November 12, 2025 • 36 mins
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
OK, let's unpack this. Welcome to the deep dive where
we try to make sense of all the financial chaos out there.
You know, the data, the headlines, the stuff that moves
markets up and down like crazy. We filtered all down to give you
the core insights fast and clear.
Today we're diving into November12th, 2025.
And honestly, if you just glanceat the headlines, you'd think,
(00:20):
wow, great day for the bulls. The Dow Jones industrial
average, it surged, had a brand new all time high.
Depending on where you looked, it closed right up there, maybe
around 48,410. Incredible really.
But you know, you peel back justone layer, just one, and
suddenly the picture looks very,very different.
It feels like the market standing on it.
Well, a knife's edge. That's exactly the word for it,
(00:41):
an inflection point and that tension.
That's really the theme for a whole deep dive today.
Our mission really is to figure out why the market is so
bifurcated, split right down themiddle.
It seems caught between that euphoria, you know, the
political good news driving the Dow and this massive, like,
immediate economic risk hanging over everything else.
(01:01):
And you could see that tension playing out right away in the
futures market overnight, couldn't you?
It just screamed investor indecision.
If you looked at the E mini S&P 500 futures, the main proxy for
the broad market, they were barely up.
Was it like 4.5 points .07% basically flat just idling?
Totally flat, exactly the S&P just sitting there waiting.
(01:24):
But then you look at the tech side, yeah, the E mini NASDAQ
100 futures that was actually lagging, yeah, showing you know
relative weakness that about 18 point or -.07%.
OK, So that subtle difference, broad market, flat tech, weaker,
it tells you the market is fundamentally coiled.
It's like a spring ready to jumpone way or the other, just
(01:45):
waiting for some kind of real catalyst.
And it's worth pointing out, right this caution kind of flew
in the face of what should have been pretty good news,
especially after hours like withAMD.
That kind of news. Usually you'd expect it to pull
the whole market up, but Nope, not this time.
It wasn't enough to breakthroughthat wider uncertainty.
And that sets up the core conflict perfectly.
It's this profound clash betweentwo totally opposing stories. 2
(02:09):
Narratives narrative One this really powerful risk on rally.
It's fueled by the political good news, the fact that this
historic 43 day federal government shutdown looks like
it's finally, finally ending. That's a huge weight off
everyone's shoulders. Yeah, the relief factor, like,
OK, the government can actually function again, which, I mean,
it feels like a low bar for a major economy, but for sectors
(02:31):
tied to, you know, domestic stability and funding, it's a
big deal. It is a big deal, but then you
have narrative to pulling in thecomplete opposite direction.
It's an aggressive risk off rotation and this is driven by
these deep nagging worries aboutvaluations, especially in those
high flying tech stocks, plus just this crippling economic
uncertainty that's been buildingfor weeks now.
(02:51):
Right. And that and certainly leads us
straight to the central problem,doesn't it, the informational
vacuum. This is what makes the next
couple of days feel so unique, so critical.
For what, over six weeks now, federal agencies like the Bureau
of Labor Statistics, the BLS, the Census Bureau, they've
basically been dark because of the shutdown.
Completely dark, which means themarket and maybe more
(03:14):
importantly, the Federal Reserve.
They've just been groping aroundin the dark.
That's the only way to put it. They've had to trade on
unreliable proxy data, maybe some regional surveys or just
pure sentiment for way too long.Think about all the crucial
numbers we rely on. Retail sales, factory orders,
consumer confidence just gone. It's like we've been living in
an economic ghost town. And now with the shutdown
(03:36):
ending, the immediate danger is this data bomb.
We're about to get hit with a super compressed schedule of all
those delayed high impact government reports starting like
right now. So this collision, this mashup
of political relief and incomingeconomic reality, that's why
this moment is so absolutely crucial for you, the listener,
the investor, to understand. OK, so let's dig into the actual
(03:59):
market performance from Tuesday,November 12th, because like you
said, our sources called it a study in contrast, and they
weren't wrong. You could look at the tape and
feel incredibly bullish or incredibly bearish, really,
depending entirely on which major index you happen to be
watching. There was a very clear winner,
the Dow Jones Industrial Average.
It didn't just rise, it surged, closed up, what, 1.18%, hitting
that record closed right around 48,410.
(04:22):
That's a huge move, especially with all this background noise.
Oh yeah. That's pure, unadulterated
political optimism right there. That move was almost entirely
driven by the expectation that the shutdown was over.
You had the Senate approving thefunding bill late Monday.
The House was expected to followsuit late Wednesday.
Boom relief rally triggered. But that relief didn't lift
(04:42):
everything, did it. It was incredibly selective.
It wasn't just a rising tide lifting all boats.
Not at all highly selective, Themoney specifically poured into
cyclical stocks, value oriented sectors.
Think about the big industrial companies, basic materials,
consumer discretionary, healthcare.
These are the parts of the market that are most sensitive
to government funding. Returning to just having data
(05:04):
certainty back right? Investors weren't necessarily
betting on explosive economic growth, yet they were.
You're just celebrating the return of some basic stability,
like, OK, we can function again.OK.
But then you pivot, you look at the other side of the market and
you've got the definite loser for the day.
The NASDAQ Composite, it actually went down, closed off
(05:24):
about half a percent, landing around 23,429.
This just hammers home that thisgreat tech rotation isn't just
some theory, it's happening and maybe even speeding up.
It's accelerating, it's the riskoff driver really pushing that
aggressive sell off in the high valuation tech names.
And if you look inside the market at the sector level, the
(05:44):
S&P 500 technology sector was the only sector to finish in the
red on Tuesday. Wow, the only one.
The only one that's a massive signal but basically every other
sector tied to stability or value is going out but tech is
going down. It confirms this isn't random
noise, it's a deliberate, purposeful rotation out of
growth and maybe into safety or perceived value.
So let's unpack that rotation a bit more.
(06:06):
What's the specific fear drivingpeople out of tech, even when
the broader mood seems optimistic about the shutdown
ending? Well, the underlying concern is
this persistent, almost nagging belief that the whole artificial
intelligence rally, you know, the AI story that's basically
driven the market for the last year and a half, that it's
created a pretty significant valuation bubble.
(06:27):
Analysts are openly drawing lines back to the.com bubble
excesses. They're looking at the metrics.
It's like what kind of metrics? Back in the late 90's, the big
red flag was often priced to sales.
Companies had revenue maybe, butoften 0 profit.
Now it's a bit different. The concern isn't 0 revenue,
it's more that the future earnings growth you need to
justify today's stock prices. So it looks almost impossibly
(06:51):
high for some of these names. Can you give us a sense of that?
Like how stretched are we talking?
Sure. So analysts point out that back
before the 2000 crash, some big tech names, even blue chips like
Cisco, we're trading at crazy multiples, maybe 80 times
forward earnings. Now you look at some of the core
AI infrastructure players, ones making the GPU's, building the
clouds, some are hitting 60X, even 70X forward earnings.
(07:14):
And crucially, they're doing it in an environment where interest
rates are way higher than they were in 2000.
Right. Higher rates make future profits
less valuable today. Exactly.
So those high multiples today, they just flash massive red
flags. It feels like the market is
pricing in absolute perfection. And then you get something like
the SoftBank news, which we'll get to, and it suggests some
(07:35):
really big players are thinking,yeah, maybe that perfection
isn't going to happen. And we saw this rotation clearly
in the data too. Bloomberg has that magnificent 7
index, right? Those mega cap tech stocks that
basically where the market rallylast year.
That index fell 1.6% during Tuesday session.
That's serious money rotating out.
Yeah, that's not insignificant. What's fascinating here, though,
is how the S&P 500 just got caught in the crossfire.
(07:58):
It only managed a tiny gain of .2%.
It couldn't really follow the Dow's big jump because tech,
being such a heavy part of the S&P, was dragging it down.
But it didn't collapse like the NASDAQ either.
It really paints this picture ofextreme selectivity.
The political relief rally only seemed to cover, I don't know,
2/3 of the market. Well, the other third was
actively unwinding. OK, so the Dow hitting a rec go
(08:21):
high. That just screams optimism,
right? Like, everything's great,
gridlocks over, economy's ready to roll.
But if we broaden our view, if we look beyond bond equities to
the other big asset classes, yeah, bonds, oil, gold, they
were sending completely different signals.
They were flashing clear risk off warnings, caution signs
everywhere. Unambiguous warnings.
This is that core dissonance, right?
(08:42):
The stock market, or at least the Dow part of it, is partying
like it's 1999 or maybe 2025. But the smart money elsewhere,
the bond traders, the commodity guys, they seem to be hedging
their bets, preparing for economic weakness or maybe just
a big data shock. So why?
Why would the bond market, of all places, be fighting the
(09:03):
Dow's rally? What's going on there?
That's the $1,000,000 question, isn't it?
