The Fed Holds. AI Does Not.

DANO WEIR: In the past, we've saved the fireworks for the beginning of July, but as far as the market's concerned, they happened at the end of the month. Welcome to On The Markets From Fermata Advisors and our private wealth arm, Sonoma Wealth. My name is Dano Weir and joined shortly by our managing principals to talk about an eventful week in the market.

DANO WEIR: We've got significant drawdowns in AI-related verticals. We've got stability concerns in the Japanese Yen. Could it all have been underpinned by new Fed Chair Kevin Warsh holding the line at this month's Fed Meeting?

DANO WEIR: Plus, we're going to look at the cautionary tale of leveraged AI investing that came to an end this week, a look at SpaceX's significant underperformance in light of this week's drawdowns, and what credit default swaps tell us about this week's AI volatility. Let's get going.

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DANO WEIR: One of our managing principals, Chris Sipes, you know, we... There are a lot of reasons that we could point to for this week's market activity, Chris. But the one that no one is talking about is that Daren went on vacation. And it's very clear that every time Daren goes on vacation, something happens. So, Daren, welcome back to the show. I think it's your fault.

DAREN BLONSKI CFP®: It is my fault, for sure. For the month of July, sort of. Yeah, I don't know what it is. I decide to go off-grid and go hunting fish. Play in the mountains and lo and behold, the market goes down.

CHRIS SIPES CFP®: Try to take one moment to yourself. Isn't it nice though, having no clue what's happening in the markets for a little while?

DAREN BLONSKI CFP®: You know, I wish I could say that, Chris, but what I did is I invested in a Starlink that sits on my dash on my truck. And now I have 24-7 connection everywhere, which, you know, I guess kind of defeats the purpose of going out there. But what it does do is it saves me having to come back to a mess and piles of emails to sort through because I can kind of maintain them throughout the week that I'm out.

DAREN BLONSKI CFP®: And it's pretty cool for just figuring out where you are and what's going on as far as like when you're out in the middle of wilderness. But yeah.

CHRIS SIPES CFP®: No such thing as off-grid anymore.

DAREN BLONSKI CFP®: There isn't, and there's a trade-off. I try not to turn on the truck and turn on the Wi-Fi very often now, but it is nice to have it just in case. You need to reach out or someone gets hurt or something like that. I used to have this Garmin receiver that I would carry, and that was a pain to use. This is easy.

DANO WEIR: Well, Daren, it's nice to have you back on the show, and we've got a lot to talk about this week. Chris, should I start with this Leopold story to kick things off, or did you want to go in a different direction to begin?

CHRIS SIPES CFP®: That's fine. Yeah, start there.

DANO WEIR: So there's a lot of different headlines to cover this week. But one that has been definitely sticking out is a story of a guy named Leopold Aschenbrenner. You guys have seen him. Yes, you know the story.

CHRIS SIPES CFP®: Anybody who's online probably in the financial world circles knows this person.

DANO WEIR: So this has been a story I've been following for several months because his name is out there if you follow investing at all. And it came to a head this week. There's a great post on Instagram, on the Metaverse Instagram, which is different than the company Meta. It was also shared on another page I follow called Day Trading. So shout out to both of those pages.

DANO WEIR: That's where this content is coming from. I'll give you the TLDR guys too long didn't read on this guy. He is 21 years old. He's working at OpenAI. He gets fired from OpenAI because he's speaking out about some of the safety concerns. He goes on to start his own hedge fund based off of... A white paper that he published. The hedge fund within a year raises $1.5 billion.

DANO WEIR: And the idea of the hedge fund is he knows so much about AI that we're going all in on AI. So it's SanDisk, it's CoreWeave, it's Intel, it's buying, buying, buying. In the first half of 2026, they were up 439%. And since launch, they were up 1551% for this hedge fund. The assets grew beyond $20 billion. What was perhaps not part of the headline was that they were doing so with leverage.

DANO WEIR: And what that can result in is... As things turn, if there is even a slight dip, that dip is magnified. And that is what happened this month. So the hedge fund was down 67% in July alone. And so that then issues what's called a margin call, if you don't know that.

DANO WEIR: And this post lays it out beautifully. A margin call means your lender is saying, hey, add more cash or collateral, or we'll sell your investments to recover your loan. And that's exactly what he ended up having to do was sell the entire fund. So I was just curious if you guys follow up.

DAREN BLONSKI CFP®: Let me clarify that he didn't sell the entire fund. I believe he just, he sold his, a lot of his private market positions. So for those who don't know, there's, there's public markets. So when we're talking about the S and P 500 Dow Jones, those are public markets.

DAREN BLONSKI CFP®: There's also private markets. So all these people own, for example, a lot of Anthropic stock already, even though it's not publicly traded. There are places where it's traded.

DAREN BLONSKI CFP®: And this week, one of the issues, and it came on the backs of a model called Kimmy 3 being released, which is, for those who are not in the AI world, it is a model that is open source, basic, very close to free other than the cost of compute to use, versus Claude, who's charging these massive token charges to use their product.

DAREN BLONSKI CFP®: So Kimmy3 comes out in the market. Now, this is the private markets where people own Claude or Anthropic stock. The market readjusts the price of Anthropic and OpenAI and all those because all of a sudden now you can get models in theory, download them on your computer, AI can run on your computer.

DAREN BLONSKI CFP®: Well that creates a repricing right and you see these New technologies, and I think we've talked a lot about this on the show, you don't know who the winning horse is going to be, right?

DAREN BLONSKI CFP®: And you're trying to bet. And then in retrospect, everyone goes, oh, I knew Amazon was going to be the winning horse. Well, there were lots of other people that tried to do what Amazon did. They just didn't succeed.

DAREN BLONSKI CFP®: And what history shows is usually luck, the one who actually ends up succeeding. And so it's called survivorship bias. And we're definitely watching in slow motion survivorship bias. Come to fruition when it comes to AI.

DAREN BLONSKI CFP®: Well, this guy, basically, he had a lot of these privately held stocks that he had leveraged really heavily. And then when we got the pricing readjustment because of Kimmy 3 model, the open source Chinese model that came out, that created all kinds of disruption in his portfolio.

DANO WEIR: So, yeah, he had to sell the public portions of his portfolio, but he actually maintains the private ones.

DAREN BLONSKI CFP®: Oh, I thought that was the other way around. No.

DANO WEIR: No but but still he's not broke but the reason why i shared the story this week was i wanted to look back at and we'll share this one too we share a different thing here share screen these.

DAREN BLONSKI CFP®: Are let me just put the the principle at work here and that is like if you take leverage on a lot of things and you know you're you're doing things aggressively like that like eventually this party's gonna come to an end on some level and you just don't want to bet that way on a retirement, for example.

DAREN BLONSKI CFP®: So if you are going to bet that way and make sure that you're prepared for the potential losses and diversify correctly, Mr. Confident here was not. Exactly.

DANO WEIR: Yeah, exactly. And these are just some cover images from our past episodes recently of this show. Just looking at the themes, guys. When good news isn't enough, are the cracks starting to show? AI falling back to earth? The Fed rate holds. Is the dot plot going away?

DANO WEIR: So the reason why I shared his story this week is it was just an example of and not necessarily that he was necessarily wrong for what he did or trying to call him out personally.

DANO WEIR: But just as you're saying, Daren, when you're talking about an individual retirees portfolio, when you hear some of these stories of people doing what I call double backflip finance, just ask yourself if you like this outcome or not. So it's just, we've kind of put it right, kind of serve it up on a platter for this week. I thought it was interesting.

CHRIS SIPES CFP®: Kind of perfectly segues into our first slide here with a quote from Ben Carlson. He says, doing more, trying harder, making more trades and paying more attention to your portfolio can be hazardous to your wealth. Christine Benz at Morningstar had this great saying about.

CHRIS SIPES CFP®: A portfolio can kind of be like a bar of soap, and the more you handle it, the smaller it's going to get. I like that analogy. And investing is one of the only... Areas in life where, you know, it doesn't necessarily pay to be quote unquote smarter or harder working or, you know, more aggressively chasing after what you're pursuing.

