Serenity
AI & Semiconductor Supply-Chain Researcher, Trader
Over a 20-year horizon the S&P 500 should beat long-dated Treasuries even at a 5.3% yield, because adjusted for inflation those bonds return only about 3% a year. Choosing Treasuries over the S&P 500 for that span is lunacy. x.com x.comÂ
US stocks benefit when rates rise with growth because earnings outpace the drag from higher discount rates. Such periods have historically been very bullish, unlike inflation-led rate rises amid slowing growth. Since fall 2025 the 10-year yield rose from 4.1% to 5.1% while nominal GDP growth accelerated to 6.6%, faster than rates. Being long offers better risk/reward; high oil prices due to the war are the remaining inflation pressure, and an end to the war would improve the setup further. x.comÂ
US stocks face a potentially bigger selloff as rising inflation compounds concerns about AI spending. PCE inflation reached a four-month high of 3.6%, increasing pressure on the Fed to raise rates; Alphabet shares fell after disappointing earnings, slowing ad growth and more than $51 billion of quarterly capital investment. x.comÂ
Extreme fear has historically offered strong long-term S&P 500 buying opportunities. After VIX spikes above 30, 35 and 40, average 12-month S&P 500 returns were 23%, 28% and over 30%, respectively; after spikes above 40, returns were positive more than 90% of the time. x.comÂ
Inflation has broken long-dated US Treasuries' safe-haven role. Long-term Treasuries have returned -4.1% annually in the 2020s to date, versus +4.9% in the 1930s. Long bonds look unlikely to do well for at least the rest of this decade. x.com x.com x.com x.comÂ
US large-cap equities look stretched as the S&P 500's 4.7% earnings yield sits below the 5.2% Treasury yield, the first extended stretch since 1999-2000. 2026 EPS estimates imply 32% growth and a 21.2x P/E. The 10-year yield hit 5.28%, its highest since 2007, which pressures long-duration, high-P/E stocks most. Since recent inflation is mostly an oil supply shock, yields could fall once the war with Iran ends and Brent eases. x.com x.comÂ
Bitcoin and the S&P 500 are the simple long-term hold for anyone who can't consistently make high returns trading, because inflation steadily erodes savings. Global money supply grows about 7-8% a year, so real inflation may be well above the official 3-4%. The S&P 500 has returned about 10-11% a year on average, only slightly above that, while Bitcoin has grown much faster over the past 10 years. Sometimes the boring strategy wins. x.comÂ
Far less inflated valuations and significant AI earnings make US equities unlike the dot-com market top. AI/SI spending may still be overexuberant. Rates and yields have returned to historical averages; more oil through the Strait of Hormuz and from OPEC and Russia should lower oil and inflation. The market may not have bottomed yet, but falling yields, steady rates and the midterms passing should let it climb the wall of worry. x.com x.com x.comÂ
A strong S&P 500 is not a strong market: the index sits near highs while 55% of its members are below their 200-day average, the worst breadth in six months. The 10-year Treasury yield is at 5.16% and Japan's 30-year yield is at a record, the bill for the rally that remains open. Trading the leaders makes more sense than owning the average. x.comÂ
US stocks can keep rising even as yields climb, because corporate earnings growth far outpaces inflation. In 1994, bond yields rose 263 basis points while earnings grew 18%; the S&P 500 went flat, then 1995 brought one of the greatest bull runs ever. Today rates are up 100 basis points against 32% earnings growth, and real GDP growth could reach 7%. Earnings and inflation drive stocks and bonds, not the other way around. x.comÂ