Is the AI Bubble Being Tested? Debt, 5% Yields and the Rotation Out of Tech

[0:00] Dano: Less than two weeks away from Halloween, it's October 16th, 2026. Is the market experiencing a spooky season? My name is Dan O'Weir. I'm the Marketing Director for Fermata Advisors and our private wealth arm, Sonoma Wealth, joined shortly by our managing principals, Daren and Chris, asking the question, is the AI bubble being tested? Tech stocks pulled back this week as investors questioned the debt funding, the AI build-out. Will the Dow gain 550 points Thursday as money rotated into other sectors? We're going to look at potentially why. Also, you think your inflation is high at the grocery store? Why business inflation makes it look tame? Are tariffs to blame for that? How is it possible that imports and exports are both spiking? And is the AI market finally giving up the ghost, Daren's words? Or is this another speed bump on the way back to all-time highs? Daren's got a chart that shows one view of the market had a good week. Let's find out right now.

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[1:31] Dano: On The Markets, Fermata Advisors, I am Dana Weir, joined by Daren Blonski, CFP, Chris Sipes, CFP. Guys, we got to start here. They are technically on the market. Well, they're definitely on the market, but this is a marketing stunt, perhaps. Tesla, did you guys see the flipping car, the flying car last night? Did you guys catch that? Oh, yeah.

[1:55] Daren: Yeah, that was something else. I'm still like wrestling with the practicality of what I saw, but yeah, okay.

[2:02] Chris: Yeah, a friend sent it to me and I'm like, whoa, I had no idea. And the... The responses from my kids and my wife was hilarious because, of course, my five-year-old son, recently six, was like, that is the coolest thing ever. I want one, and that's amazing. The older daughters thought it was AI. And my wife's response was the best. It was, who would ever want to do that in a car anyway? What are you ever going to use it for? She's being very practical.

[2:38] Daren: You know, it's interesting. I saw it and I was like, okay, you know, maybe it's one of those things where like you push the envelope enough just to create like some type of innovation that is actually practical because who are they going to give a license to drive that thing, right? My favorite meme of the week was a car like going through the middle of a billboard that was stuck up in the air. And like my favorite in the line was like first time driving a Tesla super rocket.

[3:07] Dano: Exactly. Right. And Daren, I want you to pull that chart up. Let's pull up Tesla later in the show because I don't know if it was certainly investors weren't necessarily impressed with that.

[3:18] Daren: You know, Elon's got a long history, though, of doing these things that seem outlandish. And then all of a sudden, like we see how they fit in the tapestry of the markets and innovation. You know, there was a time when electric cars were just like, come on, man, really? And now it's like Tesla superchargers all over the place and Tesla's all over the place. So I wouldn't count them out. I think there's something practical coming from it. But yeah, the market didn't seem too excited.

[3:48] Chris: Just trying to picture the roads in California with everybody that has a car that can kickflip over each other. It's going to be a mess.

[3:56] Dano: It'll be useful in Los Angeles. I'll put it to you that much.

[3:59] Chris: Yeah. Yeah. So this is a little interesting with midterms just a couple weeks away. The split Congress, now this would be if you get two different parties in the Senate and the House. That tends to be the best for the markets. And a unified Congress actually has a lower return from markets historically, and this is post-war period, 1951 to 2025. Interesting. Right now, it's looking like the Democrats will flip the House for sure. And based on the betting markets, it looks like the Senate is likely. So we should get a unified Congress based on how things look today. Oh, that's right. I forgot, Dan. Sorry. We're back and forth on who's flipping slides. I can do it, man. I'll do it.

[5:08] Dano: I got it, buddy. I got the story.

