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Excruciating. · ANGLES.

• 0:01
  SPEAKER_00: Excruciating, my weekly market review, June 30th, 2024.
• 0:07
  SPEAKER_00: Last week saw the end of the month, the quarter, and the first half of the year.
• 0:11
  SPEAKER_00: As I will summarize next week in my Q2 quarterly report,
• 0:15
  SPEAKER_00: stock indexes broadly did okay over these periods,
• 0:18
  SPEAKER_00: but last week confirmed that some two-way volatility is creeping into the mega tech
• 0:23
  SPEAKER_00: names that have carried this eight-month rally.
• 0:27
  SPEAKER_00: The highlights of the week were always going to be the presidential debate and some
• 0:30
  SPEAKER_00: big inflation data on Friday,
• 0:32
  SPEAKER_00: but I'm not sure the needle moved much.
• 0:36
  SPEAKER_00: A broadly sluggish session to start the week on Monday was characterized mainly by
• 0:40
  SPEAKER_00: a continued deepening price deterioration in the recent darling risk assets of AI
• 0:46
  SPEAKER_00: stocks and crypto.
• 0:48
  SPEAKER_00: Nvidia plunged again to reach a 13% plus correction,
• 0:53
  SPEAKER_00: shedding $430 billion in value in just three trading days.
• 0:58
  SPEAKER_00: That's more than the entire value of MasterCard.
• 1:01
  SPEAKER_00: But 70% of the large cap S&P 500 stocks actually moved higher on the day.
• 1:07
  SPEAKER_00: This further exposed the divergence that I've been referring to in this report for months.
• 1:13
  SPEAKER_00: Bitcoin had its worst day in years.
• 1:16
  SPEAKER_00: Even the hottest trades are not one-way bets.
• 1:20
  SPEAKER_00: In a complete reversal of fortunes on Tuesday,
• 1:23
  SPEAKER_00: there was a solid rebound in AI and crypto,
• 1:26
  SPEAKER_00: with Nvidia recovering all of its Monday losses.
• 1:29
  SPEAKER_00: Dip buyers can take most of the credit.
• 1:32
  SPEAKER_00: At the same time,
• 1:33
  SPEAKER_00: big consumer names like Walmart,
• 1:35
  SPEAKER_00: Nike,
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  SPEAKER_00: and Home Depot all struggled on fears that the relentless level of Americans'
• 1:41
  SPEAKER_00: retail spending may be starting to top out.
• 1:45
  SPEAKER_00: Things stabilised somewhat on Wednesday,
• 1:47
  SPEAKER_00: with stock prices across the board drifting around aimlessly,
• 1:51
  SPEAKER_00: despite decent earnings and outlook from FedEx considered to be something of a
• 1:55
  SPEAKER_00: proxy for the state of economic conditions.
• 2:00
  SPEAKER_00: Thursday was another uneventful one,
• 2:02
  SPEAKER_00: ahead of the debate that evening and the important inflation data the next day.
• 2:07
  SPEAKER_00: Megatech continued its recovery,
• 2:09
  SPEAKER_00: but Walgreens,
• 2:10
  SPEAKER_00: a favorite of dividend stock hunters and recently booted from the Dow Jones
• 2:16
  SPEAKER_00: Industrial Average Index,
• 2:18
  SPEAKER_00: got punished really hard after some very undistinguished quarterly results.
• 2:23
  SPEAKER_00: The excruciating presidential debate on Thursday night simultaneously reduced and
• 2:30
  SPEAKER_00: increased political uncertainty.
• 2:33
  SPEAKER_00: On one hand,
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  SPEAKER_00: much of the doubt about the outcome of a Trump versus Biden head to head is now
• 2:38
  SPEAKER_00: rapidly evaporating as a result of what we saw on Thursday night.
• 2:42
  SPEAKER_00: But the now somewhat more elevated sense that Biden is simply no longer a viable
• 2:47
  SPEAKER_00: candidate leading to Trump versus whoever head to head could inject a massive level
• 2:53
  SPEAKER_00: of ambiguity into the process.
