Bulls & Bears
Monday was quiet on the surface. S&P down 0.2%, Nasdaq flat. Underneath, the Middle East was anything but. The US struck Iran for a tenth straight day. Three American soldiers were killed. Trump vowed retaliation. Hormuz traffic had slowed to a trickle, and Houthis threatened a maritime blockade of Saudi Arabia through the Red Sea. Both of the world's critical oil chokepoints were now at risk simultaneously.
Tuesday brought a chip rebound that felt good for about 24 hours. The SOX bounced 5.2% as dip buyers piled in. Hedge funds completed the biggest long unwind on record, cutting 5% of gross positions in a single session. 3M raised its outlook, stock up 7.3%. GM lifted its profit forecast by $500 million. Hasbro jumped on Magic: The Gathering strength. Then Trump announced 50% tariffs on Canadian imports and oil tankers made U-turns in the Red Sea after Houthi threats. The sugar high wore off fast.
Wednesday set the stage for Thursday's carnage. S&P slipped 0.1%, Nasdaq gave back 0.6%. Oil kept climbing with Brent pushing toward $95. After the bell, Alphabet and Tesla both reported negative free cash flow. Alphabet raised capex guidance to $195–205 billion from $180–190 billion. Tesla missed earnings badly, 33 cents versus 51 cents expected. Super Micro surged 20% on its own results, but the mega-cap numbers told a different story. Trump threatened to bomb an Iranian bridge or power plant for every ship attacked.
Thursday was ugly. Brent topped $100 for the first time since May. Tesla cratered 14.5%. Alphabet dropped 7%. The Mag 7 had their worst session since April 2025. But the picture was split. Jobless claims fell to 187,000, the lowest since 1969. Lockheed Martin surged 10.5% on a record $230 billion backlog. RTX gained 7.3%. Intel crushed estimates after hours with revenue up 25% and data centre AI up 59%. Defence and energy won the week. Everything else lost.
- Mon 21 Jul — US struck Iran for the 10th straight day. Three US soldiers killed. Iran declared "full-scale war." Hormuz traffic back to a trickle.
- Mon 21 Jul — Houthis threatened maritime blockade of Saudi Arabia in the Red Sea. Both oil chokepoints now at risk.
- Mon 21 Jul — AMD surged 5% on expanded Microsoft Azure partnership. Helios AI racks to ship H2 2026.
- Tue 22 Jul — SOX index bounced 5.2%. Dip buyers piled in after bear-market lows. Hedge funds completed biggest long unwind on record.
- Tue 22 Jul — 3M raised full-year outlook, stock +7.3%. GM lifted profit forecast by $500M. Hasbro jumped on Magic: The Gathering strength.
- Tue 22 Jul — Trump imposed 50% tariffs on Canadian imports (wine, hockey sticks, cement). Oil tankers U-turned in Red Sea after Houthi threats.
- Wed 23 Jul — Alphabet reported first negative free cash flow in 20+ year history. Raised capex to $195–205B from $180–190B. Stock −4% after hours.
- Wed 23 Jul — Tesla missed earnings badly (33c vs 51c expected). Negative FCF for first time in 2 years. Margins compressed from discounting.
- Wed 23 Jul — Google Cloud revenue surged 82% to $24.8B (analysts expected 64% growth). Cloud backlog hit $514B.
- Wed 23 Jul — Oil surged, Brent near $95. Trump threatened to bomb Iranian bridge or power plant for every ship attack. Iran threatened to retaliate against energy infrastructure.
- Thu 24 Jul — Brent crude topped $100/barrel for first time since May. WTI hit $91.91. US gasoline back above $4/gallon.
- Thu 24 Jul — Tesla fell 14.5%. Alphabet dropped 7%. Mag 7 had worst day since April 2025.
- Thu 24 Jul — Intel crushed estimates: revenue +25% YoY to $16.1B, data centre AI +59%. Stock +10% after hours. Lip-Bu Tan turnaround confirmed.
- Thu 24 Jul — Lockheed Martin +10.5%, RTX +7.3%. Both raised full-year guidance. LMT record backlog $230B.
- Thu 24 Jul — Jobless claims fell to 187,000 — lowest since 1969. Labour market extremely tight.
