is on its way out.

That sleek, glowing rectangle that’s been glued to your hand for over a decade—the symbol of the Mobile Internet Era—is heading for obsolescence.

Why? Because we’re entering the Age of Artificial Intelligence—and AI doesn’t want your thumbs or your screen.

It wants your eyes, your ears, and your intent.

And to deliver on that vision, it needs a new device.

The iPhone’s Successor: Smart Glasses

The next dominant tech form factor won’t live in your pocket. It’ll sit on your face.

This isn’t some futuristic prediction—it’s already happening.

Here’s what went down just this week:

• Alphabet (GOOGL) announced a $150 million partnership with Warby Parker to launch AI-powered smart glasses by 2026.
• OpenAI acquired Jony Ive’s AI hardware startup for $6.4 billion. (Ive designed the original iPhone.)
• Ive will lead OpenAI’s hardware efforts to create a new generation of AI-native devices.

Meanwhile, Meta Platforms (META) is pushing its Ray-Ban smart glasses hard—sales tripled this year. It’s also developing Orion, a stealth project for finger-controlled AI eyewear.

Amazon (AMZN) is still shipping Echo Frames, leveraging Alexa as its voice-first interface for ambient computing.

And yes, Apple (AAPL) is reportedly extending Vision Pro into a lightweight, consumer-grade smart glasses format.

This isn’t a product cycle. It’s a platform shift.

And Big Tech knows: the company that replaces the smartphone wins the next 20 years.

Why AI Demands a New Interface

The smartphone ruled the 2010s because it matched the needs of the mobile internet: apps, touchscreens, scrolling, notifications.

But AI isn’t built for that.

AI thrives on real-time interaction, not manual input. It listens. It observes. It acts on your behalf. It’s ambient, proactive, and often invisible.

That’s why AI needs a screenless interface.

Smart glasses—equipped with cameras, microphones, displays, and context-aware AI—are the ideal interface for the ambient computing era.

They don’t require unlocking. They don’t pull you out of your world. They layer intelligence on top of your reality.

This is the leap from tap to presence. From input to interaction.

How to Invest in the AI Glasses Boom

Back in 2007, Apple didn’t just launch the iPhone—it created a $10 trillion mobile ecosystem.

That included:

• App platforms (think Meta and Spotify (SPOT))
• Networking infrastructure (Cisco (CSCO), Broadcom (AVGO), Qualcomm (QCOM))
• Component suppliers (Skyworks (SWKS), Cirrus Logic (CRUS), Corning (GLW))

You didn’t need to invest in Apple alone to win—you could ride the ecosystem.

The same strategy applies to AI glasses. Here are the top companies poised to profit from the shift:

Key AI Glasses Suppliers and Enablers

• Arm Holdings (ARM) and Qualcomm (QCOM): Chipmakers likely to power most AI glasses.
• Nvidia (NVDA): Supplies AI accelerators that will handle on-device and cloud processing.
• Sony Group (SONY): Industry leader in camera sensors, essential for computer vision.
• Lumentum (LITE), STMicroelectronics (STM), Himax Technologies (HIMX): Optical components, LiDAR, and gesture sensors.
• Ambarella (AMBA): Known for computer vision chips critical to spatial computing.
• Corning (GLW): Already supplies Apple—well-positioned for smart glass and optics.
• SoundHound AI (SOUN) and Twilio (TWLO): Voice interfaces and AI communication layers.
• Unity Software (U): Provides real-time 3D rendering engines for AR overlays and spatial OS.
• Okta (OKTA): Identity and security management for AI-native platforms.

The Big Picture

The AI glasses movement is about more than convenience. It’s a new computing paradigm—ambient, hands-free, always-on.

And it’s not science fiction.

With billions flowing into R&D and major players making their move, AI glasses could become the new standard interface for computing—just as smartphones once were.

The companies that help build, power, and scale this ecosystem could lead the next wave of generational tech gains.

Bottom Line

The smartphone changed how we accessed the internet.

AI glasses will change how we experience reality.

And just like last time, the biggest winners may not be the device makers—but the ecosystem builders.

The Mobile Internet Era is ending. The Ambient AI Era is beginning.

The iPhone is dead. Long live AI glasses.

Click here to learn more about some of the exciting investment opportunities we see emerging in this next wave of AI.

