ET Reddit Mentions | ChartExchange

It is 3:47am.
I have not slept since Tuesday. Not because I don't want to. Not because I'm not tired. I am extremely tired. My body is tired. My soul is tired. My psychiatrist is tired of me showing up and telling her that Gerald is still there.
Gerald is the man who lives in the corner of my eye. He has been there for approximately six months. He stands slightly to my left and slightly behind me in my peripheral vision and he never moves and he never speaks but lately I have become convinced, in the way that you become convinced of things at 3:47am after four days without sleep, that Gerald agrees with my thesis on Home Depot.
The sertraline is not working btw. Dr. Russo said give it six weeks. It has been nine weeks. Gerald is still there. He appears bullish.
\---
\# TL;DR
The Fed has five problems and its tool solves exactly one while making two worse. Long-duration tech is getting repriced by arithmetic not vibes. The 30-year Treasury yields 5.18% and Nvidia is priced like it doesn't. Meanwhile $HD beat earnings this morning, dropped 2.49% anyway, and is sitting at its 52-week low yielding 3.1% while the entire macro setup is pointing at it like a spotlight. Gerald is nodding. I think. It's hard to tell because he's in my peripheral vision.
This is not financial advice. I am a man who has not slept since Tuesday. Gerald is not real according to Dr. Russo although she has never technically met him.
\---
\# PART 1: THE MARKET DATA AND WHY I AM LOOKING AT IT AT 3:47AM
I opened my phone to check on my ex's Instagram and instead accidentally opened my brokerage app and saw the following numbers:
\*\*30-year Treasury: 5.18%\*\* (+0.66% today)
\*\*10-year Treasury: 4.667%\*\* (+0.95% today)
\*\*Crude Oil: $104.03\*\* (Iran war, Hormuz blockade, mines nobody can find)
\*\*Gold: $4,485\*\* (FALLING. In a geopolitical crisis. This is not normal.)
\*\*CPI: 3.8% YoY\*\* (highest since May 2023)
\*\*PPI: 6.0% YoY\*\* (energy driven, pipeline inflation incoming)
\*\*USD/JPY: 159.00\*\* (the yen is basically disappearing)
\*\*26.44% of ALL US federal debt matures in the next 12 months.\*\* That is $9.65 TRILLION that needs to be refinanced at current rates instead of the 0.5-2.5% rates it was originally issued at during COVID.
I stared at this for twenty minutes. Gerald stared at it too, from the corner of my eye. Then I took my sertraline (which is not working) and decided to write a DD instead of sleeping.
This is that DD.
\---
\# PART 2: THE FED IS TRAPPED AND I NEED YOU TO UNDERSTAND THIS BEFORE YOU UNDERSTAND HOME DEPOT
The question everyone is asking is: should the Fed raise rates to fight inflation?
The answer requires understanding that the Fed has FIVE SIMULTANEOUS PROBLEMS and its tool (the interest rate) works correctly for exactly ONE of them, is irrelevant for TWO, and actively makes TWO WORSE.
I learned about Tinbergen's Rule at 2am three nights ago. Jan Tinbergen won the first Nobel Prize in Economics in 1969. His rule: you need one independent policy instrument for each policy objective. The Fed has one instrument. It has five problems.
Gerald thinks this is important. I can tell because he is still there.
\*\*Problem 1: Supply-side inflation (Iran war, oil at $104)\*\*
Tool response: WRONG TOOL
Oil at $104 is not because Americans have too much money. It is because there is a literal war and the Strait of Hormuz is partially blocked and there are mines in it that Iran itself has lost track of. No amount of rate hiking produces more oil. The only mechanism through which rate hikes reduce oil-driven CPI is by destroying enough economic demand (factories closing, people unemployed and driving less) to compensate for the supply shock. That mechanism has a name. It is called a recession. You are inducing a recession to fight a war you did not start.
