Bad feeling, weak internals, confidence collapse, Nvidia breaking out | WAYT?

NVIDIA

Across the shows: 4 speakers in other episodes, 5 bullish and 1 bearish calls, past 30 days

• Josh Brown · Ritholtz Wealth ManagementBullish

  Nvidia is consolidating below its ~$235 breakout level, and a longer test makes the eventual breakout more powerful.

  After a May run-up on hyperscaler capex guidance, Nvidia pulled back to its 200-day moving average, bounced twice, and has been consolidating just below the ~$235 breakout level. The longer it tests that level, the more powerful the eventual breakout. RSI in the high 50s leaves room to rise into the 60s without being overbought, and there is no divergence.

  “The longer it knocks on that $2.30, $2.35 breakout level, the longer that testing process takes place, the more powerful I think the eventual breakout would be.”at 5:17

• Matt Cerminaro · Ritholtz Wealth ManagementBullish

  Judged purely on the chart with the name hidden, Nvidia reads as a buy: rising averages, strong relative strength.

  Chart shows ascending 50- and 200-day moving averages, a quick rebound after dipping below the 50-day, healthy volume, and strong relative strength with no RSI divergence. Judged purely on the chart, with the name hidden, it reads as a buy.

  “If you hid the name, this is a buy to me.”at 6:03

• Matt Cerminaro · Ritholtz Wealth ManagementBullish

  Nvidia's forward P/E sits at 2016 lows despite the huge rally, because the stock is backed by real earnings.

  Nvidia's forward P/E is at 2016 lows even though the stock is up enormously from $10 in 2023. Forward earnings estimates have historically landed close to actuals, and trailing twelve-month operating earnings already exceed Apple's. The case rests on real earnings rather than speculation.

  “If I charted the four p ratio on top of this, it would literally be making twenty sixteen lows.”at 8:30

• Josh Brown · Ritholtz Wealth ManagementBullish

  Nvidia's earnings multiple is shrinking despite surging earnings, backed by hyperscaler capex and roughly $360B of potential next-year free cash flow.

  Hyperscalers have ratified spending far into the future, and about half of data-center cost is chips. GPU clusters stay the workhorses despite ASICs and CPUs. Nvidia could generate ~$96-98B of free cash flow this fiscal year and ~$360B next year on ~$680B revenue, so the earnings multiple is shrinking even as earnings surge.

  “You think about a company that is growing earnings at this rate, it would be shocking if the earnings multiple were going up. If it were flat, it would be understandable. It's actually plunging.”at 9:31

• Matt Cerminaro · Ritholtz Wealth ManagementBullish

  Nvidia's $150B buyback signals CEO confidence in AI demand and a preference for returning capital over speculative acquisitions.

  The $150B buyback plus $85B already authorized gives $235B through Q1 2028, which would cut the share count ~4.3% at a flat price. Announcing it after Anthropic's CEO urged slowing the pace signals the CEO's confidence in AI demand and prefers returning capital over speculative acquisitions.

  “The most important CEO in the world, at the most important company in the world, saying, screw slowing. Let's buy back a $150,000,000,000 of stock. I'm not gonna go speculate buying a company.”at 10:40

• Josh Brown · Ritholtz Wealth ManagementBullish

  Nvidia's CEO is aligned with the Trump administration's priorities, and his ecosystem investments and capital allocation shouldn't be second-guessed.

  Huang is aligned with the Trump administration's mercantilist priorities (onshoring fabs, US AI dominance), which protects Nvidia from policy hostility. Brown defends Nvidia's ecosystem investments in customers, arguing with $360B of potential cash flow they are reasonable and that his instincts and capital allocation should not be second-guessed.

  “I don't think people should be second guessing his instincts, his public statements, scrutinizing his capital allocation.”at 12:02

Uber Technologies

• Josh Brown · Ritholtz Wealth ManagementBearish

  Uber is down over 12% year to date and looks poor, despite the speaker being personally long.

  He notes Uber and Lyft are both down more than 12% year to date and describes the drawdowns as substantial, offered as an example of specific stocks that are falling beneath the resilient index. He admits he is personally long Uber and feeling it, so this is a description of poor price action rather than a recommendation to sell.

  “Rideshare, again, very specific. Uber and Lyft look like shit. They're both down year to date. They're down over 12... I'm personally long Uber, so I'm feeling it myself.”at 51:02

Lyft

• Josh Brown · Ritholtz Wealth ManagementBearish

  Lyft is down more than 12% year to date and looks terrible, dragging on breadth.

  He lists Lyft alongside Uber as rideshare stocks that look terrible, both down more than 12% year to date, as an example of specific stories dragging on breadth.

