November 9, 2025 • 38 mins
Welcome to "Bulls, Bears, & The Bell," your definitive daily guide to the heartbeat of the financial markets.
Every morning before the opening bell and every afternoon after the close, we cut through the noise to bring you what truly matters. This is more than just a numbers report; it's an in-depth, daily dissection of the stock market's most critical movements, delivered in a way that's both comprehensive and easy to digest.
Join us as we navigate the session's highs and lows, from the soaring stocks that define a bull run to the market pressures that signal a bearish turn. We're here to analyze the "why" behind the numbers, exploring the catalysts driving the day's top gainers and losers. Whether it's a game-changing earnings report, a geopolitical event sending ripples across the indices, or a sector-wide shift you need to know about, we cover it all. In each episode, you can expect:
Morning Briefing (Pre-Market): Get ahead of the trading day with a look at overnight market performance, key economic data releases, and the stocks to watch right at the opening bell.
Afternoon Wrap-Up (Post-Market): A complete review of the day's action. We'll break down the major trends, analyze the most significant price movements, and provide context on what it all means for your portfolio and the week ahead.
Deep Dives & Analysis: We go beyond the headlines, offering a clear-eyed perspective on market sentiment, sector performance, and the macroeconomic forces shaping your financial world.
"Bulls, Bears, & The Bell" is built for a new generation of investors and seasoned traders alike. If you're looking for a daily ritual to keep you informed, empowered, and one step ahead of the market, your journey starts here.
Follow now to make sure you never miss a bell.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to the deep Dive. We are immediately peeling back
the layers on, well, one of the most intellectually challenging
and contradictory market environments we've seen in
years. Yeah, it really is something.
We are standing right on what feels like a critical inflection
point, wrestling with this staggering question that just
defines the current market climate.
(00:21):
How is it possible that corporate profits are not just
strong, but are actually soaringto near record levels, yet the
overall market sentiment, particularly among consumers,
has collapsed into the absolute gutter?
It is quite simply the great disconnect, as you said, and
understanding the fault lines ofthis divergent is absolutely
(00:42):
mission critical for navigating the week ahead.
You know, the intense volatilitywe saw leading into this week,
November 10th through the 14th. It wasn't random noise.
It was a battle. A battle between fundamentally
powerful corporate realities andthis paralyzing macro sentiment.
That conflict sets us up for a high stakes breakout move.
(01:02):
The only problem is, well, we don't yet know whether it will
be to the upside or the downside.
We really have to analyze our sources, connect those micro
pain points to the macro paralysis to try and forecast
the markets probable direction. And when you look at the source
material, I mean the recent selloff isn't attributable to just
one single cause, is it? It really felt like a perfect
(01:24):
storm created by three distinct,almost toxic drivers that
converged simultaneously. Precisely those three drivers,
they're the whole story of the past week and really the setup
for the next. The first was a sudden,
necessary and pretty severe recalibration of multiples,
especially within those high flying AI and tech stocks.
(01:44):
Investors stopped asking is thisgrowth real and started asking
is this price reasonable given the whole interest rate
environment? Big shift.
Yeah, that reasonableness factor.
And the second factor, the macrokiller is the record long U.S.
government shutdown or at what, 38 days and counting still
going. It's created this massive data
vacuum at the very moment the Federal Reserve needs like
(02:05):
perfect visibility, the Fed is flying blind, and the market
absolutely detests uncertainty, especially when it comes to
rates. And finally, because there was
no official data, no jobs numbers, no trusted CPI, the
market just seized on every single piece of negative private
sector information available. Like a sponge.
We saw sentiment surveys, layoffreports, all amplified far
(02:27):
beyond what the, you know, strong corporate fundamentals
would suggest. It created this kind of
emotional floor for the market ceiling, if that makes sense it.
Is OK, let's impact this whole setup and let's dive into the
week that just was focusing on that really painful performance
in the tech sector. Yeah, that speed bump was real,
wasn't it? And the source material confirms
it was almost entirely located in the epicenter of the market
(02:48):
technology. After enjoying 3 consecutive
weeks of pretty decisive winning, all three major indices
decisively snap their winning streaks for the week ending
November 7th, 2025. And the performance data for the
week, it shows exactly where thestress concentrated.
While the overall S&P 500 fell, you know, relatively modest
(03:09):
1.6%, and the Dow Jones was down1.2%.
The real pain index belongs squarely to technology.
The NASDAQ Composite plunged 3.0% for the week.
Wow, 3%. Yeah, that performance marks
it's single worst weekly showingsince that volatile period back
in early April this year. So that magnitude of movement
really confirms that the marketsoverall direction was once again
(03:31):
pretty much determined by tech stocks.
Yeah. What was the mechanism behind
that sharp, sudden decline? Was it something specific?
Well, it wasn't a profit warningor some kind of systemic
failure, Not really. It was driven by a necessary
wave of profit taking combined with what analysts are
accurately calling a recalibration of multiple.
That phrase again, exactly because for most of 2025, the AI
(03:53):
LED boom inflated valuations to levels that frankly bordered on
speculative exuberance. The simple reality is that
investors started questioning those lofty valuations.
They looked at forward earnings estimates and realized the
prices, you know, in terms of price to earnings ratios
required basically flawless execution for years to come.
And that calculus is just unsustainable, especially when
(04:15):
macro uncertainty spikes like ithas.
And we saw specific high profilecasualties that illustrate this
point perfectly, didn't we? We did mega cap Alphabet GOGL
fell 2.1% as investors realized if AI promise was already maybe
heavily priced in. But the true barometer of the AI
frenzy Chip maker NVIDIA NVDA. It plunged over 9% on the week.
(04:39):
Over 9%, yeah, a 9% weekly drop in a market leader like NVIDIA
is a serious indicator. It tells you that the momentum
trade is taking a profound and likely extended break.
It's paused. What's fascinating about this
moment and what you're saying signals A fundamental shift in
the investing environment is that market sentiment seems to
have undergone this critical regime change.
For most of the past year. The prevailing mantra was almost
(05:01):
reckless growth at any price. Right, people are willing to pay
almost anything. Investors were willing to pay
40X50X even 100X earnings for companies just tinting at AI
dominance. Now you're saying the market is
aggressively demanding growth ata reasonable price?
Growth at a reasonable price. That word reasonable is where
all the friction lives, right? Now, and we saw this friction
(05:23):
demonstrated by a clear negativesell the news reaction to
corporate reports that were fundamentally actually
excellent. Absolutely.
You look at a company like Palantir PLTR, they posted a
strong beat on earnings and crucially raise their revenue
guidance. A classic beat and raise
quarter. Which normally sends a stock
(05:44):
soaring. Exactly.
Traditionally, that's a guarantee the stock will soar.
Yet it sold off sharply immediately after the news.
Similarly, Qualcomm QCOM delivered an upbeat forecast
specifically tied to future smartphone chips, and they
dropped, too. The news was good, but the
market reaction was punitive. So this buy the rumor, sell the
news behavior, it really suggests the easy money in that
(06:05):
primary sort of straightforward AI momentum trade is
definitively over. I think that's fair to say.
Yes, the Street is signaling that flawless execution and
aggressive optimism, They're no longer enough.
They are already priced into these stretched valuations even
after the recent pullback. So this raises the stakes
immensely for the upcoming wave of tech earnings, especially the
(06:29):
big large cap names, right? Oh absolutely.
A simple beat on past earnings won't cut it anymore to justify
their current elevated multiples, which are still high.
Let's be clear, even after the pullback, companies need to
provide exceptionally strong forward guidance.
What does that look like? Well, that guidance must detail
accelerating revenues, clear monetization paths for these AI
(06:50):
products everyone's talking about, and, crucially,
defensible margins. If the guidance is merely in
line line with expectations, themarket will likely treat it as a
disappointment. The bar is much higher now.
And this nervousness, it's clearly showing up in the
underlying mechanics of the market too, right?
The market internals are deteriorating.
We are seeing a worrying declinein market breadth.
(07:11):
Fewer and fewer stocks are actually participating in these
recent rally attempts. This points directly to the risk
of what our sources are calling historic market concentration.
That concentration is a genuine systemic risk.
It really merits A deeper look, actually.
Historically, when you see a handful of stocks dominating the
index to this degree, it often precedes periods of high
(07:32):
volatility or even structural correction.
And the numbers are pretty stark.
They are. We're talking about the top ten
stocks now accounting for over 30% of the S&P 500's total
market capitalization. Over 40%, yeah.
To put that in perspective, thatlevel of concentration wibles
theheightofthe.com bubble back in 2000.
So why is that concentration percentage, 40%, held by just 10
(07:56):
companies? Why is that so dangerous for the
average investor? Maybe someone holding an S&P 500
ETF? Well, because of the profound
impact it has on passive investing, which is how most
people invest today, right through index ETFs or mutual
funds tracking the S&P 500. When 40% of the index's weight
is tied up in just ten companies, the performance of
those 10 companies essentially becomes the performance of the
(08:17):
entire market. Right, they drag everything with
them. Exactly.