- Thu 24 Jul — New Trump forced-labour tariffs (10–12.5%) on ~60 economies effective Friday. Australia hit with 12.5%.
- Thu 24 Jul — Houthis attacked two Saudi tankers in Red Sea. First tanker attacks since blockade declared.
| Index | Level | Week | Signal / Commentary |
|---|---|---|---|
| S&P 500 | 7,407.58 | -0.6% | Oil shock + Big Tech FCF burn dragging. Defence and energy only gainers. |
| Nasdaq Composite | 25,137.69 | -2.3% | Tesla −14.5%, Alphabet −7% on Thursday. SOX bounced Tuesday then faded. |
| Dow Jones | 51,711.29 | -1.0% | Honeywell +5.7% and defence names offset tech drag. |
| SOX (Semis) | — | Volatile | +5.2% Tue bounce, then gave it back. Intel +10% AH only bright spot. |
| ASX 200 | ~8,750 | -0.6% | Tracking global weakness. Copper miners holding. Energy benefiting. |
| KOSPI | — | +4% Thu | Bounced on chip rebound. Still fragile. |
| Russell 2000 | — | -1.2% | Small caps hurt by rate-hike expectations returning. |
| USD Index | — | +0.6% | Dollar strengthening on higher yields and safe-haven flows. |
| Yen | 163+ | 40yr low | BOJ under pressure. Oil import costs crushing Japan. |
Brent topped $100 for the first time since May. WTI closed at $91.91. Oil is up 40% year-on-year and 30% in three weeks. US gasoline is back above $4 per gallon. Hormuz traffic is down 75% after twelve consecutive days of US strikes on Iran. The Houthis opened a second front this week, attacking two Saudi tankers in the Red Sea. Saudi Arabia had been rerouting exports through Red Sea ports to bypass Hormuz. That workaround is now under direct fire.
Jobless claims hit 187,000, the lowest print since 1969. The economy is running hot into an oil shock. 30-year mortgage rates are at 12-month highs. The 30-year Treasury yield is in its longest stretch above 5% since 2003. The 30-year real yield is the highest since 2008. None of this screams "rate cut." All of it screams the opposite.
Fed rate hike probability jumped to 35% for next week's meeting, up from 10% seven days ago. A full hike is now priced by September. The ECB held but a September hike is 70% priced. European natural gas has surged 60% in a month. The yen hit a 40-year low against the dollar at 163+. The 2-year JGB yield hit 1.50%, its highest since 1995. The BOJ is trapped between a collapsing currency and an economy that cannot absorb higher rates.
Big Tech turning cash-flow negative is the other headline that won't go away. Alphabet posted its first negative FCF quarter ever. Tesla its first in two years. The hyperscalers are spending $700 billion-plus on AI this year, funded increasingly by debt and share sales rather than operating cash flow. Microsoft, Meta, and Amazon report next week. If the pattern holds, the argument that AI spending is fine because these companies print cash falls apart.
Oil is the only story that matters this week. Brent crossed $100 for the first time since May after Houthis attacked two Saudi tankers in the Red Sea, opening a second front alongside the effectively shut Strait of Hormuz. Saudi Arabia had been rerouting exports through Red Sea ports to bypass Hormuz. That workaround is now under direct threat. Goldman says Brent could top $120 if disruptions persist. The IEA warned global inventory buffers are running thin.
Gold caught a bid at $4,121, up 2.8% for the week. Not a huge move, but notable given yields also rose. Safe-haven demand is winning over the opportunity-cost argument for now. The divergence from last week's selloff is telling. When gold rallies alongside rising yields, real fear is in the driver's seat.
Copper keeps grinding. Freeport-McMoRan beat estimates despite Grasberg operational issues. Copper prices are up 41.5% year-on-year on tight supply and electrification demand. Musk publicly thanked Micron for memory chip allocations, calling prices "pretty insane." The supply side of the commodity complex is strained across the board.
The risk picture got materially worse this week. FINRA margin debt ballooned from $1 trillion to $1.4 trillion in six months. Leveraged semiconductor ETFs have lost more than half their value since the June peak. Forced selling could accelerate any pullback. When every margin call triggers the next one, the math turns vicious quickly.
