Bulls & Bears
This was one of the wilder weeks in memory. Oil crashed from $100 to $80 on a US-Iran ceasefire that nobody actually agreed to, then ripped back to $85 after Iran launched a surprise missile attack on Wednesday night. The Fed held rates but three dissenters voted for a hike, sending 30-year yields to their highest level since 2007. Meta got hammered after a rare EPS miss. And then Microsoft dropped the earnings report of the year and singlehandedly dragged the entire market out of the wreckage.
Microsoft's Azure cloud grew 43%, Copilot hit 30 million paid seats, and quarterly revenue touched $90 billion. The stock surged 15.5% on Thursday, adding roughly $450 billion in market cap in a single session. It was the biggest one-day gain for Microsoft since 2008 and the largest dollar-value move for any company in history. The SOX index followed with an 8% rip, its best day since April 2025. Micron gained 18%. Intel added 12%. The entire chip complex went from intensive care to champagne in about six hours.
But underneath that headline rally, cracks were getting wider. South Korea's KOSPI crashed more than 10% on Tuesday, triggering circuit breakers for the second time in a month. Samsung fell 13.4% and SK Hynix lost 14.7%. A 7.1-magnitude earthquake struck Kumamoto, Japan, right in the heart of chip country, forcing TSMC's JASM plant to evacuate. Margin debt hit a record $1.5 trillion in June. Fund managers are sitting at 3.6% cash. And the Fed just told you they are not cutting rates anytime soon.
Apple fell 4.5% after hours on Thursday despite beating on EPS. Services missed, China missed, and Tim Cook confirmed this was his final earnings call as CEO. Amazon jumped 8% after hours as AWS grew 37%, its fastest pace in 18 quarters, and the company raised full-year capex guidance to a staggering $220 billion. GDP came in at 1.5%, well below the 2.1% consensus, and core PCE printed 3.7% year-on-year. The stagflation case writes itself.
- Mon 28 Jul — Oil crashed 8.4% to $81.77 on US-Iran ceasefire optimism. Markets opened higher on hopes the pause would hold.
- Mon 28 Jul — Nvidia fell 5% on $750bn in circular financing deals. ASML dropped 8.3% on reports China built its own DUV photolithography machine.
- Mon 28 Jul — CXMT debuted on Shanghai exchange, surging 466% to become China's most valuable listed chipmaker. Moonshot AI released K3, the world's largest open-weight model.
- Tue 29 Jul — KOSPI crashed 10%+, triggering circuit breakers. Samsung −13.4%, SK Hynix −14.7%. Margin calls cascading through leveraged Korean ETFs.
- Tue 29 Jul — Apple briefly topped $5 trillion market cap. Equal-weighted S&P 500 hit record highs. Rotation out of mega-cap tech into industrials and staples accelerated.
- Tue 29 Jul — 7.1-magnitude earthquake struck Kumamoto, Japan. TSMC's JASM plant evacuated. Tokyo Electron suspended operations. One confirmed dead.
- Wed 30 Jul — Fed held 9-3. Three dissenters voted for a hike. Warsh said "there is no soft inflation target." 30Y yield hit 5.2%, highest since 2007.
- Wed 30 Jul — Iran launched surprise missile attack. Oil surged 7% to $84.73. Both the Strait of Hormuz and Red Sea choke points under active threat.
- Wed 30 Jul — Meta fell 8% after hours. EPS missed by $1 ($6.18 vs $7.17 expected). Legal charges of $2.4bn. CapEx guidance raised to $130–145bn.
- Wed 30 Jul — Microsoft beat on all lines. Azure +43%. Copilot 30M seats. Revenue $90bn. Stock rose 4% after hours initially, extended to +15.5% Thursday.
- Thu 31 Jul — Microsoft +15.5%, adding ~$450bn in market cap — largest single-day dollar gain in history. SOX +8%, best day since April 2025.
- Thu 31 Jul — Amazon +8% after hours. AWS +37%, fastest growth in 18 quarters. Raised full-year capex to $220bn. Anthropic stake worth $53.4bn.
- Thu 31 Jul — Apple −4.5% after hours. Services missed, China missed. Tim Cook confirmed this is his last earnings call as CEO. Supply constraints flagged.
- Thu 31 Jul — GDP 1.5% (vs 2.1% expected). Core PCE 3.7% YoY. Stagflation case building. Japan intervened in yen markets, pushing USD/JPY from 164 to 159.
