Why Have Bond Yields Risen To Their Highest Level Since 2004?

[0:00] Dano: It's Friday, September 25th, 2026, and it's time to go On The Markets. My name is Dano Weir from Fermata Advisors and our private wealth arm, Sonoma Wealth, joined shortly by our managing principal, Daren Blonski, asking why are bond yields rising to their highest level since 2004? Daren and I will look at those numbers as well as why AI competitors are all all at the same time are asking for a slowdown all of a sudden. China came to D. C. This week. What could that mean for the bond market, speaking of bonds, and why the key with the bond market, and really any market, is not where it goes, but how fast. Is this a structural decline under the hood or just the September that Daren predicted might be coming all along? We're going to end all that On The Markets.

[0:52] Announcer: The stock market, the economy. Your money what's the latest and what could be next find out now with Fermata On The Markets straightforward financial market updates for the brands of Fermata Advisors Sonoma Wealth Advisors Fermata 401k and Fermata tax On The Markets starts now.

[1:23] Dano: Daren Blonski, our managing principal, told me about three weeks ago, he said, Dan, I've been doing this show since 2020 on our YouTube channel. I want you to dig back and find out how many episodes we've done. And Daren, this is episode 286. And 286 is the one where we first use an AI thumbnail. There you go. You and me, we're AI now.

[1:46] Daren: Wow, dude, it only took us 200 shows to figure out how to get on the... Cool YouTube thumbnail trend. For real, Dan, like these are pretty silly looking. I think your picture actually looks more like you than my picture. But it's interesting, like for some reason, the algo loves these face thumbnails. So here we are.

[2:10] Dano: I feel like I'm in like mama's family or something, or I'm in some kind of sitcom. Like, can you believe this guy, the face I'm making? I don't know that I ever make that face. I don't know that you make this face either but Here we go. We're giving it a shot. We're always on the cutting edge here at Sonoma Wealth Advisors. Chris Sipes on assignment this week, and we are looking at bond yields rising to their highest level since 2004. And let's start with the meme. I love this meme because I love this scene. Do you know this movie, Daren? Do you know the Dark Knight Rises?

[2:42] Daren: You know, Dan, I don't, but I figured you'd love it and you'd have the whole backstory on it.

[2:47] Dano: So here it is. This is an amazing scene in the third Christopher Nolan Batman film. The Dark Knight Rises. You've got on the left, you've got Daggett, who is played by Ben Mendelsohn. He is the money guy who has been fueling a revolution and a terror campaign in Gotham City to try to take over Wayne Enterprises. And his money has been funding the thug on the right, who is Bane. And Bane's been doing all of his dirty work with Daggett's money. And so Daggett wants to make a new decision and wants to change the plan. And because he's been paying for everything, he looks at...

[3:22] Dano: Bane he says my money's been paying for all this i'm in charge here and Bane who's frame mogging him here Daren what's that called frame mogging yeah it means he's huge he's huge compared to the little guy is that like some of the is that like part of the slang vocab going out there with the teenies these days or what it is yeah i have seen the blogging going around we did that last week Bane gently touches the money guy's neck and says do you feel in charge because he's really not so there's a law there's a there's a law of the land there's a law of the jungle so that's basically what what this meme is saying for this week which is that Scott Besant declared i am the House and he's gonna make changes and try to manipulate the bond market and the bond market says do you feel like the House what does that really mean from a from a what does that mean from a market perspective what are they saying here what happened you know effectively you've got Scott Besant stepping in and buying on the long end of the curve to try to effectively do some degree of yield curve control.

[4:23] Daren: Everyone's like afraid to call it true yield curve control, but the reality, I guess, if you're tweaking with any part of the curve, what I mean by curve, the longer dated yields versus the shorter dated yield bonds, and the government will do different things to tweak with it. And in theory, you don't want the long end going up too quickly. The cost, I heard yesterday that the cost of the US debt per year, just to service our debt as a country is $11 trillion a year. Measly $11 trillion. So obviously, they don't want the interest rates to be high because that makes debt more expensive. And there's a lot of things that comes with that, which can slow down the economy. Certainly, we've seen that in the housing market. If you thought the dead dog was dead, no offense to dog lovers out there, what we saw in the bond market in the 10-year yields this week, wow.

[5:18] Daren: Well, Besant steps in a couple weeks ago and says, oh, we're just going to buy more long-dated curve support. Supposedly to bail out Japan. Lots of reasons for that. You can go back in some episodes or we can go into it further. But bottom line is, Besant thought he was able to control that long end in the market as saying, ha, fat chance. And so the bond market is this grotesque-looking human mod-dogging. Besant on the left.

[5:46] Dano: We'll get into that a little bit more in the technicals, but we always like to start with a meme. Before we get into the bond details, a couple of headlines from the week, which were noteworthy. You had the heads of OpenAI And Anthropic, Sam Altman and Dario, sitting with the UN Security Council this week, calling for constraints on AI and highlighting serious security risks, with Altman even saying that it was a risk to humanity. And then Elon separately.

