In this market‑update video, Kenny Polcari returns from a brief vacation to dissect a broad tech and AI sell‑off that is testing global markets. He walks through the latest index moves— the Dow up, S&P down modestly, Nasdaq down sharply— and a sector‑by‑sector breakdown that shows communications and consumer discretionary under pressure while industrials and energy hold up. The core narrative centers on AI‑related equities: major AI names (Microsoft, Amazon, Alphabet, Oracle, Meta) are falling as investors reassess valuation and return expectations, yet semiconductor and memory stocks, especially Micron, are rallying on strong demand for high‑bandwidth memory in data‑center expansion. Polcari highlights Micron’s upcoming earnings as a critical barometer, noting the unusually large 14‑17% options‑market move expectation and the stock’s pre‑market dip ahead of the report. He then shifts to Caterpillar, whose stock surged after its Solar Turbines unit joined Chevron‑Microsoft’s Project Kilby, a 2.7 GW energy project meant to power next‑generation AI data centers, illustrating the growing industrial side of the AI story. The macro backdrop includes upcoming PCE inflation data, ISM PMI releases, and housing indicators, with a focus on how a hotter‑than‑expected PCE could influence Fed Chair Kevin Warsh’s stance. Bond yields are elevated (2‑year at 4.18%, 10‑year at 4.48%, 30‑year at 4.93%), oil is sliding toward pre‑Iran‑invasion levels, gold is losing favor amid a stronger dollar, and the VIX has jumped 15% to 20, signaling heightened volatility. Polcari offers risk‑management advice, inviting listeners to a complimentary portfolio review, and intersperses the financial analysis with a personal touch—a bucatini amatriciana recipe—and a preview of his upcoming travel and media appearances (Yahoo podcast, Fox TV). The overall tone is analytical yet conversational, with cautious optimism about industrial AI infrastructure and concern about the near‑term volatility and valuation pressures on AI equities.
Chapters
Well, good morning. Yes, I'm back. It's me, Kenny Polcari, your host of the party. And today is Tuesday, June 23rd, 2026. And yes, I was away on vacation. I took a week off. I was kind of out of touch. I tried to be in touch, didn't have good internet, so I couldn't keep up. But anyway, here we are back at it again. And today, like I said, is Tuesday, June 23rd, 2026. And here are the things that you need to know. Well, markets are about to get tested, right? Because tech is under pressure around the globe. The cost— we sold off big last night. MU, they're getting ready to announce their earnings tomorrow after the bell, and that's going to be a big deal. Caterpillar Tractor, well, that's suggesting opportunities across a range of sectors as we discussed the AI trade. There's lots of economic data out, but the PCE will be the key for Kevin Warsh and the Fed. Oil is down this morning, bonds are down, yields are up, and gold is continuing to be lower. And what do we have for dinner tonight? We're gonna have the bucatini amatriciana. Okay, so yes, like I said, I am back from a brief vacation. I got home last night, so I'm just catching up on all of this action that I missed last week. Markets have been under a bit of pressure since we last spoke, Not a disaster at all, but there has been some pressure and likely more today. Remember, the market has climbed nearly 20% off those April lows on a number of themes, right? That include peace, possible peace in the Middle East, although the jury's still out on that. Oil continuing its fall and taking some of the pressure off of inflation. AI spending, that's gonna continue at a blistering pace. The new Fed chair, Kenny Polcari, and what will he do? Will he cut rates? Well, maybe not so quick. And corporate earnings remain resilient. Suddenly though, investors, traders, and algos are beginning to question all of those ideas, asking themselves, has this whole trade gotten just a little bit ahead of itself? So let's start with the closing prints from yesterday and see what that tells us. The Dow, well, that gained 148 points. Sounds good, right? The S&P lost 28 points or 0.4%. The NASDAQ got slammed down 351 points or 1.3%. The Russell added 25 points or 0.8%. The transports added 158 points or 7/10. The Equal Weight S&P added 11 points, or, uh, of, um, uh, just over a tenth of a percent, while the Mag 7 lost 736 points, or 2.2%. Of the 11 sectors, 6 were higher, 5 ended lower. Communications getting hit the hardest yesterday, down 2.3% on the back of a negative story on AI talent walking out the door at Google and into the door at Anthropic. And that's raising concerns that Google is losing the AI talent war. We're also seeing weakness in consumer discretionary, that was down 1.9%. Consumer staples down 1.3%. Basic materials are down 0.4%, and utilities is down 0.1%. On the upside, we saw strength in industrials, up 0.5%. Financials up 0.25%. Energy up 0.6%. Healthcare up 0.5%, and real estate up 0.4%. But here's where the story gets