In this market‑commentary video, Kenny Polcari opens with a quick‑fire briefing of the day’s headline macro and geopolitical items – Middle‑East tensions, Brent breaching $100, and a 10‑year Treasury yield near 4.7%. He then reviews the previous trading session, highlighting a broad market sell‑off driven by a concentrated decline in mega‑cap tech stocks, especially Tesla and Google, while industrials, utilities, healthcare and energy posted gains. Polcari dissects Tesla’s earnings, noting price cuts, collapsing margins, a plunge in regulatory‑credit revenue and a $25 billion AI‑capex plan that raises concerns about profitability and timing. He similarly critiques Google’s strong top‑line but massive AI‑spending outlook ($205 billion forecast) and the lack of a clear pay‑back horizon, framing both companies as catalysts for a wider AI‑spending debate that rattled the “Mag Seven.” He points out that the sell‑off was highly concentrated – the market‑cap‑weighted S&P fell 1.2% versus a modest 0.4% drop in the equal‑weight index – indicating a mega‑cap rotation rather than a market‑wide liquidation. Polcari notes Intel’s earnings beat as a bright spot and previews the upcoming earnings week (Microsoft, Meta, Apple, Amazon) alongside the Fed’s FOMC decision, with September rate‑hike odds now at 70%. He reviews supporting macro data (PMI, home‑sales, building permits) and stresses that non‑tech sector strength would confirm a rotation narrative. After a brief market‑technical analysis of S&P support levels and sector YTD performance, he advises investors to stay disciplined, focus on personal risk tolerance, and offers a complimentary portfolio review. The episode closes with a detailed salmon‑lemon spaghetti recipe, adding a personal, lifestyle touch to the market briefing.
Chapters
Well, good morning. Yes, it's me, Kenny Polcari, your host of the party. And today is Friday, July 24th, 2026. And here are the things that you need to know to get your day started. Well, the Middle East tensions continue to flare. Brent oil pierces $100 a barrel. The Houthis attack Saudi tankers in the Red Sea, and it creates more tension around, uh, the Mideast. Tech, well, I got whacked yesterday. Industrials, utilities, healthcare, and energy all ended the day higher. Tesla and Google, well, they disappointed, but Intel, they crushed it. The 10-year bond now kisses 4.7%, something that we've been discussing. And what do we have for dinner tonight? We're gonna have the salmon lemon pasta. It is a glorious day here. Okay, so what happened yesterday? Stocks got slammed. Those exhausted sellers, well, they weren't as exhausted as we thought because they came back with a vengeance, hitting hard. And those buyers that took stocks higher on Wednesday Well, they came back as well, but they let the sellers take control, and tech stocks got punched in the face and then in the gut. The Dow lost 503 points or 1%. The S&P down 90 points or 1.2%. The NASDAQ gave back 533 points or 2.1%. The Russell, well, it lost 20 points or 7/10. The transports gave up 20 points, not so bad, up a 10— down a 10th of a percent. The equal-weight S&P lost 31 points or 4/10 of a percent, while the Mag 7 lost a whopping 1,640 points, or down 4.8%. News that Tesla and Google disappointed, both reporting negative free cash flow, a result of spending massive amounts of money on the AI buildout, lit the fuse, right? It was the first time for Google, and that sent shockwaves through the system. Then we witnessed oil, uh, trade higher. Brent now back up and through $100 a barrel, WTI at $92 a barrel. Not to be outdone by the bond market, which reacted and sent the 10-year Treasury blasting up and through the 4.6s, only to kiss 4.7%. Probabilities of a September rate hike are now 70%, up from 51% on Wednesday and 40% a week ago. Okay, so here it is. Tesla earnings didn't just disappoint, they exposed exactly what investors are worried about. Tesla had to slash prices and offer aggressive financing financing incentives, crushing profitability in the process. Operating margins collapsed, automotive gross margins fell, and high-margin regulatory credit sales plunged by 67%. Then came the real gut punch. Management told investors that capital spending this year will exceed $25 billion as Tesla pours more money into AI initiatives like the CyberCab robotaxi and the Optimus humanoid robot. The problem? When do we see any meaningful revenue? The story went on, but you get it, I would imagine, right? This wasn't about a bad quarter. It