[5:11] Chris: Sorry for the rough production there. So the sentiment votes this week on AAII ticked up a little bit on the bearishness off the bearish highs of about a month ago. So we're... Kind of closer to the averages. Now, if you look at the CNN fear and greed index, we're at 30 fear, which is a fairly substantial drop from last week, which was 46 neutral. So the CNN fear and greed index has kind of been all over the place. That one, as a reminder, is a measurement of seven positioning signals, whereas the AAII sentiment indicator is just a survey of fund managers. And then you've got... The Bitcoin fear and greed index at 63, which is greed, not much different than last week at 59 greed. And that makes sense given that Bitcoin's kind of been in the same place here for a while. So those sentiment indicators tend to follow price. And in general, whenever sentiment hits an extreme in either direction, either people are extremely excited about something. Or if they're extremely pessimistic and downtrodden about something, those both tend to be contrarian indicators in either direction. So you actually, I think from an investor standpoint, prefer somewhat of a neutral stance, historically neutral stance. Or if you're a long-term investor, you prefer something overly bearish because that likely means you're getting a decent price going on the way in. Of whatever asset class you're looking at.

[7:01] Chris: Okay, so this week we got an update on the CPI. This is the year-over-year number is 3.7. You can see this on a very long-term chart going back to the 50s. I think what's kind of notable about these longer-term charts is just how the volatility of inflation was... Sort of suppressed coming out of the 70s, which would make sense. I mean, we went through a hugely volatile and high inflationary period during the 70s. We got those two jumps in inflation. But coming out of that, we had pretty low volatility when it came to inflation. And then we had COVID, of course, and now we've been sort of struggling to get back down to our normal, what we felt like has been normal. Coming into the 90s and the 2000s. So it's elevated again, 3.7%. Looks to be in a place where it could kind of go either way, either higher or lower. It's not trending, but it's definitely staying elevated.

[8:09] Chris: Now, Dan, you foreshadowed a little bit the business inflation. This is the producer's price index, which is kind of also known as business inflation. And I'll read what Heather Long said. She says another day, another hot inflation report, business inflation surged in September to 6.3%. The expectation was only 5.4. So that's a big thing with markets is when you get numbers that were not expected. It's not so much the absolute level of the number. It's more what is that number relative to the market expectations. And here the number was much higher than the market expected. So every category back to Heather. Heather Long, she says every category of business inflation was hot, even after stripping away energy costs. It's inevitable that companies will pass some of these costs along to consumers. It's yet another reason this fight against inflation is likely to be longer than anyone wants. Business wholesale inflation was at 6.3% versus consumer inflation at 3.7%. So PPI does tend to be a leading indicator of CPI. As she said, what you can see here, the CPI is in green. CPI tends to follow the PPI, but with a lag. So we'll see if that continues here.

[9:38] Chris: All right. And if we take a look at export prices and import prices, here we can see import prices year over year. A lot of volatility in these, you know, in normal times. So the fact that we're getting these jumps is not necessarily kind of out of the ordinary, but it is a little concerning that we're seeing this jump along with the jump in inflationary measures. So the import prices year over year looking at 8.1% on imports and on export prices, it's even higher at 11.6%. So goods that are being sent out, both numbers elevated relative to history. And those gray lines in... The charts, you can see our recessions. And you'll notice that typically when you get these big price jumps, it can be followed by a recession or coincident with a recession. There's obviously examples of when that didn't occur, but those higher prices tend to squeeze the financial conditions of the economy. And therefore, can sometimes lead to recessions.

[11:00] Chris: Now on the plus side, and an area where a lot of folks are saying, hey, you know, higher rates actually lead to higher inflation, and it starts to snowball on itself. Higher rates are not going to pull back inflation. It's not going to have an impact on inflation. It's going to have the opposite effect because it's going to put more money into the hands of the people that are spending it, which is by and large the... The generation that holds most of the assets, which would be the baby boomers and the folks that are on Social Security. And if you look at Social Security, adjustments, let me just read what Charlie Biello said. He said 72 million Social Security beneficiaries will see a 3.6% cost of living adjustment beginning January, 2027, the 26% increase in benefits over the past five years. It's the biggest five-year increase since 1982 to 1986. So we've got a generation of time between when these elevated amounts have been coming through. So those that are receiving Social Security are going to get a bump starting in January. We'll see how that plays through to the inflation numbers.