If one of those giants experiences a significant
pullback, say 10% on a missed forecast, it drags the entire
S&P 500 down disproportionately.Even if the other 490 stocks are
doing OK or even well. It creates this enormous
correlation risk. The entire market rises and
(08:39):
falls on the same handful of reports, increasing systemic
fragility. And we see that fragility
reflected perfectly in the volatility measure, the SIBO
Volatility Index, the VIX, the market's traditional fear index.
It jumped a staggering 25% last year, closing at a two week high
of 21.82. That metric tells you that
institutional investors are paying significantly more to
(09:00):
hedge their portfolios, reflecting deep anxiety about
the direction of those highly concentrated mega caps, doesn't
it? It absolutely does.
They're buying protection because they see the risk tied
to that concentration. OK, So that micro volatility in
the tech sector is then amplified exponentially by the
central macro problem plaguing the entire economic picture.
(09:20):
This profound data vacuum we shift from the specific stock
pane to the general policy paralysis caused by the record
long government shutdown now andit's 38th day. 38th day, yeah.
When you have the economy's policymakers deprived of their
essential inputs, it's not just an inconvenience, right?
It fundamentally blinds them. It's the perfect storm of
(09:43):
uncertainty. The government shutdown means
critical reports are simply not being released.
We are missing core labor marketdata like the monthly employment
report and FP and the Jyoti's job opening survey.
Key numbers, crucial numbers. We are also missing vital
inflation indicators. This is why the analogy is so
apartment. The Federal Reserve is now
essentially driving in the fog, or maybe more accurately,
(10:05):
groping around in the dark. The central bank relies heavily
on employment and inflation datato manage its dual mandate price
stability and maximum employment, and those reports
have effectively vanished. What's truly remarkable, though,
is the policy collision this hascreated.
Just last week, remember, beforethe full weight of the shutdown
really hit, Fed Chair Powell delivered a notably more hawkish
(10:29):
message. He did, surprisingly so to some.
He was signaling that the Fed was ready to maintain a
restrictive stance for longer, casting serious doubt on any
near term rate cuts, including the previously anticipated
December cut. But the market, in this, well,
stunning display of defiance, effectively ignored that hawkish
message. Just tuned it out, really.
(10:49):
Yeah. Instead of listening to Powell's
words, Wall Street traded entirely on the emerging
weakness confirmed by the private sector data.
Traders are increasingly confident that the Fed will cut
interest rates for a third time this year next month in
December. So the market is betting against
the Feds own words. The market is betting against
the Feds verbal guidance and fora forced data-driven pivot.
(11:12):
A pivot prompted by those terrible private sector
sentiment reports we're going todiscuss shortly.
They think the data will force the Feds hand.
OK, so if the market believes economic weakness is emerging,
why would the Fed cut based on less data?
Doesn't driving in the fog as you put it, suggests they would
hold steady, maybe fearing they'd make a mistake?
(11:32):
That's the core of the policy trap they find themselves in.
While caution usually favors a pause, you're right, the current
environment is unique. The Fed is mandated to maintain
price stability and maximum employment.
The dual mandate. Exactly.
If the only data they have, these private reports, are
screaming that the economy is falling off a Cliff, then
(11:52):
maintaining A hawkish stance without official confirmation
risks inducing a severe, unnecessary recession.
The absence of official employment data makes a Fed
exceptionally sensitive to downside economic risks right
now. And the biggest single source of
uncertainty for the immediate future it seems is the October
Consumer Price index or CPI thatwas scheduled for November 13th.
(12:13):
Our sources indicate this reportis now highly likely to be
delayed or potentially cancelledaltogether.
This sounds like a logistical crisis, almost like a CPI
uncertainty principle in action.It is.
The problem is fundamentally logistical, but the implications
are methodological and, frankly,massive.
Roughly 2/3 of the price data that feeds the core CPI measure
(12:33):
the day of the Fed relies on most for inflation is collected
manually. Manually.
Yes, by Bureau of Labor Statistics LS field agents.
These agents actually visit specific brick and mortar
locations to verify prices for goods and services.
Since those workers are furloughed due to the shutdown,
the data simply cannot be gathered properly or
(12:54):
comprehensively. So the resulting data might be
canceled altogether, meaning we just lose the October reading
entirely. Or you mentioned potentially
worse, the BLS might resort to imputed data.
What exactly does imputing mean in this context, and why does it
jeopardize the quality of the report so profound?
OK, so imputing means they don'tactually have the measurement
(13:14):
for a specific item or service. Instead, they use complex
statistical modeling to basically guess what the price
change should have been. Yes, that doesn't sound reliable
for the Fed. Well, they might use the price
change observed in the areas where data was collected, like
maybe automated energy data, andapply that pattern to the
missing category, say apparel ormedical services.
Or they might simply carry forward the previous month's
(13:37):
price change for that item. Now, imputation is a standard
tool used to fill small gaps. That's normal.
But when potentially 2/3 of the data is imputed, the resulting
index figure is no longer a truemeasure of current inflation.
It becomes, frankly, a dangerousfiction for the Fed to rely on.
And how do markets react to that?
(13:57):
Bond traders who are extremely sensitive to methodological
purity, they'll immediately distrust such a reading.
They'll trade off alternative, less comprehensive data sets
like the Producer Price index. The PPI, which we'll get to the
imputed CPI, would likely be ignored.
This methodological compromise then creates that policy trap we
mentioned earlier. Yeah, if the CPI is missed or
(14:18):
rendered untrustworthy, the Federal Reserve could go into
its crucial December 10th meeting with critically limited
visibility on 2 full months of inflation and employment data.
Exactly this is the moment when the lack of data itself becomes
a driver of policy. If the private data, those
terrible sentiment figures and layoff reports suggest deep
(14:38):
economic slowing, the Feds traditional risk management
approach suggests they should lean toward accommodation.
Maybe a cut or a pause rather than risk accelerating A
slowdown they can't accurately measure.
So the absence of official reports gives immense, almost
disproportionate power to the grim narrative coming from the
private sector. That's precisely it.
(14:59):
The vacuum gets filled and rightnow it's being filled with
negative signals. Now we arrive at the absolute
heart of the conflict, the greatdisconnect.
We've got policy paralysis because of the data vacuum
amplified by the AI valuation shock.
And all this turbulence has set against this incredible
divergent between investor mood and actual corporate
performance. This feels like the most crucial
(15:19):
part of our deep dive. It is the paradox.
It encapsulates the entire current market challenge with
official government data absent,the market fixated entirely on
those private reports we mentioned.
And they were, in the analysis of our sources, uniformly
negative. Just bleak.
OK, let's start with the mood ofthe consumer.
The University of Michigan's preliminary November sentiment
(15:40):
survey plunged dramatically, butthe truly arresting statistic,
the one that jumps off the page,is the component measuring
current economic conditions thatfell to the lowest level
recorded in the surveys 73 year history. 73 years.
Let that sink in. 73 years. Let's put that in context.
That survey began back in 1952. So this reading is lower than
(16:04):
during the absolute depths of the 2008 financial crisis, lower
than the stagflation nightmare of the 1970s, lower than the
harsh recessions of the early 1980s.
That isn't just a survey data point.
It feels like a profound psychological low point for the
American consumer. It really does, and our sources
say that collapse was directly attributed to consumer concerns
(16:24):
over the economic effects and, frankly, the political
dysfunction of this prolonged shutdown.
People are just fed up and worried.
Exactly. Consumers are deeply worried
about their jobs, their financial prospects, and that
anxiety is like a ticking time bomb for future spending.
Compounding that is the labor market weakness indicated by
that private data. The report from Challenger, Gray
(16:47):
and Christmas showed that October job cuts were the
highest for that specific month in over 2 decades 2.
Decades. Specifically since 2003.
So the narrative coming from theprivate sector is crystal clear.
Main Street feels terrible, believes the economy is slowing
rapidly and businesses are aggressively, maybe
preemptively, laying people off.But this is where the
(17:07):
contradiction just hits you overthe head, because the market is
absolutely not selling off due to deteriorating fundamentals.
Is it? Corporate America is, by the
numbers, absolutely crushing it.How can the consumer feel this
poor while the corporate bottom line is this strong?
It doesn't seem to add up. That is the ultimate test, isn't
it? Behavioral economics versus
financial reality. The bullish counter narrative
(17:29):
drawn directly from Q3 earnings reports is fundamentally
powerful. The earnings season, now over
90% complete, has been exceptionally strong.
Tell us the numbers. Look at the hard figures, 82% of
S&P 500 companies beat bottom line earnings estimates.
That's significantly above the five year average of 78%.
So companies are outperforming expectations.
(17:50):
Considerably, and this isn't merely about companies managing
expectations lower so they can beat them.
It's about genuine aggregate growth.
The S&P 500 is currently on track for a whopping 12%
aggregate earnings growth year over year. 12% growth.
That marks the fourth straight quarter of double digit year
over year gains. Even the technology sector,
Despite that recent sell off we discussed, posted an impressive
(18:13):
22% growth. 22% in tech. Yeah, the Magnificent 7 names,
even after that valuation recalibration, are still
delivering exceptional performance and importantly,
raising future guidance. This confirms that corporate
fundamentals, things like innovation, operational
efficiency, global demand for new tech like AI are providing a
powerful durable support. It's establishing a solid floor
(18:37):
for the market. So we have this market floor set
by 12% earnings growth and then a ceiling created by a 73 year
low in consumer sentiment and this paralyzing data vacuum.
