The selloff wasn’t really broad panic. It was more of a tech problem than a market problem. |
Most S&P 500 sectors actually finished higher, helped along by a welcome combination of lower oil prices and falling long-term Treasury yields. |
Tech was the exception — and a big enough one to pull the major averages in different directions. |
The Nasdaq fell 0.76%, the S&P 500 slipped 0.28%, and the Russell 2000 lost 0.8%. Meanwhile, the Dow gained 0.26%. |
For all the red on the screen, most of Monday’s damage came from one corner of the market. |
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Macro Moves:
→ 10-Year Treasury: ▼ 4.70% › Yields eased as reports suggested Treasury could tap its cash account to help finance expanded bond buybacks.
→ U.S. Dollar (DXY): ▲ 0.20% to 99.01 › The dollar regained some ground after touching a three-month low last week.
→ Bitcoin: ▲ ~1.8% to roughly $79,000 › Bitcoin kept last week’s surge alive and spent Monday knocking on the door of $80K. |
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#1 Stock to Own as Trump Launches Historic Mission Backing "Medical AI" |
In the biggest federal push since the Apollo program that landed on the Moon... Trump is now pouring the full support of the federal government into a new type of AI that could soon be worth 500 times more than ChatGPT. It works 10,000 times faster than human PhDs... and Elon Musk calls the underlying tech "the most disruptive force in history."
Click here to learn about the #1 stock to own as this new AI goes live. |
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❗ Looking Ahead:
Wednesday brings PCE inflation and Nvidia earnings, before Fed Chair Kevin Warsh takes the stage at Jackson Hole on Friday. Between AI and interest rates, the market’s two biggest pressure points are about to get tested. |
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#TRUTH:
❗❗❗ ❝ Doubt is not a pleasant condition, but certainty is absurd. ❞
~ Voltaire |
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Tesla Took the Roof Off |
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Tesla spent nearly a decade trying to turn the roof itself into the solar panel. |
Now, it’s moving on. |
The company has stopped selling its Solar Roof tiles, the premium product Elon Musk unveiled back in 2016 as a sleeker alternative to traditional rooftop panels. Tesla’s Solar Roof webpage now redirects customers to its regular solar-panel offering. |
The original ambition was considerably bigger. |
In 2021, Tesla was targeting 1,000 Solar Roof installations per week. Industry estimates suggest it never came particularly close. |
And the numbers behind Tesla’s broader solar business tell a similar story: |
→ 2016 — Solar Roof unveiled
→ 1,000/week — Tesla’s eventual installation target
→ 2026 — Solar Roof discontinued
→ ~10 years — From unveiling to exit |
But Tesla isn’t getting out of solar. |
It’s doing almost the opposite. |
The company has shifted its residential strategy back toward traditional solar panels, now produced at its Buffalo factory, while simultaneously proposing a $10.1 billion solar-cell factory outside Houston that could create 9,712 permanent jobs.
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Memory Tax. |
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The AI boom has already made chips more valuable. |
Now it’s making your gadgets more expensive. |
Amazon raised prices across its hardware lineup over the weekend, with increases hitting Echo speakers, Kindles, Fire TVs and Eero routers. In some cases, the jump was anything but subtle. |
The Echo Dot went from $49.99 to $79.99 overnight. |
That’s a 60% increase for essentially the same device. |
Amazon pointed to rising memory and storage component costs, saying it had absorbed those increases for as long as it could before passing some of them along to customers. |
And Amazon isn’t dealing with this alone. |
The AI infrastructure buildout has created enormous demand for memory, tightening supplies across the broader electronics industry. Apple has already raised prices on some Macs and iPads, and the shortage is expected to persist through 2027, with prices potentially not stabilizing until 2028. |
So there’s a slightly ironic chain developing: |
More AI → more demand for memory → more expensive components → more expensive everyday electronics. |
Amazon says promotions will still pop up over the next year, which may soften some of the sticker shock.