[12:22] Chris: One of the things when we look at the stock market, and we've talked a lot about the concentration in AI and how much AI is driving the underlying markets, and a lot of that is driven by earnings growth. This from Mike Zaccardi and via the Daily Shot, and they're showing long-term US earnings growth expectations hit another record, which is 27%. Now you can see that those earnings expectations relative to other historical times, we've only really in the modern era been higher than this one time, which was 2021 coming out of the COVID Crisis. So what's baked in, in terms of expectations, going back to what does the market expect is pretty high. The market is expecting very, very good earnings. And where do they expect those earnings to come from? Well, they expect it to come from AI. And this, again, this is from Lance Roberts. He says Micron and NVIDIA are expected to contribute 36% of the S&P 500'S aggregate year-over-year earnings growth in the third quarter, while the 10 largest contributors represent roughly 66% of the total. So 10 of the largest companies in the S&P 500 account for two-thirds of the total of the earnings growth. This remains a selective market. So the concentration in the prices, of course, is one thing, but also the concentration in the earnings expectations are in one place. So if you see days like today where tech struggles, the entire market struggles. And so there's a lot riding on those earnings and the earnings expectations.

[14:17] Chris: And what's causing sort of the hiccup in that area is the higher interest rates. So we've talked a lot about how from the top down, AI has really gone from a cash flow driven investment theme where the hyperscalers were just financing the build out of the AI infrastructure via cash flow. That shifted slowly to borrowing. In order to fund those infrastructure build outs. And that has also flowed through to a lot of the smaller companies. So the one that's in the news this week is CoreWeave. And they're a company that took on a significant amount of debt to grow. A significant amount of their overall market cap was related to debt. And if you take out that debt at, say, 2% or 3%, let's just use an example of COVID times, and you borrowed that money for four or five years, typically debt is taken out for three to five years at a time on the corporate side of things. Well, now that debt is coming due and interest rates are not that low anymore. And if you're looking at a project and the potential returns, sometimes those projects can pencil. If let's say the return is, you know, to use easy numbers, let's say that return is projected to be 5%, you're going to borrow at 2%. Well, hey, there's some room there where that borrowing makes sense. However, if that, if that. Project's return is still 5%, but now you've got to go out and borrow and the new interest rate is 6%, you're not going to clear your hurdle rate, your cost of capital. And every firm has what's called a weighted average cost of capital. How much does their equity cost? How much does their debt cost? Those rates are going higher, which means that the projects that can be financed, the hurdle rate is much higher.

[16:24] Chris: Now, if you're a bond investor, Thank you. Specifically if you're a Treasury investor and you're going to lend that money to the U. S. Government, what should you expect moving forward? This from Charlie Biello showing that the starting 10-year Treasury yield, typically there's a correlation between that starting year yield and the forward seven-year returns. So the duration being roughly seven. On a 10-year Treasury yield. And if you look at the time period between January 1976 to December 2025, there's a 97% correlation with that starting yield. And so today, that's roughly at 6%, pretty close to 6%. So it would be the expectation over the next seven years. That's if you were to buy it today and hold it for the maturity period. So the expectations are a little easier to calculate on bonds than they are on equities.

[17:35] Chris: Now, some of the controversy around interest rates and just checking the prediction markets today before the show, there's an 87% chance, according to Kalshi, that the Fed maintains the existing rate in October that they're not going to hike. Warsh spoke yesterday and didn't give any indication that they were going to hike in the October meeting. So it's likely that despite the bad inflation numbers that came out kind of across the board, not likely they're going to hike before the midterms.

