When Good News Isn't Enough

DANO WEIR: What a beautiful summer day in stark contrast to the episode thumbnail you're looking at. I promise it's not that bad, but we are selling the story here. My name is Dano Weir from Fermata Advisors and our private wealth arm, Sonoma Wealth Advisors, and we're about to go on the Markets.

DANO WEIR: It's Friday, July 24th, 2026th, and we are looking at the idea... 2026? I said 26th. We're looking at the idea that we've got some good inflation numbers. And yet that doesn't necessarily matter because, well, a spike or a wave of oil may come to wash it all out.

DANO WEIR: When good news isn't enough, this week we'll be looking at, well, the names you see, OpenAI, Anthropic, those are the companies to be in 2026, right? Maybe not. We've got the chart that shows those hyperscalers are hemorrhaging cash at the moment in the industry that is happily receiving all of that cash.

DANO WEIR: We'll look at how China is sidestepping this whole oil issue, the Iran oil crisis. If you think the U. S. Is the most expensive housing market in the world, would you be surprised to learn that they're not even in the top 10? And not oil, not jet fuel, not rice, not cotton. It is a chemical symbol that's up 142% since the start of the Iran War. What is it? Let's find out right now.

SPEAKER 2: The stock market. The economy.

SPEAKER 2: Your money. What's the latest and what could be next?

SPEAKER 2: Find out now with Fermata On The Markets. Straightforward financial market updates for the brands of Fermata Advisors, Sonoma Wealth Advisors, Fermata 401k and Fermata Tax. On the Markets starts now.

DANO WEIR: Chris Sipes, CFP, managing principal of our firm. Darren on assignment for this week. Back next week. Chris, I guess it doesn't really matter what inflation is doing at the moment because the spike that matters seems to be oil.

CHRIS SIPES CFP®: Yeah, I think, you know, when you look at what happened this week, you're like, I thought inflation, we were getting good news on inflation and what's going on in the market. But I think that that is a rear view mirror, possibly view. Compared to what the market is looking forward to.

CHRIS SIPES CFP®: And the market seems to be saying like, hey, maybe this inflation is starting to take hold a little bit more and that we should expect interest rates to be heading higher, money to be getting tighter as the Fed has to fight these inflationary pressures.

DANO WEIR: The market is looking ahead. Let's look. Back though for a moment because I came across this this week, Chris, and I thought you would really enjoy this story as a lover of history.

DANO WEIR: This is a post I saw on Instagram. I did source it eventually from the International Oak Society. It reads, things I did not know. After their defeat and loss at Copenhagen in 1807, the Danes responded by planting 90,000 oak trees towards toward their Navy's rebirth.

DANO WEIR: Oak trees take 200 years to grow. The Danish nature agent, the Danish nature agency, successor to the Royal Forester, informed the defense ministry in 2007 that their trees were ready.

CHRIS SIPES CFP®: I don't know what they mean by ready.

DANO WEIR: Well, in 1807, the Danes suffer a big naval loss and they lose all their ships. And they go, okay, we got to dig in, guys. We got to plant 90,000 oak trees so we can rebuild this Navy. It takes 200 years. And so in 2007, they finally said, hey, the trees are ready. And the reason why I shared that this week is I think there's huge applicability to AI in this story.

DANO WEIR: In that I'm a long-term guy. I'm a long-game guy myself. So I get the idea of let's dig in and really build this from the ground up. But in some instances, you've got the Navy here. Really playing the long game. And by the time the trees are actually ready, hey, we're not doing wooden ships anymore.

CHRIS SIPES CFP®: Yeah. Well, you know, the Dutch, they were an empire for a period of time. We did that episode on stock market history, Dan. And those that know that the Dutch, that's one of the, that's kind of like the, I don't know, that's widely cited as one of the first stock Markets in the world. It was during the Dutch Empire. And there's a long story to history there. So that's really cool. You're right. I did like that.

DANO WEIR: So if you're wondering why the hyperscalers, as they call them, are trying to move so fast, it's because in some instances you have to.

CHRIS SIPES CFP®: Yeah, they kind of feel trapped. So we want to start with a little bit of good news here. This was surprising to me along with the next slide, but home prices versus incomes. And this, according to Visual Capitalist, they have the U. S. Has the world's seven lowest home price to income ratio. Now, in this case, that's a good thing. You want to have a low price to income.

CHRIS SIPES CFP®: Now, being here in the US, we're constantly... Hearing how bad the housing market is, how unaffordable it is relative to our history, which is true. But when you look at it on a global scale, look at some of these countries with much, much higher prices to someone's income.