CHRIS SIPES CFP®: And it's, I think one of the only professions that I know of where like none of us could walk into a hospital and just be like, you know what, surgeon. I got this. Let me go. I'm just going to go in and I'm going to take over and do some surgery here.

CHRIS SIPES CFP®: That would never happen, but that happens all the time in the investment world. And this Leopold guy is a perfect example of somebody who probably knows a lot about these companies, probably knows a lot about what's happening in AI and what's going to happen in AI, and yet got caught up by the same thing that's caught many, many, many, many a trader before him, which is...

CHRIS SIPES CFP®: Excess leverage and running out of liquidity when things turn against you so well and Chris is so far just to say that the markets don't actually they app they absolutely count.

DAREN BLONSKI CFP®: On the fact that a majority of human beings are going to operate their investment strategies with overconfidence like the market is designed to take money from the overconfident.

DAREN BLONSKI CFP®: That's how it's designed, which is such an oxymoron because you have to be Confident to take on a position, but they're designed to take money from the overconfident, from the people that don't actually understand, think they understand, and might, the crazy thing is, might actually understand.

DAREN BLONSKI CFP®: But just because the nature of volatility and overconfidence that here's this guy who says, yeah, I know how to do this. I know what these things are doing. I'm going to take leverage on it. I'm going to crush it. He goes and talks to all these big investors. He throws around his personality and the fact that he worked for wherever he worked and blah, blah, blah.

DAREN BLONSKI CFP®: And then all of a sudden they give him a bunch of money because a bunch of people don't really know what's going on or understand it. And this guy says he understands it. And the market counts on that. And it happens time and time again.

DAREN BLONSKI CFP®: And I would even say in my experience, the richer you are, the more money you have. The more likely you're susceptible to this kind of behavior, which is kind of wild when you think about it. But I have noticed as people go up the wealth echelon, they want more creative investments.

DAREN BLONSKI CFP®: They want more private equity. They want to be in on the deal on the ground floor. It's human nature. In the stock market, the markets thrive on that confidence. I probably just offended half our listeners, but it's the truth.

DANO WEIR: And something else to consider too is that, so the person that ended up buying the public side of the investments was, you guys all know him, some people may or may not, Ken Griffin from Citadel, which is another extremely successful hedge fund who's been doing it for 40 years.

DANO WEIR: And so I got an advice, I've gotten advice from multiple people, which is through other parts of my life, which is that anytime you're playing a game with money involved. Just presume that it's very, very old and there's a lot that you do not know.

DANO WEIR: And so when you show up and you think, you know, hey, I got a... Daren's told me this many times. Oh, yeah, your first pick went up? Great, do it again. You know, you should always presume that most of these games are a lot older. Yeah, are a lot older than you think.

DAREN BLONSKI CFP®: And that's like the, you know... It happens often because it, the words out amongst friends and family that for a living, that I manage money and do stocks and think about stocks and that kind of thing. Right. And so without fail at parties, some, you know, college students or 20 something, who's just allured by money and wealth and all that and wants to do well, which is awesome.

DAREN BLONSKI CFP®: And I think it's totally cool that they're trying to pursue stuff in life. They'll come up to me and start talking to me about all this investment. And the first thing that goes through my head is, oh, you haven't blown up yet.

DAREN BLONSKI CFP®: Because anyone who's been in the market long enough has at least blown up an account. The trick is not to blow up an account that ruins your retirement.

DANO WEIR: Yeah, exactly.

DANO WEIR: Chris, let's take a second meme here. You're going to Matrix. I love this. More movies.

CHRIS SIPES CFP®: Yes. Well, Dan, we're of a certain age now where the Matrix memes will get us every time, right?

DANO WEIR: This is a throwback meme.

CHRIS SIPES CFP®: Yes. So for those that aren't watching, we've got the pills, right? We've got the GPU seller and the GPU bag holder. And then it shows Keanu Reeves as NVIDIA. And, chose Morpheus saying, did you just take both pills?

CHRIS SIPES CFP®: And what this is referencing is there's so much stuff to happen this week. I feel like it's very easy to like lose track of any of the, any one piece of the news. But earlier in the week, NVIDIA, there was a story in the Wall Street Journal that NVIDIA is in talks with open AI to guarantee 250 billion.

CHRIS SIPES CFP®: In financing for a data center that they are doing together with SoftBank in Ohio. Guys, this data center in Ohio is apparently going to be the biggest one in the country so far. They're going to spend $500 billion on this. Those that may not remember, when we've created the TARP program to bail out...

CHRIS SIPES CFP®: The financial system from the 2008 great financial crisis, that was around $750 billion. And here we are with $500 billion, which these days when we're throwing around trillions constantly, $500 billion may not sound like a lot, but that's a lot. And there's been a lot of, you know, people talking about this, most notably Michael Burry, about the circular financing where...

CHRIS SIPES CFP®: You know, NVIDIA's kind of lending money to OpenAI, who's going to turn around and buy chips from NVIDIA. So it's sort of like, you know, backing your kid's, you know, startup business, where it's like, here you go, I'll lend you a bunch of money.

CHRIS SIPES CFP®: And then you can kind of buy coffee from yourself and your coffee shop's gonna take off like it. It's, it seems a little crazy. The market doesn't care right now, to be absolutely clear here. The market does not seem to care, but it could be one of those things kind of starting to put some chinks in the armor of the AI story along with the Kimmy release.

CHRIS SIPES CFP®: You know, it's never, it's never one thing that ends up changing a narrative. It's always a series of things. To me, this story probably was a bigger story than what, what ended up getting covered this week. Very interesting.

DAREN BLONSKI CFP®: It does bring up a really important point because the Kimmy thing is a perfect example, right? Like what happens to the price of everything if all of a sudden the cost of compute goes down? Like there's some kind of chip breakthrough and all of a sudden you don't need this big $500 billion data center in Ohio.

DAREN BLONSKI CFP®: Like that forces a repricing of everything. And we've seen this firsthand here in wine country, right? Because we're in Sonoma, California, for those people that know or don't know. In Sonoma, California and Napa, I'd say in the last 25, 30 years, you can't throw a stone without hitting a vineyard. And I grew up in the county and it wasn't that way when I was growing up.

DAREN BLONSKI CFP®: Like, yeah, Sonoma and Napa had wine, but there wasn't vineyards everywhere. It was a lot of rolling fields and green fields, etc. And then. We built all this vineyard and then all these billionaires came in and said, oh, I want to own a winery too. And so they have their wine, but they don't care if they're making money on their vineyard.

DAREN BLONSKI CFP®: So then all the farmers are actually farming to make money, can't make money because there's too much product on the market. And then it blows up. Right. And that's what we've seen. I mean, there's other factors involved, including the fact that a lot of people, millennials are just not drinking.

DAREN BLONSKI CFP®: Alcohol in the same rates. And if they are, they're drinking less caloric alcohol. So the market changes, right? So at some point, the cost of compute changes. The need for these data centers changes. I don't know when. We do know that history shows us that fads and bubbles go on longer than you can stay solvent.

DANO WEIR: And clearly, we're seeing the beginnings of that or just one of the chinks in the armor along the journey of many well now i have to say this and then we're gonna get because you're talking about things getting repriced we'll get back to the show in a second but a home run example of repricing that everyone can wrap their brain around is that in the mid and this is AI overview coming from Google but i knew this as well in the mid 1800s guys aluminum was one of the most expensive metals on earth worth more than gold because it was extremely difficult to get out of the ground.

DANO WEIR: But in 1886, the Hal-Harot smelting process was invented, which was a commercial refining method which allowed manufacturers to extract aluminum easily using a new technology, electricity. And that plummeted the price down to $2 per pound. So it's a perfect example of exactly what we're talking about. It's just now we're talking about AI compute instead of aluminum, which we now wrap our food in.

DAREN BLONSKI CFP®: And I will also say that just talking to people I know in the industry who sell the product or the different equipment that goes in these big data centers, I mean, the amount of money that they're paying for these things is... Just crazy. And there's like no price tag is too much. It's just insane amount of money changing hands right now.

