November 2, 2025 • 32 mins
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Good morning and welcome to Bulls, Bears and the Bell
Weekend Edition. It is November 1st, 2025, and
today we're doing our deep dive,but maybe a bit differently.
We're not just recapping last week, we're aiming to give you a
full strategic playbook because the week ahead, November 3rd to
the 7th looks incredibly volatile, high stakes.
(00:20):
You know, if you just glanced atthe headlines, you think we're
in market paradise. The S&P 500, the NASDAQ bonafide
record highs looks amazing. But when you actually look
underneath those big index numbers, the foundation, it
feels less like solid rock and frankly, more like shifting
sand. So our mission today is to
really dig into the source material, you know, the detailed
market reports, the Fed transcripts, what companies
(00:41):
actually said in their earnings sauce.
We want to give you a crystal clear view of that underlying
instability and maybe most importantly, how you can think
about navigating it strategically this coming week.
Yeah. And that instability, it's not
just random noise. It's really being driven by two
very powerful conflicts, conflicts that sort of
solidified at the end of last week and are definitely going to
set the tone for this week. First, the market closed out
(01:04):
Friday really defined by what we're calling the great
divergent in tech earnings. It feels like investor sentiment
just fundamentally shifted. It's no longer about rewarding
AI promises. It's about demanding immediate,
tangible AI profits like right now.
But the second conflict, and this one has, I think, deeper
systemic implications for reallyevery investor is what the
(01:24):
Federal Reserve did. We're calling it the hawkish
cut. Sounds contradictory.
Right, the hawkish cut. Yeah, explain that one.
Well, the Fed gave the market the rate reduction it wanted,
but then Chair Powell immediately followed up with
rhetoric that honestly created profound and immediate
uncertainty about where rates gonext.
So that combination, it's created this really precarious
(01:45):
top heavy rally. Our goal today is to unpack
exactly how the incoming economic data, which is going to
be amplified because of the shutdown and specific tech
earnings reports, how they're going to test the very fragile
structure of this market over the next 5 trading days.
OK, let's start with the good news then, because you know
there's some fantastic headline numbers from the week ending
(02:07):
October 31st. Major indices push right into
record territory, the S&P 500 and closed the week up what,
.7%? Pretty solid, and that locked in
its third winning week in a row.Yeah, and even more impressive,
that move secured its sixth straight winning month.
That's a streak we haven't actually seen since that big
bullish run back in 2021. Right.
So six months straight up for the S&P.
(02:28):
And not really a surprise here. Technology was the main engine,
the tech heavy NASDAQ Composite,it just led the charge, rose
2.2% for the week, way ahead of everything else.
The Dow Jones Industrial Averagealso managed a decent gain,
about .8%. So if you just look at the
surface, the tape looks great. Perfectly constructive,
technically bullish. Almost like it can't be stopped.
(02:50):
But there's always a But isn't there?
The source material, the underlying data?
It seems to be screaming a warning, and it really hinges on
how narrow this advance is. This is where you need to talk
about that. That crucial warning sign, the
non confirmation alarm you called.
It tells us this rally might have a structural flaw.
It is the most dangerous aspect of the current market in my
(03:10):
view. You have the S&P 500, the Dow,
the NASDAQ, all hitting fresh record highs.
Great. But one absolutely crucial index
did not. Which one?
The small cap Russell 2000? The RUT.
It tracks all those smaller, more domestically focused
companies. Instead of rising with the tide.
The Russell 2000 actually fell 1.4% for the week.
Fell 1.4% while the S&P is hitting all time highs.
(03:33):
That doesn't feel right. That feels like a like a
fundamental disagreement within the market about the economy's
health. It's textbook, A textbook sign
of an unstable market structure,and it tells you a lot about
where the big money, the institutional capital, is really
placing its bets, or maybe hedging its bets.
Think about what the Russell 2000 represents.
(03:54):
These are smaller companies, right?
Often more leveraged, more dependent on easy credit
conditions, they're deeply tied to the US consumer local
spending. So when the RUT fails to confirm
the mega cap advance, it means investors are frankly, deeply
concerned about the underlying economic health.
They're worried about domestic credit risks.
So this isn't broad based optimism driving everything up.
(04:14):
No, not at all. This looks much more like
institutional capital playing defense.
They're flowing into just a handful of huge, liquid,
supposedly safe mega cap stocks.You know the names, the Apples,
the Amazons, the Microsoft's. They're basically hiding in the
companies with the biggest balance sheets.
And we have data on that concentration.
We do. It really highlights the risk.
Despite the overall Russell 3000index, that's a broader index
(04:36):
being up about 15% year to date,roughly half of the companies in
that index are still actually down.
For the year half, half are downeven though the index is up 15%.
That shows you the concentration.
So this defensiveness hiding in just a few names, it makes the
entire market highly vulnerable.If there's any shock or weakness
in just those few key stocks, the whole thing could wobble.
(05:00):
We are dangerously top heavy right now.
OK, so we've got this fragile structure and that fragility was
tested immediately last week by,as you said, two monumental
shocks. Let's tackle the first one,
Section 2.1, you called it the great tech Divergent.
The market's been riding this, you know, AI mania for months.
But the latest earnings from thebiggest tech players?
They showed a sudden, sharp, almost violent split between
(05:21):
winners and losers. Yeah, this might be the biggest
fundamental paradigm shift we'veseen in tech all year.
It feels like we've abruptly moved away from rewarding, you
know, visionary promises or future potential and move
towards punishing anything that doesn't show concrete, immediate
returns directly tied to AI monetization.
The reaction to the the Fab 5 earnings was completely
(05:45):
bifurcated, split right down themiddle.
OK, so who are the winners? The halves as you put.
It right the halves. Let's look at the bullish
catalysts first. The reason the indexes managed
to rally into the end of the week was almost entirely down to
Amazon. Their earnings were a
blockbuster. Shares surged what, 9.6%, up to
12% at 1:00 all time high. Now why AM?
(06:05):
Just people ordering stuff online I assume?
No, the core driver wasn't just retail.
It was the incredible 20% year over year jump in Amazon Web
Services revenue. AWS.
That's actually the fastest growth pace they've reported
since the peak of the Cloud Broom back in 2022.
OK, so Amazon won because it wasn't just talking about AI.
It showed real proof of AI monetization through its cloud
(06:27):
business. It linked that growth directly
to AI adoption by its big corporate customers.
It was actual cash flow, not just a future story.
Exactly. They are getting paid now.
That's the key. Apple was the other kind of
winner under this new playbook. Apple topped estimates and
crucially, they forecasted record holiday quarter revenue.
(06:47):
So that proved their core business, iPhones, services,
it's still really robust and themarket rewarded that because you
need that core strength, that cash flow to actually fund the
massive R&D needed for future AIintegration.
They proved they could fund the future without hurting the
present. OK, makes sense.
Now let's contrast that with thebearish drags, the have nots.
This is where the shock value came in, right?
This is where the market got frankly violent Meta Platforms,
(07:11):
Facebook's parent company. Despite reporting pretty decent
quarterly numbers overall, the stock plunged a brutal 11% in
just one trading session. 11% Ouch.
What drove that? Well, the source material, the
analyst reports we looked at, they show the reaction was
almost entirely centered on justone line item.
Meta announced significant increases in planned CapEx
(07:34):
spending, capital expenditures. Basically, they said they're
going to spend a lot more money to fund future AI
infrastructure. Analysts figured it was a jump
of roughly maybe $3 billion overwhat they previously expected.
So wait, Meta got punished for investing heavily in AI?
Isn't that what you expect them to do?
You'd think so, right? But they were punished because
(07:55):
the market just violently rejected that investment.
One key analyst report called itan expensive promise.
The market basically said, look,by diverting too much current
cash flow into this long term project, you failed the new
monetization test. Investors are saying I am not
going to fund your future visionif it sacrifices your current
profitability. It signals that the era of just
blindly trusting big CapEx spending is, well, it seems to
(08:18):
be over. Yeah, and even Microsoft, they
took a 3% hit despite strong earnings.
