The Financial Event of a Generation Is Here

Hey There,

Interest rates are moving up again.

The 10-year yield just jumped from 3.6% to 4% in less than a month.

Rising interest rates can have massive implications that no investor should ignore.

Let's rewind to the 1970s:

• Interest rates surged between 1972 and 1975
• Result? One of the largest stock market crashes in the last 100 years

Today's Worry: Is This Just the Beginning?

The recent jump might look small, but there's a bigger concern:

Could this be the start of a resumption of the 2022 interest rate surge?

When we overlay the 1970s chart on today's rates, the similarities are unsettling.

The Catalyst: Learning from October 1973

In 1973, the Yom Kippur War triggered a massive interest rate surge.

Here's what happened:

1. Egypt and Syria attacked Israel
2. Arab Oil Embargo followed
3. Oil prices 3x almost instantly
4. Result: A wave of inflation and rising interest rates

Today's Oil Situation: A Different Story

Unlike 1973, oil prices in October 2024 are lower than a year ago.

However, the current Middle East tensions are causing concern:

• The recent conflict escalation led to a small oil price jump
• Interest rates mirrored this movement

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At Bravos Research, we've been helping our clients capitalize on these market trends.

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2024 vs 2022: Spot the Difference

Let's compare the current situation to the 2022 oil shock:

• 2022: Oil prices were rising for 3 months before the Ukraine invasion
• Today: Oil prices are trending lower

We can also use moving averages to stay objective on the momentum.

In 2022, all moving averages were pointing up, indicating an uptrend.

Today, all moving averages are still pointing down, indicating a downtrend.

This bearish technical setup is why we have an ongoing short trade on oil on our website here.

Inflation: Another Key Difference

Another key different between 2021 and today is inflation.

Unlike 2021, inflation in the US is trending down sharply.

Today’s falling inflation is also starkly different to the 1970s, when inflation rose in 3 progressive waves.

This inflationary wave caused interest rates to rise with it.

Today, inflation continues to decline rapidly.

Given that interest rates tend to follow inflation over time, our expectation is that interest rates will trend lower, not higher (assuming no major Middle East conflict).

What This Means for the Stock Market

Lower interest rates are typically positive for stocks, just as rising rates are negative.

The S&P 500's recent action supports the negative correlation between interest rates and stocks:

• Price broke out of a 3-month consolidation
• All moving averages pointing upwards
• Clean, well-defined price channel

This suggests the S&P 500 remains in a strong and healthy uptrend.

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At Bravos Research, we've made some incredible trades throughout this bull market:

• Average profit in 2024 = 17.37%
• Average loss in 2024 = 3.78%

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