If you genuinely believe the shutdown ending meant smooth
sailing and strong growth ahead,you'd be selling bonds, taking
on risk, buying stocks. But what do we actually see in
the Treasury market? Right after the Veteran's Day
holiday, we saw investors aggressively buying bonds.
Classic flight to safety textbook move.
And the result of that buying what happened to yields.
(09:25):
The benchmark 10 year Treasury yield, even the one that
influences mortgage rates, corporate borrowing, basically
everything, It fell pretty sharply dropped by, sources
said. Three to six basis points
settled at a really key level right around 4.07%, maybe 4.08%.
OK. And just for listeners, a basis
point ABPS is 100th of a percent.
So 6 basis points is a decent move down for yields in one day,
(09:47):
especially after supposedly goodnews.
It's significant because in a real sustained growth rally,
yield should be going up, risk appetite increases, money flows
out of safe bonds. The fact they fell tells you
investors are hedging. They're betting against the
Dow's optimism, protecting themselves against 2 main risks.
OK. What's the first risk this data
(10:08):
bomb hedge? Buying bonds is the classic way
to protect yourself if you thinkinflation is about to surprise
on the upside. If that CPI report we're all
waiting for comes in hotter thanexpected, fear ripples to the
market. When fear hits, bond prices
usually rise. Yields fall, protecting the bond
holder. So bond traders are essentially
locking in yields now, betting that the economic data reality
(10:29):
is going to be worse, maybe hotter, on inflation than the
political relief suggests. They're betting against the
happy disinflation story. Got it.
Hedging against bad inflation news.
And the second risk ties directly to the Fed, right?
Correct. It's all about Fed policy
pricing. The market has gotten incredibly
aggressive about this. Right now, it's pricing in
something like a 63% chance of the Fed actually cutting rates
(10:51):
as early as December. 63% Wow, where did that come from?
It's been building largely fueled by some of that weak
proxy labor data, like the ADP jobs report that we had to rely
on during the shutdowns, information vacuum.
So bond traders are locking in current yields around 4.07%
because they think the Fed will be forced to cut rates soon.
If the Fed does cut, yields willfall further and the bonds they
(11:14):
bought today will be worth more.They're betting the Fed won't be
able to stay tight for long. OK, so Treasury's flashing
caution, but the risk off signalget even louder, maybe more
violent over in commodities, didn't it, Specifically crude
oil, which is super sensitive toglobal economic health.
Oh absolutely. WTI crude oil just collapsed
down more than 4%, hit a three-week low around $58.40.
(11:36):
Fifty, $8.50 a barrel. And crucially, this wasn't just
nervous traders selling futures.This was driven by a major
fundamental shock that came directly from Opec's own monthly
report. OK, OPEC, what did they reveal
that could cause oil to tank by 4%?
They dropped a bombshell, really.
Their report showed an unexpected surplus of crude oil
(11:58):
in the third quarter, like half a million barrels per day
surplus 500,000. Barrels wait a surplus.
If the global economy is supposed to be recovering, how
could they end up with so much extra oil sloshing around?
Well, that's exactly the point. The market interprets that as a
hard signal that global economicdemand, maybe especially from
places like China or other emerging markets, is weakening
(12:20):
faster than people thought. If factories slow down, if
shipping slows down, you just don't need as much oil.
So that OPEC report basically undermined the whole global
growth narrative that a lot of investors were counting on.
And there was technical confirmation too, right?
Something about the oil market structure changing.
Yeah, exactly. For the wonks out there, the
Wti's nearest time spread, that's the price difference
(12:41):
between delivering oil this month versus next month.
It briefly flipped into what's called a bearish contango
structure. OK.
Contango, can you break that down simply?
Sure. So usually in a healthy market
with strong demand, you're in backwardation.
That means the price for oil right now for immediate delivery
is higher than the price for future delivery.
People need it now. When it flips to contango, the
(13:02):
future price is higher than the spot price.
It suggests people are willing to wait, maybe pay a bit more
later, because they don't need the oil urgently right now.
If it flips into bearish contango, especially right at
the front of the curve, it's a strong signal of an immediate
supply glut. Too much oil right now.
Now where to put it? And weakening demand for prompt
delivery. Got it.
So Treasury's cautious oil collapsing on fundamental
(13:25):
weakness. Where did investors run for
cover amidst all this? Gold.
Gold. The classic ambiguity trade and
its move was really telling. Gold prices jumped over 1.3%,
getting up near 4180 dollars, maybe $4200 an ounce.
And the commentary directly linked this move to the extreme
uncertainty caused by the shutdown and that looming data
(13:47):
bomb. With no reliable U.S. economic
data, the ultimate information vacuum, investors basically had
to treat gold as a primary storeof value.
They couldn't fully trust government bonds, couldn't trust
equities. So they went for the metal.
Yeah, if you can't trust the official numbers, you trust the
shiny rock. Makes sense?
Pretty much. And you've got broader forces
supporting this too, like that recent World Bank outlook
(14:09):
predicting new all time highs for gold because of all the
global uncertainty and geopolitical risk.
Gold isn't a bet on growth, it'sa bet on chaos, maybe currency
devaluation. OK, let's switch quickly on
crypto because Bitcoin seemed tooffer a bit of a counter signal,
right? At least in terms of
institutional money flow, it managed to stay above $104,000.
Yeah, BTC stabilized above 104 K, even touched $105,410
(14:31):
briefly. Now it's always volatile, but
what underpinned that move was areally chunky inflow over half a
billion dollars, $523.98 millionflowing into those US listed
spot Bitcoin ETFs. Half a billion in a day.
Yeah, that signals serious institutional capital coming
back in after maybe some recent profit taking.
It suggests these big players might see crypto as, I don't
(14:53):
know, a non correlated asset, something less directly exposed
to the immediate US domestic data drama, the shutdown
fallout, the CPI report comparedto traditional stocks or bonds.
Maybe a cleaner way to keep somerisk exposure without betting on
the BLS data schedule. OK.
So we mentioned the market is pricing in these aggressive Fed
rate cuts by December, basicallybetting on a dovish pivot.
And you said that optimism isn'tjust wishful thinking, right?
(15:16):
The support for it actually comes in part from the Federal
Reserve itself. That's right.
There's been a real, real foundational shift in monetary
policy that we need to zoom in on.
But now with the data vacuum ending that whole dovish pivot
narrative which kind of grew in the fog it's about to get hit
with the dose of reality isn't. It it's about to be seriously
tested. Yeah.
So Roberta Paraly, he's the manager of the system open
(15:36):
market account Soma. He officially confirmed the
Fomc's decision. They are ending their balance
sheet reduction program, what wecall quantitative tightening or
QT, effective December 1st. OK, let's clarify that soma QT.
Why is stopping QT such a big deal for the market?
OK, so SOMA is basically the Fed's trading desk.
It's the ARM that actually buys and sells assets, mostly
(15:59):
treasuries and mortgage-backed securities to implement monetary
policy. Quantitative tightening QT is
when SOMA shrinks the Fed's massive balance sheet.
They do this by letting their existing bonds mature and just
not replacing them. They don't reinvest the money.
So QT removes money from the system.
Exactly. It literally pulls liquidity
cash out of the banking system. Think of it like a giant sponge
(16:22):
soaking up money from the financial markets.
For months, the Fed had been shrinking its balance sheet by
10s of billions of dollars everysingle month.
That was active tightening of financial conditions.
So stopping that is huge, takingthe foot off the brake,
essentially. What was the FED's official
reason for shifting from tightening to, well, neutral?
(16:43):
Pearly mentioned changes in money markets and the need for
the Fed to kind of step back andassess bank reserve levels.
Basically, there were signs of tightness showing up in the
short term funding markets, you know, where banks lend to each
other overnight. It suggested some banks might be
running a bit low on reserves. The cash they have to keep
parked at the Fed. OK, they don't want a repeat of
(17:05):
liquidity drying up like we saw a few years back.
Precisely. They want to avoid any plumbing
issues in the financial system. So by stopping QT, the Fed is
explicitly saying, OK, we're done actively tightening.
For now, we're moving to a neutral stance.
Let's make sure there's enough cash in the system.
But the market, the market hearsthat and immediately translates
(17:26):
it as OK. Neutral is just the necessary
first step before they start actively easing.
It's seen as the prelude to the rate cuts everyone's hoping for.
But those hopes, like we keep saying, we're largely built
during that shutdown fog, right when we didn't have real data.
Absolutely. You have to remember Fed
Governor Austin Goolsbee saying that the informational fog made
him really cautious about makingbig policy moves like cutting
(17:49):
rates. He knew the data they were
seeing, like that week ADP jobs number, probably wasn't the full
picture. So now the market is basically
flying blind into this data reality, trying desperately to
validate a dovish pivot that waspriced in based on speculation
and, frankly, political relief. OK, here's where it gets really
interesting then, because that data reality, it's hitting us
(18:10):
fast and hard. This data bomb means the BLS,
the Bureau of Labor Statistics, is about to unleash this
incredibly compressed schedule of all the critical data we've
missed. It's like a dam breaking after
43 days. And literally every single
investor, every trader, every analyst have their calendar
marked for one specific event, the ultimate market catalyst.
