The Stock Market is EXPLODING.. (SHOCKING NEWS)

We have massive news today for the stock market. AI stocks are continuing to sell off. We have some big problems there we will address in this video, but you can see a violent rotation is taking place and I want to get into why and what this news is here in just a few seconds. But first, hit the like button for the YouTube algorithm. Help push this video out to more people that need to see it that will make money from it. So jumping right into this because I don't want to waste your time. Your time is valuable. The Treasury announced today that they will double the debt buyback that they were doing before. So before the government would buy back about $2 billion worth of those 30-year bonds. Well, now they're going to do $4 billion each time they do a buyback operation. So this is Scott Bessent trying to stabilize the long end of the curve. Now yesterday, 30-year bonds hit a 19-year high. So people have been concerned about this. Basically what that means is nobody's wanted to buy the 30-year bonds. Now the government's saying, "Look, we're going to go from buying 2 billion to 4 billion." And that's bringing down 30-year Treasury yields today down about 9 and 1/2 basis points, which is a big move for 30-year bonds. Now I don't think 30-year bonds rising has been the biggest issue for the market, but it's definitely up there and has been a negative impact at least in the last couple of days as the 30-year bonds have been breaking out. So this is one reason why you are seeing this rotation today, but the other side of it is what is happening to AI stocks. And AI has its own problem. So there's really a lot of different things happening here. It's all coming together at the same time and that is why you are seeing such a violent rotation out of AI stocks into basically every other part of the market. Number one, a couple of days ago Anthropic reported 65 billion in ARR. Impressive growth, but the estimates were over 80 billion. And a lot of people think Anthropic's going to be a three, 400 billion dollar revenue business by the end of next year. You're at 65 billion today. You you are not even close to those estimates that a lot of the bulls had. That's a problem. Anthropic also came out and put their 2028 ARR target between 190 million and 200 or 190 billion and 200 billion. So, for anyone that is unaware, ARR is actually like for the next year, okay? So, basically, if Anthropic says they're going to have ARR at 200 billion dollars for 2028, that means that is their expected 2029 revenue. I know. It It's a little confusing. That's not their expected revenue for 2028, it's for 2029. So, that was a big disappointment for a lot of people. Well, on top of that, OpenAI just posted revenue of 6.7 billion. Their losses are growing. It's actually outpacing the 1 billion revenue jump that they had from the prior quarter. Quarter-over-quarter growth is up 18% for revenue at OpenAI. That does not justify the trillion dollars worth of contracts that OpenAI is signing with Oracle and Microsoft and the next guy. The math doesn't math on that. At the same time, token prices have fallen 50% in two months. Look at this. This is token prices collapsing in real time. Now, there's people that say that Kimmy K3 and Deep Seek are, you know, people are switching to those models and they're cheaper and that's why this is happening. Open AI just cut prices 80% on their Luna model. I don't know exactly why this is happening, probably a combination of all of this. But, the simple fact is, a lot of the data center investments in the entire AI complex does not work if token prices continue to fall. Say if you were looking to build a data center for $10 billion and you were expecting that data center to bring in $2 billion in revenue, but now token prices are half of what they were 2 months ago and now your data center is going to bring in a billion in revenue, it just doesn't work. You could also make the argument that if people are using cheaper models or models are becoming more efficient and they need less compute, then that's a problem for other hardware names memory GPUs because people are not going to need as many. So, that's another big problem right now. Also, Jane Street has not lost money in the stock market in 120 months. That's 10 years. Well, they lost $15 billion in July. So, they've made money 119 out of 120 months. They're not going to be rushing back into AI hardware and I think a lot of other firms are in a similar position right now where they just got burned for the first time in a long time and they're not rushing to go out and buy the same stocks that burned them. On top of all of that, and I know that's a lot, you also have the $3 trillion in off-balance sheet obligations from the hyperscalers. That's the cat's out the bag on that. Well, with token prices declining, a lot of people are saying, "Do you need to spend that much? If we're becoming