Michael Jensen @GenesisGains: "Hello everyone The market narrative suddenly..."

Denmark

Hello everyone The market narrative suddenly looks a lot less simple. As long as the Strait of Hormuz remains effectively restricted, energy markets stay under pressure. And that matters far beyond $OIL alone. Roughly 20% of global oil flows through the region, alongside LNG, fertilizers, and key industrial materials. Rising energy prices feed directly into inflation — and bond markets are already reacting. That’s why we continue to see rising global yields, a stronger dollar, and increasing pressure on equities. The problem is straightforward: Higher inflation → higher bond yields → tighter financial conditions → weaker credit growth → slower economic activity. And while AI enthusiasm has successfully masked many of those cracks so far, the divergence is becoming harder to ignore. US 10-year yields pushed back toward 4.6%, while Japanese government bond yields surged to their highest levels since the 1990s. Japan matters enormously here because rising yields and a weakening yen could eventually force Japanese institutions to sell more US Treasuries to defend their currency — adding further pressure to global bond markets. That creates a dangerous feedback loop: Falling bond prices reduce collateral values across the financial system, tightening liquidity conditions even further. Meanwhile, the US consumer is already showing signs of strain. Credit card delinquencies are at their highest levels since 2012, savings rates continue to fall, and borrowing costs for mortgages, auto loans, and consumer credit remain elevated. Freight costs and diesel prices are also climbing again, which usually ends up at the supermarket checkout a few months later. At the same time, markets remain heavily dependent on a very narrow leadership group: AI and energy. Without those sectors, earnings growth across the broader market would look close to flat. That concentration risk is becoming increasingly important, especially with $NVDA (NVIDIA Corporation) now representing over 8% of the $SPX500 ahead of earnings this week. The entire AI trade remains highly sensitive to rates because data centers, hyperscaler expansion, and infrastructure growth are all extremely capital intensive. And energy is now becoming part of that equation. Electricity prices continue to rise faster than inflation itself, while data center demand keeps exploding globally. In some countries, data centers already consume close to 20% of total electricity demand. The geopolitical backdrop also remains highly fragile. Reports suggest another high-level meeting is scheduled in Washington regarding Hormuz and Iran, while tensions continue to escalate across the Gulf region. Markets still seem to assume this situation will eventually resolve itself without major economic consequences. Bond markets are far less optimistic. At the same time, China released weaker-than-expected economic data overnight, including softer retail sales and industrial production. Chinese property prices also continue to decline, weighing further on consumer confidence. So the market now faces multiple pressure points simultaneously: • Rising yields • Sticky inflation risks • Expensive valuations • Geopolitical escalation • Weakening consumers • Increasing leverage inside the AI trade Yet equities continue to behave as if liquidity is still unlimited. That disconnect can persist longer than many expect — but historically, when liquidity tightens while positioning remains extremely leveraged, volatility tends to return very quickly. This week now becomes extremely important. We have: Nvidia earnings FOMC minutes $WMT (Walmart Inc.) earnings Further developments around Hormuz And the first major appearances from potential future Fed leadership figures The market is still partying. But bond markets are no longer dancing.

Not investment advice. The author may have financial interests in the mentioned instruments.