Why is the consumer reacting so severely to the shutdown and the
political noise, rather than maybe celebrating the financial
reality of still relatively strong employment and soaring
(18:57):
corporate profits? Yeah, it's a great question.
I think it boils down to behavioral factors and loss
aversion. The average American worker is
probably more attuned to political chaos, high profile
corporate layoff announcements, even if they are concentrated in
specific industries like tech, and the generalized media
narrative of gloom. Then abstract earnings reports.
(19:18):
Exactly More than abstract aggregated S&P 500 earnings
growth figures. And loss aversion dictates that
the pain of a potential loss, like losing your job security or
facing a recession, is felt far more acutely, maybe twice as
much as the pleasure of an equivalent gain, like seeing
your four O 1 K go up a bit. That makes sense.
The fear is stronger. Right.
The 38 day shutdown isn't just an economic event, it's seen as
(19:41):
a failure of governance that translates into profound
insecurity for many people. And this behavioral ceiling is
what's forcing the Fed to seriously consider rate cuts,
even though the underlying corporate data doesn't yet
scream recession. OK.
This profound conflict fundamentals versus sentiment
brings US directly to the technical picture, which sounds
just as volatile and critical asthe macro dilemma.
(20:04):
The market is positioned at a technical inflection point,
which makes the next few days absolutely crucial for
establishing the directional move, maybe for the rest of the
year. That's right, the technical
battleground is centered squarely on the S&P 500's 50
days simple moving average, the 50 day SMA that currently sits
right around the 6680 level. And why does this specific
(20:25):
moving average, the 50 day, holdsuch a massive psychological
power for institutional traders?Well, because it represents the
average closing price over the last 50 trading days, roughly 2
months. It's become the most critical
benchmark for confirming near term trend health.
If the S&P 500 is trading above it, the trend is generally
viewed as positive. Buyers are seen as dominant.
(20:46):
If it dips below, it signals weakness and often encourages
short sellers. OK, the significance is
multiplied exponentially here because the index had traded
above this average for 133 consecutive sessions.
A. 133 days. Yeah, that is the longest streak
since way back before the globalfinancial crisis in 2007.
Breaking a streak of that duration is a massive attention
(21:09):
grabbing signal that the market character has fundamentally
changed. People notice.
And on Friday, we saw the definitive test of that anchor.
Describe that Friday reversal because it sounds like high
drama for traders watching it live.
Oh, it was pure market theater. The index briefly dipped below
that critical 50 day SMA line, which is often the immediate
(21:29):
signal for institutional sell programs to kick in
automatically. Right, the algorithms fire.
Exactly. But then almost immediately,
immediately, really aggressive by the dip.
Money poured in staging what analysts called the biggest
intraday turn around since April.
The index managed to claw its way back and crucially close
above the 50 day SMA. At the end of the day, that
(21:51):
aggressive defense shows that buyers still have deep
conviction in the fundamental strength we talked about.
But they are fighting for their lives against this pervasive
macro anxiety. It's a real battle.
So based on the source material,we have two very clear and
immediate scenarios for the weekahead, both tied directly to
whether we hold this 6680 line on the S&P 500.
(22:13):
That's right, the bullish scenario requires the S&P 500 to
establish support at or ideally above 6680.
That means trading confidently above it for multiple sessions,
not just bouncing off it. OK.
Consolidation above. It exactly If it does that, that
defense will embolden dip buyingbehavior.
It acts as confirmation that theunderlying corporate strength
outweighs the macro fog, and that validation that signal will
(22:35):
likely pull significant amounts of sideline capital back into
the market from investors waiting for clarity.
And the alternative, the bearishsignal.
What happens if it fails? Well, if the index does not hold
up at the 50 day SMA, if it slides convincingly below 6680
early in the week and stays there, it signals that the
negative macro sentiment and that lingering AI valuation
(22:57):
shock have finally overpowered the buyers.
Game over for the Bulls short term.
Short term, yeah, that would confirm the intermediate term
downtrend is likely resuming, probably leading to a deeper
correction, potentially testing the October opening level around
6641 or even lower. Now, overlaying this crucial
technical test is a unique complication, a calendar quirk
(23:18):
that could really distort the battle.
The Veteran's Day liquidity tramp on Tuesday, November 11th.
This sounds vital for our listener to understand if
they're trading or watching closely.
It is. This is a textbook example of a
structural market anomaly that can catch people off guard.
On Tuesday, the US stock market,both the NYSE and NASDAQ, will
be fully open for normal tradinghours.
(23:39):
OK, stocks trade, Stocks trade. Crucially, however, the US bond
market will be closed in observance of the federal
holiday. Why does a closed bond market
matter so profoundly to stock traders?
What's the structural connectionthere?
Because the bond market, specifically U.S.
Treasury yields, provides the essential risk free benchmark
for all equity valuation, Treasury yields are the primary
(24:02):
input used in basically every financial model to determine the
present value of future corporate cash flows.
A discount rate. Exactly.
It's the constant input used by algorithms and human traders
alike to gauge risk appetite in real time.
When that benchmark, the anchor of all valuation, is frozen for
the day because the bond market is closed, stock traders have no
(24:24):
real time signal to gauge changing interest rate
expectations or shifting risk tolerance based on bond market
moves. So essentially Tuesday becomes
this kind of black box day whereany big stock move isn't
necessarily based on fresh fundamental shifts or real yield
comparisons, but maybe just purelow volume speculation or noise.
That's a great way to put it, Black box day.
(24:44):
It makes the veteran's day trap a significant risk for anyone
trying to say front run the 50 day SMA test based on Tuesday's
action alone. And compounding the confusion, a
significant portion of cross asset traders and sophisticated
institutions who typically provide a lot of the markets
volume will likely be offline, maybe traveling for the long
weekend or just using the day tocatch up.
(25:05):
Administratively, this guarantees significantly lower
overall market liquidity on Tuesday.
Lower volume means bigger swingson less news.
Precisely so. The warning to the listener is
critical. Any market moving news, whether
that's a new headline on the shutdown talks and the
unconfirmed rumor floating around, or even a scheduled
earnings report like Occidental Petroleum's Oxy, which is due on
(25:28):
on Tuesday, could cause exaggerated, outsize price moves
on that thin volume. Which means Tuesday's price
action could very easily be a fake out.
It might briefly break the 50 day SMA on low volume, maybe
trigger some stops and give a completely false technical
signal to longer term trend followers.
Exactly right. Tuesday's volatility and the
associated price action could beentirely unreliable for
(25:50):
determining the true technical trend.
The real test for the S&P 5 hundreds crucial 50 day SMA
battle will likely only come on Wednesday through Friday.
That's when the bond traders return, real liquidity
normalizes, and we get the context of real time Treasury
yields again. So patience is key, especially
on Tuesday. Don't get faked out.
Patience and skepticism about Tuesday's moves?
(26:10):
Absolutely. OK.
So given the near certainty thatthe official October CPI is
going to be delayed or significantly compromised, all
focus shifts dramatically to themission critical data scheduled
for the end of the week Friday, November 14th.
These reports are really the only chance we have in the near
term to get an official read to confirm whether the markets
bearish sentiment is justified by hard data or whether it's
(26:33):
largely based on political chaosand that sentiment plunge.
Right, the reality check first up on Friday morning is the
producer Price Index, or PPI. Why does this wholesale
inflation measure suddenly become so indispensable this
month? Well, if the CPI is indeed
missed or unusable, the PPI, which measures the prices
companies pay for their inputs, things like raw materials and
(26:54):
intermediate goods, becomes the only official inflation read we
have for the entire month of October.
The only one. Wow.
Consensus expects the year over year figure to cool slightly,
landing at plus 2.6%. Now, the PPI is often seen as a
leading indicator for consumer inflation down the road.
So a soft number, something below that 2.6% consensus would
(27:17):
provide some relief. It would confirm inflation is
cooling at the wholesale level. And the market reaction?
That kind of soft print would likely pressure the dollar rally
bonds when they reopen on Wednesday, of course.
And crucially for equity markets, it would effectively
lock in December rate cut bets by validating the market's
belief that the Fed has room to pivot, that inflation is heading
(27:37):
the right way. But the number everyone is
probably watching closest, especially given that staggering
73 year low in consumer sentiment we keep coming back
to, has to be retail sales, right?
Oh, arguably the most important data point of the entire week,
Retail sales for October gives us the first official
quantitative look at Q4 consumerhealth.
Remember, consensus is currentlyprojecting a pretty weak plus
(27:59):
0.2% month over month gain. Only .2%.
Yeah, that figure represents a sharp slowdown from the plus
0.6% pace we saw back in September.
And given the staggering collapse and consumer confidence
that 73 year low we discussed, the downside risk to this number
feels immense. What if consumers really did
slam the brakes in October? OK.
(28:19):
So what are the volatility scenarios?
If we get a flat or even worse, a negative retail sales print on
Friday, how does the market possibly react?
A flat or negative reading confirms that the economy is
indeed hitting that air pocket suggested by the sentiment data.
The market reaction will be intensely volatile, almost
certainly presenting a classic immediate market dilemma.
(28:39):
Dilemma. How?