(18:33):
Thursday, November 13th, 8.30 AMEastern Time, the release of the
October Consumer Price Index, CPI.
This isn't just another report, is it?
This is the report. It's the first official
inflation reading we'll have hadthis quarter.
It is the single biggest test ofwhether this whole disinflation
story, this rate cut narrative the market's been clinging to,
is actually real or just wishfulthinking.
(18:54):
And you know, when that number drops, analysts aren't just
going to look at the headline CPI figure.
They'll RIP it apart immediately.
They need to see the month over month change slowing down, sure,
But the real focus it's going tobe on core CPI.
That's the one that strips out the volatile food and energy
prices. Are so critical.
Because of course, CPI comes in sticky.
If it shows inflation is still stubbornly high in services like
(19:16):
housing costs or wages, then that 63% probability the market
has priced in for a December rate cut, it's going to
evaporate instantly. Wow.
OK. And it's not just CPI landing at
8:30 AM Thursday, right? It's a whole cluster of data
points hitting at once. Truly a data bomb.
It really is. At the same time, 8:30 AM.
(19:37):
Thursday, we also get real earnings for October.
That's crucial because it tells us if people's wages are
actually keeping up with inflation.
If real earnings are flat or falling, consumers have less
spending power, which signals a potential economic slowdown.
And we also get the weekly initial jobless claims.
Now this is one of the few real time labor market indicators
we've had during the shutdown. Seeing how this number lines up
(19:59):
with that weaker ADP proxy data will be key.
Is the labor market really cracking, potentially forcing
the Fed's hand? Or was the ADP report just
noise? And the pressure doesn't stop on
Thursday, does it? Friday morning is big, too.
Nope. Friday, November 14th again,
8:30 AM Eastern we get the producer price index or PPI for
October. That's the other side of the
(20:19):
inflation coin. It looks at prices earlier in
the pipeline, what manufacturersand producers are paying.
Often, PPI trends can signal where consumer inflation is
headed a few months down the road.
Plus, we get US import export prices for October.
That gives us a read on global price trends and whether we're
importing inflation. That's especially relevant after
that OPEC report hinted at global demand weakness.
(20:41):
So bottom line, the number one risk is crystal clear, a hot CPI
print. Absolutely, If CPI comes in
higher than expected, it just directly attacks the market's
entire foundation. Disbelief in a friendly, dovish
Fed ready to cut rates if inflation is still sticky. the
Fed simply cannot justify using policy, and the whole rationale
it's been supporting stocks through all this uncertainty
(21:02):
just crumbles. Honestly, the next 48 hours
probably the riskiest the marketis facing. the Fed started
hiking rates way back when is that political relief rally.
It might have just cleared the path for a brutal reality check.
OK. Let's pivot now to some
individual stocks because the action there on Tuesday showed
something really important happening under the surface.
It feels like the market is finally starting to grow up a
(21:23):
bit when it comes to AI. It's moving past just buying
anything with AI slapped on the label.
We saw what our source is calleda violent differentiation, maybe
an AI schism. The market seems to be demanding
actual proof now. Cold hard evidence of
profitability, executable plans,real long term Rd. maps, not
(21:44):
just hype. That divergent, that schism, was
perfectly captured by the stark difference in how Advanced Micro
Devices, AMD and NVIDIA NVDA traded.
These are two giants supposedly racing side by side in the AI
marathon. Yeah, let's start with AMD.
They were the clear winner. The fundamental story that day?
AMD was just explosive. The stock surged what, 9.6%
(22:04):
during the regular trading? And they kept going after hours
at another like 6%, pushing it up towards $252.
That's an undeniable bullish signal, and it all stemmed from
their Financial Analyst Day. It was like a massive injection
of confidence for institutional investors.
What was it specifically that AMD presented that got the
market so fired up enough for a double digit percentage gain?
(22:26):
They laid out this multi year long term vision that just blew
away expectations. They were just talking about the
next quarter. CEO Lisa Sue basically
forecasted that their revenue could grow at a compounded
annual rate AKJR above 35% for the next three to five years.
35% CAJR. That's huge.
It's incredibly aggressive growth guidance, and it's almost
(22:48):
all being driven by their data center and AI segments.
This wasn't just vague optimism,it felt like a firm commitment
to a really ambitious path forward.
And they also talked about the size of the opportunity, right,
their total addressable market, the Tam.
Right. And they didn't just throw out a
big number, they actually broke it down.
CPU's, GPU's, networking gear for AI and projected that this
(23:08):
whole AI silicon market could top a trillion dollars by 20-30
A. Trillion dollars.
Putting that kind of massive, tangible number out there gives
investors something concrete to model against.
Plus, they guided for gross margins improving into the 55%
to 58% range over the next few years.
That's well ahead of what analysts were expecting,
signaling serious efficiency and, maybe more importantly,
(23:32):
pricing power. And crucially, it sounds like
they backed it up with real customer wins, right, Moving
beyond just promises, which likeyou said, seems to be what the
market wants now. Absolutely critical point.
They highlighted deep partnerships, new deals with the
big hyper scalers, the major AI players.
They specifically name dropped open AI Oracle meta.
That's proof of execution. That's the market rewarding
(23:53):
fundamentals over just narrative.
And honestly, it's a healthy, necessary sign of maturity in
this whole AI trade. OK, now contrast that powerhouse
performance with NVIDIA, the established AI leader, the stock
that's already delivered mind blowing returns.
How did they fare? Well, despite AMD's great news,
despite the general buzz around AI, NVIDIA actually slipped down
(24:14):
about half a percent on Tuesday after already dropping 3% the
day before. This is where that narrative
risk starts to bite. It shows that fundamentals, or
maybe the lack of new positive fundamental news, are starting
to outweigh past performance. And what was the main thing
dragging NVIDIA down, fueling that AI bubble talk?
It was a. Pretty major blow to investor
(24:35):
confidence, honestly. The news came out that SoftBank,
the big Japanese tech investor, had sold its entire stake in
NVIDIA. We're talking $5.8 billion worth
of stock. 5.8 billion Wow, SoftBank makes huge bets, right?
Huge. Often very directional bets on
disruptive tech O. When an investor like that
completely liquidates such a massive osition, it adds serious
(24:56):
high profile fuel to the fire. For anyone arguing that AI
valuations have gotten out of control.
SoftBank is essentially signaling we think the stock is
peaked for now or at least the risk versus reward doesn't look
good enough for us anymore. That is the AI schism right
there, isn't it? The market seems to be shifting,
moving away from maybe just the first mover story, the narrative
risk associated with Nvidia's already massive run, and moving
(25:19):
towards stocks like AMD that canshow a credible path to long
term growth and margin expansionwith specific multi year
guidance. Exactly.
If we go back to that.com analogy for a second, the
company that actually survived the crash back in 2000, the ones
that thrived later, they were the ones with real earnings,
real cash flow, not just a massive Tam or a cool story.
(25:41):
Amity seems to be providing credible evidence of having that
path. Meanwhile, the SoftBank exit
just highlights the inherent risk when valuations get so far
ahead of current fundamentals. OK.
So beyond those two chip giants,were there other notable stock
moves that kind of reflected this search for tangible growth
or maybe just volatility? Yeah, definitely on holding
(26:01):
ticker Owen on. And that's the Swiss sneaker
company, right? They saw it up over 20%. 20%
just for sneakers. Well, their catalyst was beating
earnings expectations by a lot, posting a bigger than expected
profit and raising their forecast for the full year.
Again, it's a classic case of just solid fundamentals getting
rewarded big time, even with allthe macro uncertainty swirling
(26:22):
around. OK.
And then on the flip side, you had Circle Internet Group, CRCL,
the stablecoin issuer, they had a wild ride and then dropped.
Yes, Circle tumbled down somewhere between 9% and 12%
depending on the source and it was a classic sell the news
event. What's interesting is they
actually did report strong earnings, but the stock had been
on this absolutely insane rollercoaster ride, running from like
(26:44):
$90.00 up to nearly $300 in the back.
Down again very quickly, right? So strong, Ernie's just became
the exit signal for traders who'd ridden that wave to lock
in some massive profits. Gotcha.
And finally, IBM got a little boost tapping into that sort of
next big thing excitement. Yeah, IBM ticked up about 2.3%.
They announced what they described as a breakthrough in
(27:05):
quantum computing. You know, the markets always
looking past the current hype cycle for the next potential
growth narrative and anything that suggests real progress in
quantum computing, which promises this exponentially
faster processing power that's seen as a potentially huge high
risk but maybe very high reward long term bet.
All right. So beyond the macro data bomb
(27:27):
that's about to hit, we also have some really high stakes
company ownings reports coming up.