interesting. Technology actually finished the day higher, up by 0.4%. Even as investors were dumping some of the largest names in the AI ecosystem. Microsoft down 3%, Amazon down almost 5%, Alphabet down 5%, Oracle down 4.8%, Meta down 2.3%, all under pressure as investors reassess valuations and question whether the returns on all this AI spending is going to justify the massive capital commitments being made. Yet at the very same time, investors were aggressively buying— guess what? Other parts of the AI trade, suggesting it's more rotation and not liquidation. Semiconductors rose 2.5% while memory names continue to attract fresh money. Micron surging 6% to $1,211 and the DRAM ETF gaining 5.2% as investors focus on the exploding memory demand, right? Data center expansion and the AI infrastructure buildout that requires ever larger amounts of high bandwidth memory. Now let's go to Micron, because all eyes are going to turn to their earnings report tomorrow evening after the bell. And make no mistake about it, this matters. MU is taking on an NVIDIA type of market dynamic. The options market is already pricing a move of roughly 14 to 17% in either direction depending on what management says, and more importantly, how they say it. For perspective, Micron's average post-earnings moves over the past year have been closer to about 4%, right, up or down. So this 14% projected move highlights just how critical this report has become as a barometer for the broader AI trade. Now, the stock has had an extraordinary run, up 290% this quarter alone and more than 325% year to date. It is, as we say, priced to perfection. And when a stock is priced to perfection, Perfection becomes the minimum requirement. Anything less— think softer guidance, slowing demand trends, margin pressure, or even a cautious tone from management— could trigger a meaningful pullback. In fact, we may be seeing that, some of that psychology at work right now this morning, because Micron is down about 8.5% in the pre-market, trading near $1,100, as investors appear to be taking some money off the table ahead of Tomorrow's announcement. Now, the media is likely going to point to the sharp overnight selloff in South Korea, right? The KOSPI index was down 10% as the catalyst for this, arguing that weakness in one of the world's most important semiconductor markets is a bad omen for memory chip manufacturers. Okay, maybe, but let's not forget that the KOSPI has gained 95% year-to-date. The index is up 95%. That is unsustainable, and at some point markets need to digest or even correct those gains. And I'd say the same is true for MU, which does not mean that it's a fundamental change in the memory story. It just may mean that investors, traders, and algos are ringing the cash register and pocketing some of those magnificent gains ahead of one of the most anticipated earnings reports of the quarter. Now let's look at something else that should catch your eye. The Dow, that added 148 points, but Caterpillar accounted for 224 of those points. All by itself. In other words, without Caterpillar, the Dow would've finished the day lower, which naturally leads to the question, the heck is going on at Caterpillar? Well, can you say more the AI power grid? Shares surged up and through $1,000 a share after news that Solar Turbines, a CAT subsidiary, will participate in Project Kilby, a massive energy project in West Texas being developed by Chevron and Microsoft. This project is expected to generate roughly 2.7 gigawatts of power, enough electricity to support the next generation of AI data centers and advanced computing infrastructure. Put it this way, 2.7 gigawatts of power is enough to power about 2.5 million homes, or is the equivalent of 2 or 3 nuclear reactors. It is enough to power and run several of the largest data centers in the world. It's a big story. And what it's going to tell us is that the story is about building an entirely new layer of infrastructure that requires massive amounts of energy, transmission of the energy, cooling turbines, natural gas, and capital. The AI story is morphing into an industrial story. And just think of some of the benefi— series of that story. Chevron, ExxonMobil, GE Vernova, Constellation Energy, Eaton, Hum, Emerson, Johnson Controls, Trane, Energy Transfer, KMI, and that's only scratching the surface. Economic data today includes the Philly Fed Non-Manufacturing— think services index— and that's expected to be down 16 points, which by the way is better than -23.6 points last month, so that's good. We're also going to get the ISM Manufacturing PMI at 54.6 and the Services PMI at 52.1. Both remain in the expansion zone. Tomorrow brings us new home sales and building permits, both expected to be just a bit higher. But the focus is going to be on the PCE report on Thursday. That's the Fed's favorite inflation gauge, right? And it's expected to be hotter than last month's, at up 0.5% month over month and up 4.1% year over year. Core PCE at up 0.3% month over month and 3.4% year over