[6:22] Dano: Parroted what Dario said on Dropik that slowing down AI might be a good thing. Very interesting to see that coming at this time, Daren, because there's a lot of things you could read into basically the luminaries of AI saying we need to slow ourselves down when they were the ones in the first place to speed it up. So curious what your take was on that this week.

[6:45] Daren: Yeah, I mean, there's a lot of conspiracy going around these. They came out last week, I believe it was, and this is where it was a big deal at the end of last week and then kind of filtered through the roads or through the airwaves this week. You know, some are saying that they're saying we need to slow down. So if they create regulation, they can create regulation that cements their position as the top research labs. Others are saying that, you know, China is releasing these models like Kimmy that go out there and are next to free if you have the compute to run. And Anthropic and open AI are like, oh man, they're going to eat our lunch and our model.

[7:22] Daren: So, you know, if we can create some regulation now to protect our lead here in the United States, so they can't just dump these models onto us that destroy our business model, it's really hard to tell why they're saying what they're saying. There's also this whole antitrust dance going on, right? Between all the research labs where they're creating these AI models and they're not supposed to be talking together. Colluding together because that could be grounds for antitrust. Well, Trump administration, let's be real, is not likely to come after you for antitrust. Of all the administrations we've had recently, that probably wouldn't be on my highest concerns list. So at the end of the day, why are they calling for this? Are we truly worried about safety?

[8:17] Daren: Maybe maybe i i don't really know what i have noticed though more and more as of late it was like the first they call it the hugging face breach where one of these models jumped out of its sandbox it's a big deal and then now we're finding out that they're just jumping out all the time and i i think it's the the bigger risk is they get out and they do things they don't really know what they're doing because their training isn't aligned with humankind and that that becomes the problem right they tell the models don't get out but they also have telemodels don't do this and i think the real the real question is how do we create alignment between the needs of humans and the needs of AI and how does that align or not align that's the i think where the the problems lie and where the opportunity lies.

[9:10] Dano: And if you had to draw some more narratives, because I always love to, you can always tell sort of like in a movie when you don't know, I always, you know, me, always a movie or movie, the NFL. I have two analogies. You can kind of see elements happening in a mystery, mystery movie. And you're like, that's a clue, but you don't know the full story yet. This feels like one of those moments. So if you were trying to extrapolate, you know, perhaps there truly was just a shocking revelation technically behind the scenes. And now they're so scared that they're. Asking the UN to seriously try to put the clamps on this. But if that were true to me, they would be asking to stop. And they're not asking to stop. They said, oh, slow it down.

[9:50] Dano: Right. Another thing to consider is, you know, these are two companies that presumably we're going to IPO either this year or soon. And now some of those talks have been delayed, perhaps because they don't feel there's enough liquidity in the market to get what they feel they're worth. Maybe that's it. Who knows? But something about this just doesn't.

[10:10] Daren: The timing is highly suspect. It's just there's no way for it not to be.

[10:16] Dano: Yeah.

[10:17] Daren: And it is to be, you know. Both the labs came in and Elon Musk has been for years, literally at this point, saying slow down and calling for slowing down. But nobody really knows if they're really just trying to get the regulators in so that they can control the market, which is very, very possible, right? Because powerful companies use the government to create a moat around their business. So I think there has to be some of that going on. It's just hard to know. It's hard not to. Make it too speculative and we want to be careful there of not creating speculation.

[10:53] Daren: But it is suspect.

[10:54] Dano: Yeah. No speculation. Just good for thought if you're seeing those headlines this week and wondering what could that mean? Speaking of a lead, I dug this up this week because this is showing, it's a chart showing data center capacity by country. And I was shocked to see the United States currently Thank you. Has more data center capacity than the next 14 countries combined, including China, India, Malaysia, Australia, Japan, United Kingdom, Canada, Germany, France, South Korea, Indonesia, Ireland, Netherlands, and Brazil. That's currently.

[11:31] Dano: And the projected pipeline addition to data center capacity is going to more than double what they already have. So I just thought that was interesting to find this week. Because there's been such talk of the threat of China's AI. And when you look at the data, I mean, and there's also been such fear about data center additions to the United States. Data centers have been here for a long time. I've worked in one. So if you're worried about data centers, you need to go back to 2002 because they've been here for a while.

[12:07] Daren: Yeah, but I think it's about scale, right? Like the, you know, there's lots of things that... And I think the concern is that they're becoming too scaled. There's too many of them. And then the draws that they're creating to impacts directly, right? If a power company produces power and can sell power for more money to a data center versus what a household can afford to buy it for, then you have a problem in affordability because then households can't afford to live, right? And that becomes a political issue. So I'd say that's issue number one.