CHRIS SIPES CFP®: Look at China at 34.6. That seems to be the high, no, sorry, the highest is 86.7. I mean, I'm not even sure where that is. But And... Canada, who's also kind of famously overhoused or the prices on housing are pretty expensive, is at 9.4.

CHRIS SIPES CFP®: So the U. S. On the global scale seems to be pretty, you know, in the middle. Not too bad.

DANO WEIR: Yeah, it was shocking to see this. However, I would like to see some tighter geos because I feel like maybe New York City and San Francisco might rank a little higher. But the generic poll on this is, yeah, you know, when you look at the U. S. As a whole, perhaps not as unaffordable as you think, especially compared to what you can make here.

CHRIS SIPES CFP®: Yeah. Now, more good news also counter to narratives that I've personally experienced. This is from Bank Of America. They say lower income households wages have kept pace with inflation since 2019. While wage growth for middle and higher income households has lagged. So this is wage growth. This is not wealth.

CHRIS SIPES CFP®: Big difference there, right? But after-tax wages based on the Bank Of America deposit data, three-month moving average going back to 2019 compared with the CPI inflation. And this is based on the BLS data. So some good news there.

CHRIS SIPES CFP®: Good news, bad news, I would say, though, because As we're going to see, we got some good job numbers this week that is playing into the market's hypothesis that maybe we should be expecting a little bit higher inflation. Because if these incomes are keeping pace with inflation, it's a virtuous cycle where people make more money, they're spending more, prices tend to go up as that spending continues to recirculate.

CHRIS SIPES CFP®: So one of the many factors, of course, whenever you're talking about Markets, there's never one factor to anything. When somebody says, well, why did X happen? It's always a confluence of things. It's never one thing that causes it. And when it comes to inflation, strong income is one thing that can go into higher than expected inflation.

DANO WEIR: And something else to consider here as well is lifestyle scope. Expectations for what is you know, normal and standard of living these days include. A cell phone plan, multiple streaming service subscriptions, you know, so they may have kept pace, but keeping up with the Joneses or, you know, next door people seems to be an ever expanding pursuit.

CHRIS SIPES CFP®: Yes, absolutely. So big drop in bullishness on the AAII market expectations this week. We went from 44.9 down to 29.6 in the bullish camp. I don't know for sure, but that feels like a bigger than average drop to me, Dan. You've looked at a lot of these.

CHRIS SIPES CFP®: Seems kind of extreme. Big jump in the bearishness up to 42.3. Still nowhere near our highs or our lows, but a big change and a shift in the sentiment this week with the market, digesting some new news that we'll get into.

DANO WEIR: Yeah, that's a pretty significant jump for one week.

CHRIS SIPES CFP®: Yeah. Now, the CNN fear and greed index, before I forget to mention that, that's pretty much unchanged at 40. It was at 37 last week. Both of those are in the fear category, towards the top of the fear category, not near extreme fear.

CHRIS SIPES CFP®: And then we've got Bitcoin at 28, also pretty much unchanged at 27 last week, both of those fear readings. So, you know, on the sentiment indicators, not really showing an extreme bullishness or bearishness. But rather sort of people are kind of meh about the market at the moment, kind of across the board.

CHRIS SIPES CFP®: All right. So we talked last week, I think it was about like, hey, why aren't oil prices higher? And one of the reasons we cited was the slowdown in China's imports. And lo and behold, Bloomberg had a great chart on that this week, Bloomberg Opinion, showing China's surviving on massively reduced oil imports.

CHRIS SIPES CFP®: And you can see that that line was pretty steady there until the war started. And they just locked it down. And it's interesting that they're able to do that, that they feel like they have the stockpiles and or alternative energy sources to just turn off their oil imports that way.

CHRIS SIPES CFP®: But for whatever reason that is happening, that has reduced the demand dramatically for oil and has helped keep a lid on prices. As we've gone through this energy crisis in the Middle East.

DANO WEIR: I know a piece of this too is Venezuela. So I know that China was getting a significant amount of oil from Venezuela and that has stopped since Maduro's capture.

CHRIS SIPES CFP®: Yeah, so good news, bad news this week, we got the initial claims for unemployment insurance were at 187,000. We haven't looked at this in a while. We were looking at a lot in COVID and sort of around there. But for those that don't know, the number typically hovers around 200,000. And it's been kind of in the 200 to 220,000 pretty consistently for years.

CHRIS SIPES CFP®: And here we are at 187. Now, this is initial claims for unemployment insurance. So this is like when somebody first goes on unemployment. As the name implies. And from what I saw, this is the lowest initial claims since 1969. So a very, very low amount of people requesting unemployment insurance. You might think to yourself, well, isn't that good news?