- Thu 31 Jul — Micron +18%, Intel +12%, AMD +8%. Chip stocks roared back on Microsoft AI spend validation. Situational Awareness hedge fund sold to Citadel.
| Index | Level | Week | Signal / Commentary |
|---|---|---|---|
| S&P 500 | 7,438 | +0.4% | Thursday's Microsoft-fuelled rally erased mid-week losses. Breadth narrowing again. |
| Nasdaq Composite | 25,122 | +0.6% | SOX +8% Thursday masked a brutal earlier week. Nasdaq 100 still down for July. |
| Dow Jones | 52,208 | +0.5% | Industrials outperforming tech on broadening trade. Sherwin-Williams, Coca-Cola leading. |
| SOX (Semis) | — | +8% Thu | Best single day since April 2025. Micron +18%, Intel +12%. But still worst month in 30 years. |
| KOSPI | — | −10%+ Tue | Circuit breakers triggered. Samsung −13%, SK Hynix −15%. Korean authorities curbing leveraged ETFs. |
| Nikkei 225 | — | −4% Tue | Earthquake risk + BoJ intervention. Yen pushed from 164 to 159. Carry trade unwinding fears. |
| Russell 2000 | — | +0.8% | Small caps benefiting from broadening. Outperforming mega-cap tech for the month. |
| EUR/USD | 1.1532 | +0.3% | Dollar weakening on GDP miss. ECB more hawkish than Fed on relative basis. |
The Fed held rates at 3.50–3.75% on Wednesday but the vote was 9-3, with three governors dissenting in favour of a hike. That is the most fractured FOMC vote since the hiking cycle began. Chair Warsh delivered a 60-minute press conference where Bloomberg, Reuters and most of the analyst community concluded that Fed credibility is now shot. The long end of the curve responded immediately. The 30-year yield pushed to 5.2%, its highest since 2007. The 10-year hit 4.67%.
Warsh stated bluntly that there is "no soft inflation target" but refused to give forward guidance on rate moves. Analysts noted this was more an exercise in damage control than policy communication. The market read it as the Fed being paralysed: too afraid to hike into an election year, too stubborn to cut with oil above $80 and PCE at 3.7%.
GDP came in at 1.5% for Q2, well below the 2.1% consensus. Core PCE printed 3.7% year-on-year for June. That combination is the textbook definition of stagflation. Growth slowing, prices sticky, and a central bank that cannot move in either direction without making things worse. Core capital goods orders rose 0.9%, the one bright spot suggesting business investment is not yet rolling over.
The 30-year mortgage rate is at its highest level in 11 months. NAB reported a 15% drop in home loan applications. The US has $8 trillion in debt that needs refinancing in the next four months, the highest level in history. The cost of servicing that debt at current yields is becoming a fiscal crisis in its own right.
✓ Microsoft Azure +43%, revenue $90bn. Validated AI capex thesis. SOX +8% Thursday. Chip complex resurrected.
Oil had the most violent week of the year. Brent came off from $100 at Friday's close down to $81.77 on Monday, an 8.4% crash driven by US-Iran ceasefire hopes. Trump paused airstrikes on Sunday. Iran said it would reciprocate. Markets treated it like a peace deal. It wasn't. By Wednesday night, Iran launched a surprise missile attack that sent oil surging 7% back to $84.73. The Houthis continued blockading Saudi ports. Both the Strait of Hormuz and the Red Sea remain under active threat.
US crude inventories dropped 7.2 million barrels, an unexpected sharp draw. The Strategic Petroleum Reserve hit its lowest level since 1983, and the Energy Secretary confirmed there would be no more releases. OPEC announced it would pause production increases from October. Diesel prices in Sydney are nearing $3.50 a litre. US gasoline is back above $4 a gallon in peak driving season. European natural gas is up 40% in July, the highest since March, as LNG flows through Hormuz are disrupted.
Gold rallied 2% on Wednesday as the Fed's credibility crisis sent safe-haven demand higher. But the metal is fighting a two-front war: geopolitical risk says higher, rising yields say lower. The 30-year yield at 5.24% makes the opportunity cost of holding gold punishing. The fact gold is still above $4,100 despite those yields tells you how worried the smart money is about everything else.
