Market Outlook: Fed, AI & Oil

No one to better break down the week that was and of course the session that was then the Einstein of Wall Street, Peter Tuchman with Trades.

Peter, good to see you on this Friday.

Always a pleasure to be with you, my dear.

Yes, very much so.

We're rounding out the month of July.

What do you make of today's action, especially into the close?

You know what I mean, I think it was fairly impressive.

There was a lot of flow on both sides.

The fact is everyone needs to know that obviously the Fed day is a day where it gets very emotional.

The initial reaction was on the upside, and then we Then we had the market sell off aggressively after he stopped talking and we thought it was probably a number of different things.

It turned out it was, uh, that one hedge fund that that massive margin call that forced that to sell off.

Now, the day after Fed day is the day that really you get the, the majority of the, of the investment community gives it's a real impression of what the Fed meeting was about.

There were 3 dissenters, the most since 10 years has gone by, and they were all pushing for a raise in interest rate.

Rates and we did not get that.

However, that day, the Thursday after the Fed date, tends to, you get the real impression of what the landscape feels like.

And those days have been up ever since then.

That's why we ended up having a closing week on the upside and it being sort of a bullish end to the week.

So we were as high, I mean, we've been trading flatline off the high of the market all afternoon, and so it was impressive price action.

I'm impressed with the way we ended the month.

It was a wild month.

Let's be clear, there were so many moving parts with memory, with With the MG 7, with the anticipation of earnings with oil hitting 6739, a pre-war low, and then bouncing back into the mid-90s and high 90s and then pulling back again, we know that the long term implications of higher oil are the inflationary, the implications inflation.

And so while that maintains a certain stickiness, we're trying to sort of get our footing back on what's going on relative to the war.

We reengaged the oil trade a little bit.

And what's been curious is that while we've had oil down the last 3 days, transports as well have been down, and that's usually an inverse trade.

So look, there's a lot going on here.

We've got, I think the overall view of what's been going on this week is Capex versus monetization, right?

We saw how much money was being put in.

You mentioned it in your intro about the fact that the.

And a lot of those bigger names have continued to put their money into the AI trade.

Those guys get a nice little bit of a lift today.

Now the problem was why we had a couple of these weaker days earlier in the week was the fact that I mean we saw that with Google for the first time in history.

Google had no cash flow, no cash flow in their account as part of their guidance report on earnings.

That kind of gave The sense that their investors were being impatient.

They weren't getting that return on investment that they were looking for.

And so that sort of capex spending, which we know is going to take a little while to see its realization.

And so people need to be patient with that trade because we know the demand for AI is as big as it's ever been.

We've talked to Dan Ives about it over the last couple of weeks.

We did a piece on Wednesday.

The demand is there.

The spending is there.

The monetization may take a little while to linger while it's trying to get its footing, but I think we're in good shape.

Anything to be watching over the weekend?

You know what, look, in this new world we live in, anything can happen in the weekend.

Obviously things out of the administration, I would think relative to the war in the Middle East, how are the Straits of Hormuz?

How's the oil coming out of there, the price of oil.

I would hope that ending the closing out the month, a month that has seen high highs and low lows, I would hope that everybody just takes a little bit of a breather, you know, and And I would, I would just step away, you know, I would enjoy the beginning of August.

We still have some summer left to us, and you know, and not really project.

I would say manifest positivity and don't project into any negativity.

You mentioned the AI spend, and certainly we've seen some of these technology companies write fair their own way.

Very good results for Amazon.

Same for Microsoft, underperformance for Apple.

Do they all trade differently in this environment?

So I think what we've seen, which is unusual, is that the mag 7 and the tech sector has broken down into multiple mini sectors inside where we get to break down software, chips, memory, compute, and that used to all fall under the big tech mag 7 law and now they're all individually analyzed.

And they all play a different role and we've seen that a lot in the rotation trade that we saw all through July when they're selling the software, they're buying the chips when they're buying the chips, they're selling memory when they're selling memory they're buying compute and so there's been so much rotation even in days where we've seen up 1000, down 1000.

The advances versus declines have been 50/50.

And that's something that I tend to analyze.

Mainstream media tends to just sort of, you know, catastrophize that story, but for me that shows rotation.

People are getting out of their under or overperformers and getting into value.

We've seen a nice surge in midcap, small cap, in the secondary and tertiary AI stocks, and so, you know, I, I think we're in good shape.

All right, Peter Tuchman, of course, with Trade.

Peter, always a pleasure.

Thank you so much for joining us.

Happy weekend, everybody.

Happy trading.