[18:08] Chris: But this from Prometheus showing why don't the hikes that have been implemented, why don't they bite quite as much? When it comes to slowing down the inflation numbers. And their answer at Prometheus is because the government is paying back a significant portion of those rates because the hikes don't have as big of an impact on the private sector as they do on the public sector right now. And that's a function of the fact that we've talked about. Before where a lot of the debt globally is held on, on the public sectors, balance sheets, sovereign debt. It's not, it's not as much on the corporate debt side of things, except for when you're looking at the smaller companies. So there is a significant portion of the smaller companies that hold a lot of debt, but the larger companies overall debt ratio is a lot lower. So, but, But that can have an impact on the AI structure. I don't know this to be a fact, but I did see somebody that mentioned that CoreWeave buys a significant amount of the NVIDIA chips as an example. So if that is going to be playing through where there's not as much demand for the large company with NVIDIA because the smaller company can't afford to buy as many chips because their cost of debt is going higher, that's how that debt can play through to the rest of the market and to the economy.

[19:50] Chris: Now, one area that has been impacted by higher rates has definitely been housing, where we've seen, you know, the housing market just completely locked up over the last few years. Here, we're looking at the U. S. Housing supply hits a 10-year high, which I think that headline is misleading because while it's a 10-year high, if you look at the month's supply, typically between three and nine months supply is considered, from what I understand in the real estate market, that's considered to be sort of like a normal supply number, meaning that the prices shouldn't be going higher. They also shouldn't be going lower. If you have over nine months, then that's an excess supply. If you have under three months, that's not enough supply and the prices should be going higher. So we're at four, we're approaching five, which is a 10-year high. But look at that pandemic low when the prices just shot up. We hit a low of 1.6 in this cycle. And we hit a high in the 2008 housing crash. Of 11.12. And well, actually it looks like there was, slightly after that a little bit more. But, but when the prices started to go down, that was when the, the housing month supply had hit over 11. So we're a long ways from that before we're probably going to see, you know, a significant change in the housing prices, despite the fact that the housing market is, is really struggling and continues to be impacted by these. By these higher interest rates, which is a flow through of the inflation and the inflation expectations. So as we keep getting these higher inflation numbers, higher crude oil, higher imports and exports, it's likely that we continue to see higher interest rates, which is going to, you know, continue to work its way into the economy and into the financial conditions in ways that are kind of hard to predict at this point. That higher cost of money has ramifications that will flow through in many different ways.

[22:04] Dano: Chris, I think this chart too is a good sign that you have a bunch of people who thought, hey, wait a minute, my House is worth X. I know it's worth X. My neighbor sold it for that last year. And you are finding out quickly, everyone's kind of sitting on that 2024 number and things have changed. And it's just a matter of who's willing to start sliding in. Sliding it down. I don't know how closely you guys track your Zestimate for your own House, which is of course just an estimate. Every realtor just cringed when I said that, but I've seen mine drop. I've seen mine drop 5%. You know, so I think you're definitely, I think prices dropping is definitely in the future if this number, if this supply is ever going to change.

[22:50] Chris: Yeah. And, and, you know, anecdotally talking with clients that have put houses On The Markets, it seems like it's taking a lot longer for those homes to sell. Even in the price ranges that even a few years ago would have moved very quickly because they were somewhat entry level for Sonoma County, let's say, which is pretty highly priced for the rest of the country. But in Sonoma County, they would have considered a market that would be selling quickly. And I've had multiple clients put homes on the market in that range. And It's... Just sitting on them and saying like, hey, it's not that we're even getting people to come look. It's just like there's just no activity at all. So it's a really strange market and been really tough if you've been in the real estate profession over the last few years here.

[23:44] Dano: That's our look at the economy. As the headline indicates here for this week's episode, we're taking a look at the AI bubble being tested this week. Mr. Blonsky is our technical analyst, and we've got a look at the heat map. Darren?

