patrick.net

The Trump rout is taking on historic dimensions.

The Dow Jones Industrial Average shed almost 1,000 points on Monday and is headed for its worst April performance since 1932, according to Dow Jones Market Data. The S&P 500’s performance since Inauguration Day is now the worst for any president up to this point in data going back to 1928, according to Bespoke Investment Group.

RWSGFY says

The Trump rout is taking on historic dimensions.

The Dow Jones Industrial Average shed almost 1,000 points on Monday and is headed for its worst April performance since 1932, according to Dow Jones Market Data. The S&P 500’s performance since Inauguration Day is now the worst for any president up to this point in data going back to 1928, according to Bespoke Investment Group.

The top 10% own about 93% of the stock market and account for 50% of consumer spending. I believe the administration believes by reducing asset inflation, then consumer demand from the top 10% will decline thereby reducing inflation.

This could mean less speculation for investment housing (including AirBnB's) which partially caused the housing bubble.

Time to go international?

US equity ETFs saw net outflows of $3.6 billion last week while developed international markets attracted above-average inflows totaling $3 billion, according to JPMorgan.

AD says

I believe the administration believes

The administration seems to belive in lots of asinine shit like "crashing stonks brings rates down" or "surrendering at the start of negotiations leads to a great deal" which doesn't exactly work out when meets with reality. 🤡

from Google Gemini AI :

what is the volatility skew for Amzn this week ?

As of today, Tuesday, April 22, 2025, the volatility skew for Amazon (AMZN) options shows a typical pattern where implied volatility for put options (lower strike prices) is generally higher than that of call options (higher strike prices). This indicates a higher demand for downside protection compared to upside speculation.

Here's a more detailed breakdown based on available data:

Near-Term Skew (April 25th Expiration): Market Chameleon data indicates that for the April 25th expiration, the 25-delta put skew is +7.6%, while the 25-delta call skew is -8.4%. This positive put skew and negative call skew confirm the higher implied volatility for near-the-money put options compared to similar delta call options.
Historical Put-Call Spread: Looking at the one-year history of the 25-delta put implied volatility minus the 25-delta call implied volatility, Market Chameleon shows the following for this week:
April 22nd: +3.2%
April 23rd: +3.5%
April 24th: +3.0%
April 25th: +3.5%
April 26th: +2.8% This consistently positive spread further illustrates the higher implied volatility for put options across the week. The latest 20-day average for this put-call spread is +8.5%, while the 250-day average is +2.4%. This suggests that the current skew is less pronounced than the recent 20-day average but still significantly favors higher put implied volatility compared to the longer-term average.

* In simpler terms, the options market is pricing in a greater probability and/or impact of negative price movements for Amazon's stock in the near term compared to positive movements. This could be influenced by factors such as the upcoming earnings announcement expected around April 29th or May 1st, 2025, where investors often seek more downside protection. *

This year’s volatile, trade war-obsessed market didn’t shake American investors’ fondness for exchange-traded funds. In fact, it only made them love them more.

Investors have plowed a record $437 billion into U.S. ETFs so far this year, unfazed by the wildest markets since Covid. And if inflows maintain the current pace—historically, they accelerate in the summer and fall months—it will mark the second straight record year for U.S. ETF flows.

That is happening in part because of the relentless flow of money out of mutual funds and into ETFs, which tend to offer lower fees and certain tax advantages that their older cousins can’t match. But the decadelong trend doesn’t fully explain this year’s surge; indeed, when U.S. markets turned choppy, many began to double down on their bets on U.S. assets. And, now more than ever, they placed those wagers by buying ETFs.

“Investors are seeing selloffs as buying opportunities,” said Todd Rosenbluth, head of research at data provider VettaFi.

The hundreds of billions of dollars that investors poured into ETFs found their way into every major fund category: Stock funds and bond funds. Funds that track popular indexes continue to sell well, but so have those managed by professional stock and bond pickers, a relatively new corner of the ETF market that has gained momentum.

https://www.msn.com/en-us/money/markets/investors-pile-into-etfs-at-record-pace-despite-market-turmoil/ar-AA1FsBe7

AD says

That trash panda has only 5 screens, so no wonder he is losing.