_{On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.}

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

Why Jeff Clark says we’re headed lower… the sector that will lead the decline… a dangerous clause in the “Big Beautiful Bill” … watch the dollar and bond yields… Jonathan Rose’s subscribers go six-for-six

The second stage of this bear market will be brutal.

So says veteran trader Jeff Clark.

Now, perhaps your reaction is, “what bear market?”

As I write Monday, the S&P is just 4% below its all-time high set back in February. Plus, this earnings season has been strong; and on Friday, the University of Michigan’s consumer sentiment survey showed sentiment improved in late May.

If anything, it feels like bullish momentum could carry us deep into the summer.

Here’s Jeff explaining what he sees coming next:

This is what bear markets do.

The first rally phase in a bear market is designed to punish bearish traders who’ve held on to short positions for too long and then coax reluctant bulls back into the market.

It makes folks question if we’re even in a bear market at all.

Then, the bear takes another swipe.

To illustrate, Jeff points toward a similar setup during the bear market in 2022.

In the chart below, note how the S&P peaked in early January of that year, then suffered its first decline phase – about 16% in two months.

But then, it delivered a stunning “V” shaped rally where it recovered most of that initial decline. “What bear market?” was likely the reaction from investors.

Back to Jeff:

V-shaped rallies are dangerous. Investors who sold at the bottom regret their decision. They buy back in at higher prices.

And, this time, they vow not to get “bluffed” out of positions on the next decline because apparently, stocks only go up.

During the second decline phase, these investors hold onto their stocks and endure larger losses because they’re convinced they made a mistake selling the first time around.

Jeff believes that even if he’s wrong, the S&P’s technical set-up limits additional gains from here:

If I am wrong, since the market is already in an extended condition – with the various moving averages expanded far away from each other – we’re not going to miss out on a huge move higher.

There’s not much fuel remaining for that sort of a move.

As we’ve highlighted in past Digests, Jeff believes we’re in the early stages of a bear market that won’t bottom until later this fall – potentially, somewhere around 4,125. But at that point, we’ll have what Jeff calls a “generational buying opportunity.”

This sector will be the first to fall

Jeff warns that the financial sector will lead the market lower over the next several weeks.

Behind this call is the Bullish Percent Index for the Financial Sector (BPFINA) that just triggered a new sell signal. I’ll show you the chart in a moment.

First, a bullish percent index shows the percentage of stocks within a sector that are trading in a bullish technical formation. It can range from zero to 100, with anything above 80 indicating overbought conditions. Readings below 30 signal oversold conditions.

Through a bearish lens, sell signals occur when the index turns lower from overbought conditions, which it’s now doing.

Here’s the chart:

Source: StockCharts.com

Here’s Jeff’s bottom line:

It appears the bear is gearing up to take another swipe.

The last time the BPFINA generated a sell signal was in December. Jeff and his subscribers traded that by buying put options on Bank of America (BAC). It resulted in a 50% winner in just two weeks.

In April, when they got a buy signal, they sold uncovered put options on Citigroup (C). They closed that position just five days later with 76% gains.

Congrats to all the Delta Report traders on your wins.

If you’re a subscriber, Jeff just recommended a new bearish trade on Friday. Click here to log in and get the details.

A clause in the “Big Beautiful Bill” to keep your eye on

On Friday, we learned that President Trump’s “One Big Beautiful Bill Act” – recently passed by the House – contains a tax provision that could dent our portfolios.

“Section 899” makes a major change to how foreign investors (both individuals and sovereign entities) are taxed on U.S. investments. It carries potentially big consequences for investors, the dollar, and treasury yields.

Stepping back, for decades, foreign capital has flowed freely into American assets like stocks, real estate, and most importantly, U.S. Treasury bonds – in part due to favorable tax treatment.

Section 899 changes that.

It removes key exemptions and introduces new reporting and withholding rules. Basically, the clause makes it more complicated and costly for foreigners to park money in the U.S.

Higher taxes (up to 20%) and compliance burdens would discourage foreign investments in the U.S. And fewer foreign dollars pushing stock prices higher would be a headwind for the market.

But the far bigger issue is what this clause might mean for governments

Sovereign wealth funds and foreign central banks have long relied on Treasuries and U.S. assets for safety and liquidity.

Section 899 treats them more like any other taxable investor. The policy change undermines the incentive to keep buying U.S. assets – or even to hold the treasuries they currently own.

