Street Analysis

Speculations galore at the Wall Street Casino that has turned into recently!

Metaphorically, military keeps marching without the generals, i.e. top stocks. That is the story of today’s Wall Street.

It is not too different than the U.S. Department of Defense, sadly speaking now called the Department of War. Two of the top officers were recently shown the door this month alone. First, it was Gen. Randy George, Army Chief of Staff in early April and now John Phelan, Secretary of the Navy just about two days ago. These are high profile departures and nothing to sneeze at for a country as powerful as United States.

What this means is that the end is nigh for the Wall Street speculative excesses as we know it, let alone one of the most powerful defense forces in the world! Neither Wall Street nor military can march much further without its generals. Troops can only go so far. Leaderless rallies cannot last for long.

Last week, we covered that the stock market made a new high without having a SINGLE one of the top ten market cap stocks making a new 52-week or all time high. Yes, that is correct. Not even one of the top ten names. After that, S&P 500 made another high this week with a smaller bump closer to 7150.

This time around, only 3 out of the top 10 participated in the muted rally by making new all-time highs: Alphabet (GOOG), Amazon (AMZN) and Broadcom (AVGO) – with all 3 in a dangerously bleeding category for valuation. They are up 21%, 23% and 36% respectively in past 4 weeks alone. Other 7 of the top 10 including the “Market Cap King” Nvidia (NVDA) are either silently watching and/or staying in their deep slumber.

The bottom line is that the U.S. “system” is finally running out of steam after much collusion between the bad actors of Wall Street and government institutions driving he fiscal and monetary policies which fuel the artificial surges. It is like throwing a fuel on the fire. Now, we are running out of that fuel. Time for the reality check.

Intel (INTC) is up 25% in a pre-market condition today after having more than tripled in last one year based on the earnings beat and better than expected results. It had been one of our favorite stocks a while back and now it turning into a “speculative” one, unfortunately, as if there are not enough speculative big tech stocks that the Street is so enamored with.

At the same time, major software stocks have started to make their way closer to the ground reality after having been pummeled and punished with a recent scare from Anthropic’s major revelation about its product capabilities that threaten the “established” software business models.

On the other side of the equation, the risks remain a plenty with the major ones being now continued and unresolved war with Iran that is causing the long-lasting damage and disruption to the energy markets. That is in addition to the major drag of “unreal” budget deficits and debt the U.S. carries aside from nose-bleed market valuations. Collectively, it does not bode well.

This is one of the most disproportionate and warped share of the risk-reward equations of all time. Clearly, the repercussions can be just as ugly once we are all said and done, i.e. the dust settles after the bust. ‘nuff said as mentioned in a good number of posts before. History is not kind to those who ignore.