The Stock Market Is at All-Time Highs But Something Is Wrong (Here's Why)

Added: 2026-05-22

[00:00:00]Stocks are through the roof. Bitcoin is climbing and everyone is celebrating.

[00:00:05]But I have to show you something because for the first time in modern history, three of the largest bond markets are collapsing simultaneously.

[00:00:14]Now, if you don't know why that's incredibly dangerous, well then watch until the end of this video because right now the S&P 500 is on a generational run. Meanwhile, the bond market is saying that something terrible is on its way. And that means one of them is lying. So, let's have a look at it. The S&P 500 is, as I said, trading at an all-time high right now, trading at $7,45.

[00:00:40]Retail just continues to pour more and more money into this market. And if we look at the Buffett indicator, well, then that tells us something very, very clear. In fact, we have never seen the Buffett indicator this high. It's sitting at 195, which again is way past what he would classify as extreme danger. Now, the Buffett indicator, which again is the blue line you're looking at here, is a valuation metric.

[00:01:05]It essentially, or in short, divides the US stock market cap, so the market cap of the entire stock market by its GDP.

[00:01:14]And right now, it is again severely overvalued. But if we take a look at the S&P 500 fear and greed index, it is actually not as bad as I thought, right?

[00:01:24]And if we zoom out to a 5-year time frame, well then you can see that previously, right, as the S&P 500 was climbing and climbing, well then so was the fear and greed index and it topped in at about 93. So again, that is typically what we see before a massive crash. But again, the fact that it is already correcting itself without the price coming down with it is a phenomenal sign. Now, most people sit at home wondering why is the S&P 500 going up this dramatically anyway? What is causing this entire rally? That's a good question and I have the answer. So, what we're looking at here is essentially or very, very simply explain the S&P 500 with AI and the S&P 500 excluding AI stocks. So, this infographic here is outdated, okay? It's even worse now. And so, with AI stocks, we're talking plus 42%. Right? And without those stocks, well, then we're only talking plus 16%.

[00:02:21]So, the primary driver behind this entire stock market rally is going to be artificial intelligence. But here's the question 99% of people have asked themselves at least once. Why are markets hitting record highs despite the Iran war? Well, one of them is again the AI wave, right? The main driver behind the record-breaking performance of Asian and US markets is the sustained momentum of the AI revolution that is combined with the US being less oil dependent than ever. Okay, so have a look at this hormov dependency by country. So in the in the high-end Japan for example, right, we're talking 72% dependency whereas the United States is only sitting at 2%. And so the closure of the straight of Hermoose has a way larger and more scary impact on a country like Japan compared to the United States. And because investors know this, right?

[00:03:13]Well, then they're more confident in the US market compared to the European, Chinese, Indian, Korean or Japanese market. And you have to remember, gentlemen, price action is rarely a reflection of what happens right now. It is in fact the expectations of what the market may look like or the economy in the future. So in other words, the markets are pricing in a world 12 months from now and chances are people are not expecting this war to continue in a year, right? They are probably pricing in a resolution. And so that's what price action is going to reflect. And there's actual reasoning behind that, right? I've made an entire video covering this. Iran can't afford the war and the US definitely can't either.

[00:03:55]What? That is not the primary point of this video and the dangerous part.

[00:04:00]What's really concerning is the bond market. You see three countries with three different numbers. We have the United States 30-year yield, which is sitting at 5.141%.

[00:04:11]Now, this besides what we saw here in October of 2023, is the highest the US yields have been since 2007. Now the UK specifically right they have a debt to GDP problem which makes this structural and not temporary but Japan is again without a doubt the craziest one sitting at 4%. Sure it's not as crazy uh you know as the US or the UK but we have not seen this high yields in Japan since 1999 because the Bank of Japan held interest rates near zero for years and we're talking two decades. Even if we look at the Japanese 10-year bond yield, I mean, compared to 2021, there's a night and day difference. This is, you know, an incredibly strong uptrend. But here's what's crazy or scary, some might say, about Japan specifically. So, the Japanese institutional investors hold approximately $1.19 trillion in US treasuries alone and over $2.3 trillion in global sovereign debt. And again, that means acting as one of the largest foreign creditors to the global economies. And so when their bond market breaks, which you could argue it is doing right now with the yield sitting at 4%, they are almost without a doubt going to repatriate capital, that means they are going to sell their US treasuries, which again is worth $1.19 trillion at this moment. And what that's going to do is effectively make the US yields go much, much higher. and they're already sitting at 5.1%.

[00:05:42]But why is it a problem that the stock market is going higher as the 30-year yields are simultaneously going higher?

