Reverse Globalism Is Real — and It’s Bad for Stocks
Why capital could be shifting out of the U.S., and how I’m trading it.
Introduction: Reverse globalism is bad for stocks?
Hello Pulsers,
I hope you’ve had a strong trading week.
We’re approaching the halfway mark of the year, and U.S. equities are finally green YTD. But the mood shifted quickly last Friday after hours when Moody’s downgraded U.S. credit, sending equity markets down over 1%.
🔍In This Issue
Here are the key things I am covering in this week’s issue:
• What the U.S. credit downgrade means for markets
• Is capital beginning to leave the U.S.?
• My current trade setups and weekly positioning
Before we go any further, please do not hesitate to share this newsletter with a friend or anyone who may find value in it!
📊On Markets
The most important development last week: Moody’s downgraded U.S. credit, triggering a selloff in equity futures after the market closed on Friday.
This isn’t the first time we’ve seen this. The last U.S. downgrade was in 2011—and surprisingly, bonds outperformed stocks ($SPY) in the aftermath.
Here’s a chart showing what happened back then.
This time may be different, but with rates near 4.5%, I believe assets like $TLT offer good value. Historically, institutional buyers have stepped in once the 10-year yield approaches 5%.
🌍 Is Capital Leaving the U.S.?
Two recent Bank of America charts suggest a potential shift in capital flows—and perhaps even a broader regime shift in markets.
For decades, the U.S. has attracted global capital, thanks to:
A pro-risk tax code
A strong legal and regulatory framework
High rewards for entrepreneurship and investment
But that dynamic could shift. Rising tariffs, de-globalization, and a more protectionist tone in U.S. policy could start pushing capital away from the U.S. over time.
While I don’t believe we’re seeing a long-term trend reversal—yet—the warning signs are there.
Just compare the DAX (Germany) with the S&P 500 this year. The outperformance is notable.
If protectionism becomes persistent, capital will seek more favorable policy environments elsewhere.
💼On Positions
Here’s how I’m positioned this week:
Planning to sell calls against my $SPY position:
I have over 1,000 SPY 0.00%↑ stocks in my portfolio. I will be selling covered calls against them this week at 0.25 delta. This would act as a hedge and an income-producing move in a market where it is very likely we will be range-bound.
Will add TLT 0.00%↑ selectively to my portfolio
Continuing to build strategic options trades based on earnings setups, using my playbook
Make sure to follow along here: https://bit.ly/3KPN2lJ
Last Words
As many of you have seen, most of the charts and analyses I use are from Interactive Brokers. Interactive Brokers provides some of the best commission structures, yields on idle cash, and, more importantly, one of the best tools for active trading. As an active options trader, I can only imagine myself trading with the tools that they have provided.
If you are still deciding, check out their free simulator and everything else they provide to help you get started.
Below are the links to help you get started.
Lastly, if you enjoy my writing and delivery, and if you have not already, make sure to check out my best-selling book on Amazon! It has been a best seller for four years in a row! Please support my work by purchasing my book and leaving me an honest review. It is also the best gift you can give your loved ones this holiday.
Thank you for supporting my work.
Disclaimer
The opinions provided in this newsletter are mine and mine only and do not represent any firm or other affiliation.
You understand that NO content published and discussed during this newsletter constitutes a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person.
You further understand that I will NOT advise you personally concerning the nature, potential, value or suitability of any particular investment, security, portfolio of securities, transaction, investment strategy or other matter.
This presentation and the content provided are for educational purposes only.
Thanks for reading Market Pulse with Ardi