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Transcript

Raising The Temperature. · ANGLES.

• 0:02
  SPEAKER_00: Raising the temperature, my weekly market review, July 26, 2026.
• 0:09
  SPEAKER_00: Not a drop of oil will leave the Strait of Hormuz,
• 0:12
  SPEAKER_00: according to Iran,
• 0:13
  SPEAKER_00: on Sunday,
• 0:14
  SPEAKER_00: as the so-called three-week skirmish approached its five-month anniversary,
• 0:19
  SPEAKER_00: with a ninth consecutive day of U.S. airstrikes and zero signs of any resolution.
• 0:25
  SPEAKER_00: Stock markets around the world are still considerably higher than they were on
• 0:28
  SPEAKER_00: the day the conflict formally began back on February 28th,
• 0:32
  SPEAKER_00: but the oil price spiking back above $90 and the average price at the pump in the US
• 0:38
  SPEAKER_00: at more than $4 again,
• 0:40
  SPEAKER_00: risked making for a miserable start to the week for global stocks,
• 0:45
  SPEAKER_00: adding to the persistent jitters about AI overspending,
• 0:49
  SPEAKER_00: funded in many cases by debt.
• 0:52
  SPEAKER_00: Asian and European indexes duly had a rough day on Monday,
• 0:56
  SPEAKER_00: but Wall Street was more upbeat,
• 0:58
  SPEAKER_00: with bargain hunters gently nibbling early on following the previous week's chip
• 1:03
  SPEAKER_00: and semiconductor stock carnage.
• 1:06
  SPEAKER_00: But they were soon beaten back by inflation doomsayers, and the US indexes closed a touch lower.
• 1:14
  SPEAKER_00: After hours,
• 1:15
  SPEAKER_00: Trump threatened a 50% tariff on many Canadian goods
• 1:18
  SPEAKER_00: under obscure legislation dating back to the 1930s,
• 1:22
  SPEAKER_00: vaguely citing discriminatory treatment of US exports,
• 1:27
  SPEAKER_00: setting up either a completely unnecessary bust-up with a major trading partner,
• 1:33
  SPEAKER_00: or else yet another pointless taco episode.
• 1:37
  SPEAKER_00: The smart money is on the latter.
• 1:41
  SPEAKER_00: With a brief pause in the toxic Iran war rhetoric,
• 1:45
  SPEAKER_00: Chip stopped dip buying,
• 1:46
  SPEAKER_00: resumed on Tuesday morning,
• 1:48
  SPEAKER_00: and picked up steam as the day wore on,
• 1:50
  SPEAKER_00: and the indexes all closed nicely in the green.
• 1:54
  SPEAKER_00: After taking a day off,
• 1:55
  SPEAKER_00: Trump issued a barrage of more social media threats of violence against Iranians
• 2:01
  SPEAKER_00: on Wednesday,
• 2:02
  SPEAKER_00: and stocks stumbled out of the gate on the back
• 2:05
  SPEAKER_00: of relentlessly rocketing energy prices and soaring interest rates.
• 2:11
  SPEAKER_00: But they later recovered on more of the AI tunnel vision which continues to feed
• 2:16
  SPEAKER_00: the bulls with more bottom fishing ahead of the start of tech earnings
• 2:21
  SPEAKER_00: to record another solidly positive session.
• 2:26
  SPEAKER_00: The main event was right after the close
• 2:28
  SPEAKER_00: when Alphabet Google announced respectable earnings but scary AI spending plans
• 2:34
  SPEAKER_00: and Tesla badly missed profitability expectations despite a bump in EV sales.
• 2:41
  SPEAKER_00: The reports spooked after-hours traders and both stocks sank.
• 2:46
  SPEAKER_00: When Wall Street opened on Thursday,
• 2:48
  SPEAKER_00: the bond market sent a clear message of inflation concern,
• 2:52
  SPEAKER_00: selling off hard again as interest rates jumped across the board,
• 2:56
  SPEAKER_00: including the impactful 10-year Treasury rising to its highest rate in
• 3:00
  SPEAKER_00: over 18 months and the 30-year up to a level not seen in almost 20 years.
