Why the NASDAQ Rollercoaster Is Just Getting Started
The Paradigm is Shifting
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Macro Snapshot - Two Market Shifts to Watch
Two significant shifts are about to reshape markets and your investments. I spent ten hours distilling the insights from
’s recent Thoughtful Money Spring Conference—here are two critical trends you need to watch right now.Paradigm Shift
Darius Dale of 42 Macro believes we are shifting from Paradigm A to Paradigm B.
He believes that we have operated under a so-called K-shaped recovery model.
Factors driving Paradigm A include:
Government spending
The Fed Put (central bank market interventions)
Endless liquidity
Buy-the-dip investor mindset under low inflation conditions
The chart shows the red arrow as the outcome for middle to lower economic demographics and the green arrow for the wealthy cohort.
Paradigm B is an E-shaped economy (equal participation by upper/middle/lower demographics). It’s driven by:
Private sector demand
Innovation
Productivity growth.
This model aims for shared prosperity, but the transition will come with significant challenges. It requires dismantling some of the structures that supported Paradigm A. That process will not be smooth.
Paradigm B signals a shift from capital to labor:
Labor’s share of national income has steadily declined since the 1960s
There is a trend away from globalization
Toward reshoring jobs, and
Prioritizing domestic production.
The expectation is that this will benefit workers in the long run, but in the short term, it comes with a cost—higher production costs, lower corporate profits, and volatility.
Treasury Secretary Scott Bessent has described this shift as a reset from Wall Street to Main Street. He recognizes that this will involve some friction and that recession is a possible consequence—an acceptable one.
Darius’s technical model has him at 86% cash right now. What he invests in is:
GLDM (GLD ETF with a lower expense ratio and lower AUM)
SPY (S&P 500 ETF)
FBTC (Fidelity’s Bitcoin ETF)
T-Bills
Takeaways: a paradigm shift is taking place that signals a shift from capital to labor and a reset from Wall Street to Main Street. There will be friction and volatility, and the investment strategy needs to change to reflect this.
Geopolitical Shift: Why U.S.-China Tensions Matter to Your Portfolio
The Defense Department's (DoD) geopolitical priorities shape
's economic perspective.DoD believes that relying on China for manufacturing and allowing it to invest its surpluses in U.S. capital markets undermines U.S. national security interests.
There is a choice between continuing a system that benefits Wall Street and Washington and prioritizing the needs of Middle America
The Russia-Ukraine conflict, in which Russia outproduced NATO 4 to 1 on weapons, serves as a stark reminder of the risks of relying on foreign production.
There is a sovereign debt crisis because of the recent history of the strong USD forcing foreign entities to sell USD-denominated assets to service their USD-denominated debts.
The Trump Administration’s shift toward an America First Investment policy strongly signals to external investors, particularly China, to repatriate their capital from the US.
Currently, this foreign capital is propping up the NASDAQ 100. This is likely to put substantial downward pressure on all stock indices.
There are two ways forward:
either the U.S. inflates its way out of the $36+ trillion of debt (with the attendant risk of a hyperinflationary outcome), or
it takes the radical step of revaluing its gold to bring down its debt-to-GDP ratio by deploying a ~$800 billion unrealized gain on its gold reserves to bring down debt.
the Trump administration has a preference for the latter.
Takeaway: Due to potential capital repatriation, consider reducing exposure to indices heavily supported by Chinese investment (like the NASDAQ 100).
Technical Insights - What’s Really Driving the NASDAQ Volatility?
Take a look at this:
It’s the NASDAQ 100 over the last 5 days.
The 200-day moving average (blue line through the middle of the chop) seems like a gravitational force on the index.
Has it found a bottom? Is it going lower…or higher?
We keep hearing that the newsflow is responsible, but the reality is probably different.
All the hyperscalers—META, Amazon, Google, and Microsoft—are spending billions of dollars on AI.
Most of these dollars go into NVIDIA’s revenue line, while the hyperscalers depreciate that expense over 3-5 years.
That depreciation charge is increasing quarter by quarter, and the return on that expenditure is not boosting their quarterly net income—quite the opposite.
Although it is tempting to attribute the turmoil in the market to Trump and tariffs, there are fundamental reasons why the stocks driving the indices are losing steam.
Takeaway: The volatility in the NASDAQ reflects deeper, structural pressures—not just headline news. Tech giants’ massive spending on AI infrastructure, currently benefiting suppliers like NVIDIA, is significantly dragging their profits. Exercise caution in tech-heavy positions, and use technical indicators (e.g., the 200-day moving average) to identify clear trends before increasing exposure.
Investment Strategy: Navigating Volatility with Leveraged ETFs
Macro conferences are the ultimate TLDR (too long, don’t read). They are full of macro-banter:
Inflation is rising (unanchored, as the Fed Chair would say)
Inflation is falling
Unemployment is rising, but not too much
It’s terrible if you lose your job, but overall, it's not too bad (Fed Chair again…)
Credit spreads are rising, but the market doesn’t seem to care…yet.
If you feel like gambling trading, the current volatility provides an opportunity. The NASDAQ 100 (NDX) exhibits the most volatility:
There are leveraged ETFs for each index, both long and short:
Watching the swings in these on your screen can be stressful, so find a risk size you are comfortable with. The leverage is real. These are speculative positions.
If you watch these ETFs intraday, they deliver the ~3x movement their leverage promises.
Over a more extended period, an effect called volatility drag distorts the performance of these ETFs.
Volatility drag occurs because leveraged ETFs reset daily, meaning volatility can erode returns significantly over longer periods, even if the underlying asset stays relatively flat.
Don’t bank on keeping these positions long-term (or even overnight…)
Here is a snapshot from beginning/middle/end of Chairman Powell’s press conference on Wednesday (in order left to right):
You can see the relationship between the 3x levered ETFs. TQQQ was the one to be in Wednesday. Tuesday, SQQQ delivered. They played tag team on Thursday.
The chart speaks volumes:
Takeaway: Short-term traders can capitalize on heightened volatility through leveraged ETFs, but understand the risks. These instruments amplify gains and losses daily and aren’t suitable for long-term holds due to volatility drag. Limit your position size to what you’re comfortable potentially losing, and avoid overnight exposure whenever possible.
Key Data:
What’s Next/What To Follow?
Don’t miss out: Dive deeper into more actionable insights from the full Thoughtful Money Spring Conference (click below).
If you want to buy the replay, go to thoughfulmoney.com/conference.
Wednesday was FOMC (Fed Open Market Committee) day. No move in rates and a great press conference, well summarized by someone who has valuable market insights, Joseph Wang:
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