CHRIS SIPES CFP®: Well, from the market's perspective, they look at the Fed's mandate, which they have a dual mandate of price stability and full employment. And With those types of strong employment numbers, the one side of the Fed's mandate is pretty much taken care of, which is the employment mandate.

CHRIS SIPES CFP®: They shouldn't have to worry with where we're at with unemployment and in the initial claims, there's no sign of weakness there. So that flips it to the other side of the coin, which is price stability, and there's all kinds of fireworks happening on that front. So the market took this information and said, hey.

CHRIS SIPES CFP®: We're going to increase our probabilities that the Fed is going to hike rates possibly as soon as next week's meeting. And Warsh has set up a kind of a special press conference, I suppose you would call it, after their discussion. And this coming from the Fed chair that wants to limit communications. So it's going to be interesting.

CHRIS SIPES CFP®: Are they going to surprise the market with a with a rate hike. Right now, the market has about a one-third probability. As of yesterday, when I checked it, I did not check it today. But as of yesterday, the probabilities were around a third that they were going to hike rates, a two-thirds chance that they would keep rates the same.

CHRIS SIPES CFP®: Now, expectations are everything. Dan, I don't know if you saw that LeBron James is going to the Sixers. Yes. I think totally unexpected, right? Was it Miami in the lead in the betting Markets followed by Cleveland?

DANO WEIR: And so, and maybe even golden state of Philadelphia was not necessarily on the radar.

CHRIS SIPES CFP®: Yes, absolutely. So, Hey, you know, just like in the sports Markets, the financial Markets have expectations. Things are certain things are priced in certain things are expected. And, if they don't happen as expected.

DANO WEIR: That's when the market can have big changes one way or the other is when things happen that are not what was relatively priced in at the moment. I think something to consider here too, Chris, is I'll be honest with you. This is just an opinion. I'm just saying this, my opinion.

DANO WEIR: The idea that it's the lowest unemployment claims just feels so counter to the narrative that I'm seeing in my feed from companies announcing mass layoffs. So I know that Trump installed a new data person last year. Yeah. I didn't like the numbers from the prior person. And who knows? We don't know. But it would be a case where, in my opinion, this this number feels counter to the narrative that I'm seeing out there.

CHRIS SIPES CFP®: Yes. Well, and not just this administration and most administrations, this number does get revised. And it's sort of funny that the market takes it so seriously because it gets revised so often. And when the revisions happen, you remember what was in the spring, they were saying like, oh, we were off by like a million jobs or something. I mean, they're right. Oh, yeah, This is not an exact science by any means.

DANO WEIR: And that was the prior administration's data person, by the way. So, I mean, I'm not necessarily tying it to this administration. I'm just saying it's just, I mean, I know they got to go with something, right? But it's just sort of, okay.

CHRIS SIPES CFP®: It's subject to change. So don't put it in the history books yet.

DANO WEIR: Employment-ish.

CHRIS SIPES CFP®: Yes. But the market's taking it seriously. Interest rates marching up across the curve this week. So short-term rates. Medium-term rates, long-term rates, all heading higher. We've got the 10-year yield here, which is kind of the main yield on the treasury market.

CHRIS SIPES CFP®: And this chart from Jim Bianco, and I'll just read what Jim says. Jim runs a research firm. He also has a bond index that he sub-advises and such. So he's a Markets guy, but a research guy as well. But anyway, he says, The US 10-year is at 4.70. This is a couple days ago. The highest of Trump's second term.

CHRIS SIPES CFP®: What will it take to get it to stop rising? See the repost below. Too long didn't read. Kevin Walsh says inflation is a choice. It is time for the Fed to choose to act on it as the market is deeply troubled by its current level and outlook.

CHRIS SIPES CFP®: That's where it's saying, he's saying, Warsh has been saying for years that we need to take inflation more seriously, that this Fed is going to, and they're going to make it a number one priority. And that's kind of why there's this sleeper, like, oh my gosh, what if they come out and raise rates?

CHRIS SIPES CFP®: And I've even seen people say, what if they raise it by 50 basis points? Which for those that don't know, most of the time they're going to raise it by smaller increments. 25 basis points or a quarter percent is usually what they make those changes at.

CHRIS SIPES CFP®: When they make changes up or down by more than a quarter, the market usually takes that as the Fed feels like they're behind either on the upside or the downside. And so I think that would be a major shock if the Fed came out next week and raised rates by a full half a percent, but we shall see.

DANO WEIR: If you know a mortgage officer, please give them a hug.

CHRIS SIPES CFP®: Yeah, the beatings will continue until morale improves, right?

