Market Data 
Good morning… The Nasdaq continued to push higher into uncharted territory yesterday – marking another new record closing high as the AI trade continued to steal the show. Renewed hopes for a diplomatic breakthrough with Iran pushed oil lower again and that helped to stabilize the bond market – put that all together and you’ve got 3 reasons why investors continued to buy tech.
At 4 pm – it was a mixed bag…. the Dow lost 185 pts, the S&P ended the day flat, the Nasdaq edged higher – rising 122 pts, the Russell gained 15 pts, the Transport sank further into the abyss – losing 84 pts, the Equal Weight S&P added 2 pts, while the Mag 7 lost 102 pts.
Again, I would not say this was a broad-based rally at all, it was just another example of a very specific move into AI and the semiconductor names.
The SOXX – Semiconductor ETF gained 2.4% and is now up 15.6% in 6 days…. Memory names also benefitted from the excitement – sending the DRAM etf up 3.3% and now 17% in just 6 days – MU surging 5%, SanDisk gained nearly 7%, and if that wasn’t enough – investors continued to buy the picks-and-shovels companies supplying the chips, memory, networking equipment and power needed to fuel the AI revolution.
And the list of beneficiaries is long: Nvidia, AMD and Broadcom supply the processors; Micron and SanDisk supply memory and storage; TSMC manufactures the chips; Applied Materials, Lam Research and KLA provide the equipment; while Marvell, Dell, HPE and Vertiv supply the networking, servers, power and cooling. Then you have Microsoft, Amazon and Alphabet providing the cloud infrastructure—and Constellation Energy and GE Vernova helping provide the electricity required to run it all.
But yesterday’s AI story had an UGLY side too…..
While the chipmakers and other pick and shovel names rallied, investors sold companies that could ultimately be disrupted by personal AI agents. Meta’s Muse can do a lot…. I mean a lot, and so can the others – think OpenClaw, ChatGPT, Gemini, Siri, Grok & Instinct…. They can compare prices, make reservations, communicate with businesses and complete transactions on behalf of their users. (that would be YOU).
And that raises a new question – What happens to companies that make money because their customers are too busy – or too frustrated – to search for a better deal?
That’s called ‘consumer inertia’ – meaning customers keep paying, renewing or staying because comparing alternatives, negotiating prices or switching providers takes too much time and effort.
For example? Ok – you asked, so I’ll give it to you….
Insurance companies think Allstate, State Farm, Progressive.
Banks & Brokers think JPM, WFC, BAC, SCHW, etc…because comparing fees and financing is inconvenient.
Telecommunications – VZ, T, TMUS – because it’s a hassle to switch carriers.
Travel – BOOK, EXPE – these are go to names for so many of us when making travel plans.
Streaming services – DIS, NFLX, PARAMOUNT, it’s easy to get lost in the mess.
Gyms/Memberships– business that benefit because customers keep paying without really using the service. PLNT lost 9.5%, LTH lost 4.3%. BKNG – 2.5%, UBER – 2.5%.
Do I need to go on? Look, the point is that the AI agent can do most of it, if not all of that work for you – constantly comparing prices, negotiating bills, cancelling unused subscriptions and finding cheaper alternatives. In other words, AI could eliminate “consumer inertia”.
That is why insurers, banks, brokerages, travel platforms, telecom companies and subscription businesses suddenly found themselves in the bullseye. As a result, we saw Financials lose 2%, Communications lost 1%, Utilities lost 0.3%,
Now, let’s not get crazy…… Muse and the others are not about to destroy the banking, insurance, travel or telecommunications industries. But the market does have a tendency to ‘shoot first and ask questions later’ when that narrative becomes the ‘worry of the day’. And that is important because the message from yesterday wasn’t about how AI may lift every company associated with technology, but rather it was about identifying who supplies AI, who benefits from it and who is about to (or could) get whacked.
And now onto NYC, the UN General Assembly and Trump’s speech. In case you missed it, his message to Tehran was pretty clear….he defended the war as necessary to prevent Iran from obtaining a nuclear weapon, called on other countries to join the US in economically isolating Tehran and then laid out two very different paths.