Big Tech turning cash-flow negative while spending $700 billion a year on AI is the kind of thing that sounds fine until it isn't. Alphabet just recorded its first negative FCF quarter in over 20 years. Tesla's second negative FCF in recent memory. Microsoft, Meta, and Amazon report next week. If the pattern repeats, the "AI spending is fine because they're printing cash" thesis dies on the spot.
The Iran war has no off-ramp. Twelve consecutive days of strikes. Four US soldiers killed. Hormuz at 25% capacity. Houthis attacking Saudi tankers. Neither side is negotiating. Goldman sees $120 oil as a real scenario. Every escalation makes de-escalation harder. And nobody in Washington is talking about diplomacy.
Woodside Energy (WDS) Oil Beneficiary
Direct LNG and oil exposure. If Hormuz stays disrupted and the Red Sea joins it, Woodside is the clearest ASX beneficiary. Production reports next week should confirm the uplift.
BHP Group (BHP) Copper + Energy
Copper prices up 41.5% YoY. Energy division benefits from the oil surge. Reports production Thursday. Dual exposure to the two commodities that matter most right now.
Santos (STO) LNG Play
Asian LNG prices following crude higher. Santos benefits from any disruption to Middle East supply routes. The pricing leverage is direct and immediate.
CSL (CSL) Defensive
Rate-hike expectations and oil shocks won't touch plasma demand. Healthcare names are becoming the place to hide when everything else is on fire.
Qantas (QAN) Fuel Costs
Brent at $100 is catastrophic for airline economics. Jet fuel costs will compress margins aggressively in H2. No hedging programme can fully offset a 30% move in three weeks.
ASX Growth / Tech Duration Pain
Higher-for-longer rate outlook punishes long-duration growth. If the Fed actually hikes, these get hit again. Cash flows five years out are worth less every time yields tick up.
Gold Miners Mixed Signals
Gold rallied this week but rising real yields remain a structural headwind. The 30Y real yield at post-2008 highs is not gold's friend over the medium term.
Lithium / Uranium Macro Drag
Cyclicals sensitive to rate outlook. Long-term thesis intact but price action says wait. The macro headwinds are too strong to fight right now.
Intel (INTC) +10% AH
Revenue +25% YoY to $16.1B. Data centre AI +59%. Turnaround under Lip-Bu Tan is real. First genuine upside surprise in years. The stock had been left for dead.
Lockheed Martin (LMT) +10.5%
Record $230B backlog. Raised guidance. THAAD interceptor contract $35B. War spending is accelerating and Lockheed is the primary beneficiary.
RTX Corp (RTX) +7.3%
Raised full-year sales and earnings guidance. Pentagon munitions replenishment driving growth. The defence cycle has years left to run.
Honeywell (HON) +5.7%
Orders +16% YoY. Backlog $20B. Top Dow gainer. Industrial automation firing on every metric that matters.
Freeport-McMoRan (FCX) Beat
Copper prices +41.5% YoY offset Grasberg issues. Grasberg ramp-up on track. The copper story is intact and FCX is the purest play on it.
Tesla (TSLA) −14.5%
Earnings miss (33c vs 51c). Negative FCF. Margins crushed by discounting. Robotaxi behind schedule. Single worst day in months.
Alphabet (GOOGL) −7%
First negative FCF ever. Raised capex again. Cloud grew 82% but the market focused on cash burn. Gemini 3.5 Pro still delayed.
T-Mobile (TMUS) −10.7%
Revenue miss. Postpaid net account adds −13% YoY. Wireless growth decelerating faster than anyone expected.
American Airlines (AAL) Guidance Cut
Cut 2026 earnings guidance for the second time in three months. High fuel prices from the war to blame. Airlines have no pricing power against $100 oil.
SpaceX (SPCX) Below IPO
Trading at $119.85, below the $135 IPO price. 911M share lockup expires Aug 4. First earnings the same day. The supply/demand setup is ugly.
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Mark Gardner — MPC Markets Morning Call"China AI, Leverage, War see Market Head Lower" — Covered Moonshot Kimi K3, SOX bear market, FINRA margin debt going vertical, Iran escalation, strategy positioning.