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A Cheap Problem. |
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For a company at the center of the AI boom, Nvidia is starting to trade at a surprisingly ordinary valuation. |
Its forward P/E has fallen to roughly 24x, compared with about 21x for the S&P 500. |
That’s a pretty small premium for one of corporate America’s fastest-growing companies. |
And it raises an interesting question ahead of Wednesday’s earnings: |
Is Nvidia cheap because investors are missing something — or because they’ve stopped believing the extraordinary growth lasts forever? |
Part of the answer is simply size. Nvidia has spent the past few years turning enormous expectations into enormous actual profits. As that happens, investors have gradually shifted from valuing the company on what AI might become to what Nvidia can actually earn. |
There are also plenty of reasons for caution: competing AI chips, future cloud spending, China, trade restrictions and the possibility that today’s massive infrastructure buildout eventually slows. |
Perhaps the bigger challenge is that even beating expectations hasn’t been enough lately. |
JPMorgan notes Nvidia’s revenue guidance has beaten Wall Street estimates by an average 4% over the past four quarters — yet the stock has fallen an average 3% over the following seven days and 5% over the following 30 days. |
So Wednesday isn’t necessarily about whether Nvidia beats. |
It’s about whether Nvidia can give investors a reason to start paying up again.
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Gains & Pains: |
Gains:
→ Mastercard (MA): ▲ 3.3% › Credit-card stocks bounced from last week’s pullback as financials outperformed the broader market.
→ Visa (V): ▲ 3.1% › Joined Mastercard’s rebound as payment stocks provided some of Monday’s strength outside tech.
→ JPMorgan (JPM): ▲ 1.1% › Financials gained about 1%, helping keep the Dow in positive territory.
→ Warner Bros. Discovery (WBD): ▲ 0.5% › Shares edged higher after California’s attorney general canceled a meeting tied to the state’s challenge of Paramount’s proposed takeover. |
😬 Pains:
→ SanDisk (SNDK): ▼ 6.4% › One of the sharpest casualties of Monday’s semiconductor selloff.
→ Micron (MU): ▼ 5.8% › Memory-chip shares took a particularly hard hit as investors backed away from semiconductors ahead of Nvidia’s results.
→ J.B. Hunt (JBHT): ▼ 5.3% › Shares fell as the escalating U.S.-Canada trade dispute put transportation names under pressure.
→ AMD (AMD): ▼ 3.5% › Another casualty of the broad chip retreat that weighed heavily on the Nasdaq.
→ Intel (INTC): ▼ 3.1% › Semiconductor weakness pulled Intel lower despite attention around newly disclosed purchases by Nancy Pelosi.
→ Ford (F): ▼ 3.0% › Automakers came under pressure after Trump threatened 50% tariffs on Canadian vehicles and auto parts starting next year.
→ Nvidia (NVDA): ▼ 2.9% › Investors trimmed exposure ahead of Wednesday’s earnings report, one of the week’s biggest tests for the AI trade.
→ Broadcom (AVGO): ▼ 2.6% › Fell alongside the chip sector as investors weighed concerns around debt financing for AI expansion.
→ General Motors (GM): ▼ 1.2% › Joined Ford lower as the latest U.S.-Canada tariff threat hit auto stocks.
→ Alibaba (BABA): ▼ 0.73% › Slipped after unveiling a $10.2 billion discounted share sale to help fund its AI ambitions.
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Escapes: |
Chicago📍 Illinois 🇺🇸 |
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Commodities Check : ✔️ |
→ WTI Crude: ▼ 2.35% to $85.01 › Oil shed more than $2 as traders largely shrugged off Washington’s expanded sanctions on Iran.
→ Brent Crude: ▼ 2.35% to $92.17 › Brent retreated alongside U.S. crude, giving back some of last week’s geopolitical premium.
→ Gold: ▲ 0.97% to $4,647.29 › Gold extended its recent run and reached its highest level in more than three months.
→ Silver: ▼ 0.4% › Silver took a breather while gold continued higher.
→ Platinum: ▼ 0.2% › Platinum edged lower during Monday’s precious-metals trade.
→ Palladium: ▲ 0.5% › Palladium bucked the softer moves in silver and platinum.
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The stinger: |
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Disclaimer: |
This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills. |
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