Why? Simply because their results
failed to clear what analysts were calling stratospheric
expectations. They basically got punished for
not being absolutely perfect. So the big take away here for
you, the listener seems really fundamental.
The markets lens, how it values these companies.
(08:40):
It is structurally shifted. It's moved away from rewarding
AI hype and towards demanding profit versus promise.
And we need to carry that lens, that perspective forward for the
rest of the week, especially when we look at some of the
other tech names reporting. Absolutely critical.
It's the new playbook. OK, shifting gears a bit, let's
talk macro. The big event was obviously a
Federal Open Market Committee meeting the FOMC.
(09:02):
As expected, the committee cut the benchmark rate by 25 basis
points, 1/4 percent. That takes the target range down
to 3.75% to 4.00%. Our sources suggest this easing
was, you know, partly a nod to some weakening data we'd seen.
Specifically, consumer confidence had just fallen to a
six month low. Right.
The cut itself, honestly, it waslargely priced in.
(09:23):
It was expected. So in a way, it was secondary.
What really matters, what has the bigger systemic impact, is
Fed Chair Powell's press conference after the decision,
his rhetoric. This is why we're calling it the
hawkish cut. Sounds like an oxymoron, I know.
Yeah, it does. Give with one hand, take with
the other. Kind of.
Powell basically threw a bucket of cold water on the easing
action almost immediately. It was like giving a gift but
(09:45):
attaching a poison pill. He specifically warned that a
December rate cut is, and I'm quoting here, not a foregone
conclusion. Far from it.
That one line, it just completely reset the market's
entire perception of risk and policy stability going forward.
OK, far from it. How quickly did that uncertainty
actually hit the markets? Do we see a reaction?
Instantly and dramatically, the repricing was frankly shocking.
(10:08):
Just before the meeting, the market odds the probability of
the Fed doing another 25 basis point cut.
In December, it stood at a very confident 95%, almost baked in.
95%, OK. After Powell spoke, stressing
that everything depends on the incoming data maintaining that
sort of hawkish bias, that probability plunged all the way
down to just 63%. Wow, from 95 to 63 just based on
(10:31):
his words. Just like that, the confidence
that the hiking cycle was definitively over and that the
easing cycle was just automatically beginning,
completely shattered, gone. And the most direct consequence,
where you saw it most clearly was in the bond market.
Treasury yields normally fall ona rate cut, right?
Because bond traders price in more future easing.
This time they reverse sharply higher the benchmark 10 year
(10:51):
Treasury yield, which as we'll discuss is probably the most
important single variable for valuing tech stocks right now.
It rose nearly 10 basis points just week over week, hit a
three-week high of 4.11%. So the Fed just through its
words, effectively invalidated its own easing action.
By creating this this cloud, this lack of clarity about
December, the Fed has dramatically increased market
(11:13):
risk, and it's increased the market sensitivity to every
single piece of incoming economic data.
That's fascinating. And you mentioned the committee
itself wasn't unified, there wasdissent.
What did the source material tell us about that?
Yeah, it was a visible sign of disagreement right on the
surface. The final vote on the cut wasn't
unanimous. There were two dissents.
That signals A genuine lack of consensus within the FOMC about
(11:36):
the right path forward. The dissenting members report
suggests they were arguing for either no cut at all, or maybe a
much softer forward guidance, less hawkish.
They represent the faction inside the Fed that still sees
inflation as structurally sticky.
They worry that easing now will just force the Fed to have to
hike again later down the road. So this division, the split
(11:57):
within the committee itself, it just adds another layer of
unreliability to any future guidance they might issue, makes
it harder to trust what they say.
OK, so this brings us right to the unique challenge for the
week ahead, November 3rd to 7th.We have this technically bullish
market, but as we've established, it's fundamentally
fragile, is facing an uncertain FED policy and now apparently
(12:18):
we're running blind. The source material highlights
that the ongoing government shutdown is creating a severe
data vacuum. What does it mean exactly?
It means volatility is likely going to be amplified
dramatically and that's really what you, the listener need to
prepare for this week because the government shutdown is
dragging on key official economic data reports, the ones
(12:40):
from the Bureau of Labor Statistics, BLS, the Bureau of
Economic Analysis, B EA they arehighly likely to be delayed.
The biggest victim here is almost certainly the non farm
payrolls report, the jobs report.
Usually that's the single most important monthly indicator for
the labor market and therefore for the Fed.
So no official jobs report this Friday?
Highly unlikely, which means investors are forced to
(13:02):
essentially fly blind. They don't have the usual
government supplied bash board, which is considered the gold
standard for economic data. And when that happens, when you
lose the main report, the importance of normally secondary
private sector reports gets elevated, hugely elevated to
primary market moving status. This means the market reaction
(13:23):
to the private sector proxies. We're talking specifically about
the ISM purchasing managers index reports and the ADP
employment report. That reaction is going to be
significantly amplified. A slight miss or beat on these
reports, something that might normally cause a ripple this
week. It could trigger an outsized,
maybe even violent index movement much bigger than usual.
Right. So a huge information gap, right
(13:44):
when we need clarity the most. And this lack of clarity, you're
saying it feeds directly into this, this perverse market logic
that's currently in effect. Hashtag tag, tag 3.1.
The bad news is good news regime.
That's absolutely right. The core of this logic, it ties
right back to Powell's hawkish cut.
Think about it. What's the only thing strong
enough now to force Chair Powellto walk back that hawkish pivot
(14:06):
to make him sound more dovish? Again, more bad news.
Exactly. Clear, unambiguous evidence of a
rapidly cooling economy, maybe even a weakening one.
That's the only thing that can reliably send the 10 year yield
back down and restore momentum to that fragile tech rally.
Because if the economy stays hot, right?
If the data comes in strong, well, that just validates
Powell's caution. Yields likely climb higher and
(14:28):
this top heavy rally probably breaks.
But if the economy shows real signs of distress, then the Fed
is forced to cut rates sooner, maybe deeper.
Yields would likely fall dramatically.
And equities, especially those high growth tech stocks, they
soar because capital gets cheaper.
So the market is now actively rooting for bad economic news.
It's truly perverse psychology. Bad news is good news for stocks
(14:49):
right now. OK, that's counterintuitive, but
makes sense in this context. So let's define the rules of the
road for the listener this week.How should you interpret these
amplified reports under this perverse logic?
OK, let's break it down. Logic Rule one, This is the
bullish trigger. Weak data is bullish for
equities. So if we see a big miss on that
ADP employment report on Wednesday, or if the ISM reports
(15:11):
show manufacturing and services dipping deeper into contraction,
that means the economy is cooling fast.
That instantly raises the odds of a December Fed cut back
towards certainty. And that sends Treasury yields
slower result stocks rally aggressively.
OK. Weak data is good for stocks.
Got it. What's the opposite?
Logic Rule 2 The bearish trigger.
Strong data is bearish for equities, so a surprisingly hot
(15:34):
ISM report may be confirming strong business activity or even
worse, persistent pricing power.That validates Powell's
hawkishness. It validates those two
dissenting FOMC members who wanted to hold off on cuts.
That sends the 10 year yield decisively higher, potentially
breaking the back of those rate sensitive tech stocks.
Result. Stocks likely get crushed.
Understanding this inverse psychology really makes the
(15:56):
calendar for the week absolutelycritical.
Then these data points are goingto be potential landmines or
maybe a launchpads highly volatile moments.
They absolutely will be. Let's pinpoint them today,
November 3rd at 1000AM Eastern Time, we get the ISM
Manufacturing PMI. This is the first major test of
the week. Analysts are generally looking
(16:17):
for reading slightly below 50. Remember, 50 is the line between
growth and contraction, so a strong number here.
Anything significantly above 50 would likely be highly bearish
for stocks because it suggests the manufacturing sector is
holding up and the Fed might need to keep rates higher for
longer. Or you know the terrifying
thought. Maybe even hike again if you
watch. Manufacturing PMI on Monday,
(16:38):
then Wednesday looks packed. Wednesday is like a.