[12:44] Daren: With all this power draw coming off data centers, it does present a livability issue for all of us and everyone next door. There is lots of talk about the pollution and the noise, and I think those are all factors as well. But I tend to see things through an economic lens. And my sense is, as long as our capitalist world can make money, They're more than willing to pollute. So I think those issues will become secondary issues in this.

[13:19] Daren: But I think the big one is the data draw. And I think eventually what we'll see is that data centers and their power draw and human consumption and power will be at odds. I think that's going to be the next alignment piece. Like how do you, if data, big data needs to gobble up every bit of energy it can, and it's in juxtaposition to humans needing energy to live. Like we become the push. I think that will be an interesting moment to watch in history when it unfolds because it will at some point, I suspect.

[13:55] Daren: So the power issue, I think, is an issue with data centers and how it impacts each of us. The other piece is just a lot of what's being driven and driving this market. And I'm going to show you this in charts in boldface type today. These AI stocks, the Meg 7, are the ones driving the market up. Underneath the hood, the market doesn't look wonderful. It actually looks like we've had quite the pullback in September. Underneath the hood, when we go below those Meg 7 in the S&P 500. And so the question really is, is when does the music stop?

[14:32] Daren: We're in musical chairs right now. And we saw a little bit of that happening in Arizona with Oracle this week. But at some point, like... We don't need all the data centers. We don't need all this. And if that stops, then everything stops. It's also helping drive rates. So on our headline, we say, what's driving rates? Well, if data centers are grabbing up every last bit of debt out there to build themselves out, it means that the rates have to go up to induce buyers to buy them. That's problematic long term. And so when these data centers start to fall apart for whatever reason, that's where we might.

[15:18] Daren: See issues start to arise with the overall stock market. Secondly, as interest rates go up, people invested in stocks who are maybe less comfortable with stock volatility and want a more consistent return go, well, shoot, I can make almost 4% in tips now, or over 4%, actually. I can make 5% in the 10-year. Am I really going to keep all my money in the stock market if I can make a pretty good five-year? A pretty good interest rate return. So then what happens is people start pulling their money out of stocks, moving into bonds.

[15:53] Daren: It's not that big a deal until the institutions start doing it. When the institutions start doing it, then you start to really see a tide change in the market. Part of the issue, though, is that the institutions can't start buying all these nice new expensive or these high-yielding bonds and sell off their old bonds because that'll put a loss on their balance sheet, which could cascade. So A lot of the institutions, the insurance companies, those companies that have to by law keep or by their rules put certain things on their balance sheet, not certain things on their balance sheet.

[16:29] Daren: We'll see how that foments here as they start to want to shift to higher yielding bonds in their portfolios.

[16:36] Dano: I'd think next 4th of July we should do an entire show with just nothing but overweight United States bar charts. Where it's just the United. Here's the defense spending. Here's the rest of the world. Here's the concentration of millionaires. Here's the rest of the world. We'll get to Trump and the Chinese visit this week. But first, I wanted to ask you, Darren, speaking of the mag seven and tech stocks, there is confirmation pending SEC approval that the Nasdaq will be changing to a 23 hour trading.

[17:13] Dano: Window, with a new overnight session starting potentially in December. Your thoughts on that?

[17:20] Daren: Well, I'm pretty excited to be able to, sleep between 3am and 4am or what is it going to be? Yeah.

[17:27] Dano: The new, yeah. 3am. Something like that.

[17:34] Daren: 3am to, okay. So European investors, the new window of 9pm to 4am. Interesting. You know, I've heard about this for years now they've been talking about doing this i think they would love for that because that's going to create more transactions on the balance sheet right and if they have more yeah or they're basically if you have longer more time you can actually be trading the Markets then all the brokers make more money in the trading volume right we've seen this in the bitcoin Markets and the crypto Markets they're 24 hour they've been going you for years.

[18:13] Daren: So those of us that have paid attention to those Markets are very used to it, going to bed and waking up and watching price move substantially. The other thing is, I don't think it's that big of a deal. And I actually kind of like it. And here's why. I personally always find it very frustrating that the market closes and then it gaps higher. And I'll show you what that looks like on a chart. So something happens overnight that changes the market one way or the other. If you're a big institution and you can trade off book, meaning you can do a dark pool trade, you can do a trade that's not publicly available, either internally, externally, you can take advantage of moves.

[18:56] Daren: But the retail investor can't. So if there's something that triggers a trade in the middle of the night, I can set all kinds of things to trigger. But on the retail side, unless I can trade in after hours on one of the big broker. Books, I can't make the transaction. So I think in some ways it really levels the playing field, but I also think it's a money grab by the big brokers.