Well, scenario one it could spark a vicious bad news is bad
news sell off. In this case, investors finally
realize the economic stall is real, recession risks genuinely
rise, and that fear overpowers the hope of a Fed cut.
OK, reality bites. Right scenario 2.
It could trigger a massive bad news is good news rally based
entirely on the market, cementing its belief that a
(29:02):
December Fed rate cut is now an absolute certainty because the
economy clearly needs help. So the market cheers the bad
news because it means cheaper money.
Exactly. Traders will have mere seconds
to decide which narrative dominates the trading
environment on Friday morning. Right after that 8.30 AM Eastern
release will likely be fast, decisive and highly
(29:23):
unpredictable. Whiplash is possible.
Definitely one to watch closely now.
Beyond the macro data, the week also features some high stakes
earnings reports that will serveas immediate tests of that new
skeptical sentiment regime we talked about in Part 1, where a
simple beat just isn't enough anymore.
Forward guidance is the essential metric.
That's right, we begin with a major networking bellwether,
(29:44):
Cisco Symbol CSCO reporting Wednesday after the market
close. Cisco is a crucial checkpoint
for overall enterprise IT spending.
What's the focus there? The market will focus entirely
on enterprise AI networking orders are are companies
actually buying the gear needed for AI and also on the
progression of their backlog, how much future business is
(30:05):
lined up. They also really need to provide
clear synergy updates from that massive Splunk acquisition they
made. Investors need justification for
that big deal, especially now. OK.
Then on Thursday morning before the market opens, we get Walt
Disney DIS. That's a key media,
entertainment and importantly, consumer bellwether.
(30:26):
After that sentiment collapse, the focus on the consumer facing
businesses must be intense. Oh, absolutely intense.
For Disney, the analysis really breaks down into 3 core areas.
First, the crucial path to profitability for their direct
to consumer streaming segment. Disney Plus LED Wall Street is
tired of the losses there. They want to see black ink.
Second, the strategic road map for ESPN and the new ESPN bet
(30:49):
initiatives. How are they navigating the
sports landscape? 3rd and perhaps most sensitive
given the consumer anxiety we'vediscussed.
Any signs of slowing momentum attheir high margin parks?
Division the theme park. Exactly, the parks have been an
absolute earnings powerhouse forthem post pandemic.
Any indication that the average American family is pulling back
on discretionary travel may be delaying.
(31:10):
That Disney trip will be seen asa direct confirmation of that 73
year low sentiment reading. It would be a very tangible
signal. Also on Thursday, but after the
close, we have Applied MaterialsAMAT, a major semiconductor
capital equipment bellwether. They sit right in the middle of
the global AI hardware build out, making them crucial.
(31:31):
Hugely important, the bull case for AMAT relies entirely on
continued strong capital expenditure demand for both AI
chip manufacturing and advanced memory production.
But the crucial watch item, the thing that introduces the
geopolitical dimension will be their guidance regarding the
impact of China export license headwinds.
The restrictions. Yeah, that uncertainty has been
(31:51):
a consistent risk factor hangingover the entire semiconductor
space, and the market desperately needs clarity on how
those US restrictions are translating into tangible order
cancellations or delays from Chinese customers.
Ana's perspective is vital there.
And finally, we have two crucialcheck insurance on the health of
the Chinese consumer and tech sector with jd.com reporting I
(32:12):
think Wednesday morning and Alibaba BAE on Thursday morning.
That's right. These act as important proxies
for the health of the world's second largest economy, which
has its own set of challenges. Right now forjd.com, the focus
will likely be on retail marginsand profitability in what's
become a fiercely competitive e-commerce environment over
there. And for Alibaba?
(32:33):
For Alibaba, the Street needs tosee continued strong growth in
their cloud intelligence segment.
That's key, and also solid progress on their own AI
monetization initiatives. This is especially important as
their traditional e-commerce business matures and faces more
intense domestic competition. So cloud and AI are the focus
for Baba. So OK, let's try and summarize
(32:55):
this deeply contradictory environment.
We've been dissecting the long term fundamentals driven by that
exceptional Q3 earnings season and the durable multi year AI
technology theme. They remain powerfully intact.
That establishes, I think, a robust floor for the market,
fundamentally speaking. Right, the corporate side looks
solid. However, the near term picture
is utterly dominated by that critical 50 day SMA technical
(33:18):
test we discussed and the severemacro data gap amplified by that
shocking 73 year low in consumersentiment.
This dynamic creates the volatility, the uncertainty, and
the effect of ceiling that the market just cannot seem to
breakthrough yet. So based on that, we should
probably conclude that last week's pullback, especially in
tech, wasn't really a sign of fundamental collapse, but rather
(33:41):
a necessary, maybe even healthy rotation.
The sharp AI sell off exposed the serious structural risk
associated with that historic market concentration, where just
10 stocks drove nearly half of the market's value.
Absolutely, I think healthy rotation is the right way to
frame it. That capital didn't just vanish
from the system, it is now actively looking for new,
(34:01):
potentially more attractively priced leadership outside of
that mega cap concentration. Bubble so money is moving.
Money is moving. Looking for a new home?
This is the classic signal that investors need to rapidly
diversify their exposure away from that handful of names that
have concentrated so much of therisk and also so much of the
recent volatility. OK.
That leads directly then to the concrete strategic
recommendations for listeners trying to navigate this highly
(34:24):
contradictory, maybe confusing environment.
First, portfolio Management 101 prioritize diversification.
Correct. The primary recommendation
coming from our sources is to maintain portfolio balance and
aggressively diversify. Analysts strongly advise
avoiding overexposure. Meaning, you know, don't let 30%
(34:44):
or 40% of your portfolio sit in that handful of mega cap tech
names that have proven to be theprimary source of recent market
swings. Use this rotation as a chance to
rebalance. Take some profits, perhaps.
So broadening exposure is the key.
You mentioned specific sectors earlier that analysts are
highlighting as potential beneficiaries of this rotation.
Why industrials, consumer discretionary and healthcare?
(35:06):
Why are they the recommended landing spots?
Now that the easy money in the primary AI trade seems to be
cooling, shouldn't money just rotate into maybe other second
tier AI infrastructure plays? That's a critical question and a
challenge. While further AI infrastructure
plays will likely benefit long term, investors right now seem
to be looking for established value and maybe some insulation
(35:26):
from these immediate macro risksand uncertainties.
OK. A bit more safety.
A bit more perceived safety perhaps?
Industrials are attractive because they often benefit from
broad based infrastructure spending, some of which is non
AI related, offering potentiallymore predictable cash flows and
generally lower valuations than pure tech right now.
(35:47):
Healthcare is of course the traditional defensive value
play. It tends to be less susceptible
to economic downturns and boaststypically robust balance sheets.
OK, industrials and healthcare make sense, but consumer
discretionary, that seems counterintuitive given the 73
year low in consumer sentiment we keep talking about.
Why that? Sector.
Yeah, it seems odd on the surface.
(36:08):
The argument here is somewhat tactical.
It's that the sector has been hammered because of that
terrible sentiment, but if the market starts betting heavily on
a Fed rate cut, that bad news isgood news scenario we outlined
for Friday. The pivot play.
Exactly. Consumer discretionary is often
one of the first cyclical sectors to rally hard on the
expectation of future economic recovery driven by lower rates
(36:31):
regardless of the current week sales data.
It's a tactical recovery oriented bet on a Fed pivot
materializing. Got it.
It's a forward-looking bet. And finally, what's the ultimate
tactical caution for the week ofNovember 10th navigating all
this? I'd say remain intensely
cautious and nimble until the market clearly resolves that 50
day SMA technical test. Don't chase weakness below it or
(36:54):
strength above it until there's confirmation.
And above all, be exceptionally wary of potentially misleading
price action on Tuesday. The Veteran's Day trap.
Remember the veteran's day liquidity trap?
Due to the bond market closure, the true directional test really
begins Wednesday, and the final crucial decision point looks
like Friday's day-to-day luge, PPI and retail hashtag tag
(37:14):
outro. OK.
We have navigated the critical technical battle lines, the
necessary AI valuation reset, and its profound macro data
vacuum created by the ongoing government shutdown.
When we look at it at the end ofthe week, it really feels like
the entire market hinges on Friday's mission critical PPI
and especially retail sales reports.
(37:35):
Absolutely. The market has clearly placed
its bet firmly on a Fed cut. It is operating almost entirely
on the hope, or maybe the expectation, that bad news is
what forces the central bank's hand toward accommodation,
toward easing policy. So here is our final thought for
you, the listener, to consider based on that massive
disconnect. We've explored.
If Friday's retail sales not only disappoint, but actually
(37:56):
confirm the story told by that 73 year low in consumer
sentiment confirming that the American consumer has truly
pulled back spending in a meaningful way, will the market
successfully rally on the certainty of a December rate
cut? Sticking to the bad news is good
news, playbook. Or will institutional buyers
finally decide that truly bad news is just bad news when the
(38:19):
economic stall shifts from a fear from a sentiment reading to
an official quantitative realityin the data?
Yeah, where's the breaking point?
Exactly what level of slowdown will it take for the market to
stop relying on the Fed putting a floor under everything and
start genuinely fearing the state of the economy?