CHRIS SIPES CFP®: Now, this chart is like the chart of the year from B of A. It's been floating around for a while, so probably most people have seen it. But it says a generational transfer and free cash flow is taking place. So 12-month forward free cash flow of hyperscalers, that's the big AI companies that you might... Might already know and love.

CHRIS SIPES CFP®: And the semiconductor companies, and these are in billions. So the left side there has got it in billions, and then the time is on the bottom. And just look at those charts where the hyperscaler cash flow just falls off a cliff, and the semiconductors go straight up. And obviously, we've been seeing that reflected in the stock prices as well. The market has definitely priced that in.

CHRIS SIPES CFP®: Interesting to see those expectations just totally diverging in opposite directions.

DANO WEIR: So let me put this in another context in case people don't know. So hyperscalers, these are Amazon, Google, Meta, Microsoft. These are these companies that are trying to basically build superintelligence, SpaceX kind of. They do a few other things.

DANO WEIR: They are dumping... All their available resources, not all, but much of their available resources, massive amounts into building new railroad tracks with the idea that down the road, they're going to be able to sell freight, right? And the companies that are rocking right now are the ones that are laying the tracks, Chris.

CHRIS SIPES CFP®: Basically, yes, exactly. The metaphorical, you know, tracks and trains and everything. It's all that free cash flow that those hyperscalers, you know, That's the reason why they have just been trouncing everything else for years, is that they were producing all this free cash flow.

CHRIS SIPES CFP®: Now, instead of that cash flow being abundant, they are reinvesting it in that infrastructure, into the data centers, into the energy, into the chips, etc. And this is specifically highlighting the semiconductors as... A beneficiary of that. I think you could also say the small cap stocks because we've been covering that where the small cap stocks have just been on a tear this year and showing a lot of strength.

CHRIS SIPES CFP®: And so it's not just semiconductors, it's a lot of other things that these hyperscalers are spending their free cash flow on. And so that free cash flow is going somewhere and semiconductors has been won other places.

DANO WEIR: Just as an example, as a small company, we shared a story of a Japanese company. The name escapes me right now.

DANO WEIR: They are a toilet company, but they build precise refined porcelain products, one of which is used in AI and is used in data centers. And their price is appreciated greatly this year. So just as an example of ancillary companies that are greatly benefiting from.

CHRIS SIPES CFP®: The mag seven dumping it all into AI yeah yeah but so so now we'll get back to that in a moment with the hyperscalers because here i want to take a just a second to show the interest rate picture on the short side of things now this is the two-year treasury rate in dark blue with the Fed funds rate in gray now the Fed funds rate is the one that the Fed sets the two-year treasury rate is what the treasury is currently borrowing at when they issue two-year treasury debt.

CHRIS SIPES CFP®: And that's determined by the market. That's by you and I, how much we're willing to buy that debt at. What yield do we need to be compensated at to get that two-year money? And so it's sort of, you can think of it as like the market's perception of short-term interest rates versus the Fed's perception of short-term.

CHRIS SIPES CFP®: Interest rates. And usually that number needs to be pretty close to one another. We're at a 50 basis point spread, 51 as of this chart. So there's a half a percent difference. That's why maybe a half a percent hike is not all that crazy. That would put the Fed kind of right where the two year is at the moment.

CHRIS SIPES CFP®: And if the two year is going to continue its charge higher, the Fed might find itself behind the eight ball. So you can see back in 2022 when that inflation started to take off and the Fed got behind just how far that two-year treasury rate got in front of the Fed funds rate.

CHRIS SIPES CFP®: And then the Fed had to come out and just start hiking rates right and left, making huge gaps up in the rates. And I don't think that Warsh wants to be in that same position. So it's really put him between a rock and a hard place at the moment with his decisions around. The interest rates.

CHRIS SIPES CFP®: Now, one man's crisis is another man's opportunity, right? And here we have the 30-year tips yield, this from Bob Elliott. Bob says, recent bond sell-off has driven 30-year tips, which is inflation-protected treasuries, to near 3% real yields, meaning that you're going to get 3% plus the rate of inflation.

CHRIS SIPES CFP®: And now these are considered to be credit risk free because they're issued by the government and the government can back these with tax money, et cetera. So investors are getting the opportunity to say, I'm going to get a 3% return net of inflation for the next 30 years. So back to- Bob, he says, while everyone roots around to find the next hot stock, this is likely the generational buying opportunity hiding in plain sight.

CHRIS SIPES CFP®: These rates have not been this high since 2008, I think, and even previous to that, really sustainably this high since 2005. So it's been a long time since interest rates have been this high and real rates have been this high in the tips market.