[24:01] Daren: Yeah, I thought we'd start off here with the heat map for today. Happy Friday, everybody. Hope you had a nice week. Kind of seems like maybe last week of hot weather here in California, and then off to the races for the fall and winter, and we'll see what El Nino does to us. So I guess enjoy the fire warnings we have across the state and the heat. For one last little hurrah before it gets cold. Speaking of going into winter months, kind of looks like a Christmas tree on the charts here. This is the heat map. So the heat map, what it shows you is proportionally what the largest S&P companies are. S&P 500 is the largest 500 U. S. -based stocks. This helps us understand maybe what the market is doing, right? It's not the whole market. It's a portion of the market. And the first thing that jumps out to me when you look at this chart is notice those big dogs, NVIDIA, Microsoft, Google, Meta. Look at MU down 14% on the week. AMD down 13%. NVIDIA down six percent thank goodness for all those smaller cap stocks and that's good news for the week the the smaller stocks underneath the hood the equally weighted index which i'll show in a minute actually didn't do too bad this week look like we have a rebound in happening i think at this point what we're seeing is a correction in the higher the bigger stocks that have done really well through September and kind of rebalancing with those underneath the hood which is actually not a bad correctional positioning. Notice Apple going up 2% this week. And to your point earlier, Dan, Tesla down 7%. I guess people don't like the rocket ship.

[25:48] Dano: It's, before you move off this, I find it interesting, since we're talking about the mags here, Apple, who, when it seemed like things are ripping for AI stocks, Apple was getting pummeled in some of those cases. And now when it feels like there's a rotation out of it, I guess people don't consider them an AI company, maybe more of a hardware company or almost a consumer products company at this point, not having such a bad week.

[26:15] Daren: Yeah, I mean, it's hard not to see Apple as a bit of a consumer, almost like a utility at this point.

[26:21] Dano: Yeah, right.

[26:22] Daren: Like, think what people are going to cut first, isn't their cell phone. Like, I'm cutting back. I'm going to get rid of my cell phone. I think not. So anyway, NVIDIA, MU. AMD, Intel, all the chip manufacturers, just getting Rod Kongen smashed this week. Well, that impacts the top line, right? So we saw this bearish engulfing candle this week right here. Actually, structurally, nothing really to worry about. We're trading right in this zone of $7.58 to $7.81. Get to the high of it, we get rejected. Get to the bottom of it, we find support. We're trading sideways at this point. What we'll want to look for next week is that follow through. And if we break down into this zone here, what happens? But I would expect as of now for that to bounce. Why? Because RSP actually printed a decent green candle this week. And this is the equally weighted index. So if we're looking at those squares, all equally equal boxes, then you find the equally weighted index suggesting that this might have been the bottom. We'll see. We're not quite there yet. If we look at... Kind of our retracement lines on our fibs you can see we poked our head above that 50 retracement level and then came back under it but the fact that we did close above the 38.2 that's i think positive on the the 38.2 fib not she retracement line but i want to see that 61.8 line first before i'd say hey we're probably going to go attack all-time highs again structurally not bad news It's continuing to repair the down cycle we saw in September. We did see that correction as we thought we might, just not in the AI stocks we saw in the smaller stocks across the board.

[28:04] Daren: When we look at IWM, the bad news is we did print a new low. This week, we hit that lower number. This suggests to me that what's happening out there is it's getting harder for firms to find money to continue operations. IWM is one of the smaller, the Russell 2000 index, smaller mid-cap companies, harder to get a hold of cash. And this could be saying, hey, the lending environment is tightening. So to Chris's point earlier about Kevin Moore saying, hey, we don't, didn't really say what they're going to do with rates. One thesis being floated out there is that actually all the private lending is really tightening up so that the feds are not going to need to tighten up and that'll control the inflation. And thus, the Fed doesn't need to do the work because the market's going to do the work for it. And you can kind of see that playing out. We're certainly at that point now where I would expect to see a bounce. Just came right in on top of this candle here from January. And you can see we traded right into that wick and found support. We held there. Let's see what the follow through is next week. Too hard to judge. But right now, the trend is still down in the small index or the small and mid cap.