year. Again, both of those reads higher than last month, and that will concern Kevin Walsh, right? And his whole perspective, uh, will bring it right back to the front page news, right? Because he's an inflation hawk. So the question is, will he say anything? Will other members of the committee say anything? Or will he let the markets just hash it out? Bonds got sold yesterday. The TLT and TLH down 0.8% and 0.6% respectively. This morning, bond yields remain elevated. The 2-year is yielding at 4.18%, the 10-year is yielding 4.48%, the 30-year is at 4.93%. Oil continues to decline on the back of the potential peace deal with Iran. This morning, WTI is trading at $73.43, down 40 cents, and is now down 19% since last week, and it's down 26% off the May high. We're almost back to that pre-Iran invasion levels, and if the deal holds then I would expect us to trade back into the mid-60s. Gold, which has been a fan favorite, has suddenly fallen out of favor. Oh my God, this morning it's trading at $4,111, down $78, and is now down 14% off the May high and has fallen below all 3 trend lines. But it should find support down in the $3,900-ish range. The slump in gold, a direct result of investors pricing in a possible rate hike or more later this year, as well as the recent run-up in the US dollar, which is now up 3.6% off of the May low. European markets are all lower this morning. The cost of once again taking the blame for what we are seeing as global weakness. Markets across the eurozone are all down more than 1, 1.25%. US futures are getting crushed as well. Dow futures down 350. S&P's down 100. The NASDAQ getting whacked over the head, down 730 points. While the Russell's giving back 50 points. The sell-off in the COSPI, right, big high-flying technology and memory names cascading across all these global markets. Now SpaceX is also in the news, closing down 16% last night and looking lower again this morning on news of a bond deal. It's down 3% in pre-market trading at $149.80. It's below its opening day price of $150. IPO buys at $135 are still okay, But we could see that change in a flash as well if this route of technology weakness just beats everyone up. Now, the S&P closed at 7472, down 28 points yesterday. Futures action this morning suggests it's not going to be a pretty day. But again, watch where you— we see the pressure build. AI names and names that are really extended. Today isn't the day to be a hero. Today is the day to watch where the pressure builds. Is the selling concentrated in the most extended AI names, or does it begin to spread? The answer to that question will tell us whether this is simply a healthy correction or the beginning of something much larger. The VIX is up 15% in the pre-market, ticking now at 20, gapping up and through all 3 trend lines, leaving markets vulnerable to a swift pullback. A pullback that may last a while longer. You can give me a call at 561-931-0190 to discuss your goals and your timeline. Let's assess the risk in your portfolio versus your tolerance for volatility. I'm always happy to give you a complimentary portfolio review and risk assessment just so you have a sense of if your, if your risk level matches your portfolio level. Okay, so what do we have for dinner today? Well, considering what's going on, the bucatini amatraciana seems perfect because it's a bit spicy, it's a bit hot, so it makes sense for today's dish. Now for this you need olive oil, guanciale, red pepper flakes, dry white wine. You know me, I use a Pinot Grigio, Santa Margherita. You need a can of peeled tomatoes, hand crushed. You need salt, pepper, a pound of bucatini pasta, and of course you need the fresh grated Pecorino Romano cheese. Bring a pot of salted water to a rolling boil on the back burner so that it's ready for when you need it. Start by heating some olive oil over medium-high heat in a large sauté pan until it starts to shimmer. Add the guanciale and the pepper flakes and cook it, stirring it till it's lightly browned. You know, you want it crispy. About 5 minutes. Now you're going to add the wine. You're going to cook that down, scraping up any of the brown bits on the bottom of the pan until it's nearly evaporated. Takes about 3 minutes. Now you're going to add the tomatoes, season it with salt and pepper, bring it to a boil, then reduce it to to simmer for about 15 minutes. Now add the pasta to the pot of water and cook until al dente. Using tongs, transfer the pasta from the pot of water directly to the sauté pan, adding about 1 ladle of the pasta water, or the tears of the gods as we talk, to the pot. Turn the heat up, toss it to coat the pasta and thicken the sauce a little bit. Remove it, add a handful of cheese, stirring it rapidly. Serve in warm bowls with plenty of extra cheese on the table for your family or for your guests, whoever it is you're cooking dinner for. I'm on my way to New York City today, so I'll be doing my Yahoo podcast tomorrow and then Fox TV on Thursday and Friday. So I'll see you from there. Until then, take good care.
