The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Feeling a bit better.
Tariff-talk continues, no different than yesterday if you ask me. And yet, markets were OK with the talk and went about the usual motions. S&P futures climbed a bit in the premarket and the index opened about +20. It popped and dropped in early trading and slowly climbed through the afternoon. Yields finally fell today, dropping across the curve and Fed cuts for 2025 are now priced at 52 bips. Capital flow was a bit light today at 94%.
You never know what tomorrow will bring but today investors are brushing aside the tariff-talk 2.0 era and they are resuming their love for US equities. NVDA hit 4 trillion in market cap, triggering all sorts of stories and graphics. The Mag 7 continue their role as the drivers of the major indices as well as owning the bulk of the mindshare of Wall Street. We’ve discussed whether this is a healthy situation for the broader market many times before and the conclusion remains mixed. Regardless of one’s thoughts on the matter, the Mag 7 are responsible for pulling the market higher. The fact that it continues today, indicates that investors are returning to their familiar investment behaviors of the last couple years.
There is no reason to anticipate this will change *unless* something massive happens. At some point, something big and terrible will befall the Mag 7. But if you don’t know what that will be, or when it will happen, you cannot expect the rest of the market to randomly abandon buying those names just because we’ve gone up a lot.
Maybe this coming earnings season poses a risk to the Mag 7. I doubt it but anything’s possible. That said, earnings reports from the big financials start Tuesday morning. The first Mag 7 stocks to report are Google and Tesla. They report on 7/23/25.
So we have two weeks until Mag 7 earnings risk shows up. What do we think stocks will do in the meantime?
What do we think they’ll do if the risk pays off and the Mag 7 beat their numbers?
See you tomorrow.
-Mike
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