I suspect that most day traders are really hobbyists. I have a small IRA that I use to play speculator with, but also a long term much larger account that is left alone.

HeadSet says

I suspect that most day traders are really hobbyists. I have a small IRA that I use to play speculator with, but also a long term much larger account that is left alone.

I don't day trade, but I'm similar. Check the price of the stock (not amount in the account) and go on my way. Then my big money is in Roths and 401k that I check once a year when I get the call before tax season to toss some into Roths, depending on our tax situation. Once I'm 55 I'll keep a closer eye on it.

75% of gains, 80% of profits, 90% of capex—AI’s grip on the S&P is total and Morgan Stanley’s top analyst is ‘very concerned’

October 7, 2025 at 5:13 PM EDT

https://fortune.com/2025/10/07/ai-bubble-cisco-moment-dotcom-crash-nvidia-jensen-huang-top-analyst/

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Fed's Powell: Stock market is helping support consumer spending now

Fed Chair Jerome Powell acknowledged Wednesday that the soaring stock market is helping support consumer spending — and the overall economy — right now.

If the market goes down, Powell said, it could hurt consumer spending. But spending wouldn't take a large hit unless the market plunged.

"I think it's certainly a factor supporting consumption right now," Powell said in response to a question asked by Yahoo Finance about how much of consumer spending and the economy hinges on the stock market remaining strong.

The question gets at how prominent a role the stock market is playing in supporting spending and the overall economy.

Powell and others have noted the US is in a "bifurcated economy": Lower-income individuals are pulling back on spending, while wealthy individuals benefiting from market run-ups continue to drive spending — perhaps keeping the economy afloat.

According to a September analysis by Moody's Analytics chief economist Mark Zandi, Americans in the bottom 80% of the income distribution — those making less than $175,000 a year — are barely keeping their spending on pace with inflation. Meanwhile, the top 20% of consumers are growing their spending.

"The data also show that the US economy is being largely powered by the well-to-do," Zandi argued.

For his part, Powell cautioned that the relationship between the stock market and spending shouldn't be viewed as a dollar-for-dollar correlation. The more wealth someone has, the lower an additional dollar of wealth matters, Powell said, and consumers' inclination to spend drops as they reach very high levels of wealth.

Meanwhile, those at the lower end of the income spectrum have a higher inclination to spend as they earn more.

"It would affect spending if the stock market went down," Powell said in a press conference after the Fed's meeting on Wednesday. "But it wouldn't drop sharply unless there were quite a sharp drop in the stock market."

Stocks have reached new highs in 2025, led by Big Tech and investors' hopes that AI will lead to blockbuster profits, pulling the overall market higher.

https://finance.yahoo.com/news/feds-powell-stock-market-is-helping-support-consumer-spending-now-183222919.html

Google’s AI-related revenue is not broken out as a standalone figure, but analysts estimate that AI-driven products and infrastructure contributed at least $40–45 billion to Alphabet’s Q3 2025 revenue—roughly 40–45% of its $102.3 billion quarterly total.

How long does this rate of AI spending continue ? Will the rate slowly decline and then steady out ?

Robots like this are the next generation AI technology. So when the capital expenditures for Chat GPT, AI-security cameras, etc. start to decline, then machines like these robots will fill that demand void for AI.

https://mashable.com/article/1x-neo-humanoid-robot-preorder

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AD says

Google’s AI-related revenue is not broken out as a standalone figure, but analysts estimate that AI-driven products and infrastructure contributed at least $40–45 billion to Alphabet’s Q3 2025 revenue—roughly 40–45% of its $102.3 billion quarterly total.

How long does this rate of AI spending continue ? Will the rate slowly decline and then steady out ?