[00:05:49]You see, usually and throughout history, right, these two move in opposite direction. So, the S&P 500, you know, may trend to the upside and that typically means that the US 30-year yield is in fact going to do the opposite and trend to the downside. So, right here within the S&P 500 in 2018, we had a shift in sentiment and that of course meant that the, you know, 30-year yield just sold off completely. We saw it again here in 2021, but but here's the thing. Right now, that entire script is flipped, right? The US 30-year yield is climbing higher day by day, and so is the S&P 500. So, the the actual problem with the correlation, so again, usually, right, these two move in opposite directions, right? are inversely correlated because when stocks sell off, well then money flows into bonds as a safe haven. They offset each other, right? And that's the entire reason the 60 to 40 portfolio worked for about 40 years. But that relationship is breaking right now. So when stocks and bonds start falling together, the textbook hedge stops working, right? And there's no safe haven left in traditional finance. And we saw this uh for a brief moment in time in 2022. For the first time in a generation, both fell together, right? So that's the the the yields and the S&P 500. The 60 to 40 portfolio had its worst year on record.

[00:07:10]Stocks didn't have a hedge and bonds didn't have a buyer and that caused the S&P 500 to go down 27%.

[00:07:18]But since 2022, there is something that has changed significantly. The yields are much higher. The debt loads are much larger and the central banks are essentially boxed in. The inflation is above target, right? There's less room to cut and there's no free lunch left to serve. And so in other words, stocks are pricing in growth while bonds are pricing in stress. And so one side is reading the world wrong. The question is which of these two is it actually? Now one of these is wrong. And historically bonds are smarter, right? So looking at the.com bubble or peak the pregfc right the curve inversion historically bonds have always been smarter than the stock market when it comes to predicting the future. And so when it looks like this and the US 30-year yield is trending higher aggressively and the S&P 500 is doing the same. Well then again historically what you're going to have to trust is the US 30-year yield. But that does not mean it is a guarantee.

[00:08:16]Now ladies and gentlemen, if you want to trade Trafi with zero fees, that's again gold, silver, oil, and a bunch of different stocks, well then Alpha X is your answer, okay? And you can do a lot more than that. You could, for example, come up here into the copy trading feature. And here you'll essentially see the portfolio of a bunch of different traders, right? And you can actively choose to copy one of these traders if you wanted to. So, for example, right, this guy beat the S&P 500 almost twice in 30 days. So, if you want to, well, then now's your chance because you can go ahead and claim up to $50,000 in rewards by simply using the link down below. Now, Bitcoin, right? A lot of you are trading Bitcoin such as myself. I'm a big believer in Bitcoin and I hold a lot or have allocated a big part of my portfolio to Bitcoin. Now, Bitcoin is currently trading as a risk asset, right? And we can see that because equities are just going through the roof and Bitcoin is just trading within a slightly uptrending range far and far away from its all-time high. And so let's say that this thesis is actually right and it's going to end up playing out, meaning equities are just going to come falling. Well, then Bitcoin will likely do the same pretty aggressively in the short term. And that is key, okay? In the short term, not in the long term. But there is one asymmetric setup that nobody seems to think about here.

[00:09:39]Because if we look at the bond market, right, which is right now completely tanking as the yields are just going parabolic. Well, then that means or kind of signals that the traditional financial system is under heavy stress.

[00:09:51]The government, right, they're going to keep spending to manage that stress. And so the debasement trade is now back in action. And that's the Bitcoin thesis, right? Because Bitcoin is literally built for an environment that we're about to see. And that is essentially the Bitcoin thesis, right? That's exactly the environment that Bitcoin was literally built to thrive within. Now again, this is not going to happen next week or next month, right? But it is a massive catalyst for Bitcoin and it has already proven itself to be a hedge against uncertainty with the current Iran war. So when this war initially broke out, right, which was in February of this year, well then Bitcoin was actually one of the assets that held up the absolute best. And so when the traditional safe haven assets start failing, well then again, people are going to have to find an alternative.