CHRIS SIPES CFP®: So more news this week that really hit the market, like we were talking about with the free cash flow projections from Bank Of America. That chart came out, I think, a couple of weeks ago. And so this was actual released earnings from Meta, or sorry, Google.

CHRIS SIPES CFP®: Sorry, Google, not Meta. And this is from Callie Boss. She says, oof, what a chart. Google just posted its first quarter of negative free cash flow in at least 10 years. I saw others saying this might be the only time Google's...

CHRIS SIPES CFP®: Showed free negative free cash flow but you can see here i mean look at it relative to previous quarters just an unbelievable change in the direction of of the the the infrastructure build out and free cash flow at Google and so the market took this news obviously horribly and went ahead and just extrapolated that if Google's spending this kind of money so is everybody else.

CHRIS SIPES CFP®: And that the other earnings that we'll get later on in the next week are likely to be just as bad. And from a financial perspective, it puts the market a little bit on edge when they're investing all this money.

CHRIS SIPES CFP®: Like you said, Dan, they're building all the tracks, they're buying the trains, and they're saying, don't worry, this is going to pay off once we can start charging for all the freight that's going to come across these tracks.

DANO WEIR: And in a 10-second attention span world, They're going to expect that next month. They're going to expect that maybe six months, right? There's not, back to our earlier example, they're not going to wait 200 years to see the fruits of their harvest.

CHRIS SIPES CFP®: I don't know how long they're going to wait, but I can almost guarantee that 200 years is going to be too long.

CHRIS SIPES CFP®: But, you know, and I think...

DANO WEIR: The data centers are ready. The data centers are ready.

DANO WEIR: The earth is now uninhabitable, but the data centers are ready.

CHRIS SIPES CFP®: Yeah, yeah. This is from Charlie Biello, and I first heard this expressed with Mike Green on a podcast probably a month ago where he was talking about Google's income, their net income, and how much of it was comprised of gains on stocks that they're invested in, like SpaceX.

CHRIS SIPES CFP®: And so here, Charlie does a great job of... Illustrating that total net income in blue, how much of that is quote unquote other income in red, and then the net income X other income. See that that net income X the other income, so the growth on stocks that they are invested in is pretty flat.

CHRIS SIPES CFP®: Most of that gain has been coming from that other income. And with, you know, I don't know about the rest of their stocks, but like SpaceX is something like 50% off that's high around there. And so, you know, next quarter, it probably is not going to look quite as rosy, in that, in that other income category. So kind of live by the sword, die by the sword type of, information, you know?

CHRIS SIPES CFP®: And it's not just... Google here, this is from Callie Bost again. She said, I've said it before and I'll say it again. You can't call big tech the profitability golden children and the nimble AI leaders at the same time. Something has to give. Here you're looking at free cash flow in billions. Actual and projected, of course, beyond 26 is projected down there at the bottom.

CHRIS SIPES CFP®: But you can see the various hyperscalers and their... Their free cash flows kind of just coming to a screeching halt. Look at Oracle, really not a great outlook there. And their credit default swaps, basically insurance on their defaults, have been going up. The prices of that have been going up pretty quickly. So you think there's going to probably be some changes at Oracle to make changes on that front.

DANO WEIR: And part of Oracle's, I don't know if I can speak to it specifically with this graph, but tied in with Oracle is their purchase of Paramount and Warner Brothers. I don't know if you've been following that, but that is also an Ellison property. So the Ellisons purchased Paramount last year.

DANO WEIR: They had to get that approved. Part of that deal was also contingent. One of the reasons why President Trump has had influence over CBS. And 60 Minutes, if you've been following that scandal, is because they were trying to get that merger approved. And then they've been trying to purchase Warner Brothers as well.

DANO WEIR: And the few people are holding that up. So Oracle has got their tentacles in many things. The Ellisons have their tentacles in many things. And right now there's not been a lot of go.

CHRIS SIPES CFP®: Now, all this spending, so going back to the... The kind of the broader theme of higher inflation. Like why? Well, lots of reasons. And, of course you've got the war, but you also have this massive build out of AI, on par with, you know, as a percentage of GDP, it's up there with what we spent on the railroads. And, so there's a lot of demand for things and resources and that is driving, that is driving interest rates up.

CHRIS SIPES CFP®: That's driving the price of money up. And that's driving the price of everything up because there's a lot of demand. And, here is the computer and electronics, products. So you can see that's, that's, I think, let's see, it was an 8% year over year jump, the largest annual increase on record. And so the AI boom is driving prices higher in a lot of different areas.

CHRIS SIPES CFP®: And I think you're starting to see it in power as well. A lot of folks are starting to pay higher prices for power generation, which last month was going to be a stinger for anybody in the heat wave section of the country.