These will either confirm or maybe challenge that AI growth
story and give us more clues about broader economic health.
We need to pay close attention to companies that reported after
the bell Tuesday and the ones reporting before the market
opens Wednesday and Thursday. See if their guidance holds up.
Let's start with probably the most critical report that came
(27:48):
out after Tuesday's close. Yeah, Cisco Systems, ticker CS
Key Dough. Cisco is just essential.
It's a bellwether for enterprisespending, for networking gear
sales, just general corporate capital expenditure trends
across the economy. And the stock actually traded up
into the report right up almost 3%.
So investors were clearly optimistic, maybe hoping that
cyclical recovery vibe from the Dow, plus the AI demand that
(28:12):
lifted AMD, would show up in Cisco's order.
Book Yeah, the setup was definitely high stakes.
Expectations were running prettyhigh.
Consensus estimates had revenue pegged around $14.78 billion,
earnings per per share, EPS around $0.98.
Analysts were basically right atthe top end of Cisco's own
guidance range. They'd priced in a near perfect
quarter. But with Cisco, the headline
(28:35):
numbers, the actual results, they're almost less important
than the commentary, right? Especially their forward
outlook. What were investors really laser
focused on during that earnings call?
What was the true test? There were really three critical
things everyone was listening for the things that would
ultimately move the stock. 1st and probably most important, AI
networking orders. Cisco had previously said they
(28:56):
booked about $2 billion in orders related to AI
infrastructure for their fiscal 2025.
The market desperately needed tohear that that momentum was
accelerating. Why accelerate?
It to justify Cisco's own AI story, obviously, but also,
crucially, to validate that massive bullish ecosystem demand
that AMD had just painted hours earlier.
If Cisco isn't seeing a pickup in orders for the switches and
(29:18):
routers needed to build out AI data centers, then those huge
CapEx promises from the chip guys start to look a little
shaky. OK.
AI orders, What was the second key point?
Something about that huge acquisition they made?
Exactly. The Splunk integration investors
were hanging on every word abouthow the integration of Splunk,
that massive multi billion dollar bet on security and
(29:38):
observability software, is actually going.
Bringing a company that big intothe fold is a monumental task.
Any hint of friction delays unexpected costs that would hit
the stock immediately and raise questions about future profit
margins. OK.
And the Third Point, the big risk factor that could
potentially over shadow everything else.
That would be core networking. This is their bread and butter,
(29:59):
their traditional enterprise business, selling switches,
routers, the gear that powers regular corporate networks.
Any sign of a slow down here? Any weakness in spending from
typical large companies on just standard IT upgrades?
That's the critical risk. If CEO Chuck Robinson is
hesitant about standard corporate CapEx, it could
completely negate any positive AI news and just torpedo the
(30:21):
stock, potentially pulling down that whole cyclical confidence
narrative that the Dow just built on political relief.
OK, so Cisco was huge after the bell Tuesday.
Looking ahead to Wednesday and Thursday, what other key reports
are on the docket that could move the needle on these big
themes, maybe starting with someinternational flavor?
Yeah, Thursday morning before the bell, we get jd.com.
(30:41):
JD, that's a really important read on the Chinese consumer.
How is spending holding up over there?
What's the health of the broaderAsia Pacific economy looking
like? Their EPS estimate is around
$2.75. The commentary will feed
directly into global growth models, especially important
after OPEC flag potential demandweakness.
Yeah, OK. And then after the close on
Thursday, a couple of Giants reporting.
(31:03):
Two huge ones. First, the Walt Disney Company
DIS the Market will be all ears for updates on their streaming
business if they get closer to profitability.
How are the theme parks doing? What's the latest on their whole
turn around strategy? It's a key pulse check on
consumer discretionary spending.And the second one after the
bell Thursday. This one sounds absolutely vital
(31:24):
for the AI supply chain story. Oh, it is.
Applied Materials, a app reportsafter the close.
AMAT makes the complex equipmentthat companies use to
manufacture semiconductors. They're right at the heart of
the AI supply chain. You know, companies like AMD and
NVIDIA rely on massive capital expenditures, huge investments
to build new chip factories, expand capacity.
(31:46):
Amat's results and more importantly their guidance will
tell us if companies are still plowing billions into chip
manufacturing or if maybe they're starting to tap the
brakes on CapEx. Any hint of a slowdown from AMAT
would directly challenge those bullish long term projections
from the chip designers. Right.
And we should probably mention acouple of other maybe more
volatile names that reported late Tuesday, ones where
(32:07):
analysts seemed less certain. Yeah, Flutter Entertainment
FLUT, the online gaming company,they went to, their report
already down like 27% from the recent highs and the range of
analyst estimates for their earnings was unusually wide,
which basically signals very lowconviction, low confidence from
Wall Street. It was a real prove it moment
for them and what's become a pretty crowded market.
And then you had D local DLO, they process payments mostly in
(32:30):
emerging markets. Their report is always a useful
gauge of Fintech resilience and economic activity in those
regions. Estimates were around 16 or 17
cents EPS. Any sign of stabilization?
There would be a positive signalfor that whole high risk, high
reward fintech space #synthesis and strategic outlook.
OK, so we try to pull all these threads together, connect the
(32:50):
dots. What's the big picture take
away? I think it's that the market is
suffering from this really profound and frankly probably
unsustainable divergent. You have the Dow Jones hitting
an all time high, but that feelslike a very narrow, politically
driven event. It was celebrating the end of
government gridlock, which, let's be honest, is a pretty low
bar for feeling optimistic. But hang on, If the market, or
(33:11):
at least the Dow part, thinks the economy, is strong enough to
push those big industrial companies to record highs, why
is the rest of the market seemingly betting against
growth? Why dump oil into bearish
contango? Why pile into safe haven bonds?
It doesn't quite add up, does it?
It's the core cognitive dissonance, right?
That Dow optimism is totally isolated.
It's being directly contradictedby almost every other major
(33:33):
asset class signal we're seeing.The risk off positioning in
Treasuries, that fundamental collapse in oil prices confirmed
by Opec's own data, The flight, the safety we saw in gold,
they're all screaming the same thing.
The primary risk investors see right now is fundamental
economic weakness, maybe exacerbated by sticky inflation.
It's not political uncertainty anymore.
(33:53):
It almost feels like the market thinks ending the shutdown just
means OK, now we have a clear runway to potentially crash into
economic reality. So that faith the market put in
a dovish Fed, those hopes for rate cuts that really blossomed
during the 43 day data vacuum, that faith is about to have its
first major reality test. The CPI data is the Crucible.
It's the moment of truth. And if that CPI report comes in
(34:15):
sticky, comes in hot, not only does that 63% chance of a
December rate cut just vanish, but the Fed suddenly finds
itself in a really awkward political spot.
But maybe the Dow still high from relief, but the underlying
economy clearly struggling with inflation.
Yeah, that's a tough position. Meanwhile, down at the
individual stock level, that AI schism we talked about, that
actually feels like a healthy, maybe necessary development,
(34:38):
doesn't it? Seeing AMD surge on strong
fundamentals while Invidious slides on narrative risk, it
suggests the market is finally maturing, moving beyond just
chasing the hype. Investors are demanding credible
long term growth plans, proof ofprofit, real customer wins, not
just excitement about a concept.Completely agree it's a
necessary maturation and that trend rewarding concrete
(34:59):
fundamentals is likely going to intensify, especially if the
macro picture gets cloudier after that CPI report hits.
So looking ahead to Wednesday's trading, the entire session is
going to be overshadowed, defined really by that 8.30 AM
Eastern CPI release. The fact that futures opened
basically flat to mix just confirms it.
The market knows exactly what's coming.
(35:20):
It's holding its collective breath, recognizing just how
high the stakes are. The take away for you, our
listener, has to be this. The market is undeniably at an
inflection point. It's caught right between the
relief, the celebration of a political problem being solved
and this rising dread of an economic problem about to be
revealed in hard data. The big question is, did ending
(35:41):
the 43 day shutdown just clear the path for a much bigger,
maybe more damaging economic event?
Or can that narrow political confidence somehow withstand the
shock of reality when the data finally lands?
Hashtag tag outro. It really is that classic
conflict relief versus reality. We've got the Dow celebrating,
the politicians finally getting something done, while the bond
and commodity markets are bracing for economic shockwave.
(36:02):
Thanks for diving into the source material with us today to
unpack all of this. Yeah, it's fascinating, isn't
it? We saw the political solution
ending the shutdown. It clearly fueled one specific
index, the Dow. But the underlying economic
realities at OPEC surplus, falling bond yields, surging
gold, they wait on pretty much everything else.
Which raises, I think, a really important question for everyone
to ponder. When that CPI data finally hits,
(36:25):
when it either validates or completely demolishes the Feds
dovish pivot narrative, will that political relief rally in
the Dow even matter anymore? Or will those fundamental
economic warning signs from the Brandon oil markets finally just
overwhelm the equity optimism entirely?