The leverage picture got worse this week. FINRA margin debt hit $1.5 trillion in June, surpassing last month's record. Retail investors now owe brokers over $1 trillion in net deficit for the first time. Fund manager cash fell to 3.6%, well below BofA's 4% sell-signal threshold. There is no institutional buyer of last resort if this thing unwinds. Korea showed you what it looks like when leveraged positions get margin-called into a vacuum: Samsung and SK Hynix losing 13–15% in a single session.
Nvidia's credit default swaps surged to a record 85 basis points, the largest single-day move since the contract began trading. Oracle was downgraded to BBB-minus. The yield on bonds linked to AI companies is rising fast while five-year Treasuries dip, meaning credit spreads are widening in exactly the sector everyone is most exposed to. When the cost of insuring against default in your highest-conviction names hits record highs, pay attention. The circular financing concerns around Nvidia's $750 billion in infrastructure deals are not going away.
Woodside Energy (WDS) Oil Play
Direct LNG and oil exposure as both chokepoints remain under threat. If Hormuz stays disrupted and the Red Sea stays blocked, Woodside prints. Diesel near $3.50/L in Sydney. The energy trade is not over.
Rio Tinto (RIO) Strong H1
Reported strong half-year results this week. Copper story remains intact. The broadening trade into real assets and commodities keeps supporting the miners while tech gets battered.
CSL Limited (CSL) Defensive
Healthcare defensive that doesn't care about tariffs, oil, or AI capex debates. When everything else is volatile, plasma demand is steady. Quality hide in a stagflationary environment.
Memory Chip Play SK Hynix / Micron
MPC position. After 13–18% declines, leverage is washed out. Microsoft's Azure result validates HBM demand. SK Hynix earnings this morning. If they deliver, the bounce has legs.
Meta Platforms (META) −8% AH
Rare EPS miss ($6.18 vs $7.17). Legal charges $2.4bn. CapEx guidance raised to $130–145bn. Zuckerberg's fiscal discipline reputation takes another hit. Now the biggest lagger of the Mag Five.
Apple (AAPL) −4.5% AH
Services missed, Greater China missed. Tim Cook's last earnings call. Tariff impact on supply chain flagged. Briefly hit $5T market cap earlier in the week, then gave it all back.
ASX Banks Rate Pressure
NAB reported 15% drop in home loan applications. 30Y mortgage rate at 11-month high. If the RBA follows the hawkish global trend, bank margins get squeezed while volumes dry up.
Leveraged ETFs Korea Warning
Korean authorities moved to curb leveraged ETFs after KOSPI circuit breakers. A warning for anyone running similar products in Australian markets. Margin calls don't check your fundamentals.
Microsoft (MSFT) +15.5%
Azure +43%. Revenue $90bn. Copilot 30M seats. Biggest single-day gain since 2008, adding ~$450bn in market cap. The most disciplined of the hyperscalers. You get rewarded for CapEx that converts to revenue.
Amazon (AMZN) +8% AH
AWS +37%, fastest growth in 18 quarters. Raised full-year CapEx to $220bn. Anthropic stake now worth $53.4bn. The cloud war has two clear winners and they both reported this week.
Micron (MU) +18%
HBM demand validated by Microsoft's Azure spend. Memory chips are the direct beneficiary of every dollar the hyperscalers deploy. The leverage washout in Korea just made the entry cheaper.
Intel (INTC) +12%
Surged on Microsoft AI tailwind and its own decent earnings last week. Foundry narrative getting a second look. Still cheap relative to the sector if the turnaround story holds.
Starbucks (SBUX) +11% AH
Beat on top and bottom line after hours Wednesday. Consumer discretionary resilience in an otherwise grim macro backdrop. The defensive-growth hybrid trade.
Meta Platforms (META) −8% AH
EPS miss by a dollar. $2.4bn in legal charges. CapEx guidance $130–145bn. Zuckerberg spreading capital across too many competitive fronts. Market wanted discipline, got the opposite.
Qualcomm (QCOM) −5%
Slight miss with soft Q4 guidance. Losing Apple's modem business faster than expected. Their biggest customer is walking out the door.
Roblox (RBLX) −13%
Weak bookings guidance. The post-pandemic gaming normalization continues. User growth slowing while monetization remains elusive.
Carvana (CVNA) −14%
Beat on revenue but massive profit-taking after a parabolic YTD run. When a stock is up 120% and misses on any line, it gets sold. Fast.
Teladoc (TDOC) −24%
Cut guidance, top-line miss. Mental health segment underperforming. The SaaSpocalypse is real for companies without a moat. Proving that not all software names get the AI bid.