very efficient or people are using cheaper models, could that be bad for Nvidia numbers or AMD or Intel numbers? Could that be bad for memory numbers? Maybe. I don't have the final verdict on that. But all of these things coming together at the same time, right before the midterms, as we have the Iran war going on and what was a dramatic rise in treasury yields in the last couple of weeks, you can see why hardware is really not having a good time. Now, again, if we take a look at the heat map today, health care, big winner. Look at that. Almost every stock is green there. AI industrials, losing. Consumer defensives, winning. Cyclicals, also winning, which I think is very interesting um considering the Iran war. We're not hearing all too much on that right now, but I do personally think the Iran war could de-escalate soon. And there's been a lot of signs of that that could be coming. And I've really talked about this a lot, but I mean, Donald Trump said a couple weeks ago he would be willing to walk away from the Iran war if the Strait of Hormuz opened. Iran and Oman are in talks to figure out navigation within the Strait of Hormuz. The Pentagon said yesterday that they want to reduce the amount of US forces in the Middle East after the war with Iran is over with. It was reported yesterday from some of Trump advisers that there was positive talks with Iran, but Trump said, don't communicate with them until they're ready to sign a deal. Why? Because they're not ready to sign a deal until at least they get something figured out with Oman. So, if you put all of this together on top of it is a midterm election year, voters are not feeling good heading into the midterms. So, you want to, you know, fix that, get gas prices lower ahead of the midterms. Put all of that together, and I think it looks good for de-escalation. Now, again, back to the heat map, communication services doing quite well, financials doing quite well outside of the AI ones. So, your big banks are not doing well. The Goldman Sachs, Morgan Stanleys are not doing well because they're underwriting a lot of the AI debt. So, they're making a lot of fees from that. So, financials are not all created equal. Semiconductors, again, some are doing okay like Marvell. I'm actually a fan of Marvell. But, some of them, most of them, not doing well. Computer hardware, memory, Dell, the whole stack not doing well. Software, look at that. Software's having a blowout day today. Apple's up 2 and 1/2%. Microsoft up a half of 1%. Google is up a little bit. Meta's up about 1%. Amazon's up 1 and 1/2% and Tesla up about 3%. So, there is a very violent rotation happening today. And honestly, I think it could continue. To be honest, I don't see any reason why anyone would go out and buy hardware stocks right now. Like, there is way too much working against you and way too much uncertainty. At the same time, bond yields are now falling, and if again, there is de-escalation with Iran, that's a big positive catalyst for the broadening to continue. And again, I've been warning about hardware stocks for a long time on this channel. I just think it's finally like starting to come to fruition. We have been positioning for this broadening, and I do think it's going to last, right? Once you take AI hardware out the picture, that's been the FOMO trade, where is the money going to go? I think a lot of it's going to go to software. It's going to go to the new AI trade, robotics, automation, AI software, cybersecurity, healthcare, cyclicals, small caps. It's literally going to broaden out from semiconductors leading the markets and being the only trade on Wall Street to now everything else has a chance to do well. And I think it's going to last a long time. I think we're going to have a broadening out for a year or two. Some stocks will do a lot better than others, of course, and you want to position for those stocks like we are doing in the trading community. We are up 96% year-to-date. Not because we're smarter than the next guy, but because we are envisioning what's going to happen and executing on it before it happens. We've been positioning for this. And I think we will be proven correct over the next 6, 12, 24 months. We're going to look back and say, "Damn, Michael was right. Holy it happened." Right? I I think we're very early in this. Now, I'm not a financial advisor, not a financial planner. This is not a recommendation. If you guys want to come join us, come see how we're beating Wall Street to these opportunities um using the advantages that we have. That link is down below in the description of today's episode. Donald Trump also came out with some headlines today. He says oil prices will be a lot lower when this is over. Trump on Iran says negotiations may begin at some point. Trump says we had a lot of boats come through Hormuz last night. Trump reiterates that the Canada deal is subject to finalization. I know I we didn't talk about this yet, but