Data doubleheader at 8:15 AM Eastern Time, we get the ADP
employment change. As we said, this is effectively
the week's unofficial jobs report because the official one
is likely delayed. The consensus estimate is for
about 35,000 jobs added. That's a slight improvement from
the prior reading, which was actually -32,000, so a low.
Bar a very low. Bar, which means a significant
(17:01):
miss. Hearsay, a number close to 0 or
negative. Again, that would be very
bullish for the market. It would scream that the labor
market, which is the Fed's primary focus, is finally
cracking under the weight of higher rates.
Right, Bad news. For jobs, good news for stocks?
Exactly. But then just 90 minutes later
at 1000AM Eastern Time on Wednesday November 5th, we get
(17:24):
the ISM services, PMI and services.
Are arguably more important these days?
Arguably much. More important than
manufacturing, services make up what, 70% of the US economy and
they've been the primary driver of that sticky persistent
inflation the Fed is fighting. So scrutiny here will be
intense, particularly on the prices paid sub component within
(17:44):
the report. If that sub component shows
continued high pricing power, meaning service companies are
still successfully raising prices and consumers are paying
them, that is the market's biggest fear right now.
A hot services report validates the underlying inflationary
strength that Powell is worried about.
That would almost certainly pushyields higher and stocks lower.
Wednesday morning could be extremely choppy.
(18:04):
OK, so. Navigating this perverse
environment, this data vacuum, it means we have to look beyond
just the rice. We need to focus on the inputs
driving it. Let's identify the key strategic
battlegrounds for the week, starting with what you call the
single most important variable for equities, the 10 year
Treasury yield. Let's define its role as the
market's leash. It closed last week around
(18:25):
4.09%. Yeah, the 10.
Year yield is absolutely the keytransmission mechanism for Fed
policy right now, especially forstocks, and it operates through
pure cold mathematics. As we discussed, this current
rally is being held up almost entirely by those mega cap tech
stocks. And how are those stocks valued
not primarily on today's profits, but on massive future
(18:45):
growth expected 57, even 10 years down the line, right, the
long duration? Grow story.
Exactly. And these stocks are typically
valued using a discounted cash flow model, a DCF model.
That model uses the 10 year treasury yield as the primary
input for the risk free rate component of the discount rate.
Think of it simply. When you try to figure out the
present value of say $100 you expect to get 10 years from now,
(19:09):
you use the 10 year yield as thebaseline measure of how much
less that future money is worth today.
It's the opportunity cost. OK, so.
When the 10 year yield goes up, the discount rate applied to
those distant future cash flows also increases.
Precisely. And when that discount rate goes
up, the present value of cash flows promised 5 or 10 years in
the future gets aggressively discounted.
(19:31):
It makes those growth stocks immediately less valuable today.
Right now, since the big tech leaders rely so heavily on
future growth rather than present profit, their current
price to earnings multiples, their valuations take the
hardest hit when rates rise. This is the mathematical
headwind this fragile tech rallyis fighting against rising
yields. Got it.
So. Given that dynamic, why is the
(19:51):
specific level of 4.25% such a critical line in the sand Well
4? .25% seems to be emerging as a
key technical and psychological level.
It appears to represent the sortof consensus median target yield
for a lot of major investment banks institutional funds,
especially those algorithmic funds that trade based on fixed
income and equity relationships.Crossing 4.25% seems to
(20:14):
materially change the long term discount rate calculation enough
that it could trigger automated DE risking programs, selling
programs, the algorithms. Kick in.
Yeah, it's potentially. The point where the pure
mathematical pressure from the rising yield finally overcomes
the momentum, the enthusiasm forthe AI story.
So the action will take away. If the 10 year yield stays
contained maybe below 4.1%, the bullish tech trend can probably
(20:37):
survive, maybe even continue grinding higher.
But if it decisively moves towards 4.25%, then we should
expect the S&P 500's critical support level, we'll get to that
next to be tested almost immediately as funds are forced
to hedge or reduce their exposure to those rate sensitive
mega caps. Hashtag tag 4.2 technical and
volatility levels. OK, let's talk.
Levels then the S&P 500 close Friday around 6840.
(21:00):
What are the key technical levels you're watching this
week, especially thinking about that 4.25% yield trigger?
Right, the price. Action itself is technically
constructive. The trend is still up, but
because of that yield risk we just discussed, you have to
watch the support levels very closely.
The critical support level now seems to be the S&P 500 old
highs from earlier in the year. That area around 6750, that
(21:22):
previous ceiling should now act as the new floor.
A definitive break below 6750 would be a significant negative
technical signal. It would suggest that the
mathematical headwind from the hawkish Fed and rising yields
has finally overpowered the AI momentum, potentially forcing a
broader technical correction. OK, 6000. 750 is the key
support. What about resistance?
(21:43):
The upside? Well, the index is.
Inching closer to that big roundhistoric psychological target of
7000, you often see significant institutional interest,
sometimes short selling interestaround those big round numbers
just due to human psychology andprogram trading.
Beyond 7000, the next technical upper resistance level based on
trend lines looks to be somewhere near 7075.
(22:05):
Now you also. Flag.
Something interesting about volatility.
The VIX, the volatility index closed the week down at 17.44.
Why is a VIX in the mid seventeens a potential yellow
flag right now given all this fundamental uncertainty we've
been talking about? Yeah, the VIX.
Measures implied fear in the market, basically the cost of
options or insurance. And a level like 17.44 indicates
(22:27):
a really notable lack of fear, especially relative to the
environment we just laid out. We have a hawkish Fed, a data
vacuum coming up, clear structural fragility in the
market. This 4.25% yield level looming,
yet the VIX is relatively low. It's just dangerous complacency.
Yes, investors seem to be operating with high confidence
despite these pretty severe looming risks.
And what a low VIX level means practically is that it's
(22:50):
essentially cheap fuel for volatility.
Hedging is inexpensive right now, so if that 6750 support
level does fail, the resulting pullback probably won't be a
slow grind lower. It could be sharp, fast, and
rapid, because when panic eventually hits, people will
rush to buy that cheap protection, which spikes the VIX
higher and actually accelerates the decline.
(23:11):
Low VIX can paradoxically lead to faster sell offs when
sentiment finally shifts. Tech Tech Tech 4.3 The
monetization lens Earnings test All right, let's circle.
Back to that new profit versus promise playbook we talked about
with Amazon and Meta, the markets clearly showing it's
unforgiving right now. And that lens you said is going
to be applied mercilessly to some of the specialist tech
firms reporting earnings this week.
(23:32):
Which report do you see as the most critical test for this
whole AI thesis? Without a doubt.
The single most important reportof the week is Advanced Micro
Devices. AMD, They report Tuesday after
the closing bell. This is just a massive test.
Why? Because AMD MD stock had a
stunning run in October, up 58% in just one month 58.
Percent. Wow.
(23:53):
Yeah. Which means the bar for
perfection is set incredibly, maybe impossibly high.
Investors are absolutely going to judge AMD using that Amazon
versus Meta playbook we discussed.
Are they profiting from AI rightnow?
Are they showing high gross margins?
Are data center sales surging? Are they just spending heavily
on future promises like Meta's CapEx announcement that got
punished? So what specific?
(24:13):
Metrics will they be looking forin AMD's report?
Scrutiny will. Be laser focused on two things,
their data center segment revenue and their gross margins.
Analysts really want to see if AM DS latest AI chip, the MI 300
series is actually gaining meaningful traction against
Nvidia's H100 chip, which has been dominant.
If AMD forecasts strong and critically profitable data
(24:34):
center growth, let's say they beat analysts expectations,
which are around 30% sequential growth, that could validate the
broader AI rally. But if they miss on revenue, or
if their margins look compressedbecause it's costing them a lot
to scale up production, then thestock could see the same kind of
violent rejection that Meta faced last week.