CHRIS SIPES CFP®: These prices are going up across the board, and the question is, when do those bond vigilantes ride to the point where it's going to start reflecting in the market? So far, I haven't seen too much, but this week, the market was starting to react a little bit like, oof, this is not looking good from an inflation perspective.

DANO WEIR: I have a crazy theory to throw out. I don't want to disrupt your flow here, Chris, but you're talking here about consumer electronics. And we just think about how many, I'm looking at eight devices right now in this room that have chips in them.

DANO WEIR: So you can see it across the board in all consumer electronics, especially in gaming, which is something I'm into. You know, console, the prices to just get the memory for these things is becoming extremely expensive. This actually happened.

DANO WEIR: The United States military, this photo I'm showing here, once built an entire data center, Chris, out of PlayStation 3S because the devices themselves could be daisy-chained together and they do have compute power. So I just show this to say I would wonder if some of the used devices that are floating out there suddenly become far more valuable than expected because the new ones, you just can't get the stuff.

CHRIS SIPES CFP®: Yeah, it's a good point. And this from Charlie Bielo showing the price increases. So AI build out, obviously expensive, but also wars tend to be expensive as well. This price increases since the start of the Iran War as of 722. And sulfur, hopefully, Dan, you don't need too much sulfur, but I'm sure that's like one of those things that's included in. Way more stuff than you would ever guess, right?

DANO WEIR: Baking soda to salt to, you know, whatever, not salt, but, you know, shampoo. There's probably a ton of stuff.

CHRIS SIPES CFP®: Yes. Crude oil being the thing that's, you know, probably the biggest deal at around 30%. But even things like cotton, 23%, wheat, 18. You know, wheat's another thing that's in almost all foods, it seems like. One way or the other. Jet fuel, 44%. Diesel, 38%.

CHRIS SIPES CFP®: So some significant jumps. And if this is sustained, it's going to be tough to keep that inflation under wraps moving forward. So maybe that good June report that we got was too rear view mirror looking and not enough looking through the windshield.

CHRIS SIPES CFP®: All right, let's jump in and take a look at some of the different asset classes now. As a reminder, these are not recommendations on these positions. Some clients might hold these positions. We are just trying to capture looking at the asset class as a whole using some common traded indices. So we'll start out with the SPY, the S&P 500.

CHRIS SIPES CFP®: We have the gray line, which is the 50-day moving average, and then the green line is the 200-day moving average. Those are meant to smooth out the prices and the movements so that you can kind of get an idea of the trend and work out some of the noise in the prices. Now, notably, the S&P finished the week below the 50-day moving average.

CHRIS SIPES CFP®: As Darren likes to mention, the end-of-week closes are the most important from a short-term perspective because that's how people are going positioned into the weekend. And, so whenever we finish the week below a, a point like that, it can become what they call resistance, which is like, it's hard to get above that line.

CHRIS SIPES CFP®: Now, it's no longer support. Before, you could see just a few months ago, it would hit that 50-day moving average and kind of head back up. It was acting as support. Maybe we're going to see that again now. It's probably too early to tell, but we did finish below that 50-day moving average in the S&P.

DANO WEIR: And then that's Trump's sign to just say that he solved the war again, and then we'll get another bounce.

CHRIS SIPES CFP®: It's possible. I'm sure that's definitely a factor. Now, this was the chart that I didn't include last week, Dan, due to technical difficulties. But here we have the NASDAQ, the Qs, which is going to be more heavily weighted towards those hyperscalers.

CHRIS SIPES CFP®: I think that SpaceX is included in here now. I believe so. I believe they got that included in the index. Don't quote me on that, but I believe that's the case. Now looking a little more technically damaged on the Q's this week, you can see that we've more than broken through that 50 day moving average. We're heading down towards the 200 day moving average. So we saw a lot of weakness in the NASDAQ this week.

CHRIS SIPES CFP®: And so not going to be surprising to see that trend kind of continue until we get closer to the 200 day moving average. I mean, maybe we get a bounce back. Let's hope.

DANO WEIR: Let's hope this hope is just a blip but at the moment not looking so great on the on the NASDAQ yes SpaceX is included they got a special exemption and got immediately included in the NASDAQ and also prior to about 10 minutes ago that Japanese company i was referring to was called toto nice.

CHRIS SIPES CFP®: Okay i like this real-time fact checking Dan it's it's it's got the robot yes It's a wonder of modern life.

DANO WEIR: I'm using a hyperscaler as we speak.

