TACO (Tehran Always Chickens Out) Tuesday is On

Daily 🔥H.E.A.T.🔥 Your Financial GPS

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Matthew Tuttle
June 24, 2025

Shortest WW3 Ever….Dissent at the Fed?….Bonds Still Suck…..Is Caterpillar an AI Data Center Play?…..The Tariff Timebomb Nobody is Talking About….Could Stable Coins Actually Help Regional Banks?

Couldn’t put it any better than Mohit here…..

Geopolitics dominated the market, with a sense of relief as news reports suggested that a ceasefire has been agreed between Israel and Iran. The attack on US air bases in Qatar was well telegraphed and choreographed in order to de-escalate. It provided an excuse to Iran to say that it retaliated but without any fatality, US doesn't need to escalate further. Whether the cease fire will last remains a question as reports already indicate that Iran has violated the terms of the cease fire. However, investors could breathe a sigh of relief that chances of a major escalation have been reduced.

 

We had reduced risks in our portfolio, given the heightened uncertainty and valuations. Our medium term view remains bullish on equities and credit, and we believe that over a 3-month period, the current tensions in the ME would hardly have any impact. We would look to selectively add back some risk to our portfolio, but are still keeping risk levels low as geopolitical uncertainty remains high.

Mohit Kumar, Jefferies

And The Umpire has a great point if you are a bear….

From a macro perspective Mohit also nails it this morning…..

Our risk scenario for risky assets is not from geopolitics, but from a macro perspective. Two main risk to our overall constructive view are 1) slowdown in US employment picture over the summer months and 2) rise in yields given fiscal risks. We do see some wobbles over the summer months as our view remains that we will see some weakness in the US employment picture over summer. But that should provide a buying opportunity as we believe that the US economy is still holding up well, and we do not subscribe to the recession scenario.

Mohit Kumar, Jefferies

We are by no means out of the woods yet, we have a ceasefire between two countries that hate each other, so we will see.

However, as I have said previously, a regional war between Israel and Iran is not necessarily bearish.

Meanwhile, this is an interesting development at the Fed…..

Momentum is building within the Federal Reserve toward a more dovish policy stance, with Vice Chair Michelle Bowman joining Christopher Waller in supporting a potential rate cut as early as July. Both downplayed the inflationary impact of Trump-era tariffs, suggesting the Fed may act pre-emptively to support growth. Bowman’s emphasis on labour market fragility—despite sticky inflation—adds weight to the argument for easing, particularly if upcoming data confirms softening in employment and spending. Furthermore. Bowman outlined plans to reform the supplementary leverage ratio and reduce capital buffers for systemic banks, aiming to boost liquidity in the Treasury market—though this raises questions about systemic resilience. Fed also dropped reputational risk reviews in bank exams, signalling a deregulatory shift that may re-open access to politically sensitive sectors.

Jef-X (Daily Macro)

Treasuries disappointed during this crisis….

If U.S. Treasurys lose their safe-haven status, these bonds could take their place

After Israel attacked Iran on June 13, U.S. Treasury yields rose while other countries’ bond yields declined.

www.marketwatch.com/story/u-s-treasurys-may-be-losing-their-safe-haven-status-and-these-bonds-could-take-their-place-a0321100?mod=home_invest

Bonds still suck. US Treasuries won’t lose their safe haven status, but that doesn’t mean you should invest in them.

The Bond Market’s Biggest Risk Isn’t the Deficit, Economist Says. Here’s What Is.

www.barrons.com/articles/bond-market-treasuries-trump-tax-bill-5e258c7f?mod=hp_LEDE_C_4

We are potentially on the verge of WWIII (I don’t believe that but you never know) and IEF is doing nothing…..

That doesn’t mean developed country government bonds are going to be any better. European countries aren’t in any better fiscal shape than we are. There are better ways to have a “safe haven”. The first is of course to always have hedges in place, we talk about that all the time. In my new version of the permanent portfolio I use Gold. Gold is not always a safe haven, so that’s not why I use it. I use it because it’s an uncorrelated asset and it is probably helped by fiscal issues.

Maybe a dip buy opportunity in the gold miners here real soon and Bitcoin seems to be on the mend.

Rareview 2X Bull Cryptocurrency & Precious Metals ETF

The Rareview Total Return Bond ETF (the “Fund”) seeks to provide a total return through the combination of current income and capital appreciation.

rareviewcapital.com/2x-bull-cryptocurrency-precious-metals-etf

Caterpillar Is an AI Data-Center Play. It’s More Than Construction.

www.barrons.com/articles/lockheed-northrop-defense-stocks-iran-strikes-4c00ded0?mod=hp_FEEDS_4_AI_1

Is it? Chart is interesting here, it’s sitting on top of the 200 day moving average, which could be a stop if you wanted to go long…..

