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- You're Living Through Three Bull Markets at Once
You're Living Through Three Bull Markets at Once
Crude, gold, and AI names are all bid at once. The old playbook? Cooked.
Fed's hiking again. Brent Crude's hovering near $100. Gold's above $4,300. The S&P is sniffing a record. None of that is supposed to happen together, which means your book probably needs a rebuild.
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Something's off. Brent's hanging around $100. Gold's holding above $4,300. Silver's up about 50% off last fall's lows. The 10-year is parked right around 5%, and the S&P is a whisker from a record, dragged there by maybe seven AI names.
Three bull markets. All at once. In defiance of pretty much every macro textbook gathering dust on your shelf.
This isn't how it's supposed to work. When hard assets rip, duration usually gets taken behind the woodshed and equities follow it out. Instead, watch the money pile into two very different corners: real assets and the tiny sliver of companies that print cash no matter what the cost of capital does. Notice which corner you're already sitting in.
Everything in between? Getting squeezed. And that's where most portfolios live.
It won't last forever. But while it does, what worked in 2023 and 2024 isn't going to cut it.
How We Got Into This Mess
Three shocks, stacked.
Fed Chair Kevin Warsh restarted the hiking cycle with a unanimous move to 3.75%-4.00%, telling you inflation "is too high and has been for too long" and that it's hard to call financial conditions tight. The Fed's own dots don't have 2% inflation back until 2029. Read that again.
Then came the Saudi East-West pipeline attack, which lifted crude in a hurry and stamped a lasting risk premium on Hormuz. Crude has given back some of that this week as Saudi flows recover, but the premium hasn't gone anywhere.
And the AI buildout keeps eating power, copper, and Treasury supply as hyperscalers and sovereigns issue paper to fund compute.
Add it up. Supply squeeze, monetary tightening, and a capex boom all colliding at the same time. You don't get to pick which one wins.
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Why It Doesn't Unwind Quickly
Four reasons this sticks around.
Warsh's priorities are clear. He's optimizing for inflation credibility, not jobs. Futures and prediction markets now lean toward another hike to 4.00%-4.25% at the October 27-28 meeting.
Hormuz risk is structural now. It isn't a headline anymore. South Korea is already planning to cut Middle East crude imports to 50% by 2035. That tells you big importers are hedging for the long haul.
AI capex needs everything. Compute needs power, power needs copper, and both need capital. That pins the long end.
And sovereign issuance isn't going anywhere. Treasury supply and global funding needs are competing directly with private capital for every basis point.
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What Happens Next
Your book has to reflect all three regimes at once.
Long-duration proxies keep bleeding. The utilities the Street loves for "stability." Unprofitable growth. Low-yield REITs. Skip 'em.
Energy and materials estimates are still too low for where commodities actually trade, so you get positive revisions landing into year-end. And the AI mega-caps keep working as long as free cash flow growth outruns the discount rate. For now, it does.
The pain lives in the middle. Mid-cap consumer. Mid-cap industrial. Small-cap financials without a rate story. Trim what you don't want to own into strength.
How To Actually Trade This
Barbell your equity book. Put real assets on one end (gold, silver, energy, copper) and AI cash-flow winners on the other. Cut the middle, where duration and consumer sensitivity both bite you.
Own royalties over miners. Streaming captures the price move without the capex disasters that come with actually breaking ground.
Rent the higher-for-longer bank story. Regional NIMs are widening, not compressing.
Get paid on insurance float. P&C insurers are still earning close to 4% on invested float, and underwriting margins remain fat even as property catastrophe rates come off their highs.
Stay short duration in bonds. The long end has room to back up before it becomes a screaming buy.
Top Picks
Wheaton Precious Metals (NYSE: WPM) |
Antero Resources (NYSE: AR) |
PNC Financial Services (NYSE: PNC) |
Arch Capital Group (NASDAQ: ACGL) |
Setup Scorecard
Entry Zone: Barbell adds on any 3%-5% pullback in real assets (WPM, AR) and 5%-7% pullback in rate-sensitive earners (PNC, ACGL).
Target: 20%-30% over 12 months across the basket, with real assets doing the heavy lifting if Brent holds near $100 and gold stays above $4,300.
Stop Loss: A decisive break in gold below $3,900 or Brent below $85 unwinds the real-asset leg. Cut position size in half.
Catalyst Timeline: October 27-28 FOMC (markets lean toward another 25bp hike), Q3 bank earnings in mid-October, and the winter heating draw for gas.
Confidence Level: High on the barbell structure. Medium on the individual names, because regime shocks (Iran deal, warm winter, CRE crack) can hit any single leg.
Bottom Line
Big takeaway: The trades that worked last cycle won't bail you out this one.
What it means: With commodities, rates, and AI all bid at once, the middle of the market is where you get hurt, not paid.
How to play it: Barbell your book, tilt toward real assets and rate-sensitive earners, and cut anything in your portfolio that needs low rates or cheap oil to work.
That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.
Best Regards,
—Noah Zelvis
Macro Notes