basically for the next couple of days like 50% of the tariffs are off of Canada. Now, at this point, the markets don't even care about that, so I don't even think that's moving the markets at all. It had zero effect in overnight trading or futures trading, but that is another piece of what's happening today. Trump did confirm that he plans on meeting North Korea's Kim Kim Jong Un this year. Donald Trump says, "I had a good conversation with Canada's Prime Minister Carney last night." He says, "We have come to a deal with Canada and we have no tariffs going into Canada. Tariffs will be nonexistent for farmers." Egypt announces diplomatic contact with Iran to de-escalate tensions. Iran's Parliament speaker Gallop off today says, "Resistance is the only path to victory and if we are not prepared for war, negotiations will also be fruitless." Again, preparing for negotiations. Negotiations being the keyword here, even though this doesn't sound great, I hear negotiations are coming. Target today came out as well, easily beating the estimates. Adjusted EPS of $4.11, the estimate $2.29. Net sales $26.54 billion, the estimate $26.11 billion. Comp sales up 3.8%, estimate was 2.43%. Gross margin 33.7% and sees full year adjusted EPS $9.90 to $10.90. And Target stock is up about 5% today. This is a good sign for the consumer and a good sign for the economy. The bigger earnings as far as kind of a macro insight to the consumer and the economy will be coming out tomorrow with Walmart, but Target's a pretty good sign that we don't really have anything to worry about, but we'll see. Walmart's kind of an economic barometer for the health of the consumer. The CNN Fear & Greed Index today is sitting at 58. Yesterday, you were neutral at 54, so you are in greed just a little bit. Mark momentum is neutral, stock price strength is fear, stock price breath is greed, put and call options greed, market volatility is neutral, safe haven demand is greed and junk bond demand in extreme greed. Again, I just want to remind you guys, it is the period of volatility right before the midterms. We are in that right now and I do expect things are going to be volatile, but some of the biggest pressure points on the markets are things like the Iran war, which I think there's an incentive from Trump to actually de-escalate or end altogether ahead of the midterms. There's these problems with AI hardware. Nvidia reports earnings next week, and that's going to be a big catalyst as it always is. I don't think you have to have AI hardware stocks like collapse. I don't think this is the bubble bursting moment, but I don't know how far the crash could go with the sentiment as poorly as it is right now. It looks like a lot of things are going wrong. It looks hard to justify the amount of investing that is happening in AI right now, specifically in the hardware trade, the data center buildout, and that's just a bit of a problem from an index perspective. You know, if you think about like the S&P Micron is like 40% of the S&P 500's EPS growth in the last year. What happens if memory prices compress and come down? That's going to pressure your index earnings, right? This It just is. But for the broader market trade, the rotation trade, it could actually help that a lot. Now, I don't know where things are ultimately going to settle out here, but I think you want to be slow and steady in this environment. I don't think you want to be making brash decisions to sell everything or go all in something. I think slow and steady wins the race here. If you see opportunities that can fit in the broadening theme that you think are trading at a disconnect, I think that's an opportunity to add something. I also think if you're heavily exposed to the hardware trade, and you have a lot of profits, that's something to consider maybe hedging Because the last thing you want is this thing to really collapse again. But, we will talk about all of this in the next video. Ladies and gentlemen, that is going to do it for today's episode. Hit the like button, subscribe to the channel if you guys have not done so already. If you guys want to come trade and invest alongside of us, that link is of course down below in the description of today's episode for the Patreon. What I will also tell you is there is a free course that is slowly and steadily, again, slow and steady wins the race here, that is coming out over on Patreon to show you guys exactly how we're finding the big opportunities that we are in the trading community. What the criteria's are for stocks that 10x, the psychology of the markets, all kinds of things. The latest episode came out last night at 7:00 p.m. There's now three videos to watch over there on that. Another one's coming out tonight at 7:00 p.m. You guys don't want to miss it. It's free, cost you nothing. It's my gift to you that will change your life forever. That is it. Have a great rest of your day, and I will see you in the next one.