Many are pointing to the 30-year yield at its highest level since 2007 as proof that the bond market disapproves of the Warsh approach. Still, the Fed chair likes that the market is acting on its own without guessing the next Federal Open Market Committee (FOMC) decision.

The question is how much of the work is the bond market doing for the Fed if the outcomes are the same – slowing demand and the economy?

Brutal Day for Stocks

It was a brutal session yesterday that, ironically, improved in the early part of the Warsh presser. It's not unusual for the market to go haywire after an FOMC gathering, and it's not unusual for the market to get browbeaten in the early months of a new Fed chair.

The six-day “losing” streak for the NASDAQ-100 (NDX) has taken it close to a 50% Fibonacci retracement of the monster spurt that began in April. 

More worrisome for me is the six-day “losing” streak for the Dow Jones Transportation (TRAN) Index, and the safest safe haven of them all – Utilities (XLU) - down for four straight sessions.

 There was nowhere to run or hide yesterday.

Chips are getting walloped.

High-beta is getting walloped.

There hasn’t been any “bad” news for chips or high-beta names.

KOSPI Rout Blueprint

In this week’s Payne’s Perspective, I wrote that my only fear is a widespread one, like what we are seeing in the Korean market.

The stock market mania there was even greater than during the dot.com boom's highs. The industry met the excitement with a bevy of products that authorities reluctantly allowed.

Now, these funds are being unwound, but they have left a crater in the KOSPI.

Fear & Loathing?

Several firms believed the exchange-traded funds (ETFs) leverage issue in Korea had ended. It's going to be interesting to see what the domestic appetite for stocks will be  – foreigners were huge sellers, even during the run-up.

Meanwhile, U.S. investors are selling single stocks at the fastest pace since the COVID-19 pandemic.

I’m not sure how long the S&P 500 (SPX) can linger below its 50-day moving average before we have to start considering the 200-day moving average as a possibility, but a stand needs to be taken soon.

Iran & Diplomacy

President Trump is saying, ’let's give diplomacy a chance,’ and continues to get the Bronx cheer and belittlement from Iran.

This wild card makes everything harder to decipher.

Today’s Session

Equity futures were higher all morning, but a sense of fear lingered despite strong numbers from Samsung, a critical name in the AI trade.

Management sees a severe shortage of chips from next year through 2028 and suggests that the adoption of tokens could also make supply an issue in 2029.

Looking at the chart below, is your first instinct to sell?

Inflation Data

PCE at -0.1% M/M from +0.5% in a month should be cause for celebration.

Core PCE at +0.1% M/M versus a consensus of +0.2% suggests maybe Kevin Warsh knows what he’s doing by watching longer and allowing the bond market to do its part.

There is still a tremendous amount of trepidation in the air, but it should not supersede fundamentals and actual trends.

Comments

I'm surprised there hasn't been more talk about Chinas action, eliminating gold purchasing with Leverage, to position themselves for a bid to replace the USD as the reserve currency. At what point does the US Debt Crash the American Dream? P. Krueger on 7/30/2026 11:06:34 AM

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