[19:19] Dano: This week, President Xi visiting DC, a visit with President Trump, not much discussed. They were, by many accounts, punted a lot of the tensions and the bullet points that they have between the two of them. But I found it interesting. Kind of side by line from earlier in the month that Chinese banks. Are considering purchasing more treasuries. So I just find it interesting that there's a Chinese visit right about the time that there's a bond activity going on. So kind of interesting.

[19:58] Daren: Well, that's one theory that was proposed. Is it the reason that the various heads of these research model institutions, OpenAI, Anthropic, XAI, We're all kind of saying stuff like, hey, we got to slow down. These models are going to take over. That was on the heels of this visit between Commander Xi and President Trump. And, you know, the idea was to talk about how do we make this work? I think there's a lot of fear amongst the United States research labs that are doing the AI work that these very cheap models like Kimmy. Are going to just absolutely erode their business.

[20:42] Daren: So they were, I think it was a play to kind of get Trump. I, one theory, right? This is a theory. One theory is that they were trying to get Trump to lean into Xi and say, hey, you got to create some regulation around this. And then Trump had this really weird, like truth post. I don't know if you noticed it or saw it. He said something like, yeah, both me and Xi agree. These are super AIs or something just stupid. And it was like, what is he even talking about? And like, of all things you could be talking about in this moment, the two most powerful countries in the world literally, you know, could potentially very much threaten human existence with AI labs, and you're just going to name it super AI.

[21:27] Daren: And like, it's just kind of weird. Sometimes things that come out of his mouth, you just kind of just look at it. And I'm not a Trump hater, and I'm not an either side hater. Let me just be really clear, because I got some... Garbage on the chats recently about you know hating one side or the other and i don't like i just call spades spades like i don't really care the politics are the politics what i care about the Markets and they influence the Markets and and i think all parties are bad but whatever that's not my that the point isn't to to share our politics the point is just to call spade spade and how is it impacting your money in the Markets?

[22:04] Daren: And, I don't know. I think there could have been a little bit more meat. It looked like, in everything I saw coming out of this meeting, it was just pompous, and it was all presentation, and was basically nothing burger. But who knows? Because we weren't in the middle of the meeting.

[22:23] Dano: This is from the AP. The State Department is ordering diplomats in its International Organizations Bureau to use the term superintelligence instead of artificial intelligence. In all communications following President Donald Trump's attempt to rebrand the technology in his address to the U. N. General Assembly this week. So he's saying basically stop calling it AI and he wants to start calling it SI.

[22:46] Daren: Well, like, who cares, dude? Ok, I don't know.

[22:52] Dano: I actually like that. We're going to get to the bond Markets in a moment. Just so you know, as there is a lot happening with it this week. If you're looking for a deep dive on how bonds actually work down to the very deepest kernel, down to the very start, check out our sister podcast, It's All Money. Myself and Chris Sipes, not even knowing this was going to happen, but it sure is timely. We did a deep dive on exactly how bonds work. It's here on the YouTube channel. You can also find it linked up at SonomaWealth. Com. Darren is going to get to it right now. What is happening on the charts?

[23:31] Daren: Well, on the headlines, it looks great. The Markets look great. So what you're looking at is the SPY, S&P 500. This is the largest 500 US-based stocks. And we generally, when we say the market, this is what we mean by the market. There's different indexes you could look at. This is SPY. What I use for the most part is my barometer of how the market looks. These are all the technical levels I'm looking at and watching. And I think if just as a headline, you look at this, look at the S&P, you have to say bullish, right? We've got this bull, upper bull flag building here. You've got us hanging out at the top end of that bull flag, looking like we're getting closer and closer to a breakout.

[24:19] Daren: We did hit this resistance level here right around 775 and then it sold off. And then came down into this support level here. That's a 20-day moving average. It's kind of like the first line of defense. If it goes below that, then you have to start asking, okay, now where are we headed and what's going on? We found support. On Thursday there, bounced up really nicely. And that looks pretty healthy. I wouldn't want to bet against this at this point, finding the support there. This is the four-hour charts. This breaks the trading day into two chunks. So to your question earlier, Dan, like, hey, how's all this 24-7 and trading going to impact things? Well, it's going to make my chart reading much harder.

[25:07] Daren: That's the first thing. And there's different... Things we look for at different times. One of the things that's really important to watch is what was the weekly close on the market, right? So this is looking at the candlestick. This is the body of the candle. These are the wicks of the candle. And we're looking at that and this is the weekly close and the close looks strong. It went up there. We did it during the week, go up high and kind of get rejected. But again, on the weekly close, you wouldn't want to bet against that because you got that 20 period moving average still below. Where the market's at, we're in the upper bounds of that bull flag. So that all looks pretty good on the S&P. And then we look at the Qs, and it looks even better. I mean, look at this closeout on the weekly chart. We closed the market at an all-time high.