DAREN BLONSKI CFP®: And the ones that are winning are going to be much like the guys that were selling the Levi jeans during the gold rush, right? Levi Strauss, because they were selling the jeans and all the people out there looking for gold, thinking they're going to make it rich. Well, didn't work out so well for most of them.

DANO WEIR: I just want to give a heads up to everyone watching the show. Thank you so much. Reminder that you, if you watch our live stream on YouTube or any of our social channels, Facebook or LinkedIn, you can ask questions live.

DANO WEIR: If you're seeing things, you're wondering, wondering, want to ask us a question, just put it in the comments. We will see it and respond. So Chris, speaking of data centers in Ohio and farmland, how might that be affecting values now?

CHRIS SIPES CFP®: Well, you can see Ohio's towards the top there, right? Right below Delaware and above Illinois at about, it says $9,400 per acre. And to Darren's point about them spending money that's just outrageous, right?

CHRIS SIPES CFP®: There was an example, and I can't remember the exact amount now, but we talked about it a few weeks ago of the farmer in central Ohio that sold their acreage and it was like they got like $300 million or something. So they were getting multiples of that $9,400 an acre. So obviously, it has to drive up the cost of these resources for everyone else when these deep pockets are coming in.

CHRIS SIPES CFP®: And one of those resources that we're going to talk about this week is capital and money. And when there's a large demand for money, that contributes to higher interest rates because interest rates, you want to think of that basically as the price of money. How much does money cost?

CHRIS SIPES CFP®: Money is a commodity just like anything else. And there's a price for it. And just like farmland, capital is a resource that is currently being consumed at a very rapid rate to build out these AI data centers. And you're starting to see it reflected in the in the interest rates.

DAREN BLONSKI CFP®: Well, I think there's an undertone too, that we might be miscommunicating and that's that we have a choice, right? Like there's this questioning that certainly Chris and I not speaking for you, Chris, but reading between the lines here, we both have this like, this isn't making sense. This feels like a bubble in the making all those thoughts. But the reality is we don't have a choice.

DAREN BLONSKI CFP®: Because whoever wins This AI War, and don't fool yourself, like we're in a war with China in an arms race right now, whoever controls AI and the power of AI is going to be one of the next or the next global power. So we don't have a choice. We have to run this race as fast as we can. And we'd have to allocate as many resources. We have to create $500 billion in data centers, because if we don't do it, China's going to do it.

DAREN BLONSKI CFP®: And when China does it, it's not going to go well for the U. S. So I think we need to be careful about saying, yeah, this is a bubble, but I also think there's some reality behind it and accepting reality. This is a zero-sum game. Like, this isn't just, hey, let China win the AI race and all will be wonderful. It's China wins the AI race and we become not the power anymore.

DAREN BLONSKI CFP®: That messes with the dollar. That deconstructs every single person who listens to these. Show their portfolio. Like, there's a lot of consequences if we lose the power of the dollar. Speaking of which, which we'll get to later in the show, we're either crossing or at $40 trillion in debt. Yes, folks, we crossed the $40 trillion Mark and we did half of it in just five years.

CHRIS SIPES CFP®: Well, that's cheerful. It's the American dream.

DANO WEIR: We're speeding up.

CHRIS SIPES CFP®: Yeah, so just want to, before we jump into the normal topics, just checking in on the SpaceX IPO, because I think in my perspective, it feels like there's a lot of hype leading into things like the SpaceX IPO. And then when things kind of fizzle out, it seems like we don't learn any lessons from it.

CHRIS SIPES CFP®: And nobody goes back and is like, wow, okay, yeah, maybe there was, maybe there was a lot of froth built up in that. And maybe that whole mania that surrounded that thing wasn't, wasn't the greatest, you know, investing environment, right? And so to your point, Darren, I I totally agree.

CHRIS SIPES CFP®: We've got to invest. We don't really have a choice and it's probably going to drive prices up on these things. These are some of the best companies ever built. They're some of the companies that have made the most money in history. And yet that doesn't always mean they'll turn out to be good investments.

CHRIS SIPES CFP®: And SpaceX is a perfect example of that, at least in the short term, where the price was... Reflecting a lot of expectations. And this from Bloomberg just showing kind of the normal, well, a spectrum of outcomes in different IPOs and then where SpaceX is today. So at least so far, we had a huge run up in the first few days.

CHRIS SIPES CFP®: And now it's come back to reality and is actually performing kind of the the average ipo space there so who knows what will happen moving forward but rarely is an investment a slam dunk no-brainer especially in the short term i saw this this week Chris and i actually checked in on virgin galactic as a result as a result and dare maybe bring that up when we show candlesticks you can just see this you know thumb sticking up in June like a zit and then Whoop.

DANO WEIR: Right back down. So the hype train has left the station.

CHRIS SIPES CFP®: All right. So where's sentiment today? Still, we're a little bit higher on the bearishness at 42%. Bullishness is down in the 30s, 31. According to AAII, the CNN fear and greed index is really unchanged at 39 fear, but just kind of in the middle of fear. It's not extreme fear.

CHRIS SIPES CFP®: So kind of in the middle and then Bitcoin still about unchanged from last week at 25 extreme fear down slightly from 28 fear last week Darren i feel like Bitcoin's just like sitting on the sidelines through all this you know like i feel like Bitcoin got its butt kicked earlier this year it's just sort of like all right i'll let you guys hash it out right now yeah i mean i it definitely has been missing from the news cycle, I think, and has had done a whole lot of nothing basically since June of last year.

DAREN BLONSKI CFP®: So last year, it's pretty much just been boring.

CHRIS SIPES CFP®: Yeah. And even if you look longer term, it's, you know, really since it looks like we're about where we were in around February of 24. So about two and a half years, you know, sideways. So, all right. So we had a Fed. Meeting this week, which was kind of the big news. And it was big news because not so much because of what the Fed did or did not do, but more because of how interest rates reacted to what the Fed didn't do.

CHRIS SIPES CFP®: Going into the meeting, there was about a one-third chance that there was going to be a hike, which did not happen. They did keep the Fed funds rate unchanged. But then... As Kevin Warsh was doing the press conference, the market started selling off like crazy. Interest rates started going up higher.

CHRIS SIPES CFP®: To sum what he was saying based on the conference was that they are going to be less interventionalists in the market in a couple of ways. The biggest one being the forward guidance. And, you know, basically talking about what they're going to do ahead of time and really trying to signal to the markets what's on the horizon.

CHRIS SIPES CFP®: That's sort of a modern era, you know, sort of like a tradition of the modern era. If you went back to the 80s when Paul Volcker was the Fed chair, they did not give forward guidance and they really didn't cover the Fed that much. It would just be like, You'd wake up and the newspaper would be like, hey, Volcker just hiked rates a couple percent yesterday.

CHRIS SIPES CFP®: And so this is more of a modern area deal. And the market's really gotten used to knowing kind of what the Fed is thinking and where they're going. And so the market didn't seem to like that too much, even though Warsh has basically been saying, you know, this was going to be the MO moving forward.

CHRIS SIPES CFP®: So that was a big part of it. And then secondly, just saying that. You know, the markets have kind of started to do the tightening for the Fed and that even though they're, you know, locked in on inflation and inflation is really their number one target, that because interest rates have gone up, they may not need to do much in light of that.

CHRIS SIPES CFP®: Now, if you take a step back and you ask yourself, like, why does this matter? And you have to understand that in the modern era, most of the market's reaction, a lot of the market's reaction is based on interventions from central banks and specifically the US central bank.

CHRIS SIPES CFP®: Credibility is a big thing because the reserve currency is based on it. Interest rates, how much we pay for the cost of money and everything is really centered around. The credibility of the institution of the Fed.

CHRIS SIPES CFP®: And they have to keep prices steady in order to keep that credibility. And if you think about it from a bond investor's standpoint, and I think most people look at it from an equity markets standpoint, but the big money is in bonds.

