Breakevens Did What?!? — Fin Mkts 5/21/26

Added: 2026-05-22

[00:00:06]Hi everybody. It is the evening of Thursday, May 21st, 2026. Our first headline today is break evens did what?

[00:00:15]Despite crude oil still coiling up around $100 a barrel and despite the US 10-year Treasury note yield being stuck above this purple line. More on that later. The market that prices what inflation is expected to be over the next five or 10 years is the five and 10year break even inflation rates. And they fell today. the five-year falling to monthly lows to 2.57%, a rate we haven't seen since April 20th, one month ago. Exactly the same thing in the 10-year break even in inflation rate, falling five basis points to a low not seen since April 22nd.

[00:01:01]So, for now, the TIPS market is frontr running the expectation that crude oil is about to fall, even though the 10-year Treasury note yield is not convinced yet alongside betting markets which still see the straight of horm closed for quite a while. As you can see, uh, with only a 5% chance opening by the end of May, only a 32% chance by the end of June, and a 50/50 chance by the end of July.

[00:01:32]Second headline today, Walmart disappoints.

[00:01:36]Despite the S&P 500 closing slightly positive on the day, going up 17 basis points, Walmart stock fell seven and a third of a percent today. Investors were expecting better news from Walmart.

[00:01:53]The stock heat map was mostly green today besides this big red spot of Walmart and its little brother here, Costco, falling 2% off of fear of the discount consumer defensive area of the market. Granted, Costco may have been getting ahead of itself recently, going to the upside pretty strongly, but another interesting piece of this puzzle is Target actually going up 3% today after falling off of a disappointment of earnings uh yesterday.

[00:02:27]So certainly dayto-day movements of anything can be interpreted as largely noise but also important how you know things were expected to be versus the reality of the situation.

[00:02:42]Third headline today initial jobless claims flat possible bottom. And I say possible bottom because we're not going straight back down. This wasn't a bounce to the upside and then going straight down. This is the weekly uh jobless initial jobless claims. We're back into the range basically that we were going flat since December of 2025.

[00:03:05]The April 25 reading of this was a one-off. It looks like again I believe this is some I heard someone say this was the lowest reading since the 60s.

[00:03:17]One way to interpret this is potential people scrambling for jobs since, you know, you need a bit more money just to buy gas these days. Since the trend is your friend until the end, it looks like we're back to going flat.

[00:03:33]Continued jobless claims, which trails the initial claims by a week behind, um, ticked up today as well, but still lower than it's been for a while. Fourth headline of the day, flower food stock.

[00:03:46]I've been mentioning this stock recently because of recent rebalance of my portfolio. It's been going down and I've been adding more. I increased the position size today to a full 2% position. Now, that hasn't been updated on my website, free website in the link in the description. Not any advice, just me sharing my ideas and what I'm doing with my own money. Anyway, the headline for our show reads, "LO stock insiders saw this coming. same poop and scoop as the dot bubble. So, starting with insiders saw this coming. This is a AI summary from Stocks Heighten. The board reset the dividend to 50 cents a share and declared a quarterly dividend of 12.5 cents a share. In other words, cutting it in half. It was a dollar uh per year before, 99 cents. A part of me is actually surprised that they didn't cut it to zero like they did in the dotcom bust. As you can see here, we had basically 1.2 cent uh dividend per share per quarter up through the end of 2000.

[00:05:00]And then we didn't have any dividends from 2000 until uh well 2001 through the end of 2002. But pay attention to those dates. Our last dividend was at the end of 2000 and this was the bottom of Flower Foods stock price at that time. It had been falling.

[00:05:28]Let's be honest, insiders probably saw the dividend cut coming at that time from peak to trough. uh we actually uh fell by 55%.

[00:05:42]And I'm not sure you can call it a coincidence that the peak of the dot bubble represented here with the S&P 500 in by this blue line, the very peak was at the bottom of the stock price of Flower Foods. It's almost like muscle memory at this point, which markets can have. And notice as the.com bubble burst and the stock market fell, Flower Foods had a heck of a time to the upside. Now, I'm not saying that this will necessarily play out exactly the same way again, but Flower Foods currently is down 77% from its all-time highs with the S&P 500 currently basically at all-time highs.

[00:06:26]Now, valuationwise, you know, this company basically makes around a dollar a share.

[00:06:34]They're the biggest bread maker in the United States. They have a bit of pricing power. An average earnings per share of $1 a year with a price at $7.

[00:06:44]Well, that makes it a PE of seven. For the price to double from here in my mind is very, very easy. Which is why in the community topics again I say what moves did you make today if any? Are you buying anything selling anything? Rob's child increases Flower Foods position to a 2% position. Are you buying anything selling anything? Comment and share with the community below. A second thing that I did today was I I ended up doing it.

[00:07:14]I've been talking about this uh previously. I did buy a straddle on XLE.

[00:07:20]If you don't know what a straddle is, it's two options contracts at the same strike at the same strike price. So, it would be the ones I got were for a $60 strike price. I got it earlier in the day when it was right about 60. You buy a call and a put contract. And so if and if or when it gets out of this range which is the premium both premiums prices added together to the upside and to the downside which actually represents the implied volatility then you make money. You make all all the profit above and below these lines times 100 per contract. Now, being the implied move, the sellers of these contracts want it to expire worthless, and the sellers usually have a lot of power, which is why you usually, if you get to one of these, you get pulled back on in.