[29:21] Daren: Indexes the big bad news in the market i would say is this close on the emerging market index which is largely china-based is a huge portion of this index and you can see that close below a double top breaking that neckline i want to see follow through but if this follows through what i would expect to see is some kind of movement like this in our emerging markets you could see 10% down. Without much of a blink in our emerging markets if we could if that continues this pattern falls through and holds again emerging markets are not the us markets those are different markets so i would expect to see anywhere between I don't know, call it 14% to 10% down if this pattern validates itself with follow-through next week in the emerging markets.

[30:19] Daren: But when we look at develop, it's not quite as dreary. Similar look, you got kind of that double top look, but we held above the neckline. So I think it's possible we're still finding, like this could be the bottom here. And then we start to see a trade upward in the developed markets. Maybe some of the cooling with this talk we've heard. Over the last few weeks with a broader conflict taking place between Russia and the rest of Europe. Maybe we're finding that bottom now and the narrative switches too early to tell what exactly is happening.

[30:51] Daren: When we look at the number of S&P 500 stocks below its 200-day average, you can see we actually did find that bottom and we're improving. So there's more stocks now climbing above their 200-day average. Bill's saying nothing good happens below the 200-day. Well, we want to see more stocks above that. So right now, I'm good on saying this might have been the bottom of that. And then we're going to start seeing a broadening out of participation, which would be helpful for a rally. We get any tailwind coming in from the AI companies, and you'll see the indexes hit all-time highs again. Again, you can't count this out, given we're just trading sideways. Maybe we're just trading sideways to wait for this. The equally weighted, the rest of the S&P to step up. The one like, I don't know, IWM still looking pretty weak. So maybe this is a bottom when we trade higher. If IWM starts pushing up, the smaller companies start pushing up, we get broader participation pushing up. And then the Qs turn it around right here, then you do see all time new highs pretty quickly. Right now, that's the I think the schematic we're looking at.

[32:01] Daren: We look at the 10 year, we did have some relief in rates this week. I'm starting to look at 535 as the top of the rate market for the time being. And like I was saying earlier, the market doing some corrections there on rates and pulling things back in to cool off a little bit. When we look at the currencies, currencies had a rougher week. This is the dollar finding weakness. This is also corresponding with the IWM, which is very dollar sensitive. From export-import standpoint. And those smaller cap, mid-cap companies are much more sensitive to global macro conditions. So you can see the DXY coming down, printing this red bearish candle right here, and then also probably influencing IWM.

[32:53] Daren: Now, we've talked a lot about oil. This is kind of oils and everything. Look around your room, you're sitting in, look at the phone, you're looking at, everything around you is produced with oil. You're driving the car, whatever. And you can see we're kind of trading between $100 and $80, have been for a while. It seems like whenever we get above $100, magically the parties and the powers that be are talking about peace. And if we get below $80, we start dropping bombs on each other. I've said often on this channel, it is a positive thing, unfortunately, for Iran and some of these oil companies, oil countries that are oil dependent to keep the Middle East strife. Afloat because it tightens the oil markets. And as long as they can keep shipping oil in whatever way they're shipping oil, they make more per barrel. And so if there's too much peace in the world in the Middle East, then they can't ship the barrels as expensive. So we tend to see these kind of 80-10, at least right now, that seems to be the schematic that's been at play all of 2026. Obviously it was not before, but that seems to be where the powers that be are holding it magically if this pushed above you'd hear trump say oh we're close to peace or something like that probably get accused for trump drain derangement syndrome for saying that but and then if it gets below all of a sudden we start dropping bombs it's almost like clockwork at this point if we look at gold gold continues to work its way down i think we're still looking at lower lows on gold coming into the bottom of support i think more likely looking like we're going to break down below $4,100 an ounce and hang out and go down lower at this point. Such a hard run that we had coming into 2026, and it's been a dismal trade ever since.