CHRIS SIPES CFP®: The big money of countries and insurance companies and institutional money that they're trying to match. Obligations that are decades into the future, they have to come up with their assumptions of inflation and deflation. And basically, if they are going to earn a certain rate of return on their money, is it going to be enough to cover inflation?

CHRIS SIPES CFP®: So if a Fed loses credibility and therefore lets inflation get out of control, the price of money can go high very quickly because that huge pile of institutional money starts looking out 30 years and going, you know what, I need a little extra compensation to make sure that I have enough return to cover inflation and still have something left in return.

CHRIS SIPES CFP®: So all that to say, if you look at this move in the Treasury market was really unprecedented. This from Luke Kawa.

CHRIS SIPES CFP®: Saying the 30-year Treasury yields had never been up this much on a Fed decision, while two-year yields fell this much, based on data going back to 1987, which isn't that long. But it is kind of the modern era of Fed guidance and Fed decorum, you could say. So the Treasury market had a big reaction to this Fed Meeting on Wednesday.

DAREN BLONSKI CFP®: You know, what's interesting too on this Fed Meeting is that there were three Fed presidents that were dissenting. And I looked up when the last time that was, and it was 1969 since three Fed presidents had dissented from the chairperson.

DANO WEIR: Wow.

DAREN BLONSKI CFP®: So then I said, okay, well, what does that mean exactly? And I think that's partially why the market is pricing in the potential of 25 basis points, saying that like, look, Warsh might be keeping. Not moving rates, but there's enough momentum from the other Fed presidents for that to not be.

CHRIS SIPES CFP®: Yeah. So this is a shot of the 30-year Treasury rate, the 10-year Treasury rate in gray, and the green is the two-year Treasury rate. So these are kind of looked at as like short-term, medium-term, long-term rates. As you can see, they all moved higher. The 30-year Treasury rate reaching highs it hasn't seen since 2007. And this is as of yesterday. So the rates went even higher today.

CHRIS SIPES CFP®: But the market has been moving, moving higher. And this is, if you're keeping track, there's a lot of reasons. There's the AI build out and the demand for money. You've got the potential for higher inflation. And then, then the, the fiscal profligacy of the U S government and the fact that we're just topping. $40 trillion in debt.

CHRIS SIPES CFP®: And the outlook for that is like, hey, there's going to be a lot of demand for financing from the government too. And all of that is really creating the perfect storm for interest rates. So here we got the PCE this week, the U. S. Core PCE. And let me just read. This is from Nick Timoros of the Wall Street Journal and why this number matters. And so he says, asked Wednesday which inflation measure he relies on.

CHRIS SIPES CFP®: Fed Chairman Kevin Walsh gave the quote unquote the proper standard answer, the PCE price index, then immediately qualified it. Who knows, come after next January, what we might say about strategy. I suspect the task force might have something to add. The comment drew attention from former Fed economists, as did his remarks during his Senate confirmation hearing about looking at trimmed averages.

CHRIS SIPES CFP®: In a client note Wednesday, JPMorgan's Michael Ferroli said the latest comments seem to confirm suspicions that the task forces are just covers. To redefine the inflation challenge away. This is what Wurst said 15 months earlier in a speech at the IMF. Frequent changes to the Fed's metrics, including its best preferred measures of inflation, are beneath the high standing of the central bank.

CHRIS SIPES CFP®: Central bank credibility is the coin that purchases American economic strength. In Washington, a central banker can ill afford to be anything other than a straight shooter. So are they going to use the same measures or not? Are we going to work with 15 month ago, Kevin Warsh? Are we going to work with Wednesday, Kevin Warsh? I think the market's trying to decide what that answer is going to be.

DAREN BLONSKI CFP®: Same way with politicians, there seems to be a get the job personality, and now I have the job personality.

DANO WEIR: Chris, before you move on past this topic, every once in a while, you just say some things that are just true wisdom to me. And I just want to put them on a plaque. And I want everyone to know that Chris Sipes on July 31st, 2026, officially said the big money is in bonds.

CHRIS SIPES CFP®: Yes. Yes. Thank you, Dan.

DAREN BLONSKI CFP®: The AI is getting better. Make it actually look like Chris.

DANO WEIR: The succession of these gifts that I made, these memes that I made is getting better and better, Chris.

DAREN BLONSKI CFP®: You know, if nothing else comes of AI, it gives us the ability to articulate our humor.

DANO WEIR: That's right.

DAREN BLONSKI CFP®: You know, it's really a step up for dad humor, I must say.

DANO WEIR: That's right. Oh, and it's being designed by dads. So there you go. It's a secret play for dad joke memes. There you go.

DAREN BLONSKI CFP®: All right.

CHRIS SIPES CFP®: So this from Charlie Biello, and he's talking about credibility and the PCE. He says, the impatience that households and businesses feel over persistently high inflation have been going on for 63 months.

CHRIS SIPES CFP®: That's the consecutive, we've, we've had 63 consecutive months over five years of the PCE being above 2%, which is the professed target of the central bank. So, he says, sorry, this isn't, this isn't Charlie Bielo. He says, this is actually Warsh. He said, we are on the job. We will deliver. We are focused like a laser on making sure we can do it.

CHRIS SIPES CFP®: Kevin Warsh, that was Kevin Warsh saying that. And then Charlie says the Fed is far behind the curve and must hike rates and QE and stop money printing if they want to regain any credibility when it comes to fighting inflation. So it seems like the bond market is starting to say like, hey, you know, which way we go in here, which, which. Which Kevin Warsh is going to show up.

DAREN BLONSKI CFP®: Well, Chris, and this is what I was saying to you earlier. Like I kind of call BS on it all, right? Like you can only say, oh yeah, I'm going to be free market. We have a midterm election in a few months. Like how free market can you really be? Like Trump's going to be, oh yeah, just let the market be free because I'm more committed to my principles than winning said Trump never. Right.

CHRIS SIPES CFP®: Right. And if you look at. The other challenges that they have is that the markets are all priced basically for perfection at the moment. So this is the corporate, one part of the corporate credit market, which is high yield.

CHRIS SIPES CFP®: And so this is the spread that you get for investing in a, let's call it a company with a little bit of suspect credit. Maybe it's not investment grade. And you can see that historically, we're very low, we're very tight. So Investors really aren't getting paid that much extra.

CHRIS SIPES CFP®: Take on that extra credit risk. So credit markets are priced very, very richly. Then we've got the S&P 500. This is from Jeff Weniger at Wisdom Tree. And he says 51% of the S&P 500's market cap is in stocks trading above 10 times sales. That's half the index. In 2002, after Sun Microsystems crashed 90% CEO Scott McKeown. McNeely famously said this about his own stock at 10 times sales.

CHRIS SIPES CFP®: He said, at 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. Zero costs, zero R&D, zero taxes, zero employees. What were you thinking? He was explaining why investors have been in pain to pay for it. Today, half the S&P 500 trades there. Different decades, same math. So you've got the stock market that is very richly priced on a market cap basis.

CHRIS SIPES CFP®: And those costs are starting to go up and the market is starting to recognize that. This is the cost of insuring against default with the AI hyperscalers. Now, again, this is kind of like the spread that it costs to insure this credit. Against default. And while it's not obviously hitting like panic levels or anything, it is definitely increasing.

CHRIS SIPES CFP®: Those that are offering these credit default swaps are requiring a higher payment to take on that risk. And this is from the Financial Times. A closely watched gauge of risk in holding the debt of companies at the center of the AI boom is rising rapidly, underscoring Thank you. Jitters over big tech's vast spending on data centers, chips, and computer memory.

CHRIS SIPES CFP®: And if you look at this chart from Bank Of America, I believe, this is from Bank Of America, it might be JP Morgan, is showing why that concern is starting to happen. So you look historically, the hyperscaler debt issuance. So this is the the mag seven, the, the, what they call the hyperscalers, the, the top of the AI pyramid, the amount that they are borrowing via debt issuance.

DAREN BLONSKI CFP®: So they're fighting words, the top of the AI pyramid, Chris.

CHRIS SIPES CFP®: Yes. The top of the pyramid. They're the ones who are, who are, you know, had all the money at one point. We'll see where this ends up, but, A pyramid.