[25:55] Daren: We're at the market, not the highest we've ever been, but the weekly close closed higher than it's ever closed. Media will not report that to you, folks. You're not going to hear about that. You're all going to hear about the bond market and how everything's breaking, yada, yada, yada. Well, in fairness, what's driving this market is very much these big dogs when we look at the S&P. So this is another way to look at the S&P 500, NVIDIA, Apple, Microsoft, Google, huge chunks of the market. I mean, Apple and NVIDIA are literally bigger than all these other sectors, right? Like look at the utility sector. NVIDIA is like three times the size of the entire utility sector, which by the way, when interest rates go up, utilities get slaughtered.

[26:46] Daren: And when utilities go up, that usually means that we're looking at risk off. The fact that utilities are getting slaughtered right now, and we're seeing these big dogs going up and interest rates going up. In theory, on the headline, you'd say, oh, this is a risk on market. Let's go risk on. Well, not so fast. That's not the rest of the story. Like Paul Harvey, I love that guy, man. I wish I could have met that guy before he passed away. But Paul Harvey was this old radio show host that would always come on at the noon hour. See, this is Paul Harvey with the rest of the story. And he'd always have some random obtuse-like thing like, let me tell you the story of where the hamburger came from.

[27:30] Daren: It was always just like this Fancy, interesting fact, but I loved it as a kid. And the rest of the story, as our buddy Paul Harvey would say, is look at RSP. This is the equally weighted index. So instead of giving the bigger stocks more credit, which then can drive that index higher, RSP gives every box the same size. Equal player. This is the Communist index of the S&P 500. So everybody gets the same size regardless of the impact you have on the economy. And what this is showing us is, oh, look at that. We lost on the weekly for the second time. We lost that 20-period moving average. That you must look at and say, oh, interesting. Risk on might be switching to risk off.

[28:21] Daren: Now, like you suggested when we started the show, Dan, September's a bad month, and we kind of expected this. What's interesting is the headline indexes are still being driven by the mag seven, but a lot of the other stocks are selling off and they're showing the pain of interest rates moving as fast as they have. Well, you've got that showing up in the RSP. So, and then we look at IWM, which is the Russell 2000, the smaller stocks. We know how our third weekly close below that 20 period moving average. Last time we saw that was back in. March of this year where we closed a couple times below. So you got to be really careful though because we've now closed a couple times below.

[29:10] Daren: That doesn't mean look out below. Market's going to die. It might be the correction. It might be that moment in time where the market's going to bottom out and rip your face off higher. And that's what you saw in March. World was going to end and then it wasn't. We went to war with Iran, World War III. Everyone's going to drop nukes on each other. Oh, hark, world's over. And then all of a sudden the market rips higher. This is why you don't get your emotions involved with the Markets. What is interesting on this particular chart on IWM, you can see, look at that double top on a weekly chart. And we broke that neckline right there.

[29:52] Daren: So if I'm looking at this just from analyzing a double top, and I say, okay, well, this is give or take how far I would expect this correction to go, because that's all I would say this is at this point. I wouldn't say, you know, it's a classic sell-off in September at this point. You know, maybe we drop down to 273, another 10 points or so on the IWM. I wouldn't get myself all worked up over this one. Now, we are in a midterm election year. We've talked a lot about this on this channel. The midterm election year in September through parts of October is volatile.

[30:31] Daren: But guess what happens? The next coming few weeks over, let's say, let's see, what was the time frame? The next like three weeks historically and traditionally are some of the best times in the market that we see over the entirety of the four-year presidential cycle. This could bounce really quick and really fast. I would not freak out at this point. It's really interesting that you have SPY up, Q up, the small guys are down, Europe kind of flat, or sorry, emerging flat, mostly driven by China, and then Europe looking okay, holding on to those 20-period moving averages.

[31:23] Daren: It's not dire straits, folks. The news is just trying to get your eyeballs. That's it. What we do see, though, is our... RSP to SPY, this is going down. When this ratio goes down, that tells you that underneath the hood, the stocks are selling off. When we look at our IWM SPY ratio, we see stocks going down. So that tells you that there's weakness under the hood. When we look at all of the S&P 500 50-day average, so all the stocks and how many of them are above their 50-day average, that's going lower. We're looking at direction here, not so much what the number. There's nothing magical about the number.

[32:02] Daren: It's just directional. And the speed at which it does is important. And then when we look at stocks above their 200-day moving average, that's going down. There's weakness under the hood. Does it capitulate and become something more significant where we see something greater or a more serious correction? Gosh, it's really hard to believe that walking into an election. If you believe the politicians have any power or ability to stimulate the economy. Fed raised rates. I don't think the administration wanted the feds to raise rates.

[32:38] Daren: But given what we're seeing with interest rates, interest rates seem to be screaming rates are going higher to us right now. But the tips aren't moving as much as interest rates are. And that tells you that it's probably more a short-term inflation thing we're seeing. It'll probably pull and adjust here. We look at the VIX, which is how complacent those who trade. The S&P 500 are, they're complacent right now. So that's telling you that there's no massive concerns. You can see back in March when those trading the futures of the S&P were not complacent. That's what it looks like when they're not. So when Markets sell off, this chart tends to bounce up really quick.