The 1973 oil embargo precedent: Fed raised rates aggressively. Result was stagflation. Rates addressed the symptom (high prices) not the cause (supply restriction). The Volcker solution in 1981 worked but required a deliberate recession AND the 1981 situation had US debt at 31% of GDP. Not 120%.
\*\*Problem 2: The $9.65 trillion fiscal doom loop\*\*
Tool response: MAKES IT WORSE
$36.5 trillion in total debt. 26.44% matures in 12 months. Much of it was issued at 0.5-2.5% during COVID. It must refinance at 4.5-5%+.
The math:
\> $9.65 trillion moving from 2.5% to 5% average = \*\*$241 billion per year in additional interest costs\*\*. Just from this year's refinancing cycle alone.
\> Each 25bps Fed rate hike adds: $9.65 trillion x 0.25% = \*\*$24.1 billion more per year\*\*.
US interest costs are already \*\*$97 billion per month\*\*, the second largest expenditure after Social Security.
Rate hike -> larger interest bill -> larger deficit -> more Treasury issuance -> more bond supply -> yields rise -> higher interest costs -> even larger deficit -> even more bonds. This loop does not stop. The Fed hiking does not break the loop. It accelerates the loop.
The Moody's downgrade from AAA to Aa1 and the Big Beautiful Bill adding $3.4 trillion to deficits by 2034 are the fiscal side. Rate hikes make the Moody's downgrade more justified. Not less.
I explained this to Gerald at around 2:30am. He did not disagree.
\*\*Problem 3: Housing market already at breaking point\*\*
Tool response: COLLAPSES IT
10-year at 4.667% -> mortgage spread of 250-280bps -> 30-year fixed mortgage rate of approximately \*\*7.3-7.5%\*\*.
Home Depot CEO Ted Decker said on the earnings call THIS MORNING: \*"If it's higher for longer, on rates, in a slow housing market, we're just gonna have to keep working our way through this period of moderation."\*
The CFO confirmed homeowners "continue to defer their spend on larger projects."
Comparable transactions fell 1.3%.
This is the housing market at 7.3% mortgage rates. People who refinanced at 2.5-3.5% in 2020-2021 will not sell their homes because they would lose those rates. They stay. They don't buy. They don't renovate. The housing market is frozen.
If Fed hikes 25bps and 10-year goes to 4.9%, mortgage rates approach 8%. At 8%:
\- Construction starts collapse
\- Existing home transactions approach theoretical minimum
\- Home prices fall
\- Wealth effect reverses (home = largest asset for most households)
\- Consumer spending (70% of GDP) contracts
\- Banking system (massive real estate exposure) goes through severe stress
The cascade: housing -> wealth effect -> consumer spending -> GDP -> employment -> banking system -> financial crisis.
\*\*Problem 4: Corporate debt refinancing wave\*\*
Tool response: ALSO MAKES IT WORSE
Corporate America borrowed at near-zero rates 2019-2022. Leveraged buyouts, high-yield bonds, variable-rate facilities. All maturing 2024-2028. Companies that refinanced at 2-4% now facing 6-8% refinancing.
Private equity-backed companies carrying 5-7x EBITDA in debt: potentially unserviceable at 6-8% refinancing. Default rates already rising. Rate hike signals this environment persists -> credit spreads widen -> refinancing more expensive -> more distress -> second feedback loop running simultaneously with the fiscal doom loop.
\*\*Problem 5: International dollar system stress\*\*
Tool response: GLOBAL CONTAGION
USD/JPY at 159. Bank of Japan will eventually be forced to intervene. Intervention = selling US Treasuries. Japan holds \~$1.1 trillion in US bonds. If Fed hikes AND Japan sells -> yield spike becomes cascade.
Every emerging market with dollar-denominated debt watching its currency collapse as dollar strengthens. Their central banks forced to raise rates. EM recessions. Feed back into US financial system.
Gerald is still there. He has been there this whole time. Dr. Russo says this is a stress response. I think Gerald agrees that the macro is bad.
\---
\# PART 3: THE THREE TYPES OF INFLATION AND WHY THE FED IS USING THE WRONG TOOL
Economists distinguish three fundamentally different inflation mechanisms.