Robots like this are the next generation AI technology. So when the capital expenditures for Chat GPT, AI-security cameras, etc. start to decline, then machines like these robots will fill that demand void for AI.

https://mashable.com/article/1x-neo-humanoid-robot-preorder

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There is no "AI" in that "robot" - it's literally teleoperated by dot indians in VR goggles:

https://m.youtube.com/watch?v=n_VmMrAJc9Q&pp=ygUObmVvIHJvYm90IHNjYW0%3D

RWSGFY says

There is no "AI" in that "robot" - it's literally teleoperated by dot indians in VR goggles:

https://m.youtube.com/watch?v=n_VmMrAJc9Q&pp=ygUObmVvIHJvYm90IHNjYW0%3D

Yes I agree, but that robot will have AI once it completes that training phase and goes into low rate initial production.

AD says

RWSGFY says

There is no "AI" in that "robot" - it's literally teleoperated by dot indians in VR goggles:

https://m.youtube.com/watch?v=n_VmMrAJc9Q&pp=ygUObmVvIHJvYm90IHNjYW0%3D

Yes I agree, but that robot will have AI once it completes that training phase and goes into low rate initial production.

Or not.

RWSGFY says

AD says

RWSGFY says

There is no "AI" in that "robot" - it's literally teleoperated by dot indians in VR goggles:

https://m.youtube.com/watch?v=n_VmMrAJc9Q&pp=ygUObmVvIHJvYm90IHNjYW0%3D

Yes I agree, but that robot will have AI once it completes that training phase and goes into low rate initial production.

Or not.

So you are saying that the robot company may view it more profitable to just have "dot Indians" to manually operate the robots instead of producing autonomous or AI-chip robots ?

AD says

Google’s AI-related revenue

Another example of Google's AI - related revenue stream.

https://finance.yahoo.com/news/google-strikes-game-changing-3-110000267.html

Google has helped to secure a 10-year, $3 billion artificial intelligence hosting contract with Bitcoin miner Cipher Mining and U.K.-based AI computing startup Fluidstack.

In exchange, Google will receive a 5.4% equity stake in Cipher. But since AI training is known for being energy-intensive, and dirty fuels still power most facilities, the deal could spell bad news for the environment.

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RWSGFY says

AD says

RWSGFY says

There is no "AI" in that "robot" - it's literally teleoperated by dot indians in VR goggles:

https://m.youtube.com/watch?v=n_VmMrAJc9Q&pp=ygUObmVvIHJvYm90IHNjYW0%3D

Yes I agree, but that robot will have AI once it completes that training phase and goes into low rate initial production.

An android will need AI semiconductors.

Or not.

The goal is for an android like Data in Star Trek Next Generation. Gene Roddenberry was a brilliant visionary, and so was Steven Speilberg with his movie AI.

AD says

Yes I agree, but that robot will have AI once it completes that training phase and goes into low rate initial production.

Just like all those self-driving cars?

AD says

The goal is for an android like Data in Star Trek Next Generation. Gene Roddenberry was a brilliant visionar

"Rossum's Universal Robots" came out un the 1920s. In fact, the author coined the word "robot" from a Czech noun for "work." His robots were human-like and intelligent. They also became self-aware and wiped out humanity in a civil war.

HeadSet says

AD says

The goal is for an android like Data in Star Trek Next Generation. Gene Roddenberry was a brilliant visionar

"Rossum's Universal Robots" came out un the 1920s. In fact, the author coined the word "robot" from a Czech noun for "work." His robots were human-like and intelligent. They also became self-aware and wiped out humanity in a civil war.

"RUR" - in the end, the creator fabricates a pair of self-replicating robots to continue civilization.

A low-budget movie along these lines was "Creation of the Humanoids."