[33:15] Daren: And this is looking 30 days out. So in theory, we're not seeing anything other than a correction. It is interesting, though, the move index, which is the complacency measurement of the bond market. We're seeing that spike up like it did in March. Big move this week. It's concerning when Markets move fast in either direction. When Markets move fast down and Markets move fast up, you should question your belief about that market because usually it's going to correct back down. Usually it's going to come back in. Think of a big rubber band snapping back.

[33:53] Daren: If the cycle is more up and steady and moves... Up and steady, that's a more persistent trend. It's less likely to have a massive correctional move. When we look at the two-year, this is what was really the news this week. You saw, look at the two-year. Two-year Treasury, you're getting almost 4.8% per two-year bond right now. On the 10-year, climbed all the way up to 5.2. A little bit of a give back today. You can see that little give back right there, today's chart. Two years ago and hi again. I'm questioning this. Why am I questioning this? Well, I just told you why I'm questioning this. I'm questioning this because how fast it's moved.

[34:36] Daren: If it was steady, steady, steady up, then I would think, well, maybe, you know, maybe it's going to stay higher. And you definitely see a trend. So I'll buy that trend. But I'm looking at, you know, 4.8, 4.6. I think we probably see something in the next little bit where something happens that pulls that rate back in and cleans that up back onto trend. Because we're above trend right now. The rubber band stretched. Probably going to snap. I think you have to run with that basic thesis, especially given this chart.

[35:14] Daren: For our mortgage friends out there.

[35:16] Dano: Yeah, that's what I was going to ask about. To say a prayer for our mortgage friends, what is going on with 30-year mortgages?

[35:22] Daren: Yeah, I mean, they climbed above 7% this week, right? The housing market was dead, and now it's convulsing. And I guess if it was dead, that was worse than it convulsing. But either way, it's not looking good. And that tends to carry through the economy, right? Because if you think about us Americans, our number one tool for consumption is nothing other than our houses. House. Right? Your House is full of stuff you have to buy. And if we're not moving houses, we don't need new furniture because the old couch works just fine where it's at. And so that does have... An impact and does carry through the consumer. But again, this rally was never really and never has been really driven by this overall market exuberance.

[36:14] Daren: This market just continues to be driven by the build out of the AI boom, which I surmise is probably going to be an S-curve thing. What does that mean? We're going to have this massive build up, build out, AI is going to take over the world, and then it's going to crash and everyone will throw it out with the dogs. But then you watch what's going to happen. Then it's really going to take over. And we're really going to see it. I think it follows a very similar cycle to what we saw with the internet boom, right? It was WWW everything. And then it was WWW nothing. But under the hood, it all got built up in the infrastructure.

[36:51] Dano: And a perfect example of that S-curve for the internet that he's talking about is Darren, 20 years ago. And I'm someone who came from radio, so I have a lot of experience in it. 20 years ago, if you and I wanted to host this show weekly on a Friday to people who are our clients and others, our only option 20 years ago was to go to a local radio station, pay local radio station who had all the gear and communicate only over the electromagnetic spectrum. And because of the S-curve of the internet, yeah, pets.com didn't become a thing, but we are now doing the entire thing.

[37:30] Dano: From our houses all over the internet and people are listening over the internet. So you're saying a similar type of change and a similar type of adoption for AI.

[37:40] Daren: That's what I suspect. I think that would be my running theory. I think that's what's most likely to happen. Dollar index. So this looks at the weight of the dollar versus other indexes. So for all those people screaming that the dollar is done, the US is done. Us is no power. I disagree. And the dollar's hanging right in there. They don't really want a really expensive dollar. That's not particularly good. It's hanging out right in this zone here that I think is fine. There's nothing really to remark about there. This look at gold, lots of talk about gold, commodities, super cycle. I would say the risk is the downside on gold at the moment.

[38:23] Daren: I think we're still in a downtrend. I thought this might be a bottom. I guess you could argue that we got a higher high, and then we'll trend up, and we'll go here, and then we'll trend like something like that. You could argue that it's something like that, but you could also argue, look at that, lower lows. It's just working its way down, so then we find something around here as we work down this way. The idea is that if currencies are being debased, what does that mean? It just means that one of the reasons in that rates are going up the way they are is governments are printing money like it's going out of style to fund their war machines to fund operations more or less because it's just got a lot going on in the world right now from oil to defense etc the other thing that's interesting bitcoin's going up it broke above that neckline i talked about a few weeks back and it's working its way up.