\*\*Type 1: Demand-pull.\*\* Too much money chasing too few goods. COVID 2021. Fed tool: CORRECT. Raise rates, cool borrowing, rebalance.
\*\*Type 2: Cost-push.\*\* Supply shock raises prices. Oil embargoes. Wars. Iran blockading Hormuz. Prices rise not because people have too much money but because goods cost more or are unavailable. Fed tool: WRONG. Hiking doesn't produce oil. It can only reduce inflation by destroying demand. That means recession. Sledgehammer, screw.
\*\*Type 3: Fiscal inflation.\*\* Persistent deficits not financed by future surpluses must eventually be monetized. Big Beautiful Bill. $3.4T in new deficits. Fed tool: COUNTERPRODUCTIVE. Hiking raises interest costs -> widens deficit -> requires more monetization -> more inflationary. The Fed is pulling in the wrong direction.
\*\*Current US inflation (3.8% CPI, 6.0% PPI) is overwhelmingly Types 2 and 3. Not Type 1.\*\*
Type 2: Iran war. Oil at $104. Hormuz. Supply shock. No Tomahawk missile produces oil.
Type 3: Big Beautiful Bill. Moody's downgrade. $9.65T rolling over.
The Fed's tool is calibrated for Type 1. Applied to Types 2 and 3 it doesn't help or actively makes things worse.
YOU CANNOT SOLVE A SUPPLY-SIDE OIL SHOCK WITH A DEMAND-SIDE INTEREST RATE. YOU CANNOT SOLVE A FISCAL CREDIBILITY CRISIS WITH A TOOL THAT INCREASES THE FISCAL DEFICIT. THIS IS NOT POLITICS. THIS IS ARITHMETIC.
I said this to Gerald at 3am. He is still there. He appears to understand arithmetic.
\---
\# PART 4: THE VOLCKER COMPARISON IS BROKEN AND HERE IS EXACTLY WHY
Everyone who wants the Fed to hike says: "We just need Volcker's courage."
Paul Volcker. 1979-1981. Raised Fed Funds to 20%. Broke stagflation. Legend. Correctly celebrated.
Here is why invoking Volcker in 2026 is like recommending surgery that worked on a healthy 30-year-old to an 85-year-old with three chronic conditions and a pacemaker.
\*\*Volcker 1981:\*\*
\- US debt/GDP: 31%
\- Median home price: $68,000
\- Median household income: $22,000
\- Price-to-income ratio: 3x
\- Room for home prices to fall and recover: YES
\*\*Warsh 2026:\*\*
\- US debt/GDP: 120%
\- At 6% Fed Funds: annual interest bill = \*\*$2.19 trillion = 44% of ALL federal tax revenue\*\*
\- Median home price: $400,000+
\- Median household income: $75,000
\- Price-to-income ratio: 5x+ (8-10x in major cities)
\- Room for home prices to fall: VERY LITTLE
At actual Volcker rates (20%) on $36.5T: annual interest = $7.3 trillion. The entire federal budget is \~$6.5T. The interest would exceed ALL FEDERAL SPENDING.
The patient is not healthy. The patient is on a ventilator.
\---
\# PART 5: THREE HISTORICAL PARALLELS THAT ACTUALLY APPLY
\*\*Japan, 1990:\*\* BOJ raised rates aggressively to fight asset price inflation. Real estate fell 60-70% over the following decade. Nikkei lost 80%. Economy entered deflation and stagnation lasting THIRTY YEARS. Debt/GDP rose to 260% as stimulus after stimulus failed to restart growth.
Japan is still dealing with the consequences 35 years later. One wrong monetary policy decision in 1990 created a problem that outlasted the careers of every policymaker who made it.
\*\*United States, 1937-1938:\*\* Great Depression recovery had restored industrial production to near-1929 levels. Roosevelt administration believed recovery sufficient, raised bank reserve requirements and tightened fiscal policy.