[34:46] Daren: Bitcoin, kind of the front end of the risk curve, still looks strong. That's why I'm still leaning bullish in the market. And perhaps we're just consolidating because Bitcoin's holding together. Bitcoin really started selling off. It tends to go first. On the up end and on the down, then we'd see something. We have this double bottom and we came right back in here and sort of testing this double bottom. Not sure if this is going to invalidate. So this pattern, we're right on the edge of that. You could also argue this is a cup and handle type pattern forming on a shorter time frame, which is a very bullish chart pattern as well. So Bitcoin actually looking pretty strong. That would suggest to us that the front end of the risk curve is healthy. We're doing some consolidation and then we're going to find some all time new highs going into the end of the year, which would fit the schematic that I've expected.

[35:37] Daren: Typically on the seasonality, you see September, first two weeks of October kind of week. Now we're past our first two weeks of October. We're going to step into the election. It's looking very likely that Democrats are going to either at least take the House, maybe the Senate as well. We can watch the next two years as they fight amongst each other. Markets actually appreciate it when they fight with each other, which basically means nothing's going to get done. And when nothing gets done, it's certainty in markets like certainty. So it's not all bad if we end up splitting the government. I guess bad for the extremes of either party because they won't get what they want.

[36:13] Daren: All right. Let's see. Interesting. This was kind of interesting, guys. If I said to Chris and Dan, if I said to you, what sector has done the best this year in the stock market? Without looking up, what would you just guess off of your feeling of what you've heard?

[36:31] Dano: I would guess energy. Oh.

[36:36] Daren: What else, Chris?

[36:38] Dano: Technology.

[36:40] Daren: And you're right, Dan. It is energy. So let's look at the year to date, and energy is the top performing, and Chris, you're second there. So energy and IT are the top performing sectors this year. Look at energy. So for those who don't know, the S&P 500, the largest 500 US-based stocks, is made up of 11 different sectors. Now, there's an awful lot of overlap. Like Amazon, where does that really fit, right? We could argue that one. But it probably fits in all of them at this point. But anyway, the way they're broken up, energy has been the number one performing asset class this year, which is interesting because typically when energy is doing well, it makes sense that we've had all that's going on in the oil sector. But it's interesting that it's leading this year.

[37:32] Dano: What are you getting at? What's your theory?

[37:36] Daren: Well, I mean, I think it's part of a bigger thesis where it's just this inflation is not as sticky as people think it is. And the oil is really driving this sense of inflation because in gas and diesel and those type of things. And as soon as we get that cleaned up, I think we'll find a less inflationary environment.

[37:58] Daren: All right. Let's take a look at, let's go back to S&P and we'll take a look at Tesla. Well, actually, let's just look at the mags. So the mags, again, you've got huge bullish bearish engulfing candle here for the mags. Again, that's why we're down this week. Perhaps it's just down. We'll get some movement upward now with the rest of the S&P 500 and things will improve. Take a look at... Tesla. This is the weekly candlestick on Tesla. Let's go look at the daily candlestick on Tesla. And sure enough, Mark came in and said, your rocket ship is awful, Elon. And he didn't like it. But still kind of in a double top forming there with a neckline. We still stayed above that. So nothing too awful there. But certainly had something to say about the rocket ship.

[38:56] Dano: I had another single I wanted you to look at this week if you have a moment.

[38:59] Daren: Sure.

[39:00] Dano: Well, Netflix. Netflix had quite a week. I don't know if you guys saw the headline, but Netflix making their first major layoffs in a number of years, laying off 6% of their workforce as 1,000 people, and they actually replaced their head of content. And I thought, wow, it's just a ticker I hadn't checked in a while. And it has been a rough 2026 for them so far.