OK, let's unpack this. Welcome to the deep dive where
we try to make sense of all the financial chaos out there.
You know, the data, the headlines, the stuff that moves
markets up and down like crazy. We filtered all down to give you
the core insights fast and clear.
Today we're diving into November12th, 2025.
And honestly, if you just glanceat the headlines, you'd think,
(00:20):
wow, great day for the bulls. The Dow Jones industrial
average, it surged, had a brand new all time high.
Depending on where you looked, it closed right up there, maybe
around 48,410. Incredible really.
But you know, you peel back justone layer, just one, and
suddenly the picture looks very,very different.
It feels like the market standing on it.
Well, a knife's edge. That's exactly the word for it,
(00:41):
an inflection point and that tension.
That's really the theme for a whole deep dive today.
Our mission really is to figure out why the market is so
bifurcated, split right down themiddle.
It seems caught between that euphoria, you know, the
political good news driving the Dow and this massive, like,
immediate economic risk hanging over everything else.
(01:01):
And you could see that tension playing out right away in the
futures market overnight, couldn't you?
It just screamed investor indecision.
If you looked at the E mini S&P 500 futures, the main proxy for
the broad market, they were barely up.
Was it like 4.5 points .07% basically flat just idling?
Totally flat, exactly the S&P just sitting there waiting.
(01:24):
But then you look at the tech side, yeah, the E mini NASDAQ
100 futures that was actually lagging, yeah, showing you know
relative weakness that about 18 point or -.07%.
OK, So that subtle difference, broad market, flat tech, weaker,
it tells you the market is fundamentally coiled.
It's like a spring ready to jumpone way or the other, just
(01:45):
waiting for some kind of real catalyst.
And it's worth pointing out, right this caution kind of flew
in the face of what should have been pretty good news,
especially after hours like withAMD.
That kind of news. Usually you'd expect it to pull
the whole market up, but Nope, not this time.
It wasn't enough to breakthroughthat wider uncertainty.
And that sets up the core conflict perfectly.
It's this profound clash betweentwo totally opposing stories. 2
(02:09):
Narratives narrative One this really powerful risk on rally.
It's fueled by the political good news, the fact that this
historic 43 day federal government shutdown looks like
it's finally, finally ending. That's a huge weight off
everyone's shoulders. Yeah, the relief factor, like,
OK, the government can actually function again, which, I mean,
it feels like a low bar for a major economy, but for sectors
(02:31):
tied to, you know, domestic stability and funding, it's a
big deal. It is a big deal, but then you
have narrative to pulling in thecomplete opposite direction.
It's an aggressive risk off rotation and this is driven by
these deep nagging worries aboutvaluations, especially in those
high flying tech stocks, plus just this crippling economic
uncertainty that's been buildingfor weeks now.
(02:51):
Right. And that and certainly leads us
straight to the central problem,doesn't it, the informational
vacuum. This is what makes the next
couple of days feel so unique, so critical.
For what, over six weeks now, federal agencies like the Bureau
of Labor Statistics, the BLS, the Census Bureau, they've
basically been dark because of the shutdown.
Completely dark, which means themarket and maybe more
(03:14):
importantly, the Federal Reserve.
They've just been groping aroundin the dark.
That's the only way to put it. They've had to trade on
unreliable proxy data, maybe some regional surveys or just
pure sentiment for way too long.Think about all the crucial
numbers we rely on. Retail sales, factory orders,
consumer confidence just gone. It's like we've been living in
an economic ghost town. And now with the shutdown
(03:36):
ending, the immediate danger is this data bomb.
We're about to get hit with a super compressed schedule of all
those delayed high impact government reports starting like
right now. So this collision, this mashup
of political relief and incomingeconomic reality, that's why
this moment is so absolutely crucial for you, the listener,
the investor, to understand. OK, so let's dig into the actual
(03:59):
market performance from Tuesday,November 12th, because like you
said, our sources called it a study in contrast, and they
weren't wrong. You could look at the tape and
feel incredibly bullish or incredibly bearish, really,
depending entirely on which major index you happen to be
watching. There was a very clear winner,
the Dow Jones Industrial Average.
It didn't just rise, it surged, closed up, what, 1.18%, hitting
that record closed right around 48,410.
(04:22):
That's a huge move, especially with all this background noise.
Oh yeah. That's pure, unadulterated
political optimism right there. That move was almost entirely
driven by the expectation that the shutdown was over.
You had the Senate approving thefunding bill late Monday.
The House was expected to followsuit late Wednesday.
Boom relief rally triggered. But that relief didn't lift
(04:42):
everything, did it. It was incredibly selective.
It wasn't just a rising tide lifting all boats.
Not at all highly selective, Themoney specifically poured into
cyclical stocks, value oriented sectors.
Think about the big industrial companies, basic materials,
consumer discretionary, healthcare.
These are the parts of the market that are most sensitive
to government funding. Returning to just having data
(05:04):
certainty back right? Investors weren't necessarily
betting on explosive economic growth, yet they were.
You're just celebrating the return of some basic stability,
like, OK, we can function again.OK.
But then you pivot, you look at the other side of the market and
you've got the definite loser for the day.
The NASDAQ Composite, it actually went down, closed off
(05:24):
about half a percent, landing around 23,429.
This just hammers home that thisgreat tech rotation isn't just
some theory, it's happening and maybe even speeding up.
It's accelerating, it's the riskoff driver really pushing that
aggressive sell off in the high valuation tech names.
And if you look inside the market at the sector level, the
(05:44):
S&P 500 technology sector was the only sector to finish in the
red on Tuesday. Wow, the only one.
The only one that's a massive signal but basically every other
sector tied to stability or value is going out but tech is
going down. It confirms this isn't random
noise, it's a deliberate, purposeful rotation out of
growth and maybe into safety or perceived value.
So let's unpack that rotation a bit more.
(06:06):
What's the specific fear drivingpeople out of tech, even when
the broader mood seems optimistic about the shutdown
ending? Well, the underlying concern is
this persistent, almost nagging belief that the whole artificial
intelligence rally, you know, the AI story that's basically
driven the market for the last year and a half, that it's
created a pretty significant valuation bubble.
(06:27):
Analysts are openly drawing lines back to the.com bubble
excesses. They're looking at the metrics.
It's like what kind of metrics? Back in the late 90's, the big
red flag was often priced to sales.
Companies had revenue maybe, butoften 0 profit.
Now it's a bit different. The concern isn't 0 revenue,
it's more that the future earnings growth you need to
justify today's stock prices. So it looks almost impossibly
(06:51):
high for some of these names. Can you give us a sense of that?
Like how stretched are we talking?
Sure. So analysts point out that back
before the 2000 crash, some big tech names, even blue chips like
Cisco, we're trading at crazy multiples, maybe 80 times
forward earnings. Now you look at some of the core
AI infrastructure players, ones making the GPU's, building the
clouds, some are hitting 60X, even 70X forward earnings.
(07:14):
And crucially, they're doing it in an environment where interest
rates are way higher than they were in 2000.
Right. Higher rates make future profits
less valuable today. Exactly.
So those high multiples today, they just flash massive red
flags. It feels like the market is
pricing in absolute perfection. And then you get something like
the SoftBank news, which we'll get to, and it suggests some
(07:35):
really big players are thinking,yeah, maybe that perfection
isn't going to happen. And we saw this rotation clearly
in the data too. Bloomberg has that magnificent 7
index, right? Those mega cap tech stocks that
basically where the market rallylast year.
That index fell 1.6% during Tuesday session.
That's serious money rotating out.
Yeah, that's not insignificant. What's fascinating here, though,
is how the S&P 500 just got caught in the crossfire.
(07:58):
It only managed a tiny gain of .2%.
It couldn't really follow the Dow's big jump because tech,
being such a heavy part of the S&P, was dragging it down.
But it didn't collapse like the NASDAQ either.
It really paints this picture ofextreme selectivity.
The political relief rally only seemed to cover, I don't know,
2/3 of the market. Well, the other third was
actively unwinding. OK, so the Dow hitting a rec go
(08:21):
high. That just screams optimism,
right? Like, everything's great,
gridlocks over, economy's ready to roll.
But if we broaden our view, if we look beyond bond equities to
the other big asset classes, yeah, bonds, oil, gold, they
were sending completely different signals.
They were flashing clear risk off warnings, caution signs
everywhere. Unambiguous warnings.
This is that core dissonance, right?
(08:42):
The stock market, or at least the Dow part of it, is partying
like it's 1999 or maybe 2025. But the smart money elsewhere,
the bond traders, the commodity guys, they seem to be hedging
their bets, preparing for economic weakness or maybe just
a big data shock. So why?
Why would the bond market, of all places, be fighting the
(09:03):
Dow's rally? What's going on there?
That's the $1,000,000 question, isn't it?
