In old Billy Wigglestick’s Julius Caesar, the apothecary warns Caesar, “Beware the Ides of March.” The Ides are the middle of the month, and as today is May 15th, I thought we should review what’s happening in the markets. Because forewarned is forearmed, as they say, and the markets aren’t all they’re cracked up to be. Caesar, thinking himself damn near immortal, ignored the apothecary and paid for it with his life.

Et tu, Brute? No, you’ll know better. 

Let’s face it: while the institutions and crypto bros have breathed a sigh of relief that The Donald’s Liberation Day was a bust, the rest of us are wondering how long these rallies will last.

To get a clue, let’s look at the main asset classes and indicators.

The 10-Year Yield

The Donald’s failure to lower the UST 10-year yield will have fiscal repercussions. High 10-year Treasury yields will increase federal borrowing costs, with cascading effects on the budget. Meanwhile, defense spending and interest payments now dominate U.S. fiscal priorities.

The consequences of that higher 10-year yield aren’t great.

First, the U.S. must refinance $7.6 trillion in maturing debt over the next year, thanks to Janet Yellen’s gross negligence as U.S. Treasury Secretary under Biden. With the 10-year yield at ~4.5% (up from 2.4% pre-2020), annual interest expenses could rise by $200–$300 billion compared to lower-rate scenarios.

Second, CBO projects net interest will reach $1.8 trillion annually by 2035, consuming 35% of federal revenues. Each 1% rise in rates adds $2.9 trillion to deficits over a decade.

Third, by 2026, interest costs will exceed defense spending, forcing cuts to discretionary programs like infrastructure or education.

Finally, bond markets (the investors) will demand higher yields if deficits persist above 6% of GDP, mirroring the 2022 UK gilts crisis. Back-of-the-envelope calculations say that a 1% GDP deficit increase raises 10-year yields by 17–60 basis points.

The USD

None of this has done any favors for the USD. But that makes the President very happy.

The problem is that something is wrong if you have rising 10-year yields and a falling USD. My guess is that foreigners don’t want USTs regardless of the increased coupon payments that come with a reissuance at higher yields. De-dollarization seems to be getting real.

The Stock Markets

Stock markets have been on a tear lately.

SPX

The S&P 500’s recovery from Trump Liberation Day has been swift and definitive. The question is “Will it last?”

Until it captures another all-time high (ATH), take nothing for granted. In fact, I wouldn’t be surprised if the rally stopped within the week and turned back down.

Nasdaq Composite

Likewise, the Nazzie has recovered well. But I won’t be a true believer until it reaches 20,200.

Russell 2000 (IWM ETF)

The IWM’s recovery hasn’t been as swift or definitive. I wouldn’t be surprised to see it trading below 200 in the coming month.

To sum it up, the major stock markets have staged considerable recoveries, but not enough for me to think this is a new bull market. In fact, this may be the mother of all sucker’s rallies. And funnily enough, Shakespeare once wrote, “All that glisters is not gold.”

Gold

Right now, gold looks scary to most. But I ask you to look at the chart below and tell me it’s bearish.

We haven’t even gotten below the 50-day moving average yet. This chart would still be bullish even if we went down to 2,800 (roughly where the 200-day moving average sits).

This is one of those times when gold bugs must be patient and wait for the equities idiots to shoot their bolt. Once that happens, we’ll continue our ascent above 3,500.

Miners have been hit as well. But I’m still wildly bullish on them.

Silver

Silver is an unmitigated pain-in-the-ass… because Mr. Slammy comes in the NY morning, without drinking his necessary cup of coffee, and hits the sell button… HARD.

Silver will eventually reach $35, and its miners will positively roof it… But only after the upward pressure on its price becomes so terrible that it must go higher. We will wait, hold our positions, and take the pain.

Bitcoin

Again, this is a great recovery, but we haven’t surpassed the ATH yet. Therefore, I’m not a true believer yet.

When BTC hits above $107,000, we’ll be on our way. Until then, BTC is in danger of being in a sucker’s rally.

Wrap Up

It looks bad for metals, but only if you’ve been staring at them day-to-day. I think they’ll be fine once everyone realizes how overcooked our stock markets are. I’m not a believer in the equities and crypto rallies. I may be wrong, but not until they’ve reached new ATHs.

Until then, sit tight on your gold, silver, and miners positions. They still offer an insanely asymmetric payoff that can set you up for life. But that will take patience.

Have a great day!