CHRIS SIPES CFP®: Yeah. Yes, there you go. Now, we take a look at the small U. S. Stocks represented by the Russell 2000. And here is where you can see plenty of strength. We did land on the 50-day moving average pretty much. We're kind of floating on it. But we did not breach it. And so far, it looks like the trend is continuing.

CHRIS SIPES CFP®: Higher on the Russell 2000. Sort of not surprising given that we kind of went nowhere with the small stocks for basically 21 to 24. So for small cap investors, this is a welcome respite in that market. And speaking of welcome respites, the international Markets, we've got the developed market represented here by IFA.

CHRIS SIPES CFP®: International Markets are broadly broken into two categories. You've got the developed Markets. So think Europe, Japan, Canada, and then you've got the so-called emerging Markets, which is going to be mostly China, about 30% China. And then some other countries like Mexico. I think Vietnam is in there.

CHRIS SIPES CFP®: There's a lot of countries that it's questionable as to whether or not they're quote unquote emerging anymore. But anyway, that. I digress. This is developing. Still fairly strong trend, but you can see we're getting into spaghetti soup up there where it's just kind of sideways. We've definitely lost a little bit of the momentum in the developed market.

CHRIS SIPES CFP®: Then if we take a look at emerging, same thing. We've absolutely lost that momentum in the emerging Markets. We've lost that 50-day moving average, looking kind of similar to the NASDAQ, which is Actually, not all that surprising given that the emerging Markets have been showing a ton of strength over the last couple years, mostly driven by technology.

CHRIS SIPES CFP®: Now, it used to be that 20 years ago or so, most of the emerging Markets were commodity Markets. And that is largely no longer the case where a lot of them are actually driven by things like semiconductors. And so since we've seen... Weakness there in the hyperscalers and the technology side of things.

CHRIS SIPES CFP®: The emerging Markets have also been struggling. Who knows? It also could be pricing in some difficulty in getting energy as the Strait Of Hormuz is closed. I don't know. It all makes sense in hindsight. But as of right now, we're seeing a lot of weakness and a lot of technical damage in that chart.

CHRIS SIPES CFP®: Then we take a look at the ag which is the Bloomberg aggregate index and this is a mental.

CHRIS SIPES CFP®: Be a representation of the U. S. Bond market kind of on a broad scale. And this would be in kind of the quote-unquote belly of the curve of the bond market, which is in the five to seven-year timeframe. So bonds that are issued for that kind of medium-term time period.

CHRIS SIPES CFP®: And we've been basically sideways for several years, which corresponds with that 10-year chart that we looked at earlier because Interest rates up mean bond prices down. Interest rates down mean bond prices up. We've so far really been in an interest rate trading range for a few years now. We're at the top of that range again.

CHRIS SIPES CFP®: And so therefore, the bond prices are towards the bottom end of that range here. And so really, as a bond investor, though, you want to look at what's my yield, what are my coupons that I'm getting. To compensate me to wait. And those are north of 4. They're in the 4% to 5% range on that 10-year treasury now.

CHRIS SIPES CFP®: And so the ag is providing more in terms of coupon yield than it was in, say, 21, 22. When interest rates were practically zero, we got those interest rate raises in the market, which just absolutely killed the bond market. This time might be a little different because even if we continue to get a rise in interest rates, the likelihood that we get that ferocious of a rise like we did in 21 is pretty low.

CHRIS SIPES CFP®: And you've got this cushion now of, call it 5% yields in bonds-ish. So there is a little bit of a cushion in that market. It's not going to be as extreme in terms of the hit as interest rates continue to head up.

CHRIS SIPES CFP®: All right, long bonds also continue to just be in the doldrums. You can see there from late 23, we've been in this range. This is the 20-year plus treasury that is represented by TLT. These are not tips. These are not inflation protected. And so these are just what they call nominal bonds. And boy, no signs of life just continuing to tread water in.

CHRIS SIPES CFP®: In that long-term bond market. Been a lot of pain there for long-term bond holders. But again, on the flip side, we talked a little bit about that. We're seeing interest rates that we haven't seen in 20 some years. So those that are just kind of holding, at least you're getting paid something to hold that at this point.

CHRIS SIPES CFP®: All right, gold going from the hero to the zero in the last year. You can see the abrupt change that we had. From the start of the war, gold has been heading down. We got the death cross a few weeks ago, which was the 50-day moving average crossing over the 200-day moving average on the downside. So we've got a confirmed downtrend in gold.

CHRIS SIPES CFP®: However, just over the last week, week and a half, you can see that maybe we're going to get a test of those. We're getting a little bit of a bottoming pattern there. Way, way too early to tell for sure. Darren might be able to tell you a little bit clearer with the candles and such, but at least with this actual chart, it's too early to tell, but at least some signs for some hope from the gold market.