Iran can reach an agreement that allows it to rebuild – OR it can continue fighting and face possible “annihilation” of the Islamic Republic. It wasn’t any more complicated than that. That was tough language, but here is the interesting part – investors, and markets did NOT react as if another military escalation was imminent. They reacted as if the speech was part of Trump’s maximum-pressure negotiating strategy.
And this morning we find out that Stevey Witkoff and Jared Kushner spent three hours meeting with Iranian mediators in New York. Trump called it a ‘very productive’ meeting. Iran state media said that Iran continues to demand the ‘lifting of the naval blockade, unfreezing all Iranian assets and ending the war on all fronts.
Well, while we have heard this before, it is always encouraging when we hear it again but remember – ‘it ain’t over til the fat lady sings’ and so we wait.
WTI fell further yesterday – losing 2.7% and this morning we are down another 0.7% at $89.85…..WTI is now down about 12% since last week and the chart suggests we could see it fall to the $85 range before it finds support.
Bonds remained essentially unchanged – the 10 yr is yielding 4.95% while the 30 yr is yielding 5.29%. 30 yr mortgages continue to hover around 7%.
The VIX continues to push lower – closing down 0.06 cts at 14.15 – leaving it at levels last seen in December BEFORE the whole middle east conflict even began – which is a bit odd for me, but what it says is that investors are pushing this conflict (just like they did with Russia/Ukraine) and everything that goes with it, to the back burner – with every tick lower, they become increasingly more complacent.
And complacency becomes an issue when the market begins pricing in almost no possibility of a negative surprise. Remember – a low VIX is not, by itself, a sell signal. It can remain low for a long time while stocks continue to rise. But it does mean that protection is relatively inexpensive and that investors may be underestimating the risks sitting directly in front of them.
If, for instance, these talks do in fact produce a ceasefire – then it’s all good and investors were right, but if they blow up again, then the VIX will reprice quickly and stocks will get hit. All it means is – this is not the time to go to sleep.
Gold is lower this morning – down $44 at $4,315 – That weakness is all about the reduced geopolitical anxiety and the Fed’s continued higher-for-longer stance. The chart shows the short term and intermediate term trendlines converging right here at $4,306/$4,315.
Today at the UN – we are going to hear from a ‘Who’s Who’ list of AI CEOs as they brief the security council on the risks of AI…which is kind of comical to me…We are going to get Sammy Altman, Dario Amodei and Hugging Face CEO Clément Delangue to brief the Security Council on the risks that THEIR advanced models pose to global security and humanity. China’s DeepSeek and Moonshot AI have also been invited, making this as much a US-China technology discussion as an AI-safety debate. I mean, you can’t make this up. Grab the popcorn!
Today we’ll get the preliminary S&P Global Manufacturing and Services PMIs. Both are expected to remain in expansion territory at 53.7 & 55.9 respectively. Tomorrow is all about New Home Sales, which are expected to rise 1.3%.
This morning US futures are mixed… Dow futures are flat, S&P’s up 3, Nasdaq down 7, while the Russell is down 8.
European markets are also mixed as the churn continues.
The S&P closed yesterday at 7,764—essentially flat on the day. As I said yesterday, we are now trading in the 7,720–7,800 range. We are only 0.4% away from creating another new closing high for the S&P. Kissing 7,798 is not the same as breaking it. A decisive close above 7,798 would open the door to another leg higher. A failure would reinforce it as resistance and keep us trapped in the current range.
Thin sliced t-bone sauteed in wine and onions
Today’s dish hails from the very northern region of Italy – called Trentino/Alto Adige….this is a complex place and has a variety of influences that are visible in the language, the food and the culture. During his rule (1805-1814) over Italy – Napoleon Bonaparte annexed this land from Austria. He then renamed the region Adige – reflecting the Adige River that runs thru it as he sought to erase any historical affiliation to Austria.
The people speak Italian, and the Austro/Bavarian dialect of the German tongue. As a result, they appreciate foods with ingredients like sauerkraut, horseradish and liverwurst, food much closer to the Austro-Hungarian empire than the Roman empire – so yes – this is Italy, but this dish is not pasta, polenta or Parmegiana. It has no cream or tomatoes. It does have garlic and wine. It is a steak dish sautéed in onions with white wine -…….Easy to make and not fancy at all…. Takes no more than 30 mins to make and serve.
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