The Stock Market is going CRAZY... (WARNING)

Holy smokes. Look at this heat map today. It's either deep red or deep in the green. There's really no in between today. We're going to get into all of your big news today. Your PCE numbers, the reaction to the Fed, what other government officials are saying like Kevin Hassid and Trump, what's going on with Iran, why are AI hardware stocks exploding higher alongside Microsoft up 15% today? This is one of the crazier moves I think we've ever seen before because there's a lot of red out there today, but yet the triple Q's up 3.3% today, which is absolutely insane. The stock market is going crazy today. Do me a quick favor before we begin here. Hit that like button for the YouTube algorithm. Help push this video out to more people that need to hear it. Okay, so first and foremost, why are AI hardware stocks moving higher today? Well, it's actually a very weird scenario. So, Microsoft, they actually lowered their capex guidance for this year, but it wasn't because they're going to be spending less money. It's because of an accounting trick. So during the earnings call la last night, Microsoft kept its underlying infrastructure investment plans unchanged but adjusted its reported figures downward due to a major accounting shift. CFO Amy Hood guided to 50 billion in capex for the upcoming fiscal first quarter of 2027 and revised its full calendar year 2026 forecast to 175 billion down from the previous 190 billion estimate. So that was actually a lower capex number explains why Microsoft is higher. But why are AI stocks higher on that? Well, Microsoft extended the estimated useful life of its data centers and office buildings from 15 years to 25 years. This shift classifies more future data center real estate agreements as operating leases instead of finance leases. Because operating leases are excluded from capital expenditure accounting, the reported capex line item drops. Management repeatedly stressed that their real world buildout plans and AI component orders have not slowed down. So what do you have? you have weird accounting practices that are actually going to show lower capex numbers. So, you kind of satisfy the Microsoft crowd, right? The the worries about the capex trade and you continue to fuel the AI buildout. Wall Street's saying today, look, if all of these companies do this, which it looks likely at this point, they tend to follow each other, then that means they will have more of a capacity to spend next year. It doesn't mean that they will. It means they will have a larger capacity to spend. CFO Amy Hood confirmed that overall capex will grow further in full year 2027 to support accelerating cloud and AI demand. However, she reassured investors that that the company expects to remain free cash flow positive throughout the year. So, you kind of satisfied Microsoft investors, hence why the stock is up 15% today and also threw a bone to AI hardware stocks as well. Now, I don't personally think this is sustainable to cause, you know, another big round of FOMO in AI hardware stocks. At the end of the day, it's kind of the same old same old. We just have accounting tricks going on at this point. But AI hardware stocks had had fallen a lot heading into um yesterday's report from Microsoft. I even said on this channel that, you know, the selling had gotten pretty extreme that you could go out and start to find some AI stocks that look attractive. I mean, Micron was down 41.5% from highs. You're still down 32%. Even after today's 15 and a half% bounce, but just again picking on Micron here, the stock had fallen a lot. So it was vulnerable to any form of good news. And if you want to call this good news, we can call it good news. Wall Street is taking it as good news. Even though I don't think mathematically it changes all too much. Now Meta on the other hand today is down 9% because they did raise capex about $5 billion on the the low side. They did not move the high-end estimate, but Meta's earnings were just really bad. They missed on next quarter's revenue guidance. They missed on operating income. They missed basically across the board. It was bad. I mean, could it be worse? Obviously, but raising guidance and missing on earnings like that, yeah, the stock's down 9%. I'm I'm not surprised by that. Now, if we take a look at your indexes today, the Russell 2000 is up 0.79%, NASDAQ 100 up 3.1%, NASDAQ up 2 and a.5%, S&P up 1.12%, and the Dow is up 0.42%. 10-year Treasury yields today actually up about 4 and a half basis points, sitting at 4.665%. So, again, heading higher again, 5% is a big danger zone. A lot of people are nervous about that. If we see a run to 5% in 10-year Treasury yields, that's that's not going to be great for the markets. That could be a bit of a breaking point for the markets. Oil today down around a half of 1%. Even though the US launched a heavy wave of strikes against Iran late Wednesday in retaliation for missile strikes on American forces in the region, Iran's Islamic Revolutionary Guards Corpse have threatened further escalation in response. And there are some reports today that Iran struck a US military base in Jordan and destroyed three F-35s, but we'll see if that's confirmed. Yeah. And do we remember this uh AI investor Leopold Ashton Brener? Uh he was forced to unwind all public stock positions after steep losses. sources say this is the guy that started a fund with like a million dollars and grew it into billions of dollars in the last year or two. This used to be a researcher um at OpenAI. Pretty uh popular guy in the investing world. Kind of a a shadow, you know, you don't hear a lot of him, but every time his portfolio comes out, people people watch it. It is the situational awareness fund. It says he has sustained significant losses in recent weeks as its portfolio of AI infrastructure investments such as SKHENX declined while short positions in software companies such as Adobe moved sharply against it. So uh yeah it's not looking good. That's why again not just that but kind of why AI stocks AI hardware stocks are moving higher today. you want to be a little cautious about just rushing back into AI hardware as if you know there's going to be some kind of huge rally here like another FOMO rally. I don't think that's going to happen. We didn't get any real change. It's an accounting trick from Microsoft that could allow further capex gains uh or or growth next year, but not a guarantee at this stage. We also had some pretty big economic data today. You