[00:10:39]And what's crazy about this is the actual timing. Okay, so recently the Clarity Act passed the Senate Banking Committee. And so again, the bill advanced out of the committee with a vote of 5 to9 and now it moved to the Senate floor. So this clarity act which we're hopefully about to pass right we're certainly making progression here is in fact going to give institutions cover to allocate capital towards Bitcoin and it's doing so while the traditional fixed income world is structurally broken and that is our confluence for Bitcoin right the moment people start having like literally being forced to find an alternative Bitcoin is close to passing the actual clarity act now despite all of the stuff that we're talking about right let's have a look at the S&P 500 three-month volatility index. Again, it remains quite low. And if we have a look at it during previous times, right, you can see that when the market starts tanking, right, like it did here, for example, in 2008 during the financial crisis, you could actually see the volatility index start to move higher and higher, right? And again, right now, it's just as low as it has ever been. And we can confirm this further by looking at the actual volatility S&P 500 index which again can act as a legitimate fear gauge. So what we typically say is when this is trading above 30, we consider that risk off. In other words, uncertainty is high and the risk appetite is severely suppressed, right? And we've already been up there this year when the USI ran war initially broke out and the VIX peaked here at 35.

[00:12:10]Right now we're sitting at, you know, 16.95, right? we're below the threshold of 20 and we are technically still trading within risk on. So, you know, surface level, there's really nothing that signals that this is in fact going to lead to a massive crash. And again, I made an entire video covering the AI bubble and the similarities to the 2000 tech crash. But again, when you just look at it surface level, right, that there's really nothing signaling that this is in fact a definitive outcome because of course it isn't. And I just want to mention that I'm still long Bitcoin, right? and I'm I'm long with a lot of capital and my thesis which is exactly what we're looking at here is still actively playing out. So I believe that we have what we call a cycle peak right that is pretty much in the name.

[00:12:55]It's when we peak within a cycle before again a cycle crash down to form a bottom. Now in between these peaks right what we get is a midcycle high and you can identify that because it is not as aggressive as a cycle peak. So, the midcycle highs typically put in about halfway towards the cycle peak. Then, we form the midcycle bottom. And of course, what comes after is yet another cycle peak. Now, here's the thing about this cycle, right? We've already put in the so-called midcycle high. We have bottomed at the exact same trend line as every other cycle bottom and midcycle bottom. And so, historically, what comes next is again a move towards a new cycle peak, which would be at about $250,000 for Bitcoin. And we can pretty much confirm this by looking at the ISM PMI.

[00:13:44]So every midcycle high that we form is typically formed while the ISM PMI is contracting or at least moving towards it. So the midcycle high that we put in here in 2025 was in fact when the ISM PMI was contracting while the cycle peaks are put in while the ISM PMI is expanding which again it's doing right now. Right? So again we're following that exact same trajectory. And again, I forgot to mention this. Looking at the S&P 500, it is totally a possibility that we're just going to get an even crazier rally after an all-time high break. A lot of people, because it is a psychological level, right? An all-time high is always a psychological level, believe that the S&P 500 is due for a massive sell-off, but it just doesn't really reflect when you look at history, right? So, pretty much every all-time high break within the S&P 500, it in fact continues that rally for a good while. So I'm not saying that because the yields are going higher and the stock market is at the same time it is you know definitely going to cause a massive market crash but I'm putting it out there because the possibility of that happening is genuine and as investors right we need to remain optimistic and we need to look at the flip side as well. We cannot just be perma bullish. Now this is the outcome I'm hoping for for Bitcoin. Okay so the March 2024 high is here and that caused the April 2025 low. Now, Bitcoin initially uh rejected this level here, but then later on just trumped right through it. And so, what I'm watching is the retest of that same level. What a lot of people don't seem to look at is in fact the trend line break, which we're looking at here. Right? If we just zoom out here on Bitcoin, you can see that effectively every time Bitcoin breaks, you know, a massive trend line like this, well, then again, you know, a rally is pretty much imminent and it has just happened throughout history. But right now, we're looking at a critical level because Bitcoin has just rejected the 200 period simple moving average.

[00:15:39]So, what I would really love to see and what would make me incredibly bullish is if we can come down, retest this level, and then right after close above that 200 period simple moving average. Ladies and gentlemen, as always, I appreciate every single one of you. And whenever I make videos like this, I'm not sitting here telling you that this is a definitive outcome. I am showing you this because it is a potential outcome and the fact that this scenario is in fact plausible means that us as investors needs to be prepared for it, right? We need to be able to adapt to whatever the market is showing us. But in order for us to do that, we need to know exactly what to expect. So again, I'm still long Bitcoin and I hope that we continue the rally. I know there's a lot of talk right now about a potential AI bubble and I do believe that it is a genuine possibility due to the similarities when you compare it to the dot crash in the early 2000s. But again, there's also a chance that we can, you know, effectively absorb all of that demand. So again, there is nothing certain here. It's just not how it works within markets. And if you want to check out the video where I cover the AI bubble, well then you can find that on my channel. Now, I hope to see each and every one of you within my free Telegram group. And without further ado, I at least hope to see each and every one of you in my next