DANO WEIR: Interesting design to choose.

CHRIS SIPES CFP®: It's a choice of words. It's solely a visual pyramid. I'm not insinuating it's a financial one. But here, we expect nearly $250 billion of investment-grade hyperscaler debt issuance globally for the full year, which is a lot compared to prior years.

CHRIS SIPES CFP®: So that money is being borrowed. And driving even more demand for that capital, hoping to drive interest rates higher.

CHRIS SIPES CFP®: And this from Merrill showing the bull market cycles. So usually when people look at, you know, you quote like an average rate of return for the S&P 500, it's deceiving because most people don't know that those averages tend to come in lumps.

CHRIS SIPES CFP®: You'll have long periods of time with basically no returns, followed by periods of time with higher than average returns. And we've been in a period of time of higher than average returns for quite a while. This is from Merrill. They are saying that the generational lows were in 1942, 1974, and 2009.

CHRIS SIPES CFP®: And look, a bull market will cover up a lot of sins, and nobody knows how much longer the bull is going to run. They go in cycles and nobody knows when that cycle can change. So what can you as an investor do? In my opinion, you want to be prepared. Always be prepared and try not to predict.

CHRIS SIPES CFP®: Like our our friend Leopold showed us this week trying to predict is a fool's errand you want to be prepared and just know you know where you're at in the cycle, you know, have the expectations that are proper around your, portfolio. What happens when it's, things are good? What happens when things are bad? Am I comfortable with that? Because, you know, these cycles can change at a minute's notice.

DAREN BLONSKI CFP®: Well, and even worse, how about leveraging your predictions?

CHRIS SIPES CFP®: Right.

DAREN BLONSKI CFP®: I mean, and that's what our friend Leopold did, right? Like he had some predictions and then he adds a bunch of leverage to it and sells a bunch of people on hopium.

DAREN BLONSKI CFP®: That's, you know, not really a good way to go about things. But anyhow.

DANO WEIR: Well, we are excited to have him back on the show. He is a technical analyst. Darren Blonsky has technicals for us to look at. What a great week to look at them. I also want to remind you, if you're watching the show live, you can ask questions live, and we will answer them as best we can for educational purposes live here on the show. So just put it in the comments section, and we'll see it. Darren, do you have a...

DAREN BLONSKI CFP®: You know, I got some technicals and I thought about just pulling up the Bitcoin chart just to remind ourselves why when things look guaranteed, it's usually not the case.

DAREN BLONSKI CFP®: Because I think, you know, very short few months ago, that was definitely how people felt about Bitcoin too, right? And we are where we are today with that. And you can see.

DAREN BLONSKI CFP®: Here's the Bitcoin chart, and you can see it was way up here at 82,000 a coin there, but we made it all the way up here to 125,000. And that was the high, and now it's down at 62,000.

DAREN BLONSKI CFP®: So there's another example of the sure thing that wasn't sure. And I remember, it's almost becoming like, it's very consistent, right? We get these calls of...

DAREN BLONSKI CFP®: People wanting to buy things always around here and we get calls for people wanting to sell things and we have canaries in the coal mine of people who tend to call at the tops and the bottoms and we watch those indicators just as much as perhaps we watch any other indicator because as Chris and i were saying today that no indicator is 100 we were just talking about the yield curve and how up until recently it was you know The one indicator that was right all of the time that is no longer right.

DAREN BLONSKI CFP®: Because I guess we could say that it failed when it inverted, Chris. Do you think we can conclude that yet?

CHRIS SIPES CFP®: Yeah, I think it's been long enough, way past the average time periods for when a recession normally would have been triggered. Although I think you could argue there was a recession in 22 that was just never. Never called.

CHRIS SIPES CFP®: You know, we had the technical, was it two quarters of GDP tractions? There was a lot of other signs, but they never ended up calling it a recession. But yeah, running massive deficits will change that, change things pretty quickly.

DAREN BLONSKI CFP®: Well, the call, quote unquote, for a recession is a very political thing, right? It's not.

CHRIS SIPES CFP®: Yeah. The official call, right?

DAREN BLONSKI CFP®: There's no like, okay, this is a recession now because this price crossed this. What happens is a bunch of smart people get around and sit in a room and then decide, Oh, there's a recession because there are all these things. But what's interesting is usually recessions are called after the fact, right?

DAREN BLONSKI CFP®: So when the headlines hit, we are now officially in a recession. That's usually bottoming time for the markets when a lot of people will call and be like, oh, I got to get out. We're in a recession. Like, no, it's too late, bro. Don't get out. This is where you stay in.

DANO WEIR: Guys, it's officially a tornado. How do you know? The whole town's gone.

DAREN BLONSKI CFP®: Pretty much. Pretty much how that works. So anyway, but yeah, the yield curve has failed, I guess, although we can say that there are... Wasn't an actual recession call, but I'm sure our politicians didn't really want those economists to say that or confirm a recession, too.

DAREN BLONSKI CFP®: So there's that piece. So this is the S&P 500. So for those who don't know, the S&P 500 is the largest U. S. -based stock. So there's 500 of them in this index. When we talk about the stock market, the stock market is infinitely bigger. These are just the stocks that are being tracked in the S&P 500.

DAREN BLONSKI CFP®: So when people think the market or say... The market, that's usually what they're referring to is the S&P or even the Dow Jones, I think, is probably more often quoted by people, non-professionals. People on the professional side of things kind of watch the S&P more than anything.

DAREN BLONSKI CFP®: So case in point, I got a few calls this week, time to get out. I'm getting scared. I'm getting nervous. And the last four days have all been positive in the S and P 500. Did the media report that guys?

DANO WEIR: Negative.

DAREN BLONSKI CFP®: I mean, they might've, but I didn't hear it. Right. So you, you've had four days of up. It was Monday was a big down day and then up, up, up. And we broke. Back above this trend line that we lost. It went down here. This is the four hour, excuse me, not four days, two days up. We're looking at the four hour chart. So this is day. So two days up, but big, strong days, right?

DAREN BLONSKI CFP®: You could even, this day was a down day. So Wednesday was the big Fed day, right? And that's what the market freaked out. And then it looked at it and said, not too concerned about it. And we ended up closing the week above the 20 day moving average. When you close the week above a 20 day moving average, risk gone. You can't argue it any other way.

DAREN BLONSKI CFP®: Even the traders say risk on when we close above the 20-day moving average on a more shorter term. This will go on a longer-term basis. Look at that. We closed above the downtrend. We're still above the 20-period moving average in the S&P 500. You could very easily argue, hey, guys, gals, we're in a bull flag pattern, which tends to go up.

DAREN BLONSKI CFP®: So for all the negative... The idea that we're saving the Yen today, perhaps, for the Treasury. The idea that Iran bombed us and Jordan, and we're going to retaliate and bomb them all back, and oil and inflation. And the market says, hold my beer. Not happening. And we close above this downtrend line. Or the week.

DANO WEIR: Darren, let's reconcile this with our prior narrative. So if you're telling me that the, because we were talking about AI drawdowns, we're talking about Micron, we're talking about SanDisk. And yet you're telling me that.

DANO WEIR: The index as a whole actually did fairly well and passed this moving average so can you if i would then want to look at maybe like a FinViz and see so then is this just money flowing out of AI stocks and into other parts of the index well.

CHRIS SIPES CFP®: So to that point Dan i don't have any proof of this but this week seemed like one of the widest dispersion weeks in the market that i've seen in a while i I mean, I'm watching all the time, right? And... The difference on different days between small stocks and large stocks, growth stocks and value stocks, even within the big stocks like today, Amazon was up over 15% while Apple was down over seven.

CHRIS SIPES CFP®: I mean, these are multi-trillion dollar companies swinging in value. Medo earlier this week was down over 10% after they announced earnings. Multi, multi-trillion dollar companies with you. Double digit swings in their stocks in one day and oftentimes like going opposite directions on the same day. It's wild. It was really wild. Anyway, sorry, go ahead. Got to stop there for a second.