What will you be watching for when that volatile data drops on
(38:41):
Friday morning? That is the disconnect we will
keep tracking right here and that is what makes this moment
such a fascinating high stakes trade for everyone involved.
We'll see next time for the nextdeep dive.
Welcome to the deep Dive. We are immediately peeling back
the layers on, well, one of the most intellectually challenging
and contradictory market environments we've seen in
years. Yeah, it really is something.
We are standing right on what feels like a critical inflection
point, wrestling with this staggering question that just
defines the current market climate.
(00:21):
How is it possible that corporate profits are not just
strong, but are actually soaringto near record levels, yet the
overall market sentiment, particularly among consumers,
has collapsed into the absolute gutter?
It is quite simply the great disconnect, as you said, and
understanding the fault lines ofthis divergent is absolutely
(00:42):
mission critical for navigating the week ahead.
You know, the intense volatilitywe saw leading into this week,
November 10th through the 14th. It wasn't random noise.
It was a battle. A battle between fundamentally
powerful corporate realities andthis paralyzing macro sentiment.
That conflict sets us up for a high stakes breakout move.
(01:02):
The only problem is, well, we don't yet know whether it will
be to the upside or the downside.
We really have to analyze our sources, connect those micro
pain points to the macro paralysis to try and forecast
the markets probable direction. And when you look at the source
material, I mean the recent selloff isn't attributable to just
one single cause, is it? It really felt like a perfect
(01:24):
storm created by three distinct,almost toxic drivers that
converged simultaneously. Precisely those three drivers,
they're the whole story of the past week and really the setup
for the next. The first was a sudden,
necessary and pretty severe recalibration of multiples,
especially within those high flying AI and tech stocks.
(01:44):
Investors stopped asking is thisgrowth real and started asking
is this price reasonable given the whole interest rate
environment? Big shift.
Yeah, that reasonableness factor.
And the second factor, the macrokiller is the record long U.S.
government shutdown or at what, 38 days and counting still
going. It's created this massive data
vacuum at the very moment the Federal Reserve needs like
(02:05):
perfect visibility, the Fed is flying blind, and the market
absolutely detests uncertainty, especially when it comes to
rates. And finally, because there was
no official data, no jobs numbers, no trusted CPI, the
market just seized on every single piece of negative private
sector information available. Like a sponge.
We saw sentiment surveys, layoffreports, all amplified far
(02:27):
beyond what the, you know, strong corporate fundamentals
would suggest. It created this kind of
emotional floor for the market ceiling, if that makes sense it.
Is OK, let's impact this whole setup and let's dive into the
week that just was focusing on that really painful performance
in the tech sector. Yeah, that speed bump was real,
wasn't it? And the source material confirms
it was almost entirely located in the epicenter of the market
(02:48):
technology. After enjoying 3 consecutive
weeks of pretty decisive winning, all three major indices
decisively snap their winning streaks for the week ending
November 7th, 2025. And the performance data for the
week, it shows exactly where thestress concentrated.
While the overall S&P 500 fell, you know, relatively modest
(03:09):
1.6%, and the Dow Jones was down1.2%.
The real pain index belongs squarely to technology.
The NASDAQ Composite plunged 3.0% for the week.
Wow, 3%. Yeah, that performance marks
it's single worst weekly showingsince that volatile period back
in early April this year. So that magnitude of movement
really confirms that the marketsoverall direction was once again
(03:31):
pretty much determined by tech stocks.
Yeah. What was the mechanism behind
that sharp, sudden decline? Was it something specific?
Well, it wasn't a profit warningor some kind of systemic
failure, Not really. It was driven by a necessary
wave of profit taking combined with what analysts are
accurately calling a recalibration of multiple.
That phrase again, exactly because for most of 2025, the AI
(03:53):
LED boom inflated valuations to levels that frankly bordered on
speculative exuberance. The simple reality is that
investors started questioning those lofty valuations.
They looked at forward earnings estimates and realized the
prices, you know, in terms of price to earnings ratios
required basically flawless execution for years to come.
And that calculus is just unsustainable, especially when
(04:15):
macro uncertainty spikes like ithas.
And we saw specific high profilecasualties that illustrate this
point perfectly, didn't we? We did mega cap Alphabet GOGL
fell 2.1% as investors realized if AI promise was already maybe
heavily priced in. But the true barometer of the AI
frenzy Chip maker NVIDIA NVDA. It plunged over 9% on the week.
(04:39):
Over 9%, yeah, a 9% weekly drop in a market leader like NVIDIA
is a serious indicator. It tells you that the momentum
trade is taking a profound and likely extended break.
It's paused. What's fascinating about this
moment and what you're saying signals A fundamental shift in
the investing environment is that market sentiment seems to
have undergone this critical regime change.
For most of the past year. The prevailing mantra was almost
(05:01):
reckless growth at any price. Right, people are willing to pay
almost anything. Investors were willing to pay
40X50X even 100X earnings for companies just tinting at AI
dominance. Now you're saying the market is
aggressively demanding growth ata reasonable price?
Growth at a reasonable price. That word reasonable is where
all the friction lives, right? Now, and we saw this friction
(05:23):
demonstrated by a clear negativesell the news reaction to
corporate reports that were fundamentally actually
excellent. Absolutely.
You look at a company like Palantir PLTR, they posted a
strong beat on earnings and crucially raise their revenue
guidance. A classic beat and raise
quarter. Which normally sends a stock
(05:44):
soaring. Exactly.
Traditionally, that's a guarantee the stock will soar.
Yet it sold off sharply immediately after the news.
Similarly, Qualcomm QCOM delivered an upbeat forecast
specifically tied to future smartphone chips, and they
dropped, too. The news was good, but the
market reaction was punitive. So this buy the rumor, sell the
news behavior, it really suggests the easy money in that
(06:05):
primary sort of straightforward AI momentum trade is
definitively over. I think that's fair to say.
Yes, the Street is signaling that flawless execution and
aggressive optimism, They're no longer enough.
They are already priced into these stretched valuations even
after the recent pullback. So this raises the stakes
immensely for the upcoming wave of tech earnings, especially the
(06:29):
big large cap names, right? Oh absolutely.
A simple beat on past earnings won't cut it anymore to justify
their current elevated multiples, which are still high.
Let's be clear, even after the pullback, companies need to
provide exceptionally strong forward guidance.
What does that look like? Well, that guidance must detail
accelerating revenues, clear monetization paths for these AI
(06:50):
products everyone's talking about, and, crucially,
defensible margins. If the guidance is merely in
line line with expectations, themarket will likely treat it as a
disappointment. The bar is much higher now.
And this nervousness, it's clearly showing up in the
underlying mechanics of the market too, right?
The market internals are deteriorating.
We are seeing a worrying declinein market breadth.
(07:11):
Fewer and fewer stocks are actually participating in these
recent rally attempts. This points directly to the risk
of what our sources are calling historic market concentration.
That concentration is a genuine systemic risk.
It really merits A deeper look, actually.
Historically, when you see a handful of stocks dominating the
index to this degree, it often precedes periods of high
(07:32):
volatility or even structural correction.
And the numbers are pretty stark.
They are. We're talking about the top ten
stocks now accounting for over 30% of the S&P 500's total
market capitalization. Over 40%, yeah.
To put that in perspective, thatlevel of concentration wibles
theheightofthe.com bubble back in 2000.
So why is that concentration percentage, 40%, held by just 10
(07:56):
companies? Why is that so dangerous for the
average investor? Maybe someone holding an S&P 500
ETF? Well, because of the profound
impact it has on passive investing, which is how most
people invest today, right through index ETFs or mutual
funds tracking the S&P 500. When 40% of the index's weight
is tied up in just ten companies, the performance of
those 10 companies essentially becomes the performance of the
(08:17):
entire market. Right, they drag everything with
them. Exactly.
If one of those giants experiences a significant
pullback, say 10% on a missed forecast, it drags the entire
S&P 500 down disproportionately.Even if the other 490 stocks are
doing OK or even well. It creates this enormous
correlation risk. The entire market rises and
(08:39):
falls on the same handful of reports, increasing systemic
fragility. And we see that fragility
reflected perfectly in the volatility measure, the SIBO
Volatility Index, the VIX, the market's traditional fear index.
It jumped a staggering 25% last year, closing at a two week high
of 21.82. That metric tells you that
institutional investors are paying significantly more to
(09:00):
hedge their portfolios, reflecting deep anxiety about
the direction of those highly concentrated mega caps, doesn't
it? It absolutely does.
They're buying protection because they see the risk tied
to that concentration. OK, So that micro volatility in
the tech sector is then amplified exponentially by the
central macro problem plaguing the entire economic picture.
(09:20):
This profound data vacuum we shift from the specific stock
pane to the general policy paralysis caused by the record
long government shutdown now andit's 38th day. 38th day, yeah.
When you have the economy's policymakers deprived of their
essential inputs, it's not just an inconvenience, right?
It fundamentally blinds them. It's the perfect storm of
(09:43):
uncertainty. The government shutdown means
critical reports are simply not being released.
We are missing core labor marketdata like the monthly employment
report and FP and the Jyoti's job opening survey.