CHRIS SIPES CFP®: And a couple more here. We got Bitcoin also in a confirmed downtrend. We've been in this confirmed downtrend since the beginning of the year. Bitcoin's really been flirting with, it feels like 65,000. We've been here forever, Dan.

CHRIS SIPES CFP®: We've had a couple blips up here and there, but so far, we just continue to hit that 50-day moving average as resistance on the high side. So no signs of breakouts yet. Really just close, but no cigar when it comes to Bitcoin so far.

DANO WEIR: And I know Darren listens when he's not on the show. So Darren, I'm thankful that you're only listening and not actually able to see the chart that we're looking at, buddy.

CHRIS SIPES CFP®: Yeah. Now, last but not least, we'll take a look at commodities because that's a good representation of what you see when you do see a breakout. This is probably more extreme than others, but we were talking about the fall off in commodities. Now, commodities, one thing about them is they are highly volatile.

CHRIS SIPES CFP®: Highly volatile. And you can see the start of the war, commodities took off. Then when the ceasefire was announced, or one of them, I think it was number 38, correct me if I'm wrong, Dan, the 38th ceasefire, that's when it thought it was real this time. We got the drop off. In commodities.

CHRIS SIPES CFP®: And now we just went straight back up and look at the chart where it blows right through that 50-day moving average on the high side. So honestly, in the short term, it would not be surprising to see commodities kind of take a breather.

CHRIS SIPES CFP®: Usually when you get big, fast moves like that, the market kind of works like a rubber band when you stretch it, and then it's going to come back and kind of bounce around. So a lot of movement there on the commodity side of things. But at least at the moment, not showing any signs of slowing down in the commodities market and what's going on in the Middle East, unfortunately.

DANO WEIR: Chris, did you actually know that number 38?

CHRIS SIPES CFP®: I feel like that's what... Did you make that up? I feel like we talked about it during that show that it was the 38th agreement when we got to that. Was that correct? Did you fact check me?

DANO WEIR: Gemini overview, so take that for what you want, but President Donald Trump has claimed at least 38 to 40 times that the conflict with Iran was near an end, close to a final deal, or essentially over. Good guess, Chris.

CHRIS SIPES CFP®: Nice. Perfect.

DANO WEIR: So there we go. There's a look at the market this week. Oil certainly affecting things. Inflation perhaps not over a 50 basis. Point hike maybe around the corner. We don't know. Hyperscalers, hemorrhaging cash, semiconductors, gobbling it all up. That's where it stands now. But we can guarantee one thing, Chris, and we never use that word, but we can guarantee one thing.

DANO WEIR: Next week, it will not be exactly the same. So we'll take a look again on the Markets here from Fremont Advisors and Sonoma Wealth Advisors, our private wealth arm. Thank you so much for checking out the show. If this is your first time checking out our show.

DANO WEIR: Whether you found us on Apple Podcasts or Spotify or YouTube, subscribe. That's how you get future episodes. You can also comment and leave us a question. We will get back to you. And thank you so much for checking us out to our clients and prospective clients. Learn more about our firm at SonomaWealth. Com, and we will see you right here next week.

CHRIS SIPES CFP®: You're up to date with Fermata On The Markets. Learn about how the Fermata Advisors family of brands can help your family and business in finance. Sonoma Wealth Advisors, a comprehensive, holistic finance solution offering financial planning, asset management, and tax planning. Take our free wealth analysis now at SonomaWealth. Com.

CHRIS SIPES CFP®: Fermata 401k, business retirement solutions for small and large companies with a fiduciary commitment. Learn more at Fermata401K. Com. Fermata Tax, personalized tax services for yourself. Your family, or your business with an emphasis on efficiency. Find out how at fermatatex.com.

CHRIS SIPES CFP®: If you haven't already, like and subscribe to Fermata On The Markets on YouTube, Spotify, and Apple Podcasts. Fermata On The Markets features human hosts, editors, and voiceover talent. Music by Dr. Delight on Soundstripe, voiceover by Joan Alloway Nash. Thank you for listening to the very end. We appreciate diligent viewers and listeners.

CHRIS SIPES CFP®: Fermata Advisors, LLC is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempt from registration requirements.

CHRIS SIPES CFP®: This content was produced by Fermata Advisors, LLC, DBA Sonoma Wealth Advisors, DBA Fermata 401K, DBA Fermata Tax, 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.

CHRIS SIPES CFP®: Information presented is for educational purposes only 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.

CHRIS SIPES CFP®: And is not intended as recommendations appropriate for any individual. Viewers and listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.