was about the growing concern that Tesla is asking investors to fund an extraordinary expensive future while today's core business is actually becoming less profitable. Tesla lost 14.5% or $55, but this morning it is quoted up $5. And then we had to deal with Google. They delivered another impressive quarter. Revenues beat, cloud growth remains strong, search proved more resilient, and AI products continue to be the story. Under normal circumstances, that would've been enough to send the stock higher, but investors weren't focused on what Google earned. They're focusing on what Google is spending. Management raised its 2026 capital spending forecast to about $205 billion, up from $190 billion, confirming that the AI arms race is becoming even more expensive than we had anticipated. And that reignited the spending debate because it did not come with a clear timeline for when those investments are actually gonna generate an acceptable return. Now, what's important is not that investors are doubling AI's potential, that, that Google is doubling its AI potential. They're questioning the economics and timing, right? How long can these companies continue writing ever larger checks without seeing the payback? That concern rippled across the entire AI ecosystem, hitting not just Google, but the entire Mag Seven cohort and beyond. Google lost 7% or $23, but this one, it is also quoted higher, up $3. And again, you got to ask the question, is anyone really surprised? Analysts had raised the bar. We discussed this. Stocks were priced to perfection. We talked about that too. We talked about the risk of the sell the news type of reaction this earnings season. So what did everyone really expect, that every company would beat, raise guidance, and send stocks up another 10%? Hardly. That's not how markets work. It doesn't mean the, the game is over. It just means that we're getting the valuation reset that many of us had expected and discussed. And remember what I said yesterday? The buyers didn't disappear. They simply stepped aside and they let the sellers push prices lower. For long-term investors, that is a gift. Now here's the part of the headlines that the— here's the part that the headlines don't tell you. Yes, the Dow dropped more than 500 points. But more than 400 of those points came from just 4 stocks: Google, Goldman Sachs, Amazon, and Sherwin-Williams, of all, of all names. This isn't a broad liquidation, it's concentrated selling. To pull back the sheets a little bit, and it gets a little bit more interesting, because the market-cap-weighted S&P fell 1.2%, but the equal-weighted S&P only lost 4/10. If investors were truly running for the exit, it If this was a sell everything moment, then the Equal Weight Index would have been crushed as well, and it was not. And that tells you that this is a mega-cap story, not a market story. The sector tape confirms it, right? We saw strength in industrials, utilities, energy, and healthcare. The Mag Seven is what absorbed all or most of the pain. That's where the selling lived, in 8 or 9 stocks that became the most crowded trade on Wall Street, right? We've been talking about that as well. And I've been saying for weeks that when the Momo guys decide that the narrative has changed, they don't tiptoe out the door. They all run for the exits at the same time because they all use the same logic. We watched it happen in the semiconductor complex a few weeks ago, and yesterday it happened again, uh, across the Mag 7. But remember, the fundamentals didn't suddenly change, but their positions Well, they did after the bell. Now Intel reported and crushed it. Earnings much stronger than expected, robust guidance, and the Momo guys loved it. They're taking the stock up 5% in the pre-market this morning. Now next week comes the real test. We're going to get Microsoft, Meta, Apple, and Amazon. It's also the biggest week of earnings across the board, right? So at the same time, it's also the Fed week. The FOMC announces its rate decision on Wednesday. While a July rate cut— rate hike or cut still appears very unlikely, the market has increased the odds of a rate hike in September, taking it from 40% last week to 70% this morning. And that also changes the conversation. And don't forget the other stuff. Crude is now back in the $90s, geopolitical tensions continue to escalate, and bond yields remain unsettled. And those are exactly the kinds of macro headwinds that make the Momo guys nervous, and exactly the kind of environment where long-term