If you genuinely believe the shutdown ending meant smooth
sailing and strong growth ahead,you'd be selling bonds, taking
on risk, buying stocks. But what do we actually see in
the Treasury market? Right after the Veteran's Day
holiday, we saw investors aggressively buying bonds.
Classic flight to safety textbook move.
And the result of that buying what happened to yields.
(09:25):
The benchmark 10 year Treasury yield, even the one that
influences mortgage rates, corporate borrowing, basically
everything, It fell pretty sharply dropped by, sources
said. Three to six basis points
settled at a really key level right around 4.07%, maybe 4.08%.
OK. And just for listeners, a basis
point ABPS is 100th of a percent.
So 6 basis points is a decent move down for yields in one day,
(09:47):
especially after supposedly goodnews.
It's significant because in a real sustained growth rally,
yield should be going up, risk appetite increases, money flows
out of safe bonds. The fact they fell tells you
investors are hedging. They're betting against the
Dow's optimism, protecting themselves against 2 main risks.
OK. What's the first risk this data
(10:08):
bomb hedge? Buying bonds is the classic way
to protect yourself if you thinkinflation is about to surprise
on the upside. If that CPI report we're all
waiting for comes in hotter thanexpected, fear ripples to the
market. When fear hits, bond prices
usually rise. Yields fall, protecting the bond
holder. So bond traders are essentially
locking in yields now, betting that the economic data reality
(10:29):
is going to be worse, maybe hotter, on inflation than the
political relief suggests. They're betting against the
happy disinflation story. Got it.
Hedging against bad inflation news.
And the second risk ties directly to the Fed, right?
Correct. It's all about Fed policy
pricing. The market has gotten incredibly
aggressive about this. Right now, it's pricing in
something like a 63% chance of the Fed actually cutting rates
(10:51):
as early as December. 63% Wow, where did that come from?
It's been building largely fueled by some of that weak
proxy labor data, like the ADP jobs report that we had to rely
on during the shutdowns, information vacuum.
So bond traders are locking in current yields around 4.07%
because they think the Fed will be forced to cut rates soon.
If the Fed does cut, yields willfall further and the bonds they
(11:14):
bought today will be worth more.They're betting the Fed won't be
able to stay tight for long. OK, so Treasury's flashing
caution, but the risk off signalget even louder, maybe more
violent over in commodities, didn't it, Specifically crude
oil, which is super sensitive toglobal economic health.
Oh absolutely. WTI crude oil just collapsed
down more than 4%, hit a three-week low around $58.40.
(11:36):
Fifty, $8.50 a barrel. And crucially, this wasn't just
nervous traders selling futures.This was driven by a major
fundamental shock that came directly from Opec's own monthly
report. OK, OPEC, what did they reveal
that could cause oil to tank by 4%?
They dropped a bombshell, really.
Their report showed an unexpected surplus of crude oil
(11:58):
in the third quarter, like half a million barrels per day
surplus 500,000. Barrels wait a surplus.
If the global economy is supposed to be recovering, how
could they end up with so much extra oil sloshing around?
Well, that's exactly the point. The market interprets that as a
hard signal that global economicdemand, maybe especially from
places like China or other emerging markets, is weakening
(12:20):
faster than people thought. If factories slow down, if
shipping slows down, you just don't need as much oil.
So that OPEC report basically undermined the whole global
growth narrative that a lot of investors were counting on.
And there was technical confirmation too, right?
Something about the oil market structure changing.
Yeah, exactly. For the wonks out there, the
Wti's nearest time spread, that's the price difference
(12:41):
between delivering oil this month versus next month.
It briefly flipped into what's called a bearish contango
structure. OK.
Contango, can you break that down simply?
Sure. So usually in a healthy market
with strong demand, you're in backwardation.
That means the price for oil right now for immediate delivery
is higher than the price for future delivery.
People need it now. When it flips to contango, the
(13:02):
future price is higher than the spot price.
It suggests people are willing to wait, maybe pay a bit more
later, because they don't need the oil urgently right now.
If it flips into bearish contango, especially right at
the front of the curve, it's a strong signal of an immediate
supply glut. Too much oil right now.
Now where to put it? And weakening demand for prompt
delivery. Got it.
So Treasury's cautious oil collapsing on fundamental
(13:25):
weakness. Where did investors run for
cover amidst all this? Gold.
Gold. The classic ambiguity trade and
its move was really telling. Gold prices jumped over 1.3%,
getting up near 4180 dollars, maybe $4200 an ounce.
And the commentary directly linked this move to the extreme
uncertainty caused by the shutdown and that looming data
(13:47):
bomb. With no reliable U.S. economic
data, the ultimate information vacuum, investors basically had
to treat gold as a primary storeof value.
They couldn't fully trust government bonds, couldn't trust
equities. So they went for the metal.
Yeah, if you can't trust the official numbers, you trust the
shiny rock. Makes sense?
Pretty much. And you've got broader forces
supporting this too, like that recent World Bank outlook
(14:09):
predicting new all time highs for gold because of all the
global uncertainty and geopolitical risk.
Gold isn't a bet on growth, it'sa bet on chaos, maybe currency
devaluation. OK, let's switch quickly on
crypto because Bitcoin seemed tooffer a bit of a counter signal,
right? At least in terms of
institutional money flow, it managed to stay above $104,000.
Yeah, BTC stabilized above 104 K, even touched $105,410
(14:31):
briefly. Now it's always volatile, but
what underpinned that move was areally chunky inflow over half a
billion dollars, $523.98 millionflowing into those US listed
spot Bitcoin ETFs. Half a billion in a day.
Yeah, that signals serious institutional capital coming
back in after maybe some recent profit taking.
It suggests these big players might see crypto as, I don't
(14:53):
know, a non correlated asset, something less directly exposed
to the immediate US domestic data drama, the shutdown
fallout, the CPI report comparedto traditional stocks or bonds.
Maybe a cleaner way to keep somerisk exposure without betting on
the BLS data schedule. OK.
So we mentioned the market is pricing in these aggressive Fed
rate cuts by December, basicallybetting on a dovish pivot.
And you said that optimism isn'tjust wishful thinking, right?
(15:16):
The support for it actually comes in part from the Federal
Reserve itself. That's right.
There's been a real, real foundational shift in monetary
policy that we need to zoom in on.
But now with the data vacuum ending that whole dovish pivot
narrative which kind of grew in the fog it's about to get hit
with the dose of reality isn't. It it's about to be seriously
tested. Yeah.
So Roberta Paraly, he's the manager of the system open
(15:36):
market account Soma. He officially confirmed the
Fomc's decision. They are ending their balance
sheet reduction program, what wecall quantitative tightening or
QT, effective December 1st. OK, let's clarify that soma QT.
Why is stopping QT such a big deal for the market?
OK, so SOMA is basically the Fed's trading desk.
It's the ARM that actually buys and sells assets, mostly
(15:59):
treasuries and mortgage-backed securities to implement monetary
policy. Quantitative tightening QT is
when SOMA shrinks the Fed's massive balance sheet.
They do this by letting their existing bonds mature and just
not replacing them. They don't reinvest the money.
So QT removes money from the system.
Exactly. It literally pulls liquidity
cash out of the banking system. Think of it like a giant sponge
(16:22):
soaking up money from the financial markets.
For months, the Fed had been shrinking its balance sheet by
10s of billions of dollars everysingle month.
That was active tightening of financial conditions.
So stopping that is huge, takingthe foot off the brake,
essentially. What was the FED's official
reason for shifting from tightening to, well, neutral?
(16:43):
Pearly mentioned changes in money markets and the need for
the Fed to kind of step back andassess bank reserve levels.
Basically, there were signs of tightness showing up in the
short term funding markets, you know, where banks lend to each
other overnight. It suggested some banks might be
running a bit low on reserves. The cash they have to keep
parked at the Fed. OK, they don't want a repeat of
(17:05):
liquidity drying up like we saw a few years back.
Precisely. They want to avoid any plumbing
issues in the financial system. So by stopping QT, the Fed is
explicitly saying, OK, we're done actively tightening.
For now, we're moving to a neutral stance.
Let's make sure there's enough cash in the system.
But the market, the market hearsthat and immediately translates
(17:26):
it as OK. Neutral is just the necessary
first step before they start actively easing.
It's seen as the prelude to the rate cuts everyone's hoping for.
But those hopes, like we keep saying, we're largely built
during that shutdown fog, right when we didn't have real data.
Absolutely. You have to remember Fed
Governor Austin Goolsbee saying that the informational fog made
him really cautious about makingbig policy moves like cutting
(17:49):
rates. He knew the data they were
seeing, like that week ADP jobs number, probably wasn't the full
picture. So now the market is basically
flying blind into this data reality, trying desperately to
validate a dovish pivot that waspriced in based on speculation
and, frankly, political relief. OK, here's where it gets really
interesting then, because that data reality, it's hitting us
(18:10):
fast and hard. This data bomb means the BLS,
the Bureau of Labor Statistics, is about to unleash this
incredibly compressed schedule of all the critical data we've
missed. It's like a dam breaking after
43 days. And literally every single
investor, every trader, every analyst have their calendar
marked for one specific event, the ultimate market catalyst.