  “Rideshare, again, very specific. Uber and Lyft look like shit. They're both down year to date. They're down over 12.”at 51:02

Builders FirstSource

• Matt Cerminaro · Ritholtz Wealth ManagementBearish

  Builders FirstSource is down 45% year to date, showing pain in rate-sensitive housing names after the rate narrative flipped.

  He points to Builders FirstSource being down 45% year to date as evidence of pain in rate-sensitive housing names, tied to the narrative flipping from rate cuts to rate pressure after Warsh. He notes that if people had known the rate picture would flip, they'd have expected a much bigger market drawdown.

  “I'm looking at Builder First Source right now. Home builder down 45% year to date.”at 51:31

Aura

• Josh Brown · Ritholtz Wealth ManagementBearish

  Aura's postponed IPO is unattractive; single-product health-tech gadget IPOs have historically never made investors money.

  Aura postponed its IPO, which was hoped to price at a premium to last year's $11B funding round. He says he's never seen anyone make money buying a single-product health-tech gadget IPO, citing GoPro (revenue peaked at $1.6B in 2015, stock went to near zero), Fitbit, Peloton and SoulCycle. He wouldn't buy it, while rooting for it to succeed.

  “I'm doing this a long time. I have never seen anyone make money from buying a health tech kind of gadget IPO. Especially when it's one product.”at 53:24

Planet Fitness

• Josh Brown · Ritholtz Wealth ManagementBearish

  Fitness companies like Planet Fitness are poor bets versus Americans staying sedentary, though he admits knowing nothing about the company.

  He argues that fitness-related public companies (Fitbit down 95%, Town Sports, Bally's, SoulCycle, Weight Watchers) have been poor investments and that the better bets are Americans staying sedentary (McDonald's, Altria, Netflix). He hedges that he knows nothing about Planet Fitness and isn't calling it zero.

  “Here's Planet Fitness. I'm not going to say it's zero. I don't know anything about the company. I just know the better bets are Americans staying sedentary and fat.”at 55:43

Eli Lilly and Company

• Josh Brown · Ritholtz Wealth ManagementBullish

  Eli Lilly and GLP-1 drugs are a better long-term bet than fitness stocks, as Americans stay sedentary.

  Arguing that fitness-gadget and gym stocks are poor bets, he says the better long-term bets are Americans staying sedentary, and cites McDonald's, Altria and Netflix. Matt, responding to chat comments, says Lilly and GLP-1 are the better bet and fully agrees. It is an endorsement made in passing rather than a developed thesis.

  “they're saying in the chat, Lilly is the better bet. GLP one is the bet. Yep. Yeah. I get behind that. 100%.”at 56:19

Apple

Across the shows: 2 speakers in other episodes, 0 bullish and 1 bearish calls, past 30 days

• Matt Cerminaro · Ritholtz Wealth ManagementBearish

  Apple could wipe out standalone wearable startups by building a competing product if one gained traction.

  On standalone wearable startups like Aura, he argues big platform companies like Apple could simply build a competing product, so if a standalone wearable gained traction Apple would probably wipe it out. Josh echoes this while discussing Life360 as a similar risk. The view is bearish on small wearable companies rather than on Apple itself.

  “what's stopping Apple from doing this? ... let's say that Peloton started having some success, Apple would probably wipe them out.”at 56:28

Life360

• Josh Brown · Ritholtz Wealth ManagementBearish

  Life360 can't be owned because Apple could simply replicate its product, despite the speaker being a happy customer.

  He's a happy paying customer and spent four hours researching the stock, but concluded he can't escape the possibility that Apple could just replicate the product, so he can't commit to owning it.

  “I just... There's no escape from the idea that Apple just says, What is this bullshit? We could do that. I can't escape that conclusion, so I can't afford it.”at 57:34

Utilities Sector

• Josh Brown · Ritholtz Wealth ManagementBearish

  Utilities are not a buy-the-dip: premium valuation, uncompetitive 2.94% yield versus Treasuries, weak charts imply dead money or worse.

  He won't buy the utilities dip. The 17.3 P/E looks cheap against the five-year average near 23, but versus the ten-year average near 12 it is still roughly a 36% premium, a multiple distorted by the AI data-center narrative that now looks shaky. The 2.94% dividend yield is uncompetitive against a 5.25% ten-year Treasury, and the charts point down. His best utility holding, Entergy, has looked poor since entering his momentum strategy and is likely to be dropped. He expects dead money at best and more downside at worst.

  “I will not buy this dip. I don't like it. I don't like what it represents. I don't like how it acts. It's in no man's land... I think at best, you have dead money, and at worst, this could get way worse.”at 1:09:07

Entergy

• Josh