[00:08:16]So, my strategy here is to sell those contracts if and when we hit one of these areas. I'm expecting us to get pretty volatile here. I wouldn't be surprised to see a two standard deviation move. And this all has to do with crude oil and the Iran war. All right, crude oil is winding up here with higher lows and lower highs. If this war is going to continue for the next year, you can bet pretty strongly that crude oil is about to go much higher. Uh and if it is going to end and the straight of hormones opens, it's widely expected by everyone and their uncle at this point for crude oil to fall pretty strongly. So I am I am speculating that we get big moves out of XLE. So I bought a options strategy called a straddle today. Oh, and the expiry on on it is June 5th. I think by June 5th we will most definitely at least reach one of these levels if not uh go beyond it.

[00:09:20]Coming up tomorrow we get a very important report. This is a huge part of my thesis that there still is a recession or depression coming. The LEI the leading economic index. I will bring up the chart tomorrow. this leading economic index typically leads that it shows where the coincident economic index will go. It's been falling off of a cliff. Uh not stopping, just falling, falling, falling. If it bottoms, if it goes up, if we start to go the other way in the LEI, it strongly reduces the chances of a recession or depression.

[00:09:57]But for now, it just looks like it's waiting to pull the CI down with it. I explain this in my website link below.

[00:10:04]It's all free and I'll certainly be talking about it either tomorrow or over the weekend. Also coming up, end of the war. When will the straight of hormuz open? The break evens seem to think that they might open tomorrow. The other markets are prepared for something to happen and completely unsure as they should be at this point. Also, when all of this is said and done, you can certainly expect the Trump tariff saga to continue. Thank you for watching, liking, subscribing, sharing, commenting, and all of your support. It is greatly, greatly appreciated.

[00:10:38]Okay, on to more charts. Starting back with the S&P 500. The S&P rose 17 basis points today. We are sitting a stone throw away from all-time highs. And it's not just the semiconductors and tech RSP. The equal weight index is also very close to all-time highs.

[00:10:57]This is all in my mind hopes that the straight of hormuz is indeed opening and that crude oil will be spiking to the downside.

[00:11:06]The rumor of crude oil potentially falling sooner than later was the real driver of markets today. After all, Nvidia after yesterday's earnings ended up closing today down 1 and 3/4%.

[00:11:20]Unlike the 10-year falling one basis point today, the 2-year Treasury note yield actually rose three basis points today, pricing out a potential or even likely Fed rate hike coming in the future. And speaking of the 10-year Treasury note yield falling a basis point today after closing above these three trend lines here I have I want to point out this purple line right now is acting actually as support on the 10 US 10year Treasury note yield and this is a this is a big purple line. So scrolling out we are sitting on top of this line. What it is is the exact top of October 2023, the highest yield in the 10-year Treasury note yield that we've seen for decades at this point, connected to the next very highest high, which was January of 2025.

[00:12:14]So, we broke through that and we're currently sitting right on top of it.

[00:12:19]So, is this new support, are we going higher in the US 10ear Treasury note yield? We might be if crude oil continues to stay high or go higher.

[00:12:30]It seems like most analysts and people including myself assume that crude oil will be falling. The the the crude oil futures curve is screaming that yes, it's going to be going down. But hey, we we can't count our chickens before they hatch. And the tenur the tenure is getting rightfully very nervous here.

[00:12:51]But while we're in this scrolled out view, just to remind everybody, we have a head and shoulders stop on the US 10-year Treasury note yield for what it's worth starting in August of 2022.

[00:13:02]If this ends up playing to the downside, the target on that would be 2.44%.

[00:13:09]The main macro data supporting that potential move is that consumers are unable to save very much money and they've never felt worse in since the 1950s.

[00:13:22]More details on all of my macro views in my free website link below. Moving on, Bitcoin starting to curl up a little bit here. Still almost 40% down from all-time highs, which typically drags the stock market down with it.

[00:13:38]I don't currently have any exposure to Bitcoin. After all, why bother own a cryptocurrency that goes up only.3% when you could have fartcoin, which went up six and a half% today? My favorite memecoin. If everything goes up, if the bubble's just going to keep getting bigger and bigger, if the dollar collapses and just everything just goes to the moon, well, why not have something as stupid as Fartcoin? Again, not yet an official part of the Rob's Child portfolio, but I do have some of this. And subscribe to the channel if you haven't already. You you'll if if you're subscribed and you watch my videos, you know I was talking about it down here when it was at basically it's not all-time bottom, but basically alltime bottom around 15 cents. Anyway, I digress. This is a serious finance show. Well, as serious as you can get with a crystal ball and a dragon named Drakar Copper today.

[00:14:36]sort of remains rangebound between flip-flopping between $6.20 a pound to $6.40 a pound. Silver appearing to consolidate after falling just looks more bearish to me than bullish and gold going flat more than anything currently at 4543.

[00:14:59]Last thing I want to talk about, you know, while American tech companies, the valuations are up in the sky. K Webb, the internet ETF of China with BYU, T-Mu, the Amazon, Facebook, and you know, you name it, of China. We're still we're currently we we closed today on a dollar basis to the lowest close that we have now seen for a very long time.

[00:15:30]Well, let's call it in about 2 years and we're 73 and a half% away from all-time highs.

[00:15:38]So, if this isn't blood in the streets, I don't know what is. I'm going to have to consider upping this in my portfolio now that I'm looking at it. Anyway, it'll sure be nice to be able to focus on anything except for the Iran war.

[00:15:54]It's been the only thing that we've been able to think about now for months at this point. The break evens in the stock market seem to think that maybe this thing is ending sooner than later, but hindsight is a lot clearer than any crystal ball. And that's all from me and my crystal ball. I hope you enjoyed.

[00:16:17]Thank you for watching and see you next time. Rob's child.