From the Kobessi Letter

The elephant in the room:
AI stocks are outperforming consumer stocks by 20%+ over the last 60 DAYS. And, as AI investment exceeds $1 TRILLION per year, car repossessions are at 2009 levels. There are 2 US economies:
Rich vs Poor, and AI is the lifeline of it all.
For the first time in history, the Magnificent 7 stocks are now worth over a combined $20 TRILLION. This means that these 7 stocks alone now account for a record ~35% of the S&P 500. Not even the Dot-Com bubble in 2000 saw concentration like this. Tech has taken over.
And, this has been fantastic for investors. Since the April 2025 bottom, the S&P 500 has added over +$18 trillion in market cap. Last week, Nvidia became the first company to become worth over $5 trillion. Over HALF of the S&P 500's gains since 2023 are from 7 stocks.
But, on the other side of the table is a more bleak picture. Consumer-facing stocks are getting crushed, and the latest earnings season only underscored that. Take a look at the YTD performance of these consumer stocks. General Mills and Kraft Heinz are in a bear market.
The list goes on and on:
Take a look at Starbucks now down -11% YTD, and Chipotle down -47% YTD. Wendy's is down -48%, and Sweetgreen is down -80% this year ALONE. Many of these corporations cite a decrease in demand due to inflation and the economy.
Chipotle's CEO said it blatantly last week:
Young Americans are pulling back on eating out, specifically those in the 25 to 35 age group. "Unemployment, increased student loan repayment, and slower real wage growth" are supposedly to blame.
The data generally agrees.
The economy is particularly bad for Americans who are seeking entry level jobs. The US unemployment rate for youth graduates aged 20-24 has averaged 8.1% over the last 3 months, the highest in 4 years. This is up sharply from under 4% just 2 years ago, when the AI boom began.

********** Without Artificial Intelligence (AI) spending, the US economy would likely be contracting right now. AI spending contributed ~1 percentage point to the 1.6% US GDP growth rate recorded in the first half of 2025. This means ~63% of economic growth came from AI investment. This is by far the most on record. *************

As a result, US market concentration has hit levels not seen since the 1880s. In other words, the market is the least diversified in ~140 years. This isn't necessarily "bad" for stocks, if tech keeps on rising. But, those without exposure to stocks are being left behind.
And, while asset owners generate TRILLIONS in market cap, car repos are at 2009 levels. In 2024, 1.73 million vehicles were seized, up +16% YoY and +43% compared with 2022. We are literally in an economy where you are either "rich" off of AI or having your car repossessed.
Lastly, the Fed is cutting rates into stagflation and asset prices are rising sharply across the board.

And to continue my last post (# 343) just look at how bad Las Vegas stocks are now. Less are willing to pay to vacation and gamble in Las Vegas.

Michael Burry betting that AI-stocks runup will end soon



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Michael Burry's net worth

AD says

Take a look at the YTD performance of these consumer stocks. General Mills and Kraft Heinz are in a bear market.
The list goes on and on:

I think we are seeing is people switching from name brands to store brands or no name brands. This also applies to things like tires in that people now mostly default to the cheapest Chinese crap that they can find. Storage stocks are getting hit too; I think that is because of all the local competition. You would think that with high rents and not so great economy that there would be a bigger demand for storage units? There either isn't or they are being built in such a way as to outstrip demand. Only looking at storage stocks for the dividend, but can't justify buying when the price keeps falling.

AD says

And to continue my last post (# 343) just look at how bad Las Vegas stocks are now. Less are willing to pay to vacation and gamble in Las Vegas.

Vegas has priced itself out of the market!

AD says

But, on the other side of the table is a more bleak picture. Consumer-facing stocks are getting crushed, and the latest earnings season only underscored that. Take a look at the YTD performance of these consumer stocks. General Mills and Kraft Heinz are in a bear market.

Campbells Soup, also another known dividend payer getting clobbered as people switch away from name brands.
Pfizer also down, but we know the reasons for that.

AD says

Michael Burry betting that AI-stocks runup will end soon



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Michael Burry's net worth

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Now after Michael Burry's announcement on Nvidia, Peter Thiel has sold all his stock ownership of Nvidia

https://www.thestreet.com/investing/peter-thiel-dumps-top-ai-stock-stirring-bubble-fears

AD says

Michael Burry betting that AI-stocks runup will end soon



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Michael Burry's net worth

If he invested these $100M he got from shorting the subprime market in 2007 in S&P index fund after the 2008 crash he'd be sitting on ~$1B now. And ~$2B if invested in QQQ.

Instead he's worth puny $300M. Smart, so smart.

Bank of America raised its long-term sales estimates for Nvidia

Bank of America has raised its long-term sales and earnings estimates for Nvidia, citing explosive demand for AI infrastructure and strong pricing power across its chip lineup.