There are two potential knock-on effects:

1. A weaker dollar

If foreign capital begins to exit or if inflows slow dramatically, demand for U.S. dollars could drop, weakening the greenback.

That’s not just a currency story; it’s an investment and inflation story. A weaker dollar can push up the cost of imports, stoke the reinflation no one wants, and trigger a flight from dollar-denominated assets.

2. Soaring treasury yields

More concerning, this is happening as the U.S. is in the middle of refinancing trillions in debt.

If foreign governments step back from buying treasuries – or worse, start selling them – it will increase supply and reduce demand. That would force our government to offer higher yields to attract new buyers.

But higher yields will mean higher borrowing costs – just as America’s fiscal position is getting worse. Higher yields would also be a headwind for stocks, pressuring valuations and offering competition to stocks.

Now, the benefit of the change is that it could start righting the wrongs of unfair trade partners from past decades.

Here’s TheWall Street Journal to explain that perspective:

[Section 899] is designed to apply only in cases where other countries are deemed to be imposing unfair or discriminatory taxes against U.S. companies…

Countries that could be subject to the tax include those that impose digital-services taxes on tech companies, such as some European Union members and the U.K.

The Trump and Biden administrations have both criticized those taxes as unfairly targeting U.S. companies that dominate the tech industry. 

We’re all for “fairness” – especially with U.S. Big Tech. But it might be a bumpy ride to achieve such fairness with painful, economic collateral damage in our treasuries market.

Bottom line: Section 899 is a big deal. While it might pressure other nations toward better trade behavior, it also risks unraveling decades of dependable foreign investment in the U.S. that could, ultimately, hit our portfolios.

We’ll keep tracking this with you.

Finally, let’s end with a big congratulations to Jonathan Rose’s Earnings Advantage members

Jonathan has been helping his subscribers cash in on a slew of trading profits this earnings season.

If you’re new to the Digest, Jonathan is a veteran trader who earned his stripes at the Chicago Board Options Exchange. He went toe-to-toe with some of the world’s most aggressive and successful moneymakers.

He’s made more than $10 million over the course of his career, profiting from bull markets, bear markets, and everything in between. Most recently, he’s been helping his readers create their own trading fortunes.

Here’s Jonathan:

Over the last few weeks, we went six-for-six on a slew of doubles and triples including a huge 67.9% on gain on Global Ship Lease (GSL) and a stunning 119% on Tutor Perini Corp (TPC).

And those recent wins are just the tip of the iceberg…

Earlier this year, we landed a series of double and triple-digit winners that helped my readers take gains during one of the most volatile markets in history.

Now, here’s the bottom line: My Earnings Advantage readers had the chance to take home at least 26 winners with a 30% average return. All since I started sending out recommendations in 2024.

That’s the power of knowing exactly which trades to make when earnings season rolls around.

Congrats again to all the Earnings Advantage subscribers who have been profiting from these trades.

To learn more about Jonathan’s trading strategy in Earnings Advantage, click here.

And to watch Jonathan’s free daily market analysis, click here to join him for Masters in Trading Live, every day the market is open at 11 a.m. ET.

You can also join him on YouTube to ask him your trading questions. As he points out, “it’s a great way to connect directly with our trading community and make sure you’re getting the insights you need to help build a deeper understanding of the markets.”

We’ll keep you updated on all these stories here in the Digest.

Have a good evening,

Jeff Remsburg

Editor’s Note: As one of the most accomplished traders of our time, my colleague Jeff Clark has spent the past 40 years successfully using chaos and volatility to his advantage.

In fact, he has accurately predicted every volatile market period this century, including…

• the Great Recession of 2008…
• the Covid crash of 2020…
• the bear market in 2022…
• and the tariff scare in 2025.

Volatility in the market is nerve-racking. But what most investors don’t realize is that volatility is the best opportunity to make money as a trader.

This is Jeff’s specialty.

He’s making another prediction that the stock market could be heading for more trouble in the coming weeks and months.

Now, I’ve known and respected Jeff for two decades. That’s why I’ve highlighted his insights for my own readers many times over the years. And I’d like to take the opportunity to do that again today.

Today, Jeff is joining us to share what he’s seeing in the bond markets.

Take it away…

This is the most dangerous chart in the financial markets…

This is a chart of the iShares 20+ Year Treasury Bond Fund (TLT) from about a week ago. TLT is an exchange-traded fund that tracks the action in long-term Treasury Bonds.