institutional investors begin sharpening their pencils. Which brings us right back to where we started. As summer began, we talked about the potential for increased volatility driven by, uh, earnings, right, the start of earnings season, US politics, geopolitical risk, and an unsettled bond market. Nothing that happened yesterday changed that thesis. If anything, it only confirmed it, right? ECO data today includes the S&P Manufacturing PMI expected to be 54.4, which is fairly bullish. Services PMI 51.5, which is also bullish, right? Remains in expansionary territory. New home sales up 4.8% versus last month's read of negative 7.3. That appears to be bullish. And we're going to get building permits. The last month they were down 3%. Let's see what they are today. Uh, today's earnings give us a broad check on the economy. American Express tells us whether the consumer is still spending. For Verizon and Charter Communications tell us the health of communications and broadband demand. HCA gives us a read on healthcare. SLOB, S-L-B, gives us— tells us what's happening in the oil patch now that oil is back above $90. NextEra Energy gives us insight into the utilities and AI-driven power demand, while Canadian National Railroad is a barometer for industrial activity and freight, while Booz Allen offers a window into government technology and defense spending. One final thought: today is about whether or not investors are willing to buy anything after yesterday's tech-driven sell-off. If these non-tech sectors report solid numbers and their stocks hold up, it reinforces the thesis that this is a rotation, not a liquidation. If they don't, well, then we're going to have to revisit that thesis, right? European markets this morning are all up. Spain up 1%, Italy Euro Stoxx and Germany are up about 8/10. France and UK are up 4/10 of a percent. US futures, well, they are up. Dow futures up 270 points. S&P's up 15, and NASDAQ's up 30, while the Russell's up 11 points. The S&P closed at 7,408, down 90 points or 1.2% yesterday after trading as low as 7,376. We are below trendline support at 7,474, which means that is now resistance. Near-term chart support is that the 7,300, 7,350 level, but the trendline support is all the way down at $3,171.72, a level that I do not think we're going to test at all. Let's just remind ourselves, official S&P sector performance so far this year: energy is up 32%, industrials up 17%, infotechnology up 16.5%, real estate is up 12%, basic materials up 9.5%, utilities up 8%, consumer staples up 6.5%, healthcare is up 4%, financials up 2%. Only communications and consumer discretionary are down on the year at down 4.6% and 8.1% respectively. Now don't let the headlines force you into making these emotional decisions. We've talked about this. Focus on your own plan. Focus on your own risk tolerance, your age, where you stand in the, in the pipeline, right? Don't let the noise of the day cause chaos. If you'd like to discuss these goals, evaluate the risk in your portfolio, just get a second opinion, feel free to call me at 561- 9310190, because I'm always happy to provide a complimentary portfolio review and risk assessment. Okay, well, it is a glorious day here on Cape Cod. The sun is out, the sky is blue as you can see it. We're going to have the salmon lemon spaghetti. For this, you need a half a pound of spaghetti or more, depends on how many you're making. Olive oil, butter, 2 lemons, fresh grated Pecorino Romano cheese. You need mint and fresh basil. Start by bringing a pot of salted water to a rolling boil. Leave it on the back burner. You're gonna— once it boils, you're gonna add the pasta, cook it for about 8 minutes. Now while that's happening, in a large sauté pan, you're going to melt half a stick of butter, a little bit of olive oil, heat it up. You're going to add in the zest of 2 lemons and the lemon juice, right? When the pasta is done, you're going to add it right to the pan. Add also in a ladle of the pasta water, which we know is the tears of the gods, and you're going to toss it really well so it's all nice and coated. Now you're going to add the chopped mint and basil. Let it just cook on the stove there for another minute or so. Turn the heat off, and now you're going to add plenty of Pecorino Romano cheese and toss it. It'll form a nice creamy sauce. If you need it, you can always add a little bit more of the pasta water just to keep it moist and nice and creamy. Try it, trust me, you can thank me later. Until Monday, take good care.