[39:22] Daren: So on his face, you look at like Bitcoin up. And we look at stocks up, the Q's up. Risk on, man. But it's only in a subset of the economy, only in a subset of those things. We do tend, though, to see that these things like Bitcoin, Bitcoin goes up and down before other things. So the fact that it's building up, it tends to do that, I should say. The fact that it's building and coiling up tells you that maybe stocks are going to follow behind it up, just like they tend to follow it down. So that's the Bitcoin market.

[40:00] Daren: Now, Dan, we have got to take some humble pie today because...

[40:07] Dano: I was going to go there next, actually. I know exactly where you're going.

[40:10] Daren: All right. Where am I going, Dan?

[40:12] Dano: Meta.

[40:13] Daren: What did I say three weeks ago?

[40:15] Dano: Okay, three weeks ago, you were absolutely trashing Meta, and they had some AI agent. You're like, I guess Meta has an AI agent, but no one ever uses it. Has anyone even ever heard of Muse? And I think it's very interesting, by the way, that Mark Zuckerberg, not part of a little powwow at the UN asking for everybody to slow down on AI and Meta has had themselves a week.

[40:41] Daren: Yeah. And frankly, so a few weeks ago, it was like, you know, Mark Zuckerberg was like, hey, me too, club. Like, I want to be a part of the AI, you know, CEOs. I want to hang out with OpenAI And Anthropic. Musk and everyone's like, whatever, man. And he's had a string of really awful product rollouts, right? Like you had like what we were all going to be like live in the Meta universe for a while. Like, you know why he renamed his company Meta? And then he had these glasses that everyone hates, which by the way, are starting to pick, take off.

[41:16] Dano: Well, he released a new one this week. They're lighter. However, they're only lighter because he separated the compute and the battery into a separate pack. But. But for the photographs and for the marketing, they look real sleek.

[41:28] Daren: Well, what do you carry? What do you carry a pack in your pocket now? Is that how it goes?

[41:32] Dano: I never saw a photo of the pack, but I saw that defined is that the compute and the AI and the battery have been separated from the glasses. So I haven't actually seen what that piece looks like, but I read that in an article.

[41:44] Daren: That's interesting. And my son runs cross country and they say before the races, you cannot have metaglasses on. Which is kind of interesting. So I guess kids were wearing Meta glasses to cheat. I don't know. And I'm like, how do you cheat it across country? I guess you just like learn how to like pace yourself differently or something like that. Anyway, the Muse AI app, it's tied to your Facebook, is actually, and if nothing else, where I think it's amazing, and this is because you can find some great stuff on Marketplace, it will automatically like... For example, I've been looking at a fishing kayak to fish some of the high mountain lakes.

[42:28] Daren: And it will keep a track of all of the kayaks going on sale because I'm looking for a very specific one. And I'm like Chris, I like to buy things used. So it's like sorting through that. I also have a whole collection, which is kind of weird, but I have all these different fig trees that I grow and fruit trees. And it's looking for specific fig tree cuttings that I want. So kind of interesting, if nothing else, just the marketplace functionality. But I will say I started kind of connecting it with things to see how it did it. And it connects smooth. It operates smooth. And the advantage they have is they're in our back pockets already because they're in Facebook. Right.

[43:12] Daren: And I think out of all the other players from OpenArea Anthropic to X. They're probably connected with more of the boomer population than anyone. Like my daughter says, dad, no one's ever on Facebook anymore. Like none of the teenies. But yeah, they're all on Instagram. And they have that built-in user already in place. If they can just lift them over to Muse, they get a lot of adoption quick. And I think that's what all the labs are racing for is who can have the quick adoption. And interestingly enough, you can see the stock just went on a rocket ship this week. And just took off. And what they're saying is that Muse is really going to go after legacy financial services, like banking.

[43:57] Daren: Where X is trying to go that direction too, Facebook is already in the pockets. It's already there. It's already on our screens. I mean, it's almost like getting more like, who gets a phone book? Phone books used to be how you kept in touch with people. It's, oh, let me find Darren's Facebook page or Dan's Facebook.

[44:16] Dano: Page you know so yeah i'll take humble pie on that one my friend i will too and Meta Meta definitely felt very over and speaking of being over it's a perfect example of what what two months ago not even a month ago last week Meta just felt like done it's just like old news you know cold leftovers and If you had said, hey, go get me some Meta, you know, you just, I think in one week they ended up recouping, like, can you pull it up again?

[44:58] Dano: I think they, I think they made up for a year's worth of losses in one week.

[45:02] Daren: Well, it sees, it see the weekly chart. So you can see, yeah, like look at that monster candle. And in the last four weeks, Matt has been on a rocket ship basically ever since I smack talked it.

[45:15] Dano: But it brings them back up to where, or is that, is that July 25?

[45:19] Daren: Yeah, this is 25, June, July, August 25.