[39:25] Daren: I think they really struggled with the content. I mean... They're actually kind of like a Disney story, right? They went in on a pretty hard narrative, and now there's like this, people are trying to figure out like, okay, well, did we go too far? Did we not? But it looks like it's right. Look at Netflix there so you can see, let's see what it's down this year.

[39:51] Dano: I think it's like 40%.

[39:54] Daren: Well, it depends where you take it right from there. It's actually not too. 19 percent on the year but from the top it looks really ugly yeah 47 percent but that's been a bad year and a half almost two years with Netflix Netflix has a long history these just like brutal sell-offs and then it just bounces right i was looking back there to 22 too i mean you know just that's another yeah creator And it's just interesting to me because the product is the same, really.

[40:33] Dano: I mean, in some instances, you could argue that it's actually even better now than it's ever been. And it's a perfect example of, Chris, what you said before, which is that the idea of invest what you know or invest what you like doesn't always play out in the price action.

[40:52] Daren: Yeah, because I don't know. Like, every time I turn on Netflix, I feel like there's nothing new on there. But I am the worst person ever to criticize. I was going to say. How often do you turn on Netflix? Yeah, hold on. The only time I turn on Netflix is when I have the flu and I can't move out of bed.

[41:11] Dano: Yeah, but just the knock on them is beyond their original content. They're always cycling in stuff that they've licensed or not. And in fact, they've actually just did a deal with Disney. There's going to be some Disney shows on Netflix, which is interesting about the economics of streaming. Just consider that. But, more like, you know, the reliability is there, the quality is there. They have this library of original content that hasn't changed and has only gotten better. And, and yet there was, you know, there's, there was the action. I thought that was interesting. So tough times for them this week.

[41:45] Daren: One stock I've been kind of watching is FICO, Fair Isaac Corporation. To me, there's a stock that's going to get massively disrupted. With the AI world. There's so many more efficient ways to really figure out what kind of borrower people are than the more traditional credit scores. And something seems to be a myth. So that's, I mean, look at that. I mean, this is brutal sell-off. Just absolutely brutal. You can see this is down 68%. And that's one of those stocks, it's like a staple of the economy. Everyone needs a credit score, right? Wrong. I guess not.

[42:27] Dano: Can I give you another one that's rife for AI disruption? All right. Yeah. These are just like our bad beats at the end of the episode. Look up Getty Images, which is G-E-T-Y. So they actually went bankrupt this week. Getty Images, if you don't know, is a stock image library. And so they do deals with photographers, both press and creative, where they have a... Whole big library of stock images so you can search you can search family eating at a table and there's a stock image of a family eating a table or you can search trump fires press secretary and you can find a picture of you know trump and the press secretary those types of things they went bankrupt this week and.

[43:10] Daren: I mean this has been a while coming it's not like it just happened this week you know i feel vindicated in this like so tired of like You know, we had to be so careful about every image that someone blasts all over the internet and you can't use it, blah, Now you're like, forget it. I'm just going to make my own image. You know, and Getty ran around the world threatening to sue everybody. And, well, life looks rough for them.

[43:36] Dano: That's right. All right. Should we leave it there?

[43:39] Daren: Yeah, let's leave it there.

[43:41] Dano: Thank you so much for checking out this week's episode. I hope you got some more information. As always, the questions can never be answered because we'll only know in hindsight. What we did ask is the AI bubble being tested. Took a look at the rotation and got an update on the economy. Wherever you found this show, whether it's on YouTube, whether it's on Apple Podcasts, maybe you're a Spotify listener. Maybe you're speaking of Tesla. We do have Tesla listeners. People on their Tesla cars pull us up. We do appreciate you, even if your car can't do a kickflip yet. Subscribe wherever you are. If this is your first time finding us, you can interact with the show. You can ask questions and we'll do our best to get back to you and give you a reasonable answer if we can. And you can learn more about our firm at SonomaWealth. Com. For Darren Blonsky, for Chris Sipes, I'm Dan O'Weir and we'll see you next week.

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