(18:33):
Thursday, November 13th, 8.30 AMEastern Time, the release of the
October Consumer Price Index, CPI.
This isn't just another report, is it?
This is the report. It's the first official
inflation reading we'll have hadthis quarter.
It is the single biggest test ofwhether this whole disinflation
story, this rate cut narrative the market's been clinging to,
is actually real or just wishfulthinking.
(18:54):
And you know, when that number drops, analysts aren't just
going to look at the headline CPI figure.
They'll RIP it apart immediately.
They need to see the month over month change slowing down, sure,
But the real focus it's going tobe on core CPI.
That's the one that strips out the volatile food and energy
prices. Are so critical.
Because of course, CPI comes in sticky.
If it shows inflation is still stubbornly high in services like
(19:16):
housing costs or wages, then that 63% probability the market
has priced in for a December rate cut, it's going to
evaporate instantly. Wow.
OK. And it's not just CPI landing at
8:30 AM Thursday, right? It's a whole cluster of data
points hitting at once. Truly a data bomb.
It really is. At the same time, 8:30 AM.
(19:37):
Thursday, we also get real earnings for October.
That's crucial because it tells us if people's wages are
actually keeping up with inflation.
If real earnings are flat or falling, consumers have less
spending power, which signals a potential economic slowdown.
And we also get the weekly initial jobless claims.
Now this is one of the few real time labor market indicators
we've had during the shutdown. Seeing how this number lines up
(19:59):
with that weaker ADP proxy data will be key.
Is the labor market really cracking, potentially forcing
the Fed's hand? Or was the ADP report just
noise? And the pressure doesn't stop on
Thursday, does it? Friday morning is big, too.
Nope. Friday, November 14th again,
8:30 AM Eastern we get the producer price index or PPI for
October. That's the other side of the
(20:19):
inflation coin. It looks at prices earlier in
the pipeline, what manufacturersand producers are paying.
Often, PPI trends can signal where consumer inflation is
headed a few months down the road.
Plus, we get US import export prices for October.
That gives us a read on global price trends and whether we're
importing inflation. That's especially relevant after
that OPEC report hinted at global demand weakness.
(20:41):
So bottom line, the number one risk is crystal clear, a hot CPI
print. Absolutely, If CPI comes in
higher than expected, it just directly attacks the market's
entire foundation. Disbelief in a friendly, dovish
Fed ready to cut rates if inflation is still sticky. the
Fed simply cannot justify using policy, and the whole rationale
it's been supporting stocks through all this uncertainty
(21:02):
just crumbles. Honestly, the next 48 hours
probably the riskiest the marketis facing. the Fed started
hiking rates way back when is that political relief rally.
It might have just cleared the path for a brutal reality check.
OK. Let's pivot now to some
individual stocks because the action there on Tuesday showed
something really important happening under the surface.
It feels like the market is finally starting to grow up a
(21:23):
bit when it comes to AI. It's moving past just buying
anything with AI slapped on the label.
We saw what our source is calleda violent differentiation, maybe
an AI schism. The market seems to be demanding
actual proof now. Cold hard evidence of
profitability, executable plans,real long term Rd. maps, not
(21:44):
just hype. That divergent, that schism, was
perfectly captured by the stark difference in how Advanced Micro
Devices, AMD and NVIDIA NVDA traded.
These are two giants supposedly racing side by side in the AI
marathon. Yeah, let's start with AMD.
They were the clear winner. The fundamental story that day?
AMD was just explosive. The stock surged what, 9.6%
(22:04):
during the regular trading? And they kept going after hours
at another like 6%, pushing it up towards $252.
That's an undeniable bullish signal, and it all stemmed from
their Financial Analyst Day. It was like a massive injection
of confidence for institutional investors.
What was it specifically that AMD presented that got the
market so fired up enough for a double digit percentage gain?
(22:26):
They laid out this multi year long term vision that just blew
away expectations. They were just talking about the
next quarter. CEO Lisa Sue basically
forecasted that their revenue could grow at a compounded
annual rate AKJR above 35% for the next three to five years.
35% CAJR. That's huge.
It's incredibly aggressive growth guidance, and it's almost
(22:48):
all being driven by their data center and AI segments.
This wasn't just vague optimism,it felt like a firm commitment
to a really ambitious path forward.
And they also talked about the size of the opportunity, right,
their total addressable market, the Tam.
Right. And they didn't just throw out a
big number, they actually broke it down.
CPU's, GPU's, networking gear for AI and projected that this
(23:08):
whole AI silicon market could top a trillion dollars by 20-30
A. Trillion dollars.
Putting that kind of massive, tangible number out there gives
investors something concrete to model against.
Plus, they guided for gross margins improving into the 55%
to 58% range over the next few years.
That's well ahead of what analysts were expecting,
signaling serious efficiency and, maybe more importantly,
(23:32):
pricing power. And crucially, it sounds like
they backed it up with real customer wins, right, Moving
beyond just promises, which likeyou said, seems to be what the
market wants now. Absolutely critical point.
They highlighted deep partnerships, new deals with the
big hyper scalers, the major AI players.
They specifically name dropped open AI Oracle meta.
That's proof of execution. That's the market rewarding
(23:53):
fundamentals over just narrative.
And honestly, it's a healthy, necessary sign of maturity in
this whole AI trade. OK, now contrast that powerhouse
performance with NVIDIA, the established AI leader, the stock
that's already delivered mind blowing returns.
How did they fare? Well, despite AMD's great news,
despite the general buzz around AI, NVIDIA actually slipped down
(24:14):
about half a percent on Tuesday after already dropping 3% the
day before. This is where that narrative
risk starts to bite. It shows that fundamentals, or
maybe the lack of new positive fundamental news, are starting
to outweigh past performance. And what was the main thing
dragging NVIDIA down, fueling that AI bubble talk?
It was a. Pretty major blow to investor
(24:35):
confidence, honestly. The news came out that SoftBank,
the big Japanese tech investor, had sold its entire stake in
NVIDIA. We're talking $5.8 billion worth
of stock. 5.8 billion Wow, SoftBank makes huge bets, right?
Huge. Often very directional bets on
disruptive tech O. When an investor like that
completely liquidates such a massive osition, it adds serious
(24:56):
high profile fuel to the fire. For anyone arguing that AI
valuations have gotten out of control.
SoftBank is essentially signaling we think the stock is
peaked for now or at least the risk versus reward doesn't look
good enough for us anymore. That is the AI schism right
there, isn't it? The market seems to be shifting,
moving away from maybe just the first mover story, the narrative
risk associated with Nvidia's already massive run, and moving
(25:19):
towards stocks like AMD that canshow a credible path to long
term growth and margin expansionwith specific multi year
guidance. Exactly.
If we go back to that.com analogy for a second, the
company that actually survived the crash back in 2000, the ones
that thrived later, they were the ones with real earnings,
real cash flow, not just a massive Tam or a cool story.
(25:41):
Amity seems to be providing credible evidence of having that
path. Meanwhile, the SoftBank exit
just highlights the inherent risk when valuations get so far
ahead of current fundamentals. OK.
So beyond those two chip giants,were there other notable stock
moves that kind of reflected this search for tangible growth
or maybe just volatility? Yeah, definitely on holding
(26:01):
ticker Owen on. And that's the Swiss sneaker
company, right? They saw it up over 20%. 20%
just for sneakers. Well, their catalyst was beating
earnings expectations by a lot, posting a bigger than expected
profit and raising their forecast for the full year.
Again, it's a classic case of just solid fundamentals getting
rewarded big time, even with allthe macro uncertainty swirling
(26:22):
around. OK.
And then on the flip side, you had Circle Internet Group, CRCL,
the stablecoin issuer, they had a wild ride and then dropped.
Yes, Circle tumbled down somewhere between 9% and 12%
depending on the source and it was a classic sell the news
event. What's interesting is they
actually did report strong earnings, but the stock had been
on this absolutely insane rollercoaster ride, running from like
(26:44):
$90.00 up to nearly $300 in the back.
Down again very quickly, right? So strong, Ernie's just became
the exit signal for traders who'd ridden that wave to lock
in some massive profits. Gotcha.
And finally, IBM got a little boost tapping into that sort of
next big thing excitement. Yeah, IBM ticked up about 2.3%.
They announced what they described as a breakthrough in
(27:05):
quantum computing. You know, the markets always
looking past the current hype cycle for the next potential
growth narrative and anything that suggests real progress in
quantum computing, which promises this exponentially
faster processing power that's seen as a potentially huge high
risk but maybe very high reward long term bet.
All right. So beyond the macro data bomb
(27:27):
that's about to hit, we also have some really high stakes
company ownings reports coming up.