DAREN BLONSKI CFP®: Well, and I think this is a really important point, right? Because you could construct a super negative narrative about the market, right? Like we could say, you know, fill in the blank, like there's something to be worried about, lots to be worried about out there.

DAREN BLONSKI CFP®: And yet, if you just step back and look at the technicals of the market and say, okay, well, what did the market actually do versus all the junk I'm being Fed fundamentally and in the news? Here's what the market did. And you can see we're trading sideways. I talked about a few weeks ago, I believe, the potential of this double top. You could argue this is a triple top that's now failed.

DAREN BLONSKI CFP®: And we closed above our 20-day moving average, which is the key trading average for the traders. So if it's above that, they tend to be more risk on. We cleared that. We had a great close today.

DAREN BLONSKI CFP®: Then if we look at on the weekly, we're just trading sideways. You could argue we're within this candlestick of last week. We weren't able to break out and hold above that. So we kind of went sideways, but we still ended up positive for the week.

DAREN BLONSKI CFP®: News didn't tell you that. The narrative didn't tell you that, but the price action did. That's why we like to balance the fundamentals, which is what the, you know, I guess the story, the macro story is with what's just actually happening in the market and where we're at from a technical standpoint.

DANO WEIR: Is this like a diversified investor's dream, Darren?

DAREN BLONSKI CFP®: What do you mean?

DANO WEIR: I mean, like, just that, you know, we've got, we don't necessarily, just as Chris was saying, we don't have it all. You've got Amazon and Apple going different directions. You've got seemingly one sector going down, but then it's being evened out by the greater index at large. That feels like diversified investing in fuego.

DAREN BLONSKI CFP®: Yeah, even saying that, though, you've got the mags, which is the Magnificent Seven, those big ones, when we look at the S&P on that FinViz chart, and we look at these big dogs, they're holding up. They closed above their 20-day moving average too today.

DAREN BLONSKI CFP®: So wild swings. What I will say, and I was doing some research earlier just because I guess I need to remember this again. I was like, you know, let's have a conversation with Claude today and let's talk about, and then Grok, about midterm election years.

DAREN BLONSKI CFP®: And I think the point I wanted to make that I was most, I think is most important for today to make. For our viewers is that in midterm election years, you should expect a lot of volatility and you should expect generally positive returns by the end of the year. That's what the research is pretty conclusively says.

DAREN BLONSKI CFP®: Expect volatility anywhere from 12 to 25% down historically looking at the last 20 years or the 20 midterm elections in the last 20 years. And expect to finish up positive. The vast majority of the time, it's positive by the end of the year. But that doesn't mean getting to that positive, that it isn't going to be volatile.

DAREN BLONSKI CFP®: And so what we have right now is some volatility. But we actually have a fairly constructive stock market right now, if we're just looking at it with the S&P lens. We're trading channel on a sideways, but we're on the upper side of that channel. Which means we're probably going to make a run here, technically, towards 752. Somewhere around there, we'll find resistance.

DAREN BLONSKI CFP®: And we'll either roll over and go back down some more, or we'll break out above. We break above 751, 752 on the SPY, or on the SPX, which is the actual index.

DAREN BLONSKI CFP®: We look at and we break right above.

DAREN BLONSKI CFP®: Kind of where we were today we traded in that region we break above there then i think we actually go higher but see that makes sense to me why would we go into a midterm election in a market that has been more manipulated more controlled since the financial crisis and you really think a president who like him or hate him attaches his ego and his narcissism to the market you really think that in a midterm election year that he's Just going to sit there and go, yeah, free market economics.

DAREN BLONSKI CFP®: No, Warsh, make this market go up, lower interest rates, right? He's going to make those calls from an administrative position for the market to go up. And even those incumbents that are Democratic that might want things to fall apart, they don't want it to fall apart too much going into midterms because that creates issues politically.

DAREN BLONSKI CFP®: And I don't mean to get political on this show because certainly. If you watch the show enough, you know that we're pretty neutral here. But I think it's important because it drives what's going on.

DAREN BLONSKI CFP®: So what we're talking about is this interest rate rise that happened in September. Interesting, right before the election, we have the potential for interest rates to move. And right now, in Polymarket, they're saying there's a 60% chance. That the Fed moves the rates, 25 basis points increase in September.

CHRIS SIPES CFP®: Why is that a big deal? Mostly psychological though, because they've shown that like actual changes to the rates by the Fed don't actually impact the markets till like, I don't know.

DAREN BLONSKI CFP®: It's like nine months later. I thought it was nine months.

CHRIS SIPES CFP®: It could, it's, it's a lot, it's not like within a month. Right. So. Right. So like now the market might move up in anticipation, the interest rates might move up in anticipation that the Fed's going to hike.

CHRIS SIPES CFP®: So I guess it could have an effect there. But it's not like they hike the rates and boom, it has an immediate impact on things right before the election. But people psychologically will think it does, right? I think that's what you're saying.

DAREN BLONSKI CFP®: Yeah, of course they're going to think it psychologically does, right? Well, and I think that to Warsh's credit, that's what he said in his press conference. The market's already doing its job to curb inflation here. So we're not going to increase rates, but then that's when you had three other Fed presidents dissent.

DAREN BLONSKI CFP®: And said, no, we disagree. And then that's where the market says, well, if there's three of them disagreeing, then the probabilities of a 25% rate increase are higher.

DAREN BLONSKI CFP®: It's still really early coming into September, right? If we get the market going down some in September, then that would take the increase off the table. But I'm very sure that the incumbents and the administration. When people start mailing in their ballots come end of September, want to have that market going pretty good.

DANO WEIR: Well, for sure. They don't want to wreck the market completely. That would goof up all their insider trades. I mean, their personal investing decisions, which are never influenced.

DAREN BLONSKI CFP®: Never influenced.

DANO WEIR: Never. Sorry, I misspoke there.

DAREN BLONSKI CFP®: And you might say, well, Darren, why are you pulling up like Polymarket? It's a betting market, right? Well, what we've seen over and over is that. This stuff's probably more accurate than any of the other garbage you see on TV, right? Because it's people who actually have insight making actual bets based upon knowledge, i. e.

DAREN BLONSKI CFP®: The special operations person who bet that we were going to invade Venezuela and made like 400 grand on it. He got arrested, but not our politicians. But who's paying attention? Who cares? That doesn't matter. Back to the S&P 500. Okay, so SPX. Closed in a relatively positive situation. Now, seasonality is a thing in the market, right?

DAREN BLONSKI CFP®: So we're coming into August. We're coming into September. This period of time can be an interesting time. I've seen lots of markets go up in August, lots of markets go up in September, but there tends to be more of a pullback between now and kind of the first, second week of October, third week of October.

DAREN BLONSKI CFP®: Given this election year, midterm election year, I wouldn't be shocked to see lots of volatility move up, move down. You're going to see the different power players trying to influence the market to give themselves the benefit at the ballot. That's just going to happen. Let's take a look at oil. Oil is a big driver in the markets right now.

DAREN BLONSKI CFP®: It's a big driver for what's going on in Iran. It's been my observation, let's call it, not prediction, but observation that When oil gets much above 100, then magically, all of a sudden, we find an MOU or a peace deal on the table. And when oil gets below about $80 a barrel, well, magically, a bomb or a missile drops on one or the other.

DAREN BLONSKI CFP®: So it seems to me, at least since March, that if you're thinking sweet spot, this is your sweet spot for oil, okay? If we get much above 100, we tend to see some peace.

DAREN BLONSKI CFP®: This is just purely observational, antidotal. And if it gets below here, we get bombs.

DAREN BLONSKI CFP®: Now, why would that be?

DAREN BLONSKI CFP®: Well, it's really simple, right? Because all the players, both U. S. And Iran. They can't just start lobbing nukes at each other and just obliterate each other, right? They're all politicians. They all want to stay in power to the degree they can stay in power.

DAREN BLONSKI CFP®: So if they can hold on to their power base and last out this administration, which I think the Iranians are trying to do is get to the point of where Trump's a lame duck and he can't do anything or wait another two years and then he gets voted out of office and make it really hard for him to win any elections or his people were to win elections.

