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DJIA: 51,778
Sure it’s the end of the world… but is it discounted? While one of our favorite quips, of late it has taken on a tinge of reality. As Barron’s cleverly put it, we’ve gone from FOMO to FOBE – fear of being extinct. And to look at the VanEck Semiconductor ETF (SMH – 561), down some 20% just since June, we have done some discounting. While not exactly an existential problem for the Semis, unknowns always are a problem for stocks. And asking Musk, Altman, and Amodei to play nice together is what Bloomberg’s John Authers equates to the “prisoner’s dilemma” – a reference to the game theory experiment of placing rational actors in a position where they may fail to cooperate even when doing so would be in their mutual interest. Meanwhile, there’s more to life than its ending, at least when it comes to the stock market. Rising rates have had their effect on Financial stocks, particularly wreaking havoc on market numbers. The A/Ds are a decent proxy for the average stock, and in turn the overall health of the market. That look is not a good one.
So Warsh stood up to Trump, but not to the Bond market? With seemingly little choice, there was little surprise, leaving the market’s sell-off Wednesday itself a bit of a surprise. But there are those algos set in motion by the 2-year or who knows what, and often reverse course the next day. Meanwhile, Monday’s nearly 5% gain in the iShares Software ETF (IGV – 106) showed that some investors believe a slowdown in AI development could be a boom for those most threatened by it. And the chart appears to back that up, with IGV far outperforming SMH since late July. Keep in mind that when it comes to IGV versus SMH, rotation is too good a word. It’s more like a daily flip-flop. Last time we touched on investing versus trading, to that point you might also look at long-term charts of TMO (659) and DE (686).
Frank D. Gretz
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