have core PCE price index month overmonth for June that came in at 0.1%. The forecast was 0.1%. So in line with estimates broadly, it says here consensus at 0.2%. This was a better than expected report. If you take a look at the last, you know, couple of months, you you came in low today. This is the lowest uh PCE month-over-month number for core you've seen in over a year. I mean, this is uh some of the lowest numbers you've seen in the last 3 years. We also had GDP growth rate quarter-over-arter advanced numbers for Q2 coming in at 1.5% today, which was lower than the forecasted 2.2%. So inflation basically core PCE came in lower than expected. GDP came in lower than expected as well. Kind of a weird scenario. Uh personal income, or at least not what people had expected. Personal income month over month came in at 0.2%. The forecast was 0.4% and personal spending month over month for June came in at 0.3% versus the forecast of 0.2%. You also had initial jobless claims today. They came in at 197,000. The forecast was around 200,000. So that was stronger than expected. China's vice premier expressed concerns about recent US restrictive measures against China and says both sides agree to step up communication and expand cooperation. And it does look like there is some regional escalation in the Middle East. It says here the Houthis attack Saudi Arabia from Iraqi territory in cooperation with Iraqi militias. Kevin Hasset today says quote he still has confidence in Wsh of course. Hasset says, "I think WASH's job just got a bit easier with today's inflation data." And he says, "I don't see markets in bubble territory due to AI." He also says, "I am very bullish on Fed policy going in the proper direction." Kevin Hasset, when asked if WSH is a hawk or a dove, says, quote, he's a realist. He says the markets may need a couple more prints like today's, and he says that WSH will do what the data says he should do. Iran says today talks with Oman over management of the straight of Hermoose continue. And Pakistan today is pushing US Iran talks. Pakistan says it is quote doing the utmost to revive US Iran negotiations stressing that diplomacy is the only path to easing tensions. Islam Abad which hosted peace talks and helped broker a temporary ceasefire said it supports all efforts to sustain the truce and resume dialogue between Washington and Thrron. Another reason why AI stocks could be moving higher today is South Korea is weighing a shortselling ban. The the Korean exchange has reportedly reviewed the technical feasibility of a temporary shortselling ban and tighter daily price limits to curb market volatility. Officials said no decision has been made, describing the review as a contingency exercise. Authorities are on high alert as sharp market declines fuel calls from retail investors for stronger stabilization measures. And another developing story we should probably watch closely here. It says Iran to receive Chinese air defense missiles. Iran is expected to receive an initial shipment of up to 400 Chinese-made man pods within weeks under a deal worth 60 to 70 million. Reuters reported citing sources the systems would would strengthen Iran's short-range missile short-range air defenses after months of conflict with the US and Israel. China denied the report while Pakistan rejected claims it would facilitate deliveries. So yeah, the last thing we need is uh beef with China, some kind of tariff conflict because China is giving missile systems or military equipment to Iran. And that's a risk to watch out for at this point. That would take this market correction from bad to worse quickly if we started hearing uh you know China tariff threats being thrown out there. Now again, if we look at the NASDAQ today, the triple Q's, you uh bounced right at that 100 day moving average. You're up almost 3% today. You're still down a lot from highs. And again, I think that's why you're bouncing so aggressively today because you were down yesterday 11 12% from highs. After the bounce today, you're currently down about 9%. You're still down a lot. And this was a slight positive for the AI trade again from the accounting change for Microsoft. A slight positive for Microsoft investors as well. Although they're still going to be spending the same amount of money, Microsoft says, "Look, we're not going to let free cash flow go negative. That's some reassurance. But again, I I I still don't think it's impressive enough to drive another FOMO rally in AI hardware stocks. And it's not that big of a deal to drive a new rally for, let's say, Microsoft to new all-time highs. Like, could this give you a rally? Sure. And it did today. But I I don't think it's super sustainable. And I think these these bounces will likely be sold. I think Wall Street is in the mentality of right now of let's uh derisk from AI hardware. Let's let's get out of some of these stocks. So, I think it could trick a lot of people with such a strong move today and such a hyper concentration. I mean, look at this in, you know, your some of your hyperscalers and your AI hardware stocks and deep red for everything else. A lot of retail investors are going to go, "Oh, yep. AI hardware trade back on and alive," which it doesn't appear that way to me. Oh, yeah. The stock market is uh going crazy today. But again, think about the bigger picture here and think about really what's going to do well after the midterm elections, right? We are in this volatile period before the midterms where you tend to get a correction. You want to be thinking about what happens between now and next July when the markets tend to basically go vertical. I mean, you want to be positioning in the stocks that are really going to win in this environment. And I think those are cyclicals, industrials, those are small caps, those are software stocks. Some of the areas that have been left behind in the last 6 months as AI stocks have dominated the headlines or AI AI hardware stocks I should say. Also, keep in mind we do have earnings from Apple and Amazon and Roblox and Reddit and some others today and after hours that can also move the markets quite a bit. Again, it's really down to the capex numbers when it comes to Amazon and we'll we'll see what happens. So, let me know your thoughts on all of this down below in the comment section. Hit the like button as well as 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 down below in the description of today's episode. Have a fantastic rest of your day and I will see you in the next