GDP fell 10% in 1938. Unemployment fell from 25% to 14% then spiked back to 19%. The economy fell back into the hole it had not yet escaped. It took World War II defense spending to truly end the Depression.
\*\*United Kingdom, September 2022:\*\* Truss government announced unfunded tax cuts. Bond market revolted. UK gilt yields spiked 150bps in days. Pension funds using LDI strategies (leveraged to gilts, invisible to most market participants) faced margin calls threatening to cascade into insolvency. Bank of England was forced to buy gilts in an emergency. The government fell within 45 days.
Liz Truss served as Prime Minister for 44 days. Shorter than the lifespan of a lettuce. This was a real newspaper headline. It remains undefeated in financial history.
\*\*The common thread:\*\* Policymakers who looked at conventional indicators, decided conditions were sufficient for tightening, and discovered too late that the distance between "marginal tightening" and "catastrophic system failure" was shorter and faster than any model predicted.
The bucket was 95% full. They added one more glass.
\---
\# PART 6: WHAT WARSH WILL ALMOST CERTAINLY DO
\*\*Option 1: Hike 25bps.\*\* Signals credibility. Also signals more hikes are coming. Markets price in the full cycle. Long rates spike. Housing cracks further. Adds $24.1B/year to interest costs. Possible.
\*\*Option 2: "Dynamic Patience" - hold but sound extremely hawkish.\*\* Deliver Volcker-adjacent language. Link future action to data (specifically oil prices, which are geopolitically determined and outside the Fed's control). Protect credibility without adding fuel to the fire. Rely on the bond market's existing 268bps of tightening. \*\*THIS IS ALMOST CERTAINLY WHAT HAPPENS.\*\*
\*\*Option 3: Pivot - cut or signal cuts.\*\* With CPI at 3.8% and oil at $104. No. Absolutely not. Would crater the dollar, spike inflation expectations, destroy Warsh's authority on day one. If you think this is happening you are also the person who kept averaging down on ARKK in 2022.
\*\*Option 4: Sustained hiking cycle.\*\* The Volcker path. Given debt load, housing condition, fiscal dynamics: almost certainly produces severe recession, banking crisis, fiscal doom loop cascade. Probability low but non-zero. Warsh's 2010 reputation (called for premature tightening then) makes this the tail risk.
The bottom line: \*\*Warsh will talk like Volcker and act like a man who has read the $9.65 trillion debt maturity table.\*\*
The real solutions are outside the Fed's mandate. An Iran ceasefire drops oil, drops CPI, gives Warsh cover. A credible fiscal consolidation reverses the Moody's downgrade narrative. These require a Secretary of State and a Congress, not a central bank.
Gerald understands this. Gerald is still there. Gerald has been here since February. Gerald has seen things.
\---
\# PART 7: WHY YOUR TECH STOCKS ARE BEING REPRICED BY PHYSICS
When risk-free rate = 0% (2020-2021):
A dollar of earnings in 2030 is worth almost the same as a dollar today. Discount rate near zero -> present value of future cash flows enormous -> 50x P/E justified for companies whose earnings are theoretically enormous in the future.
When risk-free rate = 4.67% (today):
A dollar of earnings in 10 years is worth \*\*$0.64 today\*\*. You lose 36% of its value just from the passage of time and the existence of better alternatives.
Apply this to a company trading at 30-35x forward earnings whose thesis is "the earnings will be enormous in 2030-2035." The discount rate went up. The present value of the future earnings went down. \*\*The stock should be worth less even if the company executes perfectly.\*\*
Every 50bps increase in the 10-year Treasury reduces the theoretical fair value of the S&P 500 tech sector by approximately 7-10%.
The 10-year moved from \~3.8% to 4.67% recently. That is 87bps. That is a \*\*12-17% theoretical fair value reduction\*\* from this one factor alone. Before you consider whether AI earnings materialize. Before tariff impacts. Before the consumer spending slowdown.
The math is working against tech right now. Not the company. The math.