[45:24] Dano: Yeah. So It's a perfect example. I'm going to tie it back to this week's theme, which is that this week, I mean, bonds are in, feels like meltdown. Feels like a bond meltdown this week. So make the case to me, in your experience in investing, why when something is painfully obvious, when Exxon gets relegated from the S&P 500, why that's not necessarily the end and might actually be a trend.

[45:50] Daren: Well, it's, I usually, so. I've learned in investing over the years is usually when I get to the puke point, that's probably close to the end point of whatever trend. And that could be a trend down or a trend up. And let's take like the silver trade. I remember when like silver and gold were just rocket shipping earlier in the year. I was having people call me just out of nowhere, just super stoked about gold. It was forever going to go up. It was going to change everyone's lives and crush.

[46:25] Daren: So, you know, Meta might've just had its run, its run and it's done. We don't know. It's certainly when it looked for debt, it was falling for debt. It had a pretty deep descending wedge on it and then just took off.

[46:42] Dano: Yeah. I think if you're sitting, if you're one of our clients, if you're, if you have bonds and you're like, these things are on fire, I need to get rid of these or whatever it is, if you're feeling down about it, met is a perfect example of, you know, here's. It's a different asset, but the turnaround can happen and it can happen fast. And it's, it just, it just, in my short time focusing on finance and the Markets, it's, it's seeming more and more like when the answer is obvious, sometimes it ends up being the opposite.

[47:13] Daren: Yeah. I mean, here's a perfect, like this is TLT, right? The long dated bond. It's just in the toilet, man. And it's just dying. Like it's been such a dog. But if you look back to the history of TLT, it's got some runs on it that are extreme. And that's why when we talk with clients, we're like, look, like there should always be something in your portfolio you sort of hate. Otherwise, you're not diversified. You just aren't. And it's hard to hold things like the TLT 20-year bond right now. But when it rips, it rips. Just like we saw with Meta the last few weeks, right? Like when it gets to those bottoms, it just goes. And that's how the market acts. This is the Schwab.

[47:56] Daren: Schwab really got just pummeled this week. It was interesting that the market kind of pummeled Schwab because of the Meta AI release and the idea that Meta, Amazon, X, they're all going to go after legacy financial services. Anyway. Interesting week. Headlines look fine. News lines look like scary. Underneath the hood, it's pretty weak. Might be coming to an end. We're walking into October here next week.

[48:37] Daren: We're walking into a midterm election. It's a good time just to stay the course and focus on other things because it's probably going to be a little rauncus the next month.

[48:52] Dano: Thank you so much for checking out the show. Chris Sipes will return next week. We are Farmada Advisors. The private wealth arm is Sonoma Wealth. We also have Farmada Tax and Farmada 401K. Wherever you found this show, subscribe. Whether it's on Apple Podcasts, Spotify, or YouTube, hit that subscribe button. Specifically on YouTube, hit the bell so you get notifications when we go live and when we post new videos. As I mentioned before, you can also check out our sister podcast on this very same channel, It's All Money. Which has a deep dive on bonds with myself and Chris Sipes. And if you are new to the firm, or if you've been kind of lurking in the shadows for a while, or maybe you're, Darren, I look at our podcast sources.

[49:33] Dano: We actually have people who listen to us via their Tesla and via their Amazon Alexa. They ask Alexa to play On The Markets podcast. We appreciate you. If you've been lurking and hanging out, you want to learn more about what we do as a firm, head to SonomaWealth. Com and start with a wealth analysis. For Darren Blonsky, my name is Dan O'Weir, and we'll see you next week On The Markets.

[49:56] Announcer: You're up to date with Fermata On The Markets. Learn about how the Fermata Advisors family of brands can help your family and business in finance. Sonoma Wealth Advisors, a comprehensive, holistic finance solution offering financial planning, asset management, and tax planning. Take our free wealth analysis now at SonomaWealth. Com. Fermata 401k. Business retirement solutions for small and large companies with a fiduciary commitment. Learn more at fermata401k.com. Fermata Tax, personalized tax services for yourself, your family, or your business with an emphasis on efficiency. Find out how at fermatatax.com.

[50:40] Announcer: If you haven't already, like and subscribe to Fermata On The Markets on YouTube, Spotify, and Apple Podcasts. Fermata On The Markets features human hosts, editors, and voiceover talent. Music by Dr. Delight on Soundstripe, voiceover by Joan Alloway Nash. Thank you for listening to the very end. We appreciate diligent viewers and listeners. Fermata Advisors LLC is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempt from registration requirements. This content was produced by Fermata Advisors, LLC, DBA Sonoma Wealth Advisors, DBA Fermata 401K, DBA Fermata Tax.

[51:26] Announcer: The opinions expressed by Fermata Advisors, LLC on this show are their own. Information presented on this program is believed to be factual and up to date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk. And unless otherwise stated are not guaranteed. Information Express does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual.

[52:23] Announcer: Viewers and listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.

[52:41] Dano: Thanks for watching.