Key numbers, crucial numbers. We are also missing vital
inflation indicators. This is why the analogy is so
apartment. The Federal Reserve is now
essentially driving in the fog, or maybe more accurately,
(10:05):
groping around in the dark. The central bank relies heavily
on employment and inflation datato manage its dual mandate price
stability and maximum employment, and those reports
have effectively vanished. What's truly remarkable, though,
is the policy collision this hascreated.
Just last week, remember, beforethe full weight of the shutdown
really hit, Fed Chair Powell delivered a notably more hawkish
(10:29):
message. He did, surprisingly so to some.
He was signaling that the Fed was ready to maintain a
restrictive stance for longer, casting serious doubt on any
near term rate cuts, including the previously anticipated
December cut. But the market, in this, well,
stunning display of defiance, effectively ignored that hawkish
message. Just tuned it out, really.
(10:49):
Yeah. Instead of listening to Powell's
words, Wall Street traded entirely on the emerging
weakness confirmed by the private sector data.
Traders are increasingly confident that the Fed will cut
interest rates for a third time this year next month in
December. So the market is betting against
the Feds own words. The market is betting against
the Feds verbal guidance and fora forced data-driven pivot.
(11:12):
A pivot prompted by those terrible private sector
sentiment reports we're going todiscuss shortly.
They think the data will force the Feds hand.
OK, so if the market believes economic weakness is emerging,
why would the Fed cut based on less data?
Doesn't driving in the fog as you put it, suggests they would
hold steady, maybe fearing they'd make a mistake?
(11:32):
That's the core of the policy trap they find themselves in.
While caution usually favors a pause, you're right, the current
environment is unique. The Fed is mandated to maintain
price stability and maximum employment.
The dual mandate. Exactly.
If the only data they have, these private reports, are
screaming that the economy is falling off a Cliff, then
(11:52):
maintaining A hawkish stance without official confirmation
risks inducing a severe, unnecessary recession.
The absence of official employment data makes a Fed
exceptionally sensitive to downside economic risks right
now. And the biggest single source of
uncertainty for the immediate future it seems is the October
Consumer Price index or CPI thatwas scheduled for November 13th.
(12:13):
Our sources indicate this reportis now highly likely to be
delayed or potentially cancelledaltogether.
This sounds like a logistical crisis, almost like a CPI
uncertainty principle in action.It is.
The problem is fundamentally logistical, but the implications
are methodological and, frankly,massive.
Roughly 2/3 of the price data that feeds the core CPI measure
(12:33):
the day of the Fed relies on most for inflation is collected
manually. Manually.
Yes, by Bureau of Labor Statistics LS field agents.
These agents actually visit specific brick and mortar
locations to verify prices for goods and services.
Since those workers are furloughed due to the shutdown,
the data simply cannot be gathered properly or
(12:54):
comprehensively. So the resulting data might be
canceled altogether, meaning we just lose the October reading
entirely. Or you mentioned potentially
worse, the BLS might resort to imputed data.
What exactly does imputing mean in this context, and why does it
jeopardize the quality of the report so profound?
OK, so imputing means they don'tactually have the measurement
(13:14):
for a specific item or service. Instead, they use complex
statistical modeling to basically guess what the price
change should have been. Yes, that doesn't sound reliable
for the Fed. Well, they might use the price
change observed in the areas where data was collected, like
maybe automated energy data, andapply that pattern to the
missing category, say apparel ormedical services.
Or they might simply carry forward the previous month's
(13:37):
price change for that item. Now, imputation is a standard
tool used to fill small gaps. That's normal.
But when potentially 2/3 of the data is imputed, the resulting
index figure is no longer a truemeasure of current inflation.
It becomes, frankly, a dangerousfiction for the Fed to rely on.
And how do markets react to that?
(13:57):
Bond traders who are extremely sensitive to methodological
purity, they'll immediately distrust such a reading.
They'll trade off alternative, less comprehensive data sets
like the Producer Price index. The PPI, which we'll get to the
imputed CPI, would likely be ignored.
This methodological compromise then creates that policy trap we
mentioned earlier. Yeah, if the CPI is missed or
(14:18):
rendered untrustworthy, the Federal Reserve could go into
its crucial December 10th meeting with critically limited
visibility on 2 full months of inflation and employment data.
Exactly this is the moment when the lack of data itself becomes
a driver of policy. If the private data, those
terrible sentiment figures and layoff reports suggest deep
(14:38):
economic slowing, the Feds traditional risk management
approach suggests they should lean toward accommodation.
Maybe a cut or a pause rather than risk accelerating A
slowdown they can't accurately measure.
So the absence of official reports gives immense, almost
disproportionate power to the grim narrative coming from the
private sector. That's precisely it.
(14:59):
The vacuum gets filled and rightnow it's being filled with
negative signals. Now we arrive at the absolute
heart of the conflict, the greatdisconnect.
We've got policy paralysis because of the data vacuum
amplified by the AI valuation shock.
And all this turbulence has set against this incredible
divergent between investor mood and actual corporate
performance. This feels like the most crucial
(15:19):
part of our deep dive. It is the paradox.
It encapsulates the entire current market challenge with
official government data absent,the market fixated entirely on
those private reports we mentioned.
And they were, in the analysis of our sources, uniformly
negative. Just bleak.
OK, let's start with the mood ofthe consumer.
The University of Michigan's preliminary November sentiment
(15:40):
survey plunged dramatically, butthe truly arresting statistic,
the one that jumps off the page,is the component measuring
current economic conditions thatfell to the lowest level
recorded in the surveys 73 year history. 73 years.
Let that sink in. 73 years. Let's put that in context.
That survey began back in 1952. So this reading is lower than
(16:04):
during the absolute depths of the 2008 financial crisis, lower
than the stagflation nightmare of the 1970s, lower than the
harsh recessions of the early 1980s.
That isn't just a survey data point.
It feels like a profound psychological low point for the
American consumer. It really does, and our sources
say that collapse was directly attributed to consumer concerns
(16:24):
over the economic effects and, frankly, the political
dysfunction of this prolonged shutdown.
People are just fed up and worried.
Exactly. Consumers are deeply worried
about their jobs, their financial prospects, and that
anxiety is like a ticking time bomb for future spending.
Compounding that is the labor market weakness indicated by
that private data. The report from Challenger, Gray
(16:47):
and Christmas showed that October job cuts were the
highest for that specific month in over 2 decades 2.
Decades. Specifically since 2003.
So the narrative coming from theprivate sector is crystal clear.
Main Street feels terrible, believes the economy is slowing
rapidly and businesses are aggressively, maybe
preemptively, laying people off.But this is where the
(17:07):
contradiction just hits you overthe head, because the market is
absolutely not selling off due to deteriorating fundamentals.
Is it? Corporate America is, by the
numbers, absolutely crushing it.How can the consumer feel this
poor while the corporate bottom line is this strong?
It doesn't seem to add up. That is the ultimate test, isn't
it? Behavioral economics versus
financial reality. The bullish counter narrative
(17:29):
drawn directly from Q3 earnings reports is fundamentally
powerful. The earnings season, now over
90% complete, has been exceptionally strong.
Tell us the numbers. Look at the hard figures, 82% of
S&P 500 companies beat bottom line earnings estimates.
That's significantly above the five year average of 78%.
So companies are outperforming expectations.
(17:50):
Considerably, and this isn't merely about companies managing
expectations lower so they can beat them.
It's about genuine aggregate growth.
The S&P 500 is currently on track for a whopping 12%
aggregate earnings growth year over year. 12% growth.
That marks the fourth straight quarter of double digit year
over year gains. Even the technology sector,
Despite that recent sell off we discussed, posted an impressive
(18:13):
22% growth. 22% in tech. Yeah, the Magnificent 7 names,
even after that valuation recalibration, are still
delivering exceptional performance and importantly,
raising future guidance. This confirms that corporate
fundamentals, things like innovation, operational
efficiency, global demand for new tech like AI are providing a
powerful durable support. It's establishing a solid floor
(18:37):
for the market. So we have this market floor set
by 12% earnings growth and then a ceiling created by a 73 year
low in consumer sentiment and this paralyzing data vacuum.
Why is the consumer reacting so severely to the shutdown and the
political noise, rather than maybe celebrating the financial
reality of still relatively strong employment and soaring
(18:57):
corporate profits? Yeah, it's a great question.
I think it boils down to behavioral factors and loss
aversion. The average American worker is
probably more attuned to political chaos, high profile
corporate layoff announcements, even if they are concentrated in
specific industries like tech, and the generalized media
narrative of gloom. Then abstract earnings reports.
(19:18):
Exactly More than abstract aggregated S&P 500 earnings
growth figures. And loss aversion dictates that
the pain of a potential loss, like losing your job security or
facing a recession, is felt far more acutely, maybe twice as
much as the pleasure of an equivalent gain, like seeing
your four O 1 K go up a bit. That makes sense.
The fear is stronger. Right.
The 38 day shutdown isn't just an economic event, it's seen as
(19:41):
a failure of governance that translates into profound
insecurity for many people. And this behavioral ceiling is
what's forcing the Fed to seriously consider rate cuts,
even though the underlying corporate data doesn't yet
scream recession. OK.
This profound conflict fundamentals versus sentiment
brings US directly to the technical picture, which sounds
just as volatile and critical asthe macro dilemma.