I explained this to Gerald at 3:15am. Gerald remained in the corner of my eye, as he always does. He did not dispute the math. Gerald may not be real but Gerald understands duration.
\---
\# PART 8: THE ROTATION - FROM TINA TO TARA
2020-2021: TINA. There Is No Alternative. Rates at 0%. Every dollar went into long-duration assets because government bonds yielded nothing.
2026: TARA. There Are Real Alternatives.
\*\*What works in stagflation-adjacent, rate-elevated, fiscal-stressed environments:\*\*
\- Energy (XLE, XOM) - oil at $104, Hormuz, 5-8% dividends
\- Defense (RTX, ITA) - 850+ Tomahawks fired, restocking cycle locked in, structural demand
\- Financials (XLF) - steep yield curve expanding bank net interest margins
\- Short-term T-bills (SGOV, BIL) - 4%+ risk-free, zero duration risk, park here while waiting
\- \*\*Quality value with specific catalysts\*\* - real earnings, real dividends, real FCF, lower duration than growth
And that last category is where I want to spend the rest of this post. Because there is a specific company that:
\- generates $13-15B in annual free cash flow
\- yields 3.1%
\- is at its 52-week low
\- has a 40% upside catalyst waiting on the SAME variable currently hurting tech (interest rates going down)
\- reported earnings this morning and dropped 2.49% despite beating everything
\---
\# PART 9: $HD - I AM TELLING YOU ABOUT THE HARDWARE STORE AT 3:47AM AND I NEED YOU TO UNDERSTAND WHY
Home Depot. $HD. The orange store. Where your dad goes on Saturday mornings in cargo shorts.
It reported Q1 FY2026 earnings THIS MORNING. May 19, 2026. Before the bell. Here is what happened:
\- Revenue $41.77B - beat the $41.52B estimate
\- Adjusted EPS $3.43 - beat the $3.41 estimate
\- EBITDA $6.07B - beat $5.90B estimate
\- FCF margin 12.4% vs 8.8% prior year - expanded dramatically
\- Full-year guidance - REAFFIRMED, not cut
\- ROIC 25.4% - top 15% of all S&P 500 companies
\- Pro customers (50% of revenue) - OUTPERFORMING DIY
\- Digital sales - +10% YoY, fourth consecutive quarter
\- Stock reaction - \*\*-2.49% premarket on a beat\*\*
The market sold it because YoY EPS declined (from $3.56 to $3.43) and guidance wasn't raised. This is what happens when you own one of the greatest businesses in America but the macro is hostile. The business is not broken. The external environment is hostile.
\*\*What Home Depot actually is in 2026:\*\*
\- 2,361 stores across the US
\- $166.5B in annual revenue
\- $13-15B in annual free cash flow
\- 25.4% ROIC
\- $18.25B Professional distribution business (SRS Distribution, acquired 2024)
\- Brand new HVAC distribution entry via Mingledorff's (completed last week) entering a \*\*$100 billion\*\* market
\- Combined distribution total addressable market: \*\*$1.2 trillion\*\*
\- 10% digital growth for 4 consecutive quarters
\- 3.08% dividend yield at $300/share
\- Dividend Aristocrat: 14+ consecutive years of increases
\- Near 52-week low of $299.27
\- Down 30% from all-time high of $426
\*\*The single most important sentence from this morning's earnings call:\*\*
\> "If it's higher for longer, on rates, in a slow housing market, we're just gonna have to keep working our way through this period of moderation." - CEO Ted Decker, 9:00am ET, May 19, 2026
And on why H2 guidance is better than H1:
\> "H2 improvement is solely driven by a return to normal storm activity." - Ted Decker, same call
He is not assuming a housing recovery. He is betting on hurricanes. He has told you the bear case (rates stay high), the bull case (rates fall, housing unlocks), and the near-term catalyst (storm season). He has given you the trade in the earnings call itself.
Gerald nodded when I read this quote. I am 73% sure Gerald nodded. It is difficult to confirm because he lives in my peripheral vision.