• 2:57
  SPEAKER_00: The week, the month, the quarter and the half came to an end with something of a whimper on Friday.
• 3:03
  SPEAKER_00: Wall Street decided to,
• 3:04
  SPEAKER_00: for the moment,
• 3:05
  SPEAKER_00: put growing political volatility concerns on the shelf as something to worry about later,
• 3:11
  SPEAKER_00: choosing instead to focus on the publication of the important core personal
• 3:16
  SPEAKER_00: consumption expenditures,
• 3:17
  SPEAKER_00: PCE price index,
• 3:19
  SPEAKER_00: which increased just 0.1% for the month and showed that this measure of annualized
• 3:24
  SPEAKER_00: inflation fell to 2.6%,
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  SPEAKER_00: the lowest reading since March 2021.
• 3:31
  SPEAKER_00: Wall Street's response was something of a shrug,
• 3:33
  SPEAKER_00: partly because the numbers mostly matched expectations,
• 3:37
  SPEAKER_00: and also because the major indexes are trading not far below all-time record levels,
• 3:42
  SPEAKER_00: and this data certainly wasn't unexpectedly spectacular enough news to push
• 3:47
  SPEAKER_00: anything meaningfully higher from there.
• 3:50
  SPEAKER_00: In the end, we saw stock prices sink a little on some pretty low volume.
• 3:55
  SPEAKER_00: There's an old adage on Wall Street that bull markets climb a wall of worry,
• 4:00
  SPEAKER_00: bear markets slide down a river of hope.
• 4:03
  SPEAKER_00: The stock market,
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  SPEAKER_00: excluding select mega caps,
• 4:06
  SPEAKER_00: remains in a corrective phase since mid-May,
• 4:09
  SPEAKER_00: which is still unresolved.
• 4:12
  SPEAKER_00: It's important to recognize that the top three stocks in the market,
• 4:15
  SPEAKER_00: Microsoft,
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  SPEAKER_00: Apple,
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  SPEAKER_00: and Nvidia,
• 4:18
  SPEAKER_00: now make up 20% of the weight of the entire S&P 500 index,
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  SPEAKER_00: and Nvidia alone represents 20% of the technology sector.
• 4:31
  SPEAKER_00: Out of 11 sectors,
• 4:33
  SPEAKER_00: only the technology and communication services sectors are outpacing the
• 4:38
  SPEAKER_00: year-to-date gains by the S&P 500 index.
• 4:43
  SPEAKER_00: In order to reignite broad demand and further gains in stock prices,
• 4:47
  SPEAKER_00: Wall Street needs to have a more concrete sense of the Federal Reserve's first
• 4:51
  SPEAKER_00: interest rate cut and some stability at least in U.S.
• 4:55
  SPEAKER_00: consumer behavior that seems to be turning negative.
• 4:59
  SPEAKER_00: In order for stocks to rally from here,
• 5:00
  SPEAKER_00: there needs to be a broadening out in the number of stocks fueling the gains.
• 5:06
  SPEAKER_00: There remains a lot of noise in this market about economic growth,
• 5:09
  SPEAKER_00: inflation,
• 5:10
  SPEAKER_00: earnings,
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  SPEAKER_00: the Fed,
• 5:11
  SPEAKER_00: geopolitics,
• 5:12
  SPEAKER_00: and coming up soon,
• 5:13
  SPEAKER_00: the election.
• 5:15
  SPEAKER_00: But for all the noise, the facts remain as such.
• 5:19
  SPEAKER_00: The bullish mantra that has powered stocks higher since November of last year remains largely intact.
• 5:26
  SPEAKER_00: And as long as that remains the case, then the downside risks for this market should remain limited.
• 5:32
  SPEAKER_00: That said,
• 5:33
  SPEAKER_00: we should continue to be concerned about the rate at which growth is slowing,
• 5:38
  SPEAKER_00: not so much because of any recession risk,
• 5:41
  SPEAKER_00: but instead because at these price valuations,
• 5:45
  SPEAKER_00: any significant moderation in growth is simply not built in.