⚡️ Caterpillar: The AI Data Center Power Play Hiding in Plain Sight

Wall Street just toured their 1.3 million square foot facility in Indiana — where they’re doubling engine production. Not for mining trucks… for AI data centers.

Think hyperscalers, server farms, and backup power measured in megawatts.

  • CAT’s Lafayette plant builds engines up to 6,000 horsepower.

  • Data centers require 125MW+ each, with 125% redundancy.

  • CAT already sells generators into this market — and is scaling for more.

44% of CAT’s machinery sales are from Energy & Transportation — not construction. That’s where the data center upside lives.

So while the street obsesses over cooling chips and GPUs, no one’s watching the backup power arms race. But that’s where CAT is quietly crushing it.

We call this Second Order AI Infrastructure — the boring, necessary backbone plays that catch a bid once the “hot” trades fade.

And CAT? It’s the boring pickaxe in the AI gold rush. Ignore it at your own risk.

Headlines out of the Middle East have pushed tariffs into the background, but they are still probably a bigger risk to the markets than a war is. TD Cowen came out with a new report on this yesterday…..

Tariff and Shipping Demand Outlook.pdf753.86 KB • PDF File

We had GPT take a deep dive……

💣 The Tariff Timebomb Nobody’s Talking About

While the headlines focus on missiles over the Middle East, the real bomb is building in trade policy.

According to TD Cowen, we’re entering Trade War 2.0 — and this time, it’s systemically inflationary.

  • “10% is the new zero” on tariffs.

  • China? Try 30%.

  • Mexico and Canada (non-USMCA)? 25%.

  • And by late summer, we could see 50% tariffs on copper, semis, steel, pharma.

July 9th is the deadline. After that, the gloves come off.

📦 The supply chain? Hanging by a thread:

  • Port congestion

  • Delayed shipments

  • Air freight bottlenecks

  • Back-to-school shipments already behind

🧨 Tariff impact is already baked into inflation data — it just hasn’t shown up yet. But by Q3, CPI will start flashing red.

Winners:

  • Reshoring plays: CAT, EMR, ROK, TXN

  • Domestic transport: UNP, CP, ODFL

  • U.S. steel & energy: CLF, NUE, XOM, CVX

  • Defense: RTX, LMT, NOC

Losers:

  • Import-reliant consumer goods: NKE, HAS, BBBY

  • Asia-facing freight: FDX, MATX

  • Neobanks and DTC brands with China exposure

The takeaway? Tariffs are not a risk. They’re the market now. And passive investors are asleep at the wheel.

Stablecoin World Opens Up to Smaller Banks

Regional and community banks will be able to get in on the stablecoin market through Fiserv ventures with crypto firms and PayPal

www.wsj.com/finance/currencies/stablecoin-crypto-fiserv-smaller-banks-aa9049ea?mod=finance_lead_story

There are a lot of reasons I don’t like regional banks, which is why I launched SKRE…

SKRE - Inverse Regional Banks ETF | Innovative Investment Strategy

Explore SKRE, the Inverse Regional Banks ETF offering a unique investment strategy with -200% daily performance of the SPDR S&P Regional Banking ETF. Ideal for navigating volatile markets.

www.shortregionalbanks.com

Stable Coins were one of the reasons, but Fiserv may have just changed the game….

🔍 The Big Idea: Stablecoins Won’t Kill Regional Banks—They Might Just Save Them

For years, we said stablecoins were an existential risk to regional banks.

Now?

They might actually save them.

Fiserv just launched FIUSD, a turnkey stablecoin platform for 3,000+ regional and community banks — complete with branded coin capability, fraud controls, and built-in custody via big banks.

Here’s why that matters:

  • Regional banks get to play on the digital dollar rails — without losing deposits to Coinbase or PayPal.

  • Fiserv earns a cut of stablecoin transaction fees + Treasury yield.

  • Circle (CRCL), Paxos, Solana (SOL), and PayPal (PYPL) are all part of the network.

This could turn Fiserv into the Visa of stablecoins.

Winners:

  • $FISV: Infrastructure tollbooth

  • $CRCL: Expanding rails

  • $SOL: Blockchain back-end for TradFi

  • $SOFI, $PYPL, $SQ: Could plug into the system

Losers:

  • Neobanks like $HOOD that counted on deposit disintermediation

  • Regional banks that don’t adopt this tech

If you're short regional banks (like we are via SKRE), keep an eye on this. It won’t save everyone. But it may save the smart ones.

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