DAILY ISSUE

Bond Markets Are Warning Us of Potential Troubles – Here’s How You Can Profit

Hello, Reader.

Tom Yeung here with today’s Smart Money.

In Greek mythology, the gates of hell are barred by a fearsome three–headed dog named Cerberus. The beast was meant to be so terrifying that even the sight of it was enough to intimidate the dead from living.

A similar three–headed beast typically guards every developed financial system…

• Stocks
• Bonds
• Short–term debt

These three “heads” have usually been enough to deter any politician, regulator, or world leader from tinkering too much with their country’s financial system.

The image below shows Cerberus guarding our financial system, rendered by ChatGPT.

During President Donald Trump’s first term, a sudden stock market decline was often enough to cause an executive order rollback.

Bond markets have long restrained European leaders from overspending.

And disruptions in short–term debt are often so unforgiving that even America outsources its management to a central bank that’s virtually “untouchable” by the president himself.

The fearsome reputation is warranted. Entire economies have collapsed after getting bitten by one of these three heads. Trouble in one area also often spills over into another.

More recently, the financial market’s canine guardian kept America in check after President Trump announced reciprocal tariffs on “Liberation Day” on April 2. Stocks and short–term debt initially growled at the import taxes, and, as a result, President Trump walked back most of the “Liberation Day” tariffs on April 9 and initiated a 90–day pause. This calmed down both stocks and bonds, sending stocks soaring and bonds back down.

But our three–headed financial guard dog is still not happy.

So, in today’s Smart Money, I’ll explain why that might come down to the most important “head” of all… bonds.

Then, I’ll share how you can financially prepare for the disorder to follow, including a once–in–a–generation investment opportunity that’s part of a trend that’s here to stay… regardless of how angry our financial system’s Cerberus becomes.

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The “Middle Head” Growls Loudest

On Friday, Moody’s became the last of the three major bond–rating agencies to cut America’s sovereign credit rating from the highest triple–A rating.

Their rationale is straightforward: America’s government has a spending problem.

In 2024, the federal government spent $6.8 trillion while collecting just $4.9 trillion in tax revenues – or $1.39 for every dollar collected. The latest tax bill, coming out of a Republican–led Congress, will widen that figure to roughly $1.42.

Now, perhaps tax revenues will be higher than expected. Government spending often causes a surge in economic activity, giving tax collectors a larger base to work with.

But this optimistic math isn’t sneaking past the bond market “guard dog.”

On Monday, 30–year bond yields rose above 5% – a figure we haven’t consistently seen in two decades. Ten–year bonds saw a similar jump to 4.5%, and an ensuing Treasury bond auction on Wednesday saw surprisingly weak demand. Bond traders are spooked, and they’re letting the world know.

Perhaps most worryingly, this “middle head” of the trio is often the best predictor of trouble. We saw bond yields spike in the years leading up to the 2008 financial crisis and the 2016 and 2022 economic slowdowns. These warning flags happened long before trouble appeared in stocks or short–term debt; this week’s spike suggests the government’s latest tax plan puts America down an unsustainable fiscal path of spending far more than it can afford.

Fortunately, investors have options to guard themselves…

How to Profit From Disorder

We believe there are two obvious “safe havens” to ride out America’s unsustainable fiscal deficits. Gold is a compelling investment, as Eric outlined in a recent Smart Money. So are international stocks – especially given the Trump administration’s ongoing tariff regime.

In fact, Eric just booked around 200% gains in less than two months on an international stock that he recommended to his Leverage subscribers in early April. It is a global performance luxury and lifestyle brand that manufactures 100% of its products outside of the U.S.

The relative underperformance of both gold and international stocks has left them at wide discounts.

However, having a good offense is also necessary for getting ahead.

As Eric has noted, America remains at the very forefront of artificial intelligence, which is creating once–in–a–generation investment opportunities.

That is why he has recently released three brand–new special reports that detail how AI – and fast encroaching artificial general intelligence (AGI) – is our best bet to get ahead, regardless of what happens next.

Eric recommends one stock ready to go for investing in AGI… another for investing alongside AGI… and a third for investing in stealth AGI.

You can learn how to access the names of these companies in his brand–new The Road to AGI: Final Warning.

You can also get a free pick by watching his presentation here.

As companies rush to offset tariff costs and America’s unsustainable debt, they’re accelerating AI adoption – pushing us toward AGI faster than anyone expected.

With AGI potentially just 12–24 months away, Eric says this shift is still not priced into markets – creating a rare window for massive gains.

Watch his free The Road to AGI Final Warning now.

Regards,

Market Analyst, InvestorPlace

P.S. While the markets continue to face uncertainties from trade wars and angry bond markets, legendary investor Louis Navellier believes there’s something much bigger happening behind the scenes.

According to Louis, Liberation Day 2.0 could unleash $10 trillion in new stimulus, create millions of high-paying jobs, and spark the next phase of a generational bull market. But only if you know where to look.

Louis’ Stock Grader system helps investors separate the winners from the losers. He has used it for 47 years and uncovered 175 different stocks that soared 1,000% or more.

Now his system is flashing fresh signals on stocks poised to benefit from the Liberation Day 2.0 blueprint, which Louis will explain in his Liberation Day 2.0 Summit on Wednesday, May 28, at 1 p.m. Eastern.

It’s an event you won’t want to miss. Click here now to save your seat.