• 3:08
  SPEAKER_00: With no help whatsoever from Alphabet, Google,
• 3:12
  SPEAKER_00: or Tesla,
• 3:13
  SPEAKER_00: both of which got thoroughly brutalized as punishment
• 3:17
  SPEAKER_00: for their disappointing reports the night before,
• 3:20
  SPEAKER_00: stock markets completely broke down as oil prices roared back into triple digits,
• 3:26
  SPEAKER_00: and the week's index gains were more than wiped out in one horrible session,
• 3:31
  SPEAKER_00: which resulted in the magnificent seven stocks losing a combined $800 billion
• 3:35
  SPEAKER_00: in value.
• 3:39
  SPEAKER_00: After hours,
• 3:40
  SPEAKER_00: Intel shattered expectations with a blowout Q2 earnings report,
• 3:44
  SPEAKER_00: but Trump continued raising the temperature,
• 3:48
  SPEAKER_00: announcing a sweeping new set of tariffs on 60 countries,
• 3:52
  SPEAKER_00: representing 99.4% of US imports.
• 3:55
  SPEAKER_00: Many of its victims are already formulating their retaliation.
• 4:00
  SPEAKER_00: Financial markets seemed unsure how to react on Friday, eventually settling for not doing much.
• 4:07
  SPEAKER_00: Interest rates paused their rocket ride and stocks drifted aimlessly throughout
• 4:11
  SPEAKER_00: the session,
• 4:12
  SPEAKER_00: closing unchanged but on edge ahead of geopolitical uncertainty over the weekend and
• 4:18
  SPEAKER_00: a monster upcoming week,
• 4:21
  SPEAKER_00: with a kind of live Fed interest rate decision on Wednesday and a truckload
• 4:25
  SPEAKER_00: of earnings reports,
• 4:27
  SPEAKER_00: including from Microsoft,
• 4:29
  SPEAKER_00: Meta, Apple, Amazon, Qualcomm, ExxonMobil, Chevron and many more.
• 4:35
  SPEAKER_00: The downside risk for stocks seems greater now than it has been in some time,
• 4:40
  SPEAKER_00: with high valuations,
• 4:42
  SPEAKER_00: intensifying war,
• 4:44
  SPEAKER_00: a rebuild of Trump's highly damaging tariff wall,
• 4:48
  SPEAKER_00: spiraling interest rates, and a worsening inflation outlook.
• 4:53
  SPEAKER_00: But there is still a world where mega cap earnings can possibly come to the rescue.
• 5:00
  SPEAKER_00: Some other things I'm thinking about.
• 5:02
  SPEAKER_00: Until somewhat recently,
• 5:03
  SPEAKER_00: the market's view of AI spending was the bigger the better,
• 5:07
  SPEAKER_00: as investors embraced the idea that the more the hyposcale is spent on AI,
• 5:12
  SPEAKER_00: the more of a windfall they'll eventually receive.
• 5:15
  SPEAKER_00: However, that's changing, primarily due to two factors.
• 5:20
  SPEAKER_00: One, the sheer amount of money being thrown at the limited supply
• 5:24
  SPEAKER_00: of AI equipment has caused the prices of tech components such as semiconductors
• 5:29
  SPEAKER_00: or memory to skyrocket.
• 5:31
  SPEAKER_00: And two,
• 5:32
  SPEAKER_00: These hyperscalers seem to be caught in an arms race as spending increases
• 5:37
  SPEAKER_00: by one elicit a we're behind response from others who react
• 5:43
  SPEAKER_00: by boosting their own expenditure.
• 5:46
  SPEAKER_00: Investors don't want to see spending being slashed That would be bad for everyone,
• 5:51
  SPEAKER_00: but nor do they want to see such an enormous acceleration either,
• 5:55
  SPEAKER_00: because that can end up depressing free cash flow at these firms.
• 6:00
  SPEAKER_00: Restraint, please, seems to be the message from Wall Street.
• 6:04
  SPEAKER_00: Less than a month ago, oil prices seemed poised to fall into the $60 range.
• 6:10
  SPEAKER_00: By last week,
• 6:11
  SPEAKER_00: they were back above $100,
• 6:14
  SPEAKER_00: once again threatening to ignite even higher inflation around the world.
• 6:19
  SPEAKER_00: The job of global central banks is getting harder and harder when it comes
• 6:23
  SPEAKER_00: to interest rate setting decisions.
• 6:26
  SPEAKER_00: And the next such test for the Federal Reserve is on deck for this coming Wednesday.