And it’s breaking down.

Why is that dangerous?

Because, as bond prices fall, longer-term interest rates rise. And rising rates are bad news for stock prices.

Please understand, the Federal Reserve Board sets the target for short-term Federal Funds interest rates. That’s the rate over which stock market investors have been obsessing. That’s the rate most folks expect the Fed will cut two or three times this year.

Bond investors determine what happens with longer-term interest rates.

Based on the look of the above chart, TLT looks set to fall. That means longer-term rates are set to rise.

TLT peaked in September 2024 near $99 per share. It then declined all the way to $84 in January, where it found support and bounced. That bounce ran out of steam last month. TLT has been falling for six straight weeks.

Now it looks like TLT is set to lose the support of the $84 level. If that happens, we could see a quick drop to the October 2023 low near $78.

That would put long-term interest rates near 5.6%, or even a bit higher. We haven’t seen long term rates that high in 20 years. And it’s happening at a time when the U.S. Treasury has to refinance trillions of dollars in maturing debt, and when the U.S. government is trying to pass a budget that will add trillions more to the deficit.

Stock market investors have ignored this situation, so far. TLT is down 7% over the past six weeks. Yet, the S&P 500 is higher.

Somebody is lying.

Stocks and Treasury bonds typically move in the same direction. So, this sort of divergence is notable.

One of these assets is due for an epic reversal. Either Treasury bonds need to rally to catch up with the action in stocks, or stocks are going to be pulled down to match the action in bonds.

The widely accepted opinion on Wall Street is that bond investors are smarter than stock investors.

We’ll soon find out if that’s true.

Best regards and good trading,

Jeff Clark
Editor, Market Minute

Now, let’s take a look back at what we covered here at Smart Money this week… and what you can look forward to in your next issue.

Smart Money Roundup

Why “Safe” Investing Isn’t Always Safe – and One Risk Worth Taking

May 28, 2025

We humans tend to convert potential safety benefits into performance benefits. A motorcycle rider who is wearing a helmet tends to feel more invincible than a rider who isn’t, potentially leading to the sort of disasters that occur when risk wears the guise of safety. It may surprise you to learn that it’s the same on Wall Street. So, continue reading to find out the best way to diversify into foreign markets – one risk I think that’s worth taking.

This Canadian Company Is Immune to Tariffs – Here’s How Eric Made a Quick 200% Gain on It

May 29, 2025

On one side of the trade war moat, non-tariffed firms are finding enormous success as their competition melts away. On the other side are companies liquifying on a warm day. And this appears to be taking Wall Street by surprise. In this issue, Tom Yeung highlights two company, one in each group. Plus, he shares Eric’s strategy that helped earn subscribers a 200% gain in just seven weeks from the company on the right side.

Google’s AlphaEvolve Is Cracking 300-Year-Old Math Mysteries — and Could Boost Portfolios

May 31, 2025

Google’s new Gemini-powered AlphaEvolve isn’t like the typical AI agents that we’ve talked about. This new system creates and evolves computer programs using what Google calls “evolutionary programming” – essentially natural selection for code. In Saturday’s issue, we dive more into AlphaEvolve and explore why this is a pivotal moment for the AI Revolution. Then, we take a look at how Louis Navellier has been preparing investors for a larger framework at play… a strategy that could deliver life-changing wealth.

3 Certainties for a New American Prosperity… and One Stock Set to Profit

June 1, 2025

Uncertainty is everywhere. Just look at the fact that more than 350 S&P 500 companies cited the word “uncertainty” in their latest earnings calls. But the word also gives many the excuse to be lazy. So, Louis Navellier is here to share the real story: three major positive economic shifts that are already happening with full certainty. Read on to find out how this plan could trigger a generational bull market – and how you can join.

Looking Ahead

I recently sat down to interview Jeff Clark about his secret to handing his readers more than 1,000 winning trades during volatile times…

It’s something he calls the “Chaos Pattern.”

In our conversation, Jeff shares compelling new research that shows how chaos could soon be dominating the markets once again. He’ll reveal what he sees coming… and how he trades the market right now.

Hint: It’s by using a new, powerful stock screener that scans the market for Jeff’s “Chaos Pattern” every single day.

That interview will be available in your next Smart Money.

Stay tuned…

Regards,

Eric Fry
Editor, Smart Money