📈 Updated Forecast Highlights
• Revenue Projections:
• Bank of America now estimates $300 billion in annual revenue from Nvidia’s Blackwell and Rubin chips by 2026.
• This represents a 20% upside to previous forecasts and reflects accelerating enterprise adoption of AI hardware.
• Earnings Outlook:
• The firm projects $8 per share in calendar year 2026 EPS, implying a valuation of 25x earnings—considered reasonable given Nvidia’s growth trajectory.
• Earlier in 2025, BofA raised its price target from $160 to $180, and later to $200, suggesting potential for a 60% rally from current levels.
• Strategic Confidence:
• Analysts dismissed concerns over China export restrictions as “irrelevant” to Nvidia’s near-term earnings, emphasizing robust demand in other regions.
• Nvidia’s average selling prices are reportedly rising more than 50% generation-on-generation, boosting margins and long-term profitability.

🧠 Why It Matters
• AI Infrastructure Boom: Nvidia is positioned at the center of a projected $3–4 trillion annual AI infrastructure spend by 2030, according to Morningstar.
• Investor Sentiment: Despite recent volatility, Wall Street remains bullish. Nvidia stock trades near $190, about 8% below its October peak.

RWSGFY says

AD says

Michael Burry betting that AI-stocks runup will end soon



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Michael Burry's net worth

If he invested these $100M he got from shorting the subprime market in 2007 in S&P index fund after the 2008 crash he'd be sitting on ~$1B now. And ~$2B if invested in QQQ.

Instead he's worth puny $300M. Smart, so smart.

But he's been "contrarian investing" and "active in macroeconomics bets"! A man got to do something with his time!

Also interesting besides this circular investing between Open AI, Oracle and Nvidia is that Michael Burry is assailing essentially accounting fraud in regards to the "AI companies" like Meta or Facebook are knowingly depreciating assets (i.e., AI systems) beyond their likely useful life causing stocks like Meta being artificially inflated by about 20%.

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Michael Burry's depreciation observation is that major tech companies ("hyperscalers") are allegedly overstating their earnings by using unrealistically long depreciation schedules for their AI computing equipment, such as Nvidia chips and servers. He calls this practice "one of the more common frauds of the modern era".
Core Argument
Extended Useful Life: Burry argues that while the AI hardware market features rapid technological advancements, often with a 2-3 year product cycle for new, more powerful chips, companies are depreciating this equipment over 5-6 years.
Inflated Earnings: By extending the "useful life" of an asset on their books, companies reduce their annual non-cash depreciation expense, which in turn artificially inflates their reported net income and makes their profits look higher than they are in economic reality.
Projected Impact: Burry estimates that this accounting practice could lead to a collective understatement of depreciation expenses by $176 billion across these tech giants between 2026 and 2028. He projected that by 2028, Oracle's earnings could be overstated by 26.9% and Meta's by 20.8%.
"Race Against Time": The issue creates a "race against time" where companies are rapidly spending capital (capex) on new infrastructure, hoping that future AI-driven revenues will eventually catch up and justify the massive investment before the current hardware becomes technologically obsolete and requires significant write-downs (impairments).
Company Actions
Several companies have adjusted their depreciation schedules:
Meta extended the useful life of its network equipment from 4-5 years to 5.5 years earlier this year.
Alphabet and Microsoft have made similar moves, extending their useful lives to six years.
Amazon recently moved in the opposite direction for a subset of equipment, reducing the useful life estimate from six years back to five years, citing the "increased pace of technology development, particularly in AI and machine learning".
Market Context
Burry's observation is part of a broader critique of the AI sector, which he believes is in a bubble. He has also disclosed short positions in Nvidia and Palantir. Critics suggest that while Burry's analysis may be "early" (a common theme for his famous 2008 housing market short), the concerns about the long-term return on investment for AI capital expenditures are shared by others, including some analysts at BlackRock.

He assumes algorithms won't improve over the next years. A very bold assumption.

Anyone buy the dip today? I put in a buy for Wendy's if it hits $7.80.