These will either confirm or maybe challenge that AI growth
story and give us more clues about broader economic health.
We need to pay close attention to companies that reported after
the bell Tuesday and the ones reporting before the market
opens Wednesday and Thursday. See if their guidance holds up.
Let's start with probably the most critical report that came
(27:48):
out after Tuesday's close. Yeah, Cisco Systems, ticker CS
Key Dough. Cisco is just essential.
It's a bellwether for enterprisespending, for networking gear
sales, just general corporate capital expenditure trends
across the economy. And the stock actually traded up
into the report right up almost 3%.
So investors were clearly optimistic, maybe hoping that
cyclical recovery vibe from the Dow, plus the AI demand that
(28:12):
lifted AMD, would show up in Cisco's order.
Book Yeah, the setup was definitely high stakes.
Expectations were running prettyhigh.
Consensus estimates had revenue pegged around $14.78 billion,
earnings per per share, EPS around $0.98.
Analysts were basically right atthe top end of Cisco's own
guidance range. They'd priced in a near perfect
quarter. But with Cisco, the headline
(28:35):
numbers, the actual results, they're almost less important
than the commentary, right? Especially their forward
outlook. What were investors really laser
focused on during that earnings call?
What was the true test? There were really three critical
things everyone was listening for the things that would
ultimately move the stock. 1st and probably most important, AI
networking orders. Cisco had previously said they
(28:56):
booked about $2 billion in orders related to AI
infrastructure for their fiscal 2025.
The market desperately needed tohear that that momentum was
accelerating. Why accelerate?
It to justify Cisco's own AI story, obviously, but also,
crucially, to validate that massive bullish ecosystem demand
that AMD had just painted hours earlier.
If Cisco isn't seeing a pickup in orders for the switches and
(29:18):
routers needed to build out AI data centers, then those huge
CapEx promises from the chip guys start to look a little
shaky. OK.
AI orders, What was the second key point?
Something about that huge acquisition they made?
Exactly. The Splunk integration investors
were hanging on every word abouthow the integration of Splunk,
that massive multi billion dollar bet on security and
(29:38):
observability software, is actually going.
Bringing a company that big intothe fold is a monumental task.
Any hint of friction delays unexpected costs that would hit
the stock immediately and raise questions about future profit
margins. OK.
And the Third Point, the big risk factor that could
potentially over shadow everything else.
That would be core networking. This is their bread and butter,
(29:59):
their traditional enterprise business, selling switches,
routers, the gear that powers regular corporate networks.
Any sign of a slow down here? Any weakness in spending from
typical large companies on just standard IT upgrades?
That's the critical risk. If CEO Chuck Robinson is
hesitant about standard corporate CapEx, it could
completely negate any positive AI news and just torpedo the
(30:21):
stock, potentially pulling down that whole cyclical confidence
narrative that the Dow just built on political relief.
OK, so Cisco was huge after the bell Tuesday.
Looking ahead to Wednesday and Thursday, what other key reports
are on the docket that could move the needle on these big
themes, maybe starting with someinternational flavor?
Yeah, Thursday morning before the bell, we get jd.com.
(30:41):
JD, that's a really important read on the Chinese consumer.
How is spending holding up over there?
What's the health of the broaderAsia Pacific economy looking
like? Their EPS estimate is around
$2.75. The commentary will feed
directly into global growth models, especially important
after OPEC flag potential demandweakness.
Yeah, OK. And then after the close on
Thursday, a couple of Giants reporting.
(31:03):
Two huge ones. First, the Walt Disney Company
DIS the Market will be all ears for updates on their streaming
business if they get closer to profitability.
How are the theme parks doing? What's the latest on their whole
turn around strategy? It's a key pulse check on
consumer discretionary spending.And the second one after the
bell Thursday. This one sounds absolutely vital
(31:24):
for the AI supply chain story. Oh, it is.
Applied Materials, a app reportsafter the close.
AMAT makes the complex equipmentthat companies use to
manufacture semiconductors. They're right at the heart of
the AI supply chain. You know, companies like AMD and
NVIDIA rely on massive capital expenditures, huge investments
to build new chip factories, expand capacity.
(31:46):
Amat's results and more importantly their guidance will
tell us if companies are still plowing billions into chip
manufacturing or if maybe they're starting to tap the
brakes on CapEx. Any hint of a slowdown from AMAT
would directly challenge those bullish long term projections
from the chip designers. Right.
And we should probably mention acouple of other maybe more
volatile names that reported late Tuesday, ones where
(32:07):
analysts seemed less certain. Yeah, Flutter Entertainment
FLUT, the online gaming company,they went to, their report
already down like 27% from the recent highs and the range of
analyst estimates for their earnings was unusually wide,
which basically signals very lowconviction, low confidence from
Wall Street. It was a real prove it moment
for them and what's become a pretty crowded market.
And then you had D local DLO, they process payments mostly in
(32:30):
emerging markets. Their report is always a useful
gauge of Fintech resilience and economic activity in those
regions. Estimates were around 16 or 17
cents EPS. Any sign of stabilization?
There would be a positive signalfor that whole high risk, high
reward fintech space #synthesis and strategic outlook.
OK, so we try to pull all these threads together, connect the
(32:50):
dots. What's the big picture take
away? I think it's that the market is
suffering from this really profound and frankly probably
unsustainable divergent. You have the Dow Jones hitting
an all time high, but that feelslike a very narrow, politically
driven event. It was celebrating the end of
government gridlock, which, let's be honest, is a pretty low
bar for feeling optimistic. But hang on, If the market, or
(33:11):
at least the Dow part, thinks the economy, is strong enough to
push those big industrial companies to record highs, why
is the rest of the market seemingly betting against
growth? Why dump oil into bearish
contango? Why pile into safe haven bonds?
It doesn't quite add up, does it?
It's the core cognitive dissonance, right?
That Dow optimism is totally isolated.
It's being directly contradictedby almost every other major
(33:33):
asset class signal we're seeing.The risk off positioning in
Treasuries, that fundamental collapse in oil prices confirmed
by Opec's own data, The flight, the safety we saw in gold,
they're all screaming the same thing.
The primary risk investors see right now is fundamental
economic weakness, maybe exacerbated by sticky inflation.
It's not political uncertainty anymore.
(33:53):
It almost feels like the market thinks ending the shutdown just
means OK, now we have a clear runway to potentially crash into
economic reality. So that faith the market put in
a dovish Fed, those hopes for rate cuts that really blossomed
during the 43 day data vacuum, that faith is about to have its
first major reality test. The CPI data is the Crucible.
It's the moment of truth. And if that CPI report comes in
(34:15):
sticky, comes in hot, not only does that 63% chance of a
December rate cut just vanish, but the Fed suddenly finds
itself in a really awkward political spot.
But maybe the Dow still high from relief, but the underlying
economy clearly struggling with inflation.
Yeah, that's a tough position. Meanwhile, down at the
individual stock level, that AI schism we talked about, that
actually feels like a healthy, maybe necessary development,
(34:38):
doesn't it? Seeing AMD surge on strong
fundamentals while Invidious slides on narrative risk, it
suggests the market is finally maturing, moving beyond just
chasing the hype. Investors are demanding credible
long term growth plans, proof ofprofit, real customer wins, not
just excitement about a concept.Completely agree it's a
necessary maturation and that trend rewarding concrete
(34:59):
fundamentals is likely going to intensify, especially if the
macro picture gets cloudier after that CPI report hits.
So looking ahead to Wednesday's trading, the entire session is
going to be overshadowed, defined really by that 8.30 AM
Eastern CPI release. The fact that futures opened
basically flat to mix just confirms it.
The market knows exactly what's coming.
(35:20):
It's holding its collective breath, recognizing just how
high the stakes are. The take away for you, our
listener, has to be this. The market is undeniably at an
inflection point. It's caught right between the
relief, the celebration of a political problem being solved
and this rising dread of an economic problem about to be
revealed in hard data. The big question is, did ending
(35:41):
the 43 day shutdown just clear the path for a much bigger,
maybe more damaging economic event?
Or can that narrow political confidence somehow withstand the
shock of reality when the data finally lands?
Hashtag tag outro. It really is that classic
conflict relief versus reality. We've got the Dow celebrating,
the politicians finally getting something done, while the bond
and commodity markets are bracing for economic shockwave.
(36:02):
Thanks for diving into the source material with us today to
unpack all of this. Yeah, it's fascinating, isn't
it? We saw the political solution
ending the shutdown. It clearly fueled one specific
index, the Dow. But the underlying economic
realities at OPEC surplus, falling bond yields, surging
gold, they wait on pretty much everything else.
Which raises, I think, a really important question for everyone
to ponder. When that CPI data finally hits,
(36:25):
when it either validates or completely demolishes the Feds
dovish pivot narrative, will that political relief rally in
the Dow even matter anymore? Or will those fundamental
economic warning signs from the Brandon oil markets finally just
overwhelm the equity optimism entirely?
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