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Bulls vs Bears — Episode 130: Hyperscalers to HyperspendersDeep dive on why the market stopped caring about EPS and started caring about CapEx discipline. Microsoft vs Meta as the case study. Plus introducing Phil De Lochry, 30+ years in markets.
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MPC Morning Call — Daily BriefingsFull coverage of the oil crash, KOSPI circuit breakers, Fed credibility crisis, Microsoft's record day, and Amazon/Apple after-hours reactions. Available on Spotify, Apple Podcasts, YouTube.
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Mark Gardner — Peak Dispersion ArticleWhen opinion is maximally divided between "AI bubble" and "land of milk and honey," history says you're near a turning point. Not necessarily a crash, but the trend is about to change.
"There is no soft inflation target. The Federal Reserve is committed to its 2% mandate, and we will use all tools available to achieve it."
"For hyperscalers, it's CDS, not EPS, that matters now. The credit default swap market is telling you what the equity market hasn't figured out yet."
"Fear of missing out is becoming fear of massive overbuilding. Combined Mag Seven capex is approaching a trillion dollars annually."
"CPI may have peaked in May if oil doesn't break to new highs. But that's a very big if."
"90% of S&P 500 companies beating estimates, Q2 earnings growth tracking 34% YoY versus 26% consensus. Forward estimates for Q3, Q4 and 2027 still rising."
| Date | Company | Ticker | Focus |
|---|---|---|---|
| Mon 4 Aug | REA Group | REA | Kicks off ASX earnings season. Listing volumes, pricing power, India expansion |
| Mon 4 Aug | AMD | AMD | AI GPU market share vs Nvidia. Data centre revenue trajectory. MI300X demand |
| Tue 5 Aug | RBA Decision | — | Hold or hike? Trimmed mean CPI 3.7%. Global hawkish tilt adds pressure |
| Wed 6 Aug | Eli Lilly | LLY | GLP-1 demand curve. Tirzepatide supply constraints. Biggest healthcare catalyst |
| Thu 6 Aug | SpaceX Lock-Up | SPCX | Largest IPO escrow release in history. Insider selling pressure. Already below IPO price |
| Fri 8 Aug | US Payrolls | — | Labour market resilience. Hot number = September hike odds spike |
| w/c 4 Aug | Fortescue | FMG | Iron ore price impact. Cost discipline. Green energy spend scrutiny |
| w/c 4 Aug | Chevron / Exxon | CVX / XOM | Oil major earnings. Production volumes. Capital returns vs reinvestment |
| Sat 9 Aug | Berkshire Hathaway | BRK | Cash pile allocation. Insurance earnings. Buffett's market commentary |
Microsoft's 15.5% surge on Thursday was spectacular. It rescued the S&P 500 from what was shaping up to be one of the worst weeks of the year. But step back and think about what that means. One company adding $450 billion in a single session papered over a week where the Fed lost three voters to the hawks, GDP missed by half a percentage point, oil whipsawed 20% in both directions, South Korea blew up, and Meta posted its worst earnings miss in years. That is not a healthy market. That is a market balanced on a knife edge where one earnings report determines whether the week is green or red.
The leverage data speaks for itself. Margin debt at $1.5 trillion. Fund managers at 3.6% cash. Nvidia's credit default swaps at record highs. Korea showed you exactly what happens when leveraged positions unwind without a buyer. Samsung losing 13% in a day is not a Korean problem. It is a preview of what happens when the forced selling starts in a market where everyone is fully invested, fully leveraged, and fully unhedged.
We are positioned defensively. Holding Chevron and SK Hynix as our core positions. The memory chip stocks got cheap enough after the Korean washout that the risk-reward shifted. Microsoft validated the HBM demand story. But we are not chasing the Thursday rally into Friday's close. The setup into August is treacherous: SpaceX's record lock-up release, US payrolls, RBA decision, and the start of ASX earnings season with a negative tilt. Any one of those could be the catalyst that tips the margin debt domino.
Our playbook has not changed. Trim what you are not confident in before earnings. Hold cash to buy the dip instead of panicking through it. Oil majors for the geopolitical hedge. Quality healthcare defensives like CSL and ResMed. Memory chips at washout prices if you can stomach the volatility. And the Buy the Dip strategy around the S&P 500 for structured exposure without the timing risk. The AI story is real. Microsoft proved it this week. But buying an index held up by one stock's earnings, with this leverage, at these yields, heading into August? That is not conviction. That is recklessness.