Huge implications. OK, AMD is.
The big one Tuesday, you also mentioned Palantir is another
(24:55):
key data point for this monetization thesis.
Yeah, absolutely. Palantir, ticker PLTR reports
Monday after the bell. This is a really key test of the
whole AI platform monetization idea.
You know, for years Palantir wasvery heavily focused on big
bespoke government contracts. That was their bread and butter.
Now the market needs to see clear evidence that their newer
(25:16):
AI platform offering is actuallytranslating into accelerating
commercial contracts. That scene is the higher margin,
stickier part of the business. The options market is pricing in
a massive move for Palantir, something like 17.8%, which just
shows you the extreme volatilityexpected around this report, a
strong beat on commercial customer acquisition numbers and
stable or improving margins. That's probably the only thing
(25:38):
that keeps the momentum going for that stock.
Got it. Beyond those specific AI plays,
are there other earnings this week that act as broader
economic bellwethers? Yeah, a couple are.
Worth watching Uber UBE reports and that'll give us a necessary
read on the gig economy and alsoconsumer discretionary spending
that ties right back into the health of the labor market.
The Fed is watching, and we alsoget reports from major
(26:00):
pharmaceutical companies like Pfizer PFE and Amgen AMGN.
They'll give us an update on thehealth of the entire healthcare
sector. Healthcare is important because
it often provides defensive ballast for the overall index if
the more volatile tech sector falters.
So the results matter for index stability too.
Hashtag tag 4.4 Commodity conflicts.
Golden crude. OK, let's.
(26:20):
Shift briefly away from stocks. How are the key risk assets
outside of equities reacting? Thinking specifically about gold
and crude oil in this new macro environment, the bookish Fed,
the uncertainty, yeah, they're definitely.
Reacting but to slightly conflicting forces, especially
gold. Let's start with gold.
It closed Friday just hovering below that key psychological
level of $4000 an ounce ended around $3997.00 and cents cents.
(26:44):
Now the long term bull case for gold that remains pretty robust.
Its historic surge earlier in 2025 when it hit a record over
$4300 really reflects its strategic long term role Central
banks see it as crucial in what's clearly a more fractured
global order. So total banks are still.
Buying. Buying at record.
Paces actually as a hedge against geopolitical instability
de dollarization trends that underlying been is still there.
(27:07):
However, in the short term, goldis facing a pretty significant
headwind. And that headwind is driven
directly by the Fed's hawkishness.
Powell's rhetoric is fueling AUSdollar rally and critically,
it's driving real yields higher.That's the interest rate minus
inflation. Since gold is a non yielding
asset, it doesn't pay interest. When real yields rise, the
(27:28):
opportunity cost of holding goldinstead of, say, a treasury bond
increases dramatically. That tends to push the gold
price down in the immediate term.
So gold is likely to remain under some pressure until the
market gets more clarity on whatthe Feds actually going to do in
December. OK, so short term.
Pressure on gold? What about crude oil?
Is it global growth outlook helping prices there?
Not really the outlook. For crude oil looks frankly,
(27:49):
unambiguously bearish right now.And the supply picture might be
even worse than many realize. WTI prices, the US benchmark
they fell back towards $60.00 a barrel last week, closed around
$60.86. The drop is being driven mainly
by massive oversupply concerns that just aren't going away.
In fact, recent reports indicatethat OPEC plus Bell,
(28:09):
counterintuitively, might actually be inclined to raise
production soon, or at least stop their deeper cuts.
Why? Because global demand isn't
growing as fast as they had hoped, So supply is.
Exceeding demand, it seems. That way, and critically, the
source material points out that the volume of oil just sitting
idly in tankers out at sea has apparently risen to a record
high. That signals A persistent glut
(28:30):
of oil that's struggling to findbuyers right now.
This bearishness isn't just market shatter, either.
It's corroborated by the official US Energy Information
Administration, the EIA. Their latest forecast is pretty
stark. They expect prices to continue
falling, averaging maybe $62.00 a barrel in this fourth quarter
of 2025 and then dropping further to average just $52 a
barrel in the first half of 2026.
(28:53):
The supply side just seems to beoverwhelming the current demand
narrative for oil. OK, so let's try to synthesize
this incredibly complex picture we've painted.
What we have is a market with a bullish trend that is
technically sound. It's still pointing upwards, but
that trend is fundamentally fragile.
It's dangerously narrow in termsof which stocks are
participating. And now it's fighting the direct
mathematical headwind of rising Treasury yields, which are being
(29:16):
spurred on by newly hawkish sounding Fed.
You add in the complacency signal from the Lovix and the
fundamental uncertainty from thedata vacuum, it really feels
like the perfect setup for maximum volatility in the week
ahead, right. So to give.
You, our listeners, a clear strategic playbook for
navigating these choppy waters. Over the next 5 days, we've
(29:36):
boiled down all the source material we reviewed into 3 core
actionable steps. Think of these as the key inputs
you should probably track almostminute by minute action will
take away. Number one, watch the leash.
That's the 10 year Treasury yield.
This is your primary leading indicator for the stock market
right now. If the yield stays contained,
let's say below 4.1%, the tech rally might be able to keep
(29:58):
breathing. Maybe ignore the Fed for a bit
longer. But if it decisively moves
towards that 4.25% level, you absolutely must anticipate that
the S&P 500 is critical. 6750 support level will be tested
almost immediately as algorithmslikely start to de risk.
Couldn't agree more. Number the one is yields actual
take. Away #2 trade the perverse data
you have to prepare for potentially outsize, maybe even
(30:20):
violent volatility around those key data releases in the ISM
reports on Monday and Wednesday,and especially that ADP
employment report on Wednesday morning.
And crucially, remember the inverse logic.
Strong economic data is likely bearish for stocks right now
because it validates Powell's caution.
Weak economic data is likely bullish for stocks because it
forces the Fed's hand towards cutting rates in December.
(30:43):
Plan your trades. Set your stops accordingly.
The reactions could be swift. Yeah, that inverse.
Logic is key this week and action.
Will take away #3 Apply the monetization lens.
Don't treat all AI related stocks equally anymore.
Use that divergent we saw between Amazon rewarded for
profit and Meta punished for CapEx.
Promises is your playbook. Apply it directly to AMD on
(31:04):
Tuesday and Palantir on Monday. If they prove tangible profit,
if they show high gross margins,if they demonstrate accelerating
commercial contracts, reward them.
But if they simply promise future growth funded by big
spending plans today, expect themarket to punish them,
potentially violently. Proof of her promise is the name
of the game. That's it.
Those are the. 3 keys, watch yields, trade the perverse data
(31:24):
logic and apply that monetization lens to earnings.
And maybe I'll leave you with this final synthesizing thought
because it kind of inverts the classic way we think about risk
sometimes. The primary risk to this entire
market structure right now, it'sprobably not a weak economy
forcing A recession because frankly, the Fed would likely
react quickly to that with more rate cuts, which could support
(31:44):
stocks. No, the primary risk right now
seems to be a strong economy. A surprisingly hot ISM services
report may be unexpected. Strengthen the ADP jobs number,
something that validates Chair Powell's hawkish stance.
That's the scenario that could send the 10 year yield surging
through 4.25%, breaking the backof this top heavy equity rally
and maybe triggering a sudden technical collapse.
(32:06):
The biggest risk is good news. Wow.
The biggest risk is good economic news.
That really is perverse, isn't it?
And it's especially fascinating when you consider, as some
reports noted last week, that one major tail risk, those US,
China trade tensions actually seem to ease a bit, removing a
potential negative catalyst. So given that bit of global Z
risking, but combined with the incredible narrowness of this
(32:29):
rally that we keep talking about, should you trust the
technical strength that's pushedus to record highs?
Or is the market being dangerously complacent as
suggested by that low VIX level?Something for you to consider as
you prepare for what looks like a challenging, but maybe also
potentially lucrative week aheadin the markets.
Thanks for diving deep with us on Bulls, Bears and the Bell
Weekend Edition. We'll see you next week.