(20:04):
The market is positioned at a technical inflection point,
which makes the next few days absolutely crucial for
establishing the directional move, maybe for the rest of the
year. That's right, the technical
battleground is centered squarely on the S&P 500's 50
days simple moving average, the 50 day SMA that currently sits
right around the 6680 level. And why does this specific
(20:25):
moving average, the 50 day, holdsuch a massive psychological
power for institutional traders?Well, because it represents the
average closing price over the last 50 trading days, roughly 2
months. It's become the most critical
benchmark for confirming near term trend health.
If the S&P 500 is trading above it, the trend is generally
viewed as positive. Buyers are seen as dominant.
(20:46):
If it dips below, it signals weakness and often encourages
short sellers. OK, the significance is
multiplied exponentially here because the index had traded
above this average for 133 consecutive sessions.
A. 133 days. Yeah, that is the longest streak
since way back before the globalfinancial crisis in 2007.
Breaking a streak of that duration is a massive attention
(21:09):
grabbing signal that the market character has fundamentally
changed. People notice.
And on Friday, we saw the definitive test of that anchor.
Describe that Friday reversal because it sounds like high
drama for traders watching it live.
Oh, it was pure market theater. The index briefly dipped below
that critical 50 day SMA line, which is often the immediate
(21:29):
signal for institutional sell programs to kick in
automatically. Right, the algorithms fire.
Exactly. But then almost immediately,
immediately, really aggressive by the dip.
Money poured in staging what analysts called the biggest
intraday turn around since April.
The index managed to claw its way back and crucially close
above the 50 day SMA. At the end of the day, that
(21:51):
aggressive defense shows that buyers still have deep
conviction in the fundamental strength we talked about.
But they are fighting for their lives against this pervasive
macro anxiety. It's a real battle.
So based on the source material,we have two very clear and
immediate scenarios for the weekahead, both tied directly to
whether we hold this 6680 line on the S&P 500.
(22:13):
That's right, the bullish scenario requires the S&P 500 to
establish support at or ideally above 6680.
That means trading confidently above it for multiple sessions,
not just bouncing off it. OK.
Consolidation above. It exactly If it does that, that
defense will embolden dip buyingbehavior.
It acts as confirmation that theunderlying corporate strength
outweighs the macro fog, and that validation that signal will
(22:35):
likely pull significant amounts of sideline capital back into
the market from investors waiting for clarity.
And the alternative, the bearishsignal.
What happens if it fails? Well, if the index does not hold
up at the 50 day SMA, if it slides convincingly below 6680
early in the week and stays there, it signals that the
negative macro sentiment and that lingering AI valuation
(22:57):
shock have finally overpowered the buyers.
Game over for the Bulls short term.
Short term, yeah, that would confirm the intermediate term
downtrend is likely resuming, probably leading to a deeper
correction, potentially testing the October opening level around
6641 or even lower. Now, overlaying this crucial
technical test is a unique complication, a calendar quirk
(23:18):
that could really distort the battle.
The Veteran's Day liquidity tramp on Tuesday, November 11th.
This sounds vital for our listener to understand if
they're trading or watching closely.
It is. This is a textbook example of a
structural market anomaly that can catch people off guard.
On Tuesday, the US stock market,both the NYSE and NASDAQ, will
be fully open for normal tradinghours.
(23:39):
OK, stocks trade, Stocks trade. Crucially, however, the US bond
market will be closed in observance of the federal
holiday. Why does a closed bond market
matter so profoundly to stock traders?
What's the structural connectionthere?
Because the bond market, specifically U.S.
Treasury yields, provides the essential risk free benchmark
for all equity valuation, Treasury yields are the primary
(24:02):
input used in basically every financial model to determine the
present value of future corporate cash flows.
A discount rate. Exactly.
It's the constant input used by algorithms and human traders
alike to gauge risk appetite in real time.
When that benchmark, the anchor of all valuation, is frozen for
the day because the bond market is closed, stock traders have no
(24:24):
real time signal to gauge changing interest rate
expectations or shifting risk tolerance based on bond market
moves. So essentially Tuesday becomes
this kind of black box day whereany big stock move isn't
necessarily based on fresh fundamental shifts or real yield
comparisons, but maybe just purelow volume speculation or noise.
That's a great way to put it, Black box day.
(24:44):
It makes the veteran's day trap a significant risk for anyone
trying to say front run the 50 day SMA test based on Tuesday's
action alone. And compounding the confusion, a
significant portion of cross asset traders and sophisticated
institutions who typically provide a lot of the markets
volume will likely be offline, maybe traveling for the long
weekend or just using the day tocatch up.
(25:05):
Administratively, this guarantees significantly lower
overall market liquidity on Tuesday.
Lower volume means bigger swingson less news.
Precisely so. The warning to the listener is
critical. Any market moving news, whether
that's a new headline on the shutdown talks and the
unconfirmed rumor floating around, or even a scheduled
earnings report like Occidental Petroleum's Oxy, which is due on
(25:28):
on Tuesday, could cause exaggerated, outsize price moves
on that thin volume. Which means Tuesday's price
action could very easily be a fake out.
It might briefly break the 50 day SMA on low volume, maybe
trigger some stops and give a completely false technical
signal to longer term trend followers.
Exactly right. Tuesday's volatility and the
associated price action could beentirely unreliable for
(25:50):
determining the true technical trend.
The real test for the S&P 5 hundreds crucial 50 day SMA
battle will likely only come on Wednesday through Friday.
That's when the bond traders return, real liquidity
normalizes, and we get the context of real time Treasury
yields again. So patience is key, especially
on Tuesday. Don't get faked out.
Patience and skepticism about Tuesday's moves?
(26:10):
Absolutely. OK.
So given the near certainty thatthe official October CPI is
going to be delayed or significantly compromised, all
focus shifts dramatically to themission critical data scheduled
for the end of the week Friday, November 14th.
These reports are really the only chance we have in the near
term to get an official read to confirm whether the markets
bearish sentiment is justified by hard data or whether it's
(26:33):
largely based on political chaosand that sentiment plunge.
Right, the reality check first up on Friday morning is the
producer Price Index, or PPI. Why does this wholesale
inflation measure suddenly become so indispensable this
month? Well, if the CPI is indeed
missed or unusable, the PPI, which measures the prices
companies pay for their inputs, things like raw materials and
(26:54):
intermediate goods, becomes the only official inflation read we
have for the entire month of October.
The only one. Wow.
Consensus expects the year over year figure to cool slightly,
landing at plus 2.6%. Now, the PPI is often seen as a
leading indicator for consumer inflation down the road.
So a soft number, something below that 2.6% consensus would
(27:17):
provide some relief. It would confirm inflation is
cooling at the wholesale level. And the market reaction?
That kind of soft print would likely pressure the dollar rally
bonds when they reopen on Wednesday, of course.
And crucially for equity markets, it would effectively
lock in December rate cut bets by validating the market's
belief that the Fed has room to pivot, that inflation is heading
(27:37):
the right way. But the number everyone is
probably watching closest, especially given that staggering
73 year low in consumer sentiment we keep coming back
to, has to be retail sales, right?
Oh, arguably the most important data point of the entire week,
Retail sales for October gives us the first official
quantitative look at Q4 consumerhealth.
Remember, consensus is currentlyprojecting a pretty weak plus
(27:59):
0.2% month over month gain. Only .2%.
Yeah, that figure represents a sharp slowdown from the plus
0.6% pace we saw back in September.
And given the staggering collapse and consumer confidence
that 73 year low we discussed, the downside risk to this number
feels immense. What if consumers really did
slam the brakes in October? OK.
(28:19):
So what are the volatility scenarios?
If we get a flat or even worse, a negative retail sales print on
Friday, how does the market possibly react?
A flat or negative reading confirms that the economy is
indeed hitting that air pocket suggested by the sentiment data.
The market reaction will be intensely volatile, almost
certainly presenting a classic immediate market dilemma.
(28:39):
Dilemma. How?
Well, scenario one it could spark a vicious bad news is bad
news sell off. In this case, investors finally
realize the economic stall is real, recession risks genuinely
rise, and that fear overpowers the hope of a Fed cut.
OK, reality bites. Right scenario 2.
It could trigger a massive bad news is good news rally based
entirely on the market, cementing its belief that a
(29:02):
December Fed rate cut is now an absolute certainty because the
economy clearly needs help. So the market cheers the bad
news because it means cheaper money.
Exactly. Traders will have mere seconds
to decide which narrative dominates the trading
environment on Friday morning. Right after that 8.30 AM Eastern
release will likely be fast, decisive and highly
(29:23):
unpredictable. Whiplash is possible.
Definitely one to watch closely now.
Beyond the macro data, the week also features some high stakes
earnings reports that will serveas immediate tests of that new
skeptical sentiment regime we talked about in Part 1, where a
simple beat just isn't enough anymore.
Forward guidance is the essential metric.
That's right, we begin with a major networking bellwether,
(29:44):
Cisco Symbol CSCO reporting Wednesday after the market
close. Cisco is a crucial checkpoint
for overall enterprise IT spending.