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Mark Gardner — MPC Markets Morning Call"Stock Downs Small Despite War Intensifying" — Covered AMD/Microsoft deal, SpaceX earnings date, Burry Oracle short, Iran tracker update, US oil reserves at 4-year lows.
"A few key risks are moving in the wrong direction. Higher oil prices are pushing up inflation expectations and Treasury yields, which complicates the Fed outlook."
"Escalating Middle East tensions have pushed crude prices higher, raising concerns that inflation could re-accelerate and delay interest-rate relief, maybe even cause the Fed to hike."
"After a negative cash flow quarter, the new raise in capex does not sit well for Alphabet. The market's most reliable cash generators are now spending more than they bring in."
"This is a massive capex year, but I am confident that all the projects we invest in will generate incredible returns. This could be the best return on capital expenditures we have ever seen."
"My bottom line... What's going on is much bigger than INTC. Results are a sign that we are still much earlier in AI than many think."
| Date | Company | Ticker | Focus |
|---|---|---|---|
| Mon 28 Jul | Microsoft | MSFT | Azure AI growth, Copilot, margins |
| Tue 29 Jul | FOMC Day 1 | — | Rate decision Day 2 |
| Wed 30 Jul | FOMC Decision | — | Statement, presser. Hike odds 35% |
| Wed 30 Jul | Meta Platforms | META | AI capex, Reality Labs, Reels |
| Thu 31 Jul | Apple | AAPL | iPhone cycle, Apple Upgrade leasing, services |
| Thu 31 Jul | Amazon | AMZN | AWS, retail margins, AI infrastructure |
| Thu 31 Jul | BHP | BHP | Copper production, energy division |
| Mon 4 Aug | SpaceX | SPCX | First earnings. 911M share lockup trigger |
| w/c 28 Jul | ServiceNow | NOW | AI tools driving bookings growth |
| w/c 28 Jul | AMD | AMD | Helios shipping, MI455X, Venice CPUs |
Big Tech is burning cash to stay in the AI race. The Middle East is burning everything else. Pick which fire matters more to your portfolio. We know where we stand. Oil at $100 with Hormuz at 25% capacity and the Red Sea now a second theatre of conflict is the defining risk this quarter. Not AI capex. Not earnings beats. Oil.
The chip rebound on Tuesday was FOMO chasing a dead cat. The SOX bounced 5.2% and gave it all back by Thursday. Earnings are strong in aggregate but the hyperscalers are spending faster than they're earning. Alphabet's first negative FCF in its history deserves more attention than a one-day bounce in semiconductor names that are still down 20% from their June highs.
Intel was the genuine bright spot. Revenue up 25%, data centre AI up 59%, guidance raised. Real results, not promises. Lip-Bu Tan is doing what nobody thought possible at a company most of the Street had written off. That matters. But one company's turnaround doesn't fix the broader problem of $700 billion in annual AI spending hitting balance sheets that are already stretching.
The Fed meeting next week is going to be ugly. Hike into an oil shock? Hold while inflation reaccelerates? Both options are bad. Bond markets are already voting: the 30-year at its longest stretch above 5% since 2003. The 30-year real yield at its highest since 2008. Rate hike odds went from 10% to 35% in a single week. The market is pricing in a mistake either way.
Defence and energy are the places to be. Not because we like the reasons. Because the reasons aren't going away. Lockheed Martin's $230 billion backlog didn't appear by accident. RTX raising guidance while tech cuts it tells you where the money is flowing. Woodside and Santos on the ASX. Chevron and Exxon in the US. These aren't exciting picks. They're the right picks.
Next week: Microsoft, Meta, Apple, Amazon. Those four will tell us whether $700 billion in AI spending holds up or cracks. Watch the capex guidance, not headline EPS. If Microsoft raises its Azure capex again and Meta pushes Reality Labs losses higher, the free cash flow question gets louder. If Apple and Amazon show discipline, maybe the market stabilises. But the weight of evidence is tilting toward trouble.
Our S&P 500 strategy invests weekly through November. Built for exactly this setup. You get structured entry discipline instead of guessing the low. When oil is at $100, the Fed is debating a hike, and Big Tech is burning cash, the last thing you want is to be making emotional decisions about when to buy. Let the structure do the work.