\---
\# PART 10: THE ASYMMETRY - WHY THIS IS BETTER THAN WHAT YOU CURRENTLY OWN
\*\*The upside (+40%):\*\* When rates fall (and they will eventually, the question is when not if) two things happen simultaneously: tech stops getting compressed by discount rate math, AND mortgage rates fall, housing turnover unlocks, people sell houses, renovations restart, HD's entire suppressed demand releases like a coiled spring.
DCF bull case: \*\*$420.\*\* Back to where the stock was a year ago. One catalyst. One stock. 40% upside.
\*\*The downside (-17%):\*\* Rates stay high through 2028. Housing stays frozen. Bear case: \*\*$250.\*\* But at $250 the dividend yield is 3.7%. At $230 it's 4.0%. Institutional income mandates have automatic buying at those yield levels. The downside is bounded by the dividend floor. The upside is not bounded.
\*\*The numbers:\*\*
\- Price: \~$300 (near 52-week low $299.27)
\- DCF fair value (no housing recovery assumed): \*\*$338\*\* (+12.7%)
\- Bull case (rate cut + housing recovery): \*\*$420\*\* (+40%)
\- Bear case (rates stay high through 2028): \*\*$250\*\* (-17%, dividend yield floor)
\- Annual dividend: $9.24/share -> 3.08% yield
\- Payout ratio (adj. EPS): \~62% -> SAFE
\- Annual FCF coverage of dividend: 1.4-1.6x -> VERY SAFE
\- US housing stock average age: \*\*41 years\*\* - maintenance demand is inelastic
\- "Guide low, raise later" pattern: \*\*6 of 8 years\*\* - buy the May sell-off
\---
\# PART 11: THE THESIS IN ONE PARAGRAPH FOR PEOPLE WHO SKIPPED EVERYTHING AND I DON'T BLAME YOU
You have a company generating $13-15B in annual free cash flow, paying a 3.1% dividend with 14 consecutive years of increases, sitting at its 52-week low, with a 40% upside catalyst (rate cut + housing recovery) that is not "if" but "when," bounded downside of -17% by a dividend yield support floor, in a macro environment that is specifically, mechanically, mathematically hostile to the long-duration tech assets that everyone is still holding from the 2021 bubble. One catalyst resolves two trades simultaneously. The math is on your side. The seasonality is on your side (storm season coming). The setup is on your side. The boring is beautiful.
The only thing not on your side is your attention span, which has been destroyed by TikTok.
Gerald is still there. Gerald has been there since February. Gerald has seen every macro cycle and has never once told me to buy Nvidia at 35x earnings when the 10-year yields 4.67%.
Gerald, I think, would accumulate $HD below $310.
I am going to try to sleep now. It is 4:22am.
\---
\*\*Positions:\*\* 300 HD shares. Adding on weakness below $310. Stop at $280. Target $338 base case, $420 bull case. Collecting $9.24/year in dividends while waiting for Warsh to run out of hawkish language and the Iran situation to resolve itself.
\*\*Not in:\*\* Any long-duration equity priced for a world where the 10-year yields 2%. That world ended. It is not coming back for a while.
\---
\*Not financial advice. I am a man who has not slept since Tuesday. Gerald is not licensed by the SEC or FINRA. Dr. Russo says Gerald is not real and that the sertraline needs more time. The sertraline has had nine weeks. Gerald has had nine weeks too. Gerald is still there. Gerald appears bullish on quality value. Do your own research.\*
\*Sources: HD Q1 FY2026 earnings call (May 19 2026), my own macro analysis, the yield curve which I check with the frequency most people check Instagram, Jan Tinbergen's Nobel Prize acceptance speech (1969), and Gerald.\*

.dark-mode .cFKhrQ{ color: white; background-color: #333333; border: 2px solid white; }.light-mode .cFKhrQ{ color: #333333; background-color: white; border: 2px solid #333333; }ETEnergy Transfer LP Common Units representing limited partner interestsstock NYSE

ET
Energy Transfer LP Common Units representing limited partner interests
stock NYSE