Yo Pit Crazies,
When I was a floor trader, we watched the tape, buy and sell volumes scrolling across Quotron screens.
That tape told you what the market actually thought. Now there is a second tape: social media. And right now, the doom scroll is beating the ticker tape.
This week’s economic news was bullish. CPI setup looks manageable. The data was fine. But none of that mattered because the social media tape, the endless AI-kills-everything narrative, is the dominant force moving prices. Sentiment on the news tape becomes selling on the ticker tape.
The Stocks Caught in the Crossfire
I got stopped out of Pinterest (PINS) this week. New 52-week low. The company has growing revenue. The problem? Decreasing margins from AI spending. That is the story for half of tech right now. It is not about fundamentals. It is about the narrative.
Look at VIX this week.
5 day VIX
It opened down on good economic news, then jumped when the social media sentiment turned ugly. The five-day chart tells the story: every time the news tape said “buy,” the social media tape said “sell”, and selling won.
The winners right now are companies that make physical stuff. Motorola Solutions (MSI) is flying on hardware sales and chips. The losers are anything digital, streaming, social platforms, ad-driven businesses. Netflix (NFLX) is down about 40 percent from its highs as it chases Warner Bros. Discovery (WBD).
I do not want to spend 100 billion dollars on a film library and movie studio right now. Paramount Skydance (PSKY) should thank their lucky stars they lost that bid. The market is punishing anything that sounds like it could be replaced by AI, whether that fear is rational or not.
Who Benefits From AI Pessimism
Here is my counter: Who benefits most from AI pessimism right now? Elon Musk. xAI just merged into SpaceX ahead of what could be a record-setting IPO this year, with a potential valuation of $1.5 trillion.
Every time AI fear spikes, it sets up a bigger narrative flip when his IPO needs hype. He is painting the tape for his own future payday. SpaceX would be a direct beneficiary of all these developments.
What to Do Until the Narrative Shifts
Until the social media narrative shifts, good economic news will not save digital tech. The “AI kills everything” story has to exhaust itself first.
Watch for that turn. It will probably come when someone, maybe Elon, needs it to. In the meantime, if you are in digital names, size down or get selective.
The tape that matters right now is not the one showing earnings. It is the one in your pocket, feeding you fear.
Rant and Rave: The News Nobody Noticed
The jobs have been parsed, and if you don’t like Trump, they are terrible. Reversions mean we have gained no jobs. That is a bleak assessment, but what anyone cannot deny is the Federal labor force is shrinking.
Did anyone notice we cut hundreds of thousands of Federal jobs?
I did not think so. The only President to actually do what he said and shrink the size and scope of the Federal Government in the last 50 years is sitting in the White House.
Is Congress doing anything to help? Nope. They are arguing over the SAVE act, which is something, but the level of spending in the Uniparty is atrocious. We need term limits and continued reductions in spending and regulations.
The one bright spot in the day was the EPA effectively rolled back the CO2 nonsense that has plagued development and energy initiatives for nearly 20 years.
Like I said above, the news tape was positive, but the social media sentiment, which is seeping into trading big time, is still rough on tech.