The Great Mattsby
Chartist, Gann Theory, Stocks/Crypto/FX
Innovation stocks no longer move inversely to Treasury yields, and that is the bull case. After the 2022 inflation shock, yields and these stocks have climbed together because yields are being pushed up by stronger real growth, AI capex, fiscal supply and fading recession fears, the same forces that lift disruptors' expected cash flows. The risk is a shift to deficits plus slowing growth, which would bring the old inverse correlation back immediately. x.com x.comÂ
Growth stocks and ARKK, as duration assets, are signaling falling discount rates and cooling inflation by grinding higher off the lows. What matters to them is the long-term discount rate, not the Fed's overnight rate; a hike aims to keep inflation from staying high rather than proving it is rising. If inflation were reaccelerating, these names would be getting crushed. If they roll over hard from here, the signal has failed. x.com x.comÂ
Genomics and innovation biotech stocks are an unusually asymmetric short: the companies are 50-100% overvalued even on an aggressive DCF and burn cash while rates break out. They are benefiting from quarter-end markups that end tomorrow, the chart is overbought, and they broke out on Moderna news that has nothing to do with them. Some will benefit from AI, but that is largely narrative. x.comÂ
ARK Innovation ETF's bull case is drawing whale support, with $4M of bullish options flow rolling July $75 calls up and out to September $82 calls. Bulls got confirmation from a monthly tweezer off support, though hedgers remain active and the low now sits 14% away, so this is not a spot to chase. x.com x.comÂ
ARK Innovation is a poor bet because Cathie Wood's track record is horrible and she did not see AI coming, so there is little reason to believe she can see around the next corner. Investors still put a net $2.5B into the fund in a week. 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
Expensive borrowing makes debt-funded AI projects harder to justify, pressuring AI stocks and the S&P 500. Inflation keeps pressure on rates. If Republicans lose Congress after the midterms, Trump could rely on executive action to speed permits, power projects and existing funding programs, keeping AI investment moving despite expensive money. Tech and risk assets could catch a bid if earnings hold and bond yields settle; Fed cuts remain uncertain. x.comÂ
ARK Innovation ETF is unlikely to ever regain its Covid highs relative to the Nasdaq 100. It just hit a fresh 52-week low against the Nasdaq 100 and is nearing an all-time relative low, while carrying one of the highest ETF expense ratios. Cathie Wood day-trades names in the fund and has badly underperformed the index for years while collecting hundreds of millions in fees. x.comÂ
Debt-funded AI building is making tech stocks vulnerable to a 25-30% pullback as rates and energy prices rise. AI company borrowing reached $466B this year versus $101B a year earlier; weekly default-insurance trading on seven AI names rose from under $2B in July to over $9B in September. Keep cash for lower prices, though 30% earnings growth and a 19x market multiple argue this is not an AI bubble. x.comÂ
AI spending makes Defiance AI Infrastructure the simplest way to own chips, cooling and power. Roundhill Memory alone holds makers for a shortage expected into 2028. VanEck Semiconductor is the broadest chip fund and a core long-term AI holding. Global X Robotics & AI owns factory and hospital automation sellers now. ARK Autonomous Tech covers autonomy but is the most aggressive, volatile pick. Roundhill Neocloud is the list's only rental fund and most direct way to own AI compute demand. x.com … Show more
ARK Innovation ETF has investors paying to lose money: as @jbulltard1 notes, it lost ground even while innovative growth stocks rallied nonstop. A team of roughly 50 people still underperforms the S&P 500, and a random person on the street is probably a better stock picker than analysts relying on Monte Carlo simulations. @jbulltard1 also points out that its chief futurist, Brett Winton, sold Nvidia at around $18 and remains in the role. x.com x.com x.comÂ
Demand for compute remains strong and the AI investment cycle is still running, so the underlying AI opportunity has not changed. But if wars keep inflation high and rates stay higher for longer, even great businesses will see their multiples compressed, damaging the AI trade without necessarily invalidating it. The S&P 500 forward P/E has fallen from 23.2x to 18.7x, a roughly 5.35% earnings yield versus 5.47% on the 20-year Treasury; how long this backdrop lasts is unknowable. x.comÂ