Good morning and welcome to Bulls, Bears and the Bell
Weekend Edition. It is November 1st, 2025, and
today we're doing our deep dive,but maybe a bit differently.
We're not just recapping last week, we're aiming to give you a
full strategic playbook because the week ahead, November 3rd to
the 7th looks incredibly volatile, high stakes.
(00:20):
You know, if you just glanced atthe headlines, you think we're
in market paradise. The S&P 500, the NASDAQ bonafide
record highs looks amazing. But when you actually look
underneath those big index numbers, the foundation, it
feels less like solid rock and frankly, more like shifting
sand. So our mission today is to
really dig into the source material, you know, the detailed
market reports, the Fed transcripts, what companies
(00:41):
actually said in their earnings sauce.
We want to give you a crystal clear view of that underlying
instability and maybe most importantly, how you can think
about navigating it strategically this coming week.
Yeah. And that instability, it's not
just random noise. It's really being driven by two
very powerful conflicts, conflicts that sort of
solidified at the end of last week and are definitely going to
set the tone for this week. First, the market closed out
(01:04):
Friday really defined by what we're calling the great
divergent in tech earnings. It feels like investor sentiment
just fundamentally shifted. It's no longer about rewarding
AI promises. It's about demanding immediate,
tangible AI profits like right now.
But the second conflict, and this one has, I think, deeper
systemic implications for reallyevery investor is what the
(01:24):
Federal Reserve did. We're calling it the hawkish
cut. Sounds contradictory.
Right, the hawkish cut. Yeah, explain that one.
Well, the Fed gave the market the rate reduction it wanted,
but then Chair Powell immediately followed up with
rhetoric that honestly created profound and immediate
uncertainty about where rates gonext.
So that combination, it's created this really precarious
(01:45):
top heavy rally. Our goal today is to unpack
exactly how the incoming economic data, which is going to
be amplified because of the shutdown and specific tech
earnings reports, how they're going to test the very fragile
structure of this market over the next 5 trading days.
OK, let's start with the good news then, because you know
there's some fantastic headline numbers from the week ending
(02:07):
October 31st. Major indices push right into
record territory, the S&P 500 and closed the week up what,
.7%? Pretty solid, and that locked in
its third winning week in a row.Yeah, and even more impressive,
that move secured its sixth straight winning month.
That's a streak we haven't actually seen since that big
bullish run back in 2021. Right.
So six months straight up for the S&P.
(02:28):
And not really a surprise here. Technology was the main engine,
the tech heavy NASDAQ Composite,it just led the charge, rose
2.2% for the week, way ahead of everything else.
The Dow Jones Industrial Averagealso managed a decent gain,
about .8%. So if you just look at the
surface, the tape looks great. Perfectly constructive,
technically bullish. Almost like it can't be stopped.
(02:50):
But there's always a But isn't there?
The source material, the underlying data?
It seems to be screaming a warning, and it really hinges on
how narrow this advance is. This is where you need to talk
about that. That crucial warning sign, the
non confirmation alarm you called.
It tells us this rally might have a structural flaw.
It is the most dangerous aspect of the current market in my
(03:10):
view. You have the S&P 500, the Dow,
the NASDAQ, all hitting fresh record highs.
Great. But one absolutely crucial index
did not. Which one?
The small cap Russell 2000? The RUT.
It tracks all those smaller, more domestically focused
companies. Instead of rising with the tide.
The Russell 2000 actually fell 1.4% for the week.
Fell 1.4% while the S&P is hitting all time highs.
(03:33):
That doesn't feel right. That feels like a like a
fundamental disagreement within the market about the economy's
health. It's textbook, A textbook sign
of an unstable market structure,and it tells you a lot about
where the big money, the institutional capital, is really
placing its bets, or maybe hedging its bets.
Think about what the Russell 2000 represents.
(03:54):
These are smaller companies, right?
Often more leveraged, more dependent on easy credit
conditions, they're deeply tied to the US consumer local
spending. So when the RUT fails to confirm
the mega cap advance, it means investors are frankly, deeply
concerned about the underlying economic health.
They're worried about domestic credit risks.
So this isn't broad based optimism driving everything up.
(04:14):
No, not at all. This looks much more like
institutional capital playing defense.
They're flowing into just a handful of huge, liquid,
supposedly safe mega cap stocks.You know the names, the Apples,
the Amazons, the Microsoft's. They're basically hiding in the
companies with the biggest balance sheets.
And we have data on that concentration.
We do. It really highlights the risk.
Despite the overall Russell 3000index, that's a broader index
(04:36):
being up about 15% year to date,roughly half of the companies in
that index are still actually down.
For the year half, half are downeven though the index is up 15%.
That shows you the concentration.
So this defensiveness hiding in just a few names, it makes the
entire market highly vulnerable.If there's any shock or weakness
in just those few key stocks, the whole thing could wobble.
(05:00):
We are dangerously top heavy right now.
OK, so we've got this fragile structure and that fragility was
tested immediately last week by,as you said, two monumental
shocks. Let's tackle the first one,
Section 2.1, you called it the great tech Divergent.
The market's been riding this, you know, AI mania for months.
But the latest earnings from thebiggest tech players?
They showed a sudden, sharp, almost violent split between
(05:21):
winners and losers. Yeah, this might be the biggest
fundamental paradigm shift we'veseen in tech all year.
It feels like we've abruptly moved away from rewarding, you
know, visionary promises or future potential and move
towards punishing anything that doesn't show concrete, immediate
returns directly tied to AI monetization.
The reaction to the the Fab 5 earnings was completely
(05:45):
bifurcated, split right down themiddle.
OK, so who are the winners? The halves as you put.
It right the halves. Let's look at the bullish
catalysts first. The reason the indexes managed
to rally into the end of the week was almost entirely down to
Amazon. Their earnings were a
blockbuster. Shares surged what, 9.6%, up to
12% at 1:00 all time high. Now why AM?
(06:05):
Just people ordering stuff online I assume?
No, the core driver wasn't just retail.
It was the incredible 20% year over year jump in Amazon Web
Services revenue. AWS.
That's actually the fastest growth pace they've reported
since the peak of the Cloud Broom back in 2022.
OK, so Amazon won because it wasn't just talking about AI.
It showed real proof of AI monetization through its cloud
(06:27):
business. It linked that growth directly
to AI adoption by its big corporate customers.
It was actual cash flow, not just a future story.
Exactly. They are getting paid now.
That's the key. Apple was the other kind of
winner under this new playbook. Apple topped estimates and
crucially, they forecasted record holiday quarter revenue.
(06:47):
So that proved their core business, iPhones, services,
it's still really robust and themarket rewarded that because you
need that core strength, that cash flow to actually fund the
massive R&D needed for future AIintegration.
They proved they could fund the future without hurting the
present. OK, makes sense.
Now let's contrast that with thebearish drags, the have nots.
This is where the shock value came in, right?
This is where the market got frankly violent Meta Platforms,
(07:11):
Facebook's parent company. Despite reporting pretty decent
quarterly numbers overall, the stock plunged a brutal 11% in
just one trading session. 11% Ouch.
What drove that? Well, the source material, the
analyst reports we looked at, they show the reaction was
almost entirely centered on justone line item.
Meta announced significant increases in planned CapEx
(07:34):
spending, capital expenditures. Basically, they said they're
going to spend a lot more money to fund future AI
infrastructure. Analysts figured it was a jump
of roughly maybe $3 billion overwhat they previously expected.
So wait, Meta got punished for investing heavily in AI?
Isn't that what you expect them to do?
You'd think so, right? But they were punished because
(07:55):
the market just violently rejected that investment.
One key analyst report called itan expensive promise.
The market basically said, look,by diverting too much current
cash flow into this long term project, you failed the new
monetization test. Investors are saying I am not
going to fund your future visionif it sacrifices your current
profitability. It signals that the era of just
blindly trusting big CapEx spending is, well, it seems to
(08:18):
be over. Yeah, and even Microsoft, they
took a 3% hit despite strong earnings.
Why? Simply because their results
failed to clear what analysts were calling stratospheric
expectations. They basically got punished for
not being absolutely perfect. So the big take away here for
you, the listener seems really fundamental.
The markets lens, how it values these companies.
(08:40):
It is structurally shifted. It's moved away from rewarding
AI hype and towards demanding profit versus promise.
And we need to carry that lens, that perspective forward for the
rest of the week, especially when we look at some of the
other tech names reporting. Absolutely critical.
It's the new playbook. OK, shifting gears a bit, let's
talk macro. The big event was obviously a
Federal Open Market Committee meeting the FOMC.
(09:02):
As expected, the committee cut the benchmark rate by 25 basis
points, 1/4 percent. That takes the target range down
to 3.75% to 4.00%. Our sources suggest this easing
was, you know, partly a nod to some weakening data we'd seen.
Specifically, consumer confidence had just fallen to a
six month low. Right.
The cut itself, honestly, it waslargely priced in.
(09:23):
It was expected. So in a way, it was secondary.
What really matters, what has the bigger systemic impact, is
Fed Chair Powell's press conference after the decision,
his rhetoric. This is why we're calling it the
hawkish cut. Sounds like an oxymoron, I know.
Yeah, it does. Give with one hand, take with
the other. Kind of.
Powell basically threw a bucket of cold water on the easing
action almost immediately. It was like giving a gift but
(09:45):
attaching a poison pill. He specifically warned that a
December rate cut is, and I'm quoting here, not a foregone
conclusion. Far from it.
That one line, it just completely reset the market's
entire perception of risk and policy stability going forward.
OK, far from it. How quickly did that uncertainty
actually hit the markets? Do we see a reaction?
Instantly and dramatically, the repricing was frankly shocking.
(10:08):
Just before the meeting, the market odds the probability of
the Fed doing another 25 basis point cut.
In December, it stood at a very confident 95%, almost baked in.
95%, OK. After Powell spoke, stressing
that everything depends on the incoming data maintaining that
sort of hawkish bias, that probability plunged all the way
down to just 63%. Wow, from 95 to 63 just based on
(10:31):
his words. Just like that, the confidence
that the hiking cycle was definitively over and that the
easing cycle was just automatically beginning,
completely shattered, gone. And the most direct consequence,
where you saw it most clearly was in the bond market.
Treasury yields normally fall ona rate cut, right?
Because bond traders price in more future easing.
This time they reverse sharply higher the benchmark 10 year
(10:51):
Treasury yield, which as we'll discuss is probably the most
important single variable for valuing tech stocks right now.
It rose nearly 10 basis points just week over week, hit a
three-week high of 4.11%. So the Fed just through its
words, effectively invalidated its own easing action.
By creating this this cloud, this lack of clarity about
December, the Fed has dramatically increased market
(11:13):
risk, and it's increased the market sensitivity to every
single piece of incoming economic data.
That's fascinating. And you mentioned the committee
itself wasn't unified, there wasdissent.
What did the source material tell us about that?
Yeah, it was a visible sign of disagreement right on the
surface. The final vote on the cut wasn't
unanimous. There were two dissents.
That signals A genuine lack of consensus within the FOMC about
(11:36):
the right path forward. The dissenting members report
suggests they were arguing for either no cut at all, or maybe a
much softer forward guidance, less hawkish.
They represent the faction inside the Fed that still sees
inflation as structurally sticky.
They worry that easing now will just force the Fed to have to
hike again later down the road. So this division, the split
(11:57):
within the committee itself, it just adds another layer of
unreliability to any future guidance they might issue, makes
it harder to trust what they say.
OK, so this brings us right to the unique challenge for the
week ahead, November 3rd to 7th.We have this technically bullish
market, but as we've established, it's fundamentally
fragile, is facing an uncertain FED policy and now apparently
(12:18):
we're running blind. The source material highlights
that the ongoing government shutdown is creating a severe
data vacuum. What does it mean exactly?
It means volatility is likely going to be amplified
dramatically and that's really what you, the listener need to
prepare for this week because the government shutdown is
dragging on key official economic data reports, the ones
(12:40):
from the Bureau of Labor Statistics, BLS, the Bureau of
Economic Analysis, B EA they arehighly likely to be delayed.
The biggest victim here is almost certainly the non farm
payrolls report, the jobs report.
Usually that's the single most important monthly indicator for
the labor market and therefore for the Fed.
So no official jobs report this Friday?
Highly unlikely, which means investors are forced to
(13:02):
essentially fly blind. They don't have the usual
government supplied bash board, which is considered the gold
standard for economic data. And when that happens, when you
lose the main report, the importance of normally secondary
private sector reports gets elevated, hugely elevated to
primary market moving status. This means the market reaction
(13:23):
to the private sector proxies. We're talking specifically about
the ISM purchasing managers index reports and the ADP
employment report. That reaction is going to be
significantly amplified. A slight miss or beat on these
reports, something that might normally cause a ripple this
week. It could trigger an outsized,
maybe even violent index movement much bigger than usual.
Right. So a huge information gap, right
(13:44):
when we need clarity the most. And this lack of clarity, you're
saying it feeds directly into this, this perverse market logic
that's currently in effect. Hashtag tag, tag 3.1.
The bad news is good news regime.
That's absolutely right. The core of this logic, it ties
right back to Powell's hawkish cut.
Think about it. What's the only thing strong
enough now to force Chair Powellto walk back that hawkish pivot
(14:06):
to make him sound more dovish? Again, more bad news.
Exactly. Clear, unambiguous evidence of a
rapidly cooling economy, maybe even a weakening one.
That's the only thing that can reliably send the 10 year yield
back down and restore momentum to that fragile tech rally.
Because if the economy stays hot, right?
If the data comes in strong, well, that just validates
Powell's caution. Yields likely climb higher and
(14:28):
this top heavy rally probably breaks.
But if the economy shows real signs of distress, then the Fed
is forced to cut rates sooner, maybe deeper.
Yields would likely fall dramatically.
And equities, especially those high growth tech stocks, they
soar because capital gets cheaper.
So the market is now actively rooting for bad economic news.
It's truly perverse psychology. Bad news is good news for stocks
(14:49):
right now. OK, that's counterintuitive, but
makes sense in this context. So let's define the rules of the
road for the listener this week.How should you interpret these
amplified reports under this perverse logic?
OK, let's break it down. Logic Rule one, This is the
bullish trigger. Weak data is bullish for
equities. So if we see a big miss on that
ADP employment report on Wednesday, or if the ISM reports
(15:11):
show manufacturing and services dipping deeper into contraction,
that means the economy is cooling fast.
That instantly raises the odds of a December Fed cut back
towards certainty. And that sends Treasury yields
slower result stocks rally aggressively.
OK. Weak data is good for stocks.
Got it. What's the opposite?
Logic Rule 2 The bearish trigger.
Strong data is bearish for equities, so a surprisingly hot
(15:34):
ISM report may be confirming strong business activity or even
worse, persistent pricing power.That validates Powell's
hawkishness. It validates those two
dissenting FOMC members who wanted to hold off on cuts.
That sends the 10 year yield decisively higher, potentially
breaking the back of those rate sensitive tech stocks.
Result. Stocks likely get crushed.
Understanding this inverse psychology really makes the
(15:56):
calendar for the week absolutelycritical.
Then these data points are goingto be potential landmines or
maybe a launchpads highly volatile moments.
They absolutely will be. Let's pinpoint them today,
November 3rd at 1000AM Eastern Time, we get the ISM
Manufacturing PMI. This is the first major test of
the week. Analysts are generally looking
(16:17):
for reading slightly below 50. Remember, 50 is the line between
growth and contraction, so a strong number here.
Anything significantly above 50 would likely be highly bearish
for stocks because it suggests the manufacturing sector is
holding up and the Fed might need to keep rates higher for
longer. Or you know the terrifying
thought. Maybe even hike again if you
watch. Manufacturing PMI on Monday,
(16:38):
then Wednesday looks packed. Wednesday is like a.
Data doubleheader at 8:15 AM Eastern Time, we get the ADP
employment change. As we said, this is effectively
the week's unofficial jobs report because the official one
is likely delayed. The consensus estimate is for
about 35,000 jobs added. That's a slight improvement from
the prior reading, which was actually -32,000, so a low.
Bar a very low. Bar, which means a significant
(17:01):
miss. Hearsay, a number close to 0 or
negative. Again, that would be very
bullish for the market. It would scream that the labor
market, which is the Fed's primary focus, is finally
cracking under the weight of higher rates.
Right, Bad news. For jobs, good news for stocks?
Exactly. But then just 90 minutes later
at 1000AM Eastern Time on Wednesday November 5th, we get
(17:24):
the ISM services, PMI and services.
Are arguably more important these days?
Arguably much. More important than
manufacturing, services make up what, 70% of the US economy and
they've been the primary driver of that sticky persistent
inflation the Fed is fighting. So scrutiny here will be
intense, particularly on the prices paid sub component within
(17:44):
the report. If that sub component shows
continued high pricing power, meaning service companies are
still successfully raising prices and consumers are paying
them, that is the market's biggest fear right now.
A hot services report validates the underlying inflationary
strength that Powell is worried about.
That would almost certainly pushyields higher and stocks lower.
Wednesday morning could be extremely choppy.
(18:04):
OK, so. Navigating this perverse
environment, this data vacuum, it means we have to look beyond
just the rice. We need to focus on the inputs
driving it. Let's identify the key strategic
battlegrounds for the week, starting with what you call the
single most important variable for equities, the 10 year
Treasury yield. Let's define its role as the
market's leash. It closed last week around
(18:25):
4.09%. Yeah, the 10.
Year yield is absolutely the keytransmission mechanism for Fed
policy right now, especially forstocks, and it operates through
pure cold mathematics. As we discussed, this current
rally is being held up almost entirely by those mega cap tech
stocks. And how are those stocks valued
not primarily on today's profits, but on massive future
(18:45):
growth expected 57, even 10 years down the line, right, the
long duration? Grow story.
Exactly. And these stocks are typically
valued using a discounted cash flow model, a DCF model.
That model uses the 10 year treasury yield as the primary
input for the risk free rate component of the discount rate.
Think of it simply. When you try to figure out the
present value of say $100 you expect to get 10 years from now,
(19:09):
you use the 10 year yield as thebaseline measure of how much
less that future money is worth today.
It's the opportunity cost. OK, so.
When the 10 year yield goes up, the discount rate applied to
those distant future cash flows also increases.
Precisely. And when that discount rate goes
up, the present value of cash flows promised 5 or 10 years in
the future gets aggressively discounted.
(19:31):
It makes those growth stocks immediately less valuable today.
Right now, since the big tech leaders rely so heavily on
future growth rather than present profit, their current
price to earnings multiples, their valuations take the
hardest hit when rates rise. This is the mathematical
headwind this fragile tech rallyis fighting against rising
yields. Got it.
So. Given that dynamic, why is the
(19:51):
specific level of 4.25% such a critical line in the sand Well
4? .25% seems to be emerging as a
key technical and psychological level.
It appears to represent the sortof consensus median target yield
for a lot of major investment banks institutional funds,
especially those algorithmic funds that trade based on fixed
income and equity relationships.Crossing 4.25% seems to
(20:14):
materially change the long term discount rate calculation enough
that it could trigger automated DE risking programs, selling
programs, the algorithms. Kick in.
Yeah, it's potentially. The point where the pure
mathematical pressure from the rising yield finally overcomes
the momentum, the enthusiasm forthe AI story.
So the action will take away. If the 10 year yield stays
contained maybe below 4.1%, the bullish tech trend can probably
(20:37):
survive, maybe even continue grinding higher.
But if it decisively moves towards 4.25%, then we should
expect the S&P 500's critical support level, we'll get to that
next to be tested almost immediately as funds are forced
to hedge or reduce their exposure to those rate sensitive
mega caps. Hashtag tag 4.2 technical and
volatility levels. OK, let's talk.
Levels then the S&P 500 close Friday around 6840.
(21:00):
What are the key technical levels you're watching this
week, especially thinking about that 4.25% yield trigger?
Right, the price. Action itself is technically
constructive. The trend is still up, but
because of that yield risk we just discussed, you have to
watch the support levels very closely.
The critical support level now seems to be the S&P 500 old
highs from earlier in the year. That area around 6750, that
(21:22):
previous ceiling should now act as the new floor.
A definitive break below 6750 would be a significant negative
technical signal. It would suggest that the
mathematical headwind from the hawkish Fed and rising yields
has finally overpowered the AI momentum, potentially forcing a
broader technical correction. OK, 6000. 750 is the key
support. What about resistance?
(21:43):
The upside? Well, the index is.
Inching closer to that big roundhistoric psychological target of
7000, you often see significant institutional interest,
sometimes short selling interestaround those big round numbers
just due to human psychology andprogram trading.
Beyond 7000, the next technical upper resistance level based on
trend lines looks to be somewhere near 7075.
(22:05):
Now you also. Flag.
Something interesting about volatility.
The VIX, the volatility index closed the week down at 17.44.
Why is a VIX in the mid seventeens a potential yellow
flag right now given all this fundamental uncertainty we've
been talking about? Yeah, the VIX.
Measures implied fear in the market, basically the cost of
options or insurance. And a level like 17.44 indicates
(22:27):
a really notable lack of fear, especially relative to the
environment we just laid out. We have a hawkish Fed, a data
vacuum coming up, clear structural fragility in the
market. This 4.25% yield level looming,
yet the VIX is relatively low. It's just dangerous complacency.
Yes, investors seem to be operating with high confidence
despite these pretty severe looming risks.
And what a low VIX level means practically is that it's
(22:50):
essentially cheap fuel for volatility.
Hedging is inexpensive right now, so if that 6750 support
level does fail, the resulting pullback probably won't be a
slow grind lower. It could be sharp, fast, and
rapid, because when panic eventually hits, people will
rush to buy that cheap protection, which spikes the VIX
higher and actually accelerates the decline.
(23:11):
Low VIX can paradoxically lead to faster sell offs when
sentiment finally shifts. Tech Tech Tech 4.3 The
monetization lens Earnings test All right, let's circle.
Back to that new profit versus promise playbook we talked about
with Amazon and Meta, the markets clearly showing it's
unforgiving right now. And that lens you said is going
to be applied mercilessly to some of the specialist tech
firms reporting earnings this week.
(23:32):
Which report do you see as the most critical test for this
whole AI thesis? Without a doubt.
The single most important reportof the week is Advanced Micro
Devices. AMD, They report Tuesday after
the closing bell. This is just a massive test.
Why? Because AMD MD stock had a
stunning run in October, up 58% in just one month 58.
Percent. Wow.
(23:53):
Yeah. Which means the bar for
perfection is set incredibly, maybe impossibly high.
Investors are absolutely going to judge AMD using that Amazon
versus Meta playbook we discussed.
Are they profiting from AI rightnow?
Are they showing high gross margins?
Are data center sales surging? Are they just spending heavily
on future promises like Meta's CapEx announcement that got
punished? So what specific?
(24:13):
Metrics will they be looking forin AMD's report?
Scrutiny will. Be laser focused on two things,
their data center segment revenue and their gross margins.
Analysts really want to see if AM DS latest AI chip, the MI 300
series is actually gaining meaningful traction against
Nvidia's H100 chip, which has been dominant.
If AMD forecasts strong and critically profitable data
(24:34):
center growth, let's say they beat analysts expectations,
which are around 30% sequential growth, that could validate the
broader AI rally. But if they miss on revenue, or
if their margins look compressedbecause it's costing them a lot
to scale up production, then thestock could see the same kind of
violent rejection that Meta faced last week.
Huge implications. OK, AMD is.
The big one Tuesday, you also mentioned Palantir is another
(24:55):
key data point for this monetization thesis.
Yeah, absolutely. Palantir, ticker PLTR reports
Monday after the bell. This is a really key test of the
whole AI platform monetization idea.
You know, for years Palantir wasvery heavily focused on big
bespoke government contracts. That was their bread and butter.
Now the market needs to see clear evidence that their newer
(25:16):
AI platform offering is actuallytranslating into accelerating
commercial contracts. That scene is the higher margin,
stickier part of the business. The options market is pricing in
a massive move for Palantir, something like 17.8%, which just
shows you the extreme volatilityexpected around this report, a
strong beat on commercial customer acquisition numbers and
stable or improving margins. That's probably the only thing
(25:38):
that keeps the momentum going for that stock.
Got it. Beyond those specific AI plays,
are there other earnings this week that act as broader
economic bellwethers? Yeah, a couple are.
Worth watching Uber UBE reports and that'll give us a necessary
read on the gig economy and alsoconsumer discretionary spending
that ties right back into the health of the labor market.
The Fed is watching, and we alsoget reports from major
(26:00):
pharmaceutical companies like Pfizer PFE and Amgen AMGN.
They'll give us an update on thehealth of the entire healthcare
sector. Healthcare is important because
it often provides defensive ballast for the overall index if
the more volatile tech sector falters.
So the results matter for index stability too.
Hashtag tag 4.4 Commodity conflicts.
Golden crude. OK, let's.
(26:20):
Shift briefly away from stocks. How are the key risk assets
outside of equities reacting? Thinking specifically about gold
and crude oil in this new macro environment, the bookish Fed,
the uncertainty, yeah, they're definitely.
Reacting but to slightly conflicting forces, especially
gold. Let's start with gold.
It closed Friday just hovering below that key psychological
level of $4000 an ounce ended around $3997.00 and cents cents.
(26:44):
Now the long term bull case for gold that remains pretty robust.
Its historic surge earlier in 2025 when it hit a record over
$4300 really reflects its strategic long term role Central
banks see it as crucial in what's clearly a more fractured
global order. So total banks are still.
Buying. Buying at record.
Paces actually as a hedge against geopolitical instability
de dollarization trends that underlying been is still there.
(27:07):
However, in the short term, goldis facing a pretty significant
headwind. And that headwind is driven
directly by the Fed's hawkishness.
Powell's rhetoric is fueling AUSdollar rally and critically,
it's driving real yields higher.That's the interest rate minus
inflation. Since gold is a non yielding
asset, it doesn't pay interest. When real yields rise, the
(27:28):
opportunity cost of holding goldinstead of, say, a treasury bond
increases dramatically. That tends to push the gold
price down in the immediate term.
So gold is likely to remain under some pressure until the
market gets more clarity on whatthe Feds actually going to do in
December. OK, so short term.
Pressure on gold? What about crude oil?
Is it global growth outlook helping prices there?
Not really the outlook. For crude oil looks frankly,
(27:49):
unambiguously bearish right now.And the supply picture might be
even worse than many realize. WTI prices, the US benchmark
they fell back towards $60.00 a barrel last week, closed around
$60.86. The drop is being driven mainly
by massive oversupply concerns that just aren't going away.
In fact, recent reports indicatethat OPEC plus Bell,
(28:09):
counterintuitively, might actually be inclined to raise
production soon, or at least stop their deeper cuts.
Why? Because global demand isn't
growing as fast as they had hoped, So supply is.
Exceeding demand, it seems. That way, and critically, the
source material points out that the volume of oil just sitting
idly in tankers out at sea has apparently risen to a record
high. That signals A persistent glut
(28:30):
of oil that's struggling to findbuyers right now.
This bearishness isn't just market shatter, either.
It's corroborated by the official US Energy Information
Administration, the EIA. Their latest forecast is pretty
stark. They expect prices to continue
falling, averaging maybe $62.00 a barrel in this fourth quarter
of 2025 and then dropping further to average just $52 a
barrel in the first half of 2026.
(28:53):
The supply side just seems to beoverwhelming the current demand
narrative for oil. OK, so let's try to synthesize
this incredibly complex picture we've painted.
What we have is a market with a bullish trend that is
technically sound. It's still pointing upwards, but
that trend is fundamentally fragile.
It's dangerously narrow in termsof which stocks are
participating. And now it's fighting the direct
mathematical headwind of rising Treasury yields, which are being
(29:16):
spurred on by newly hawkish sounding Fed.
You add in the complacency signal from the Lovix and the
fundamental uncertainty from thedata vacuum, it really feels
like the perfect setup for maximum volatility in the week
ahead, right. So to give.
You, our listeners, a clear strategic playbook for
navigating these choppy waters. Over the next 5 days, we've
(29:36):
boiled down all the source material we reviewed into 3 core
actionable steps. Think of these as the key inputs
you should probably track almostminute by minute action will
take away. Number one, watch the leash.
That's the 10 year Treasury yield.
This is your primary leading indicator for the stock market
right now. If the yield stays contained,
let's say below 4.1%, the tech rally might be able to keep
(29:58):
breathing. Maybe ignore the Fed for a bit
longer. But if it decisively moves
towards that 4.25% level, you absolutely must anticipate that
the S&P 500 is critical. 6750 support level will be tested
almost immediately as algorithmslikely start to de risk.
Couldn't agree more. Number the one is yields actual
take. Away #2 trade the perverse data
you have to prepare for potentially outsize, maybe even
(30:20):
violent volatility around those key data releases in the ISM
reports on Monday and Wednesday,and especially that ADP
employment report on Wednesday morning.
And crucially, remember the inverse logic.
Strong economic data is likely bearish for stocks right now
because it validates Powell's caution.
Weak economic data is likely bullish for stocks because it
forces the Fed's hand towards cutting rates in December.
(30:43):
Plan your trades. Set your stops accordingly.
The reactions could be swift. Yeah, that inverse.
Logic is key this week and action.
Will take away #3 Apply the monetization lens.
Don't treat all AI related stocks equally anymore.
Use that divergent we saw between Amazon rewarded for
profit and Meta punished for CapEx.
Promises is your playbook. Apply it directly to AMD on
(31:04):
Tuesday and Palantir on Monday. If they prove tangible profit,
if they show high gross margins,if they demonstrate accelerating
commercial contracts, reward them.
But if they simply promise future growth funded by big
spending plans today, expect themarket to punish them,
potentially violently. Proof of her promise is the name
of the game. That's it.
Those are the. 3 keys, watch yields, trade the perverse data
(31:24):
logic and apply that monetization lens to earnings.
And maybe I'll leave you with this final synthesizing thought
because it kind of inverts the classic way we think about risk
sometimes. The primary risk to this entire
market structure right now, it'sprobably not a weak economy
forcing A recession because frankly, the Fed would likely
react quickly to that with more rate cuts, which could support
(31:44):
stocks. No, the primary risk right now
seems to be a strong economy. A surprisingly hot ISM services
report may be unexpected. Strengthen the ADP jobs number,
something that validates Chair Powell's hawkish stance.
That's the scenario that could send the 10 year yield surging
through 4.25%, breaking the backof this top heavy equity rally
and maybe triggering a sudden technical collapse.
(32:06):
The biggest risk is good news. Wow.
The biggest risk is good economic news.
That really is perverse, isn't it?
And it's especially fascinating when you consider, as some
reports noted last week, that one major tail risk, those US,
China trade tensions actually seem to ease a bit, removing a
potential negative catalyst. So given that bit of global Z
risking, but combined with the incredible narrowness of this
(32:29):
rally that we keep talking about, should you trust the
technical strength that's pushedus to record highs?
Or is the market being dangerously complacent as
suggested by that low VIX level?Something for you to consider as
you prepare for what looks like a challenging, but maybe also
potentially lucrative week aheadin the markets.
Thanks for diving deep with us on Bulls, Bears and the Bell
Weekend Edition. We'll see you next week.
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