DAREN BLONSKI CFP®: And Trump's trying to get the straight open so that oil goes down because if oil goes down, gas is great. But he doesn't want it too far down. Right. You don't want oil too cheap because that also creates other issues.

DAREN BLONSKI CFP®: So this seems to be the sweet spot. So just Mark that in your mind. If you see oil above 100, just magically we'll have a peace deal. What's kind of funny is either side will start talking about peace. Like we have a peace deal and the other side is not confirming it, totally denying it.

DAREN BLONSKI CFP®: But, you know, apparently. So 80s your bombs, 100s your peace. I think that's what we're tending to see the channel stay in.

DAREN BLONSKI CFP®: Now that summer's kind of wrapping up, kids are going back to school. Yes, they go back to school in early August now. Isn't that crazy?

DAREN BLONSKI CFP®: It's no longer the doldrums of summer. It is kids are out of school by, or in school by, you know. Mid-August. So that means vacation slows down. There's less gas being consumed. We all get back to our routines and realities for those who have kids.

DAREN BLONSKI CFP®: All right. I think we should talk about SpaceX just because it was a big one in the news. We talked about earlier about how, hey, SpaceX was a big deal. It was all the hype. It was going to go to the moon, went up to 124 and change. And now we closed out the week at 108.

DAREN BLONSKI CFP®: Looked like we were going to get some movement and it moved up to 116 here and change and then roll back over. We're closed out the week down at the bottom of this channel. That's telling you there's probably further weakness to come when we look out on the four hour.

DAREN BLONSKI CFP®: What the market tends to do is when it visits one area and it seems to be really locking into this 108 number, when it goes to this certain area multiple times, like you have right here, that's not so good. It means it's probably going to go lower. The fact that it closed on the low end of that at 108, I think we had lower next week on SpaceX.

DAREN BLONSKI CFP®: Makes sense too, right? I mean, they're getting repriced. We're actually seeing the repricing happen in real time with SpaceX because a big part of SpaceX is their XAI. Kimi comes out and says, ah, you just download it and you have your own LLM on your computer if it can run it. That's a game changer for a lot of corporations.

DAREN BLONSKI CFP®: Interestingly, I don't know if you all noticed this, but as soon as Kimi 3 came out, you had Anthropic and OpenAI pounding the table for... AI regulation. We need to regulate. It's a shocker, right? Like, we're the good guys. We're going to regulate it because that model from China, well, it's under, you know, it's cutting us under. And we have to be patriotic.

DAREN BLONSKI CFP®: Now, if you think about it, China could take that model and go around to all the countries around the world and install it in the computers, and AI takes over all these other countries. Like, you can think of some really dire situations with AI. So, don't get me wrong. U. S. Absolutely needs to win. I just think we have the best chance of winning by allowing for open markets.

DANO WEIR: Darren, I have an interesting companion to SpaceX here, and I wonder if you could pull this up for me before we move on to something else. Because when we talk about investing, we talk about, okay, what's the upside? What's the potential? Where could this go? The narrative, certainly in June for SpaceX, was literally the moon, literally Mars, right?

DANO WEIR: And it's AI, and it's AI space centers, data centers, and all this stuff. And there is a stock which we frequently cite because sometimes when we're giving an example, we have to come up with an example stock. And one we have often given as a stock, which is a known brand, which seemingly would go nowhere, would be Coca-Cola. Can you give me Coca-Cola year to date?

DAREN BLONSKI CFP®: All right. Because I...

DANO WEIR: I was shocked to see that year to date, Coca-Cola is up 27%. And so just so fun, not that those two are necessarily correlated, but just if you're looking for narrative, so funny to me that you've got SpaceX with all the potential in the world and Coca-Cola, which has been around for over 100 years and which one is up 27% this year.

DAREN BLONSKI CFP®: Well, we've talked about this multiple times. There's something going on with... You know, drinks, right? Because what's the number one performing stock of all time?

DANO WEIR: Monster.

DAREN BLONSKI CFP®: Monster. I mean, this is crazy, right? So, you know, this is where when Chris and I start talking about to be boring is good, like this is to be boring is good. And what tends to happen with these high flyers, they just rip. I mean, here's Tesla. For all the hype and the news and everything you've heard about Tesla, if you're...

DAREN BLONSKI CFP®: You bought Tesla in November of 24. You haven't made a dime. In fact, you could have bought it way back here, let's call it, in 2022, and you haven't made a dime. You could have bought it right here at the top in 2021. The stock is worth the same today that it was in 2021.

DANO WEIR: So not necessarily recommending, but we've just dogged on it. We've used it so many times, I felt like we had to give Coke their due this week.

DAREN BLONSKI CFP®: Yeah, I mean, I think it's an excellent point. Like, here's Coke, you know, probably the world's most boring stock there is. I mean, they keep clicking along. And in fairness, though, a lot of people all over the world, like their main source of liquid is Coke, right?

DAREN BLONSKI CFP®: Because that's what's available to them. And fresh water is harder to come by than Coke. It's really sad. I should say fresh, clean water is harder to come by. But that's changing with a lot of the filters and stuff now. But anyway, it's interesting. Concept or idea when you think about that.

DAREN BLONSKI CFP®: All right, so we talked about oil, we talked about SpaceX, let's talk about the dollar. One of the big headlines today is that the Treasury is going to step in and save the Yen. Why don't they want the Yen to blow up? Because if the Yen blows up, that creates all kinds of issues throughout the economy.

DAREN BLONSKI CFP®: So the Treasury is stepping in and selling dollars and buying Yen. Interestingly enough, you can see this massive move in the strength of the dollar today, which is actually not bad in printing a beautiful double top on the dollar. You can see, look at that double top there.

DAREN BLONSKI CFP®: This looks like we might have a little bit further to go to complete that pattern of a double top. But that's actually not a bad thing. Just like with oil, you don't want it too high. You don't want it too low. You want it to move smooth because things tend to blow up when the dollar moves too hard against other currencies. If interest rates move too hard.

DAREN BLONSKI CFP®: Speaking of interest rates, we can't not talk about interest rates today because interest rates are problematic at the moment. So you can see the 10-year just ripping upwards. 4.73, you're going to buy a house. In the near future just got more expensive for you to buy that house. We haven't seen rates this high since January of last year.

DAREN BLONSKI CFP®: That's going to make it harder. We look at the 30-year. We haven't seen rates this high on the 30-year. It's going weekly since 2007. Guys, what happened in 2008?

CHRIS SIPES CFP®: Not not much right well no and i do i do think that's a good point because everybody keeps saying like it was it's it's the highest since 2007 and almost like implying that that's what caused 2008 but i mean you can see that on the longer term the rates were on a you know a project continually lower trajectory so i i don't actually necessarily think that higher rates caused 2008.

CHRIS SIPES CFP®: I'm sure it was one of the many things, right? But I don't necessarily think that's a harbinger for another great financial crisis. Hopefully not. One thing that is totally different now is banks back then lent money, and no longer do banks really lend money.

CHRIS SIPES CFP®: I don't know if anybody's tried to borrow money from a bank lately, but... It's really, really difficult. Most of the money is in the private credit side of things, and that's been experiencing its own issues. So, you know, if there is going to be an issue, it's probably going to be more on the private side than like one of the big money center banks. But anyway.

DAREN BLONSKI CFP®: It is interesting. I think correlation is not causation here, right? But it is a factor, right? Higher rates do slow down the economy, makes lending harder. That tends to gum up the engine of the economy. It looks to me like rates are still 30 years going to keep going higher. That's bad news politically for the people in power currently.

DAREN BLONSKI CFP®: Depends who, whoever. I think what happens is if things don't feel good, people tend to blame it on the party they don't like anyway. So whatever, right? You don't know who ultimately suffers the most from that one. But usually it's the party in power. If we look at IWM, which is our mid-cap, we have our S&P 500, our largest 500 US-based stocks.

DAREN BLONSKI CFP®: We got our Russell 2000. And we're still above that. On the weekly, it looks good. The fact we're continuing to close below that 20-day moving average, see how we're following that red line down and we haven't broken up above that. We got rejected today. That's bad news for...