What's the focus there? The market will focus entirely
on enterprise AI networking orders are are companies
actually buying the gear needed for AI and also on the
progression of their backlog, how much future business is
(30:05):
lined up. They also really need to provide
clear synergy updates from that massive Splunk acquisition they
made. Investors need justification for
that big deal, especially now. OK.
Then on Thursday morning before the market opens, we get Walt
Disney DIS. That's a key media,
entertainment and importantly, consumer bellwether.
(30:26):
After that sentiment collapse, the focus on the consumer facing
businesses must be intense. Oh, absolutely intense.
For Disney, the analysis really breaks down into 3 core areas.
First, the crucial path to profitability for their direct
to consumer streaming segment. Disney Plus LED Wall Street is
tired of the losses there. They want to see black ink.
Second, the strategic road map for ESPN and the new ESPN bet
(30:49):
initiatives. How are they navigating the
sports landscape? 3rd and perhaps most sensitive
given the consumer anxiety we'vediscussed.
Any signs of slowing momentum attheir high margin parks?
Division the theme park. Exactly, the parks have been an
absolute earnings powerhouse forthem post pandemic.
Any indication that the average American family is pulling back
on discretionary travel may be delaying.
(31:10):
That Disney trip will be seen asa direct confirmation of that 73
year low sentiment reading. It would be a very tangible
signal. Also on Thursday, but after the
close, we have Applied MaterialsAMAT, a major semiconductor
capital equipment bellwether. They sit right in the middle of
the global AI hardware build out, making them crucial.
(31:31):
Hugely important, the bull case for AMAT relies entirely on
continued strong capital expenditure demand for both AI
chip manufacturing and advanced memory production.
But the crucial watch item, the thing that introduces the
geopolitical dimension will be their guidance regarding the
impact of China export license headwinds.
The restrictions. Yeah, that uncertainty has been
(31:51):
a consistent risk factor hangingover the entire semiconductor
space, and the market desperately needs clarity on how
those US restrictions are translating into tangible order
cancellations or delays from Chinese customers.
Ana's perspective is vital there.
And finally, we have two crucialcheck insurance on the health of
the Chinese consumer and tech sector with jd.com reporting I
(32:12):
think Wednesday morning and Alibaba BAE on Thursday morning.
That's right. These act as important proxies
for the health of the world's second largest economy, which
has its own set of challenges. Right now forjd.com, the focus
will likely be on retail marginsand profitability in what's
become a fiercely competitive e-commerce environment over
there. And for Alibaba?
(32:33):
For Alibaba, the Street needs tosee continued strong growth in
their cloud intelligence segment.
That's key, and also solid progress on their own AI
monetization initiatives. This is especially important as
their traditional e-commerce business matures and faces more
intense domestic competition. So cloud and AI are the focus
for Baba. So OK, let's try and summarize
(32:55):
this deeply contradictory environment.
We've been dissecting the long term fundamentals driven by that
exceptional Q3 earnings season and the durable multi year AI
technology theme. They remain powerfully intact.
That establishes, I think, a robust floor for the market,
fundamentally speaking. Right, the corporate side looks
solid. However, the near term picture
is utterly dominated by that critical 50 day SMA technical
(33:18):
test we discussed and the severemacro data gap amplified by that
shocking 73 year low in consumersentiment.
This dynamic creates the volatility, the uncertainty, and
the effect of ceiling that the market just cannot seem to
breakthrough yet. So based on that, we should
probably conclude that last week's pullback, especially in
tech, wasn't really a sign of fundamental collapse, but rather
(33:41):
a necessary, maybe even healthy rotation.
The sharp AI sell off exposed the serious structural risk
associated with that historic market concentration, where just
10 stocks drove nearly half of the market's value.
Absolutely, I think healthy rotation is the right way to
frame it. That capital didn't just vanish
from the system, it is now actively looking for new,
(34:01):
potentially more attractively priced leadership outside of
that mega cap concentration. Bubble so money is moving.
Money is moving. Looking for a new home?
This is the classic signal that investors need to rapidly
diversify their exposure away from that handful of names that
have concentrated so much of therisk and also so much of the
recent volatility. OK.
That leads directly then to the concrete strategic
recommendations for listeners trying to navigate this highly
(34:24):
contradictory, maybe confusing environment.
First, portfolio Management 101 prioritize diversification.
Correct. The primary recommendation
coming from our sources is to maintain portfolio balance and
aggressively diversify. Analysts strongly advise
avoiding overexposure. Meaning, you know, don't let 30%
(34:44):
or 40% of your portfolio sit in that handful of mega cap tech
names that have proven to be theprimary source of recent market
swings. Use this rotation as a chance to
rebalance. Take some profits, perhaps.
So broadening exposure is the key.
You mentioned specific sectors earlier that analysts are
highlighting as potential beneficiaries of this rotation.
Why industrials, consumer discretionary and healthcare?
(35:06):
Why are they the recommended landing spots?
Now that the easy money in the primary AI trade seems to be
cooling, shouldn't money just rotate into maybe other second
tier AI infrastructure plays? That's a critical question and a
challenge. While further AI infrastructure
plays will likely benefit long term, investors right now seem
to be looking for established value and maybe some insulation
(35:26):
from these immediate macro risksand uncertainties.
OK. A bit more safety.
A bit more perceived safety perhaps?
Industrials are attractive because they often benefit from
broad based infrastructure spending, some of which is non
AI related, offering potentiallymore predictable cash flows and
generally lower valuations than pure tech right now.
(35:47):
Healthcare is of course the traditional defensive value
play. It tends to be less susceptible
to economic downturns and boaststypically robust balance sheets.
OK, industrials and healthcare make sense, but consumer
discretionary, that seems counterintuitive given the 73
year low in consumer sentiment we keep talking about.
Why that? Sector.
Yeah, it seems odd on the surface.
(36:08):
The argument here is somewhat tactical.
It's that the sector has been hammered because of that
terrible sentiment, but if the market starts betting heavily on
a Fed rate cut, that bad news isgood news scenario we outlined
for Friday. The pivot play.
Exactly. Consumer discretionary is often
one of the first cyclical sectors to rally hard on the
expectation of future economic recovery driven by lower rates
(36:31):
regardless of the current week sales data.
It's a tactical recovery oriented bet on a Fed pivot
materializing. Got it.
It's a forward-looking bet. And finally, what's the ultimate
tactical caution for the week ofNovember 10th navigating all
this? I'd say remain intensely
cautious and nimble until the market clearly resolves that 50
day SMA technical test. Don't chase weakness below it or
(36:54):
strength above it until there's confirmation.
And above all, be exceptionally wary of potentially misleading
price action on Tuesday. The Veteran's Day trap.
Remember the veteran's day liquidity trap?
Due to the bond market closure, the true directional test really
begins Wednesday, and the final crucial decision point looks
like Friday's day-to-day luge, PPI and retail hashtag tag
(37:14):
outro. OK.
We have navigated the critical technical battle lines, the
necessary AI valuation reset, and its profound macro data
vacuum created by the ongoing government shutdown.
When we look at it at the end ofthe week, it really feels like
the entire market hinges on Friday's mission critical PPI
and especially retail sales reports.
(37:35):
Absolutely. The market has clearly placed
its bet firmly on a Fed cut. It is operating almost entirely
on the hope, or maybe the expectation, that bad news is
what forces the central bank's hand toward accommodation,
toward easing policy. So here is our final thought for
you, the listener, to consider based on that massive
disconnect. We've explored.
If Friday's retail sales not only disappoint, but actually
(37:56):
confirm the story told by that 73 year low in consumer
sentiment confirming that the American consumer has truly
pulled back spending in a meaningful way, will the market
successfully rally on the certainty of a December rate
cut? Sticking to the bad news is good
news, playbook. Or will institutional buyers
finally decide that truly bad news is just bad news when the
(38:19):
economic stall shifts from a fear from a sentiment reading to
an official quantitative realityin the data?
Yeah, where's the breaking point?
Exactly what level of slowdown will it take for the market to
stop relying on the Fed putting a floor under everything and
start genuinely fearing the state of the economy?
What will you be watching for when that volatile data drops on
(38:41):
Friday morning? That is the disconnect we will
keep tracking right here and that is what makes this moment
such a fascinating high stakes trade for everyone involved.
We'll see next time for the nextdeep dive.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Medal of Honor: Stories of Courage
Rewarded for bravery that goes above and beyond the call of duty, the Medal of Honor is the United States’ top military decoration. The stories we tell are about the heroes who have distinguished themselves by acts of heroism and courage that have saved lives. From Judith Resnik, the second woman in space, to Daniel Daly, one of only 19 people to have received the Medal of Honor twice, these are stories about those who have done the improbable and unexpected, who have sacrificed something in the name of something much bigger than themselves. Every Wednesday on Medal of Honor, uncover what their experiences tell us about the nature of sacrifice, why people put their lives in danger for others, and what happens after you’ve become a hero. Special thanks to series creator Dan McGinn, to the Congressional Medal of Honor Society and Adam Plumpton. Medal of Honor begins on May 28. Subscribe to Pushkin+ to hear ad-free episodes one week early. Find Pushkin+ on the Medal of Honor show page in Apple or at Pushkin.fm. Subscribe on Apple: apple.co/pushkin Subscribe on Pushkin: pushkin.fm/plus
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com