DAREN BLONSKI CFP®: Our mid-cap stocks which is interesting Chris you would think that mid-cap would get a breakout with currency dxy going down because this makes it easier for us to export which is usually helps more mid-cap companies you would think yeah you would think but it didn't it didn't play that way So that means there's a different headwind, right? That's causing it.

DAREN BLONSKI CFP®: But another perfect example of like why there's no perfect if this, then that, especially when it comes to the markets. We look at the SOX, which is the Philadelphia Semiconductor Index. It's just been getting clobbered. And if we look at its high, let's see how far down it is now. 22% down.

DAREN BLONSKI CFP®: So it's these type of stocks that were blowing up some of these hedge fund companies that were taking big leverage. But it could be bottoming. You could argue that it found a bottom there at 10,000 right in this area where there was support, hit the bottom, it's moving up. Didn't print a particularly good-looking candle today, but it did hold above. See that long wick down?

DAREN BLONSKI CFP®: You could argue that that was the bottom candle. You can see here's a different look at a bottom candle. Sometimes when you get those long weeks down, that's where buyers say, I'll take that at that price. That's way oversold. But the fact that it closed right on top of that 20-week moving average, it's still a little risky to buy. Momentum isn't clear.

DANO WEIR: We've got a comment, and Darren, we've got a question for you to look at a ticker if you have a second.

DAREN BLONSKI CFP®: Let's see.

DANO WEIR: I can read it.

DAREN BLONSKI CFP®: Celsius.

DANO WEIR: So this is coming from at days in Jefferson City. Thanks so much for watching the show. We appreciate you. So speaking of drinks, what about CELH, which is Celsius, the energy drink?

DAREN BLONSKI CFP®: Not looking good for Celsius. In fact, I'm drinking one right now. The sparkling Fuji pear Apple.

DAREN BLONSKI CFP®: I'm pretty sure this stuff's bad for you, but. Nonetheless, it's still good. All right. So, yeah, I mean, so first things I'd say, let's look at the daily chart. We're not holding on to this 20-period moving average. So it's just looking weak right now. Doesn't look like a strong opportunity.

DAREN BLONSKI CFP®: If you look at this, there's your bottom support at like 29. You can see how important this area has been for a very long time. You could argue it's finding a bottom here. The fact that it's finding a bottom that's a higher bottom than right here, you can see that trend up. It's technically trending upward, just in a very volatile way.

DAREN BLONSKI CFP®: So you could argue that it's building that bottom. You could also argue that, oh, look at this. It's a bear flag, and it's going to fall through that.

DAREN BLONSKI CFP®: It's not something that I... Would step in the way of at the moment. I'd want to see more support. I want to see a breakout. I want to see a hold. Let's look at it on the one-hour chart.

DAREN BLONSKI CFP®: Yeah, there's nothing really like, you could say in a very short term that's trending upward that's got a bull flag on the short term. See that bull flag right here?

DAREN BLONSKI CFP®: So I think maybe if you're a trader and you're doing a very short-term trade on that, you could argue.

DAREN BLONSKI CFP®: I'd want to take a size of a position that's sized appropriately for my portfolio.

DAREN BLONSKI CFP®: That's interesting. But yeah, Celsius kind of flies in the face of Monster. That's for sure.

DAREN BLONSKI CFP®: The, but it's definitely not repeating Monster at the moment. It'd probably be like one of those things where like goes to the moon and anyone who's still holding it goes. See, I told you it's survivorship bias.

DANO WEIR: Yeah, I think Monster had drawdowns of like 50 and 75% at one point, if memory serves.

DAREN BLONSKI CFP®: Let's see what this drawdown is. Well, let's see what's the drawdown that's called. Started the year right here. So the drawdown this year is roughly 46%.

DANO WEIR: Yeah, no big deal. That feels great.

DAREN BLONSKI CFP®: That's weak.

DANO WEIR: Yeah. Thank you. Thank you at Days in Jefferson City for that question. Appreciate that very much. And thank you for checking out the show. We appreciate you.

DAREN BLONSKI CFP®: Kind of looks like the gold chart.

DAREN BLONSKI CFP®: I was talking to a potential new client the other day and she's like, yeah, my advisor threw me all in gold last year. You know, it was a safe bet. Gold is not safe, people. Like anyone who's selling gold as a safety item to you is a charlatan.

DAREN BLONSKI CFP®: Down 25 the only time gold becomes safe is if it's like new world order and everything blows up and it's guns and gold and alcohol are the only commodities out there to trade in like cigarettes you know they do in prisoner camps or something like that but if we get there like none of this matters anyway in the meantime price appreciation on gold tends to be pretty volatile but the victory laps that were taken And...

DAREN BLONSKI CFP®: By the gold bugs here. And in full disclosure, I love gold. I spend time hunting gold in the mountains. No problem with gold, but it is just an asset class like any other asset class. And the minute you treat it as your G-O-D lowercase.

DAREN BLONSKI CFP®: We've got an issue and it's just an asset class and it should be properly added to a portfolio that is relative to the size of your portfolio from a risk perspective.

DAREN BLONSKI CFP®: You can see we're finding support in this kind of core 4,000 area. Maybe it's finding a bottom there. The fact is just channeling and consolidating there.

DAREN BLONSKI CFP®: Too hard to say. I wouldn't. Take a gander to bet which way that's headed. There's zero momentum on that one at the moment. Just look at silver, silver, same thing. Perfect. So silver is like a perfect example of what we talked about earlier. This, this like hype, you know, the SpaceX hype or whatever. I love silver.

DAREN BLONSKI CFP®: I love gold. I love, I think SpaceX will do great over the long period of time. That's not advice, but that's. I think it's an attic hold, right? You put it in the attic, you forget about it, and you let it go and look at it a few years from now. I think silver and gold are similar in that way, but right now it's going down.

DAREN BLONSKI CFP®: It's to the weak side. Great. Now I can accumulate more of it because long-term, it's a commodity. There's less of it until someone invents some creative way to pull more silver out of the ground or more gold out of the ground. They find a massive deposit. That's the risk of silver and gold.

DAREN BLONSKI CFP®: Well, I think we're going to leave it there, guys. All in all, I actually am constructive about the stock market right now. I think it's in a fairly decent spot given all of what is going on. I don't think you can count it out and I think you would be crazy to step in front of this thing.

DANO WEIR: What a week. The, the week Darren gets back. So glad because we had a lot to look at there. Chris was some great insights as well. And we thank you. For checking out On The Markets.

DANO WEIR: And we did this week what I feel we are set out to do, which is let's take what's out there, let's take the narratives, let's deconstruct them, and let's just share some things with you that perhaps your favorite news source is not positioning in a way that is constructive, which is that the S&P perhaps did not have the week that you thought, among many other things.

DANO WEIR: So if you enjoyed this, if this is your first time checking out the show, subscribe wherever you are. Hit that sub button on YouTube or if it's on Apple Podcasts or Spotify. We do this show every single week. We are Fermata Advisors and our Sonoma Wealth private wealth brand. If you want to learn how we work with and help clients and families, get to SonomaWealth. Com.

DANO WEIR: You can book your wealth analysis there. And thank you to our clients who have listened all the way to the end. We appreciate you so much. For Darren Blonsky and Chris Sipes, I'm Daniel Weir, the Marketing Director. We will see you next week.

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CHRIS SIPES CFP®: We appreciate diligent viewers and listeners. Fermata Advisors, LLC is registered as an investment advisor with the SEC and only transact business in states where it is properly registered or is excluded or exempt from registration requirements. This content was produced by Fermata Advisors, LLC, DBA Sonoma Wealth Advisors, DBA Fermata 401K, DBA Fermata Tax.

CHRIS SIPES CFP®: The opinions expressed by Fermata Advisors, LLC on this show are their own. Information presented on this program. Is believed to be factual and up to date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed.

CHRIS SIPES CFP®: Discussions and answers to questions do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Information presented is for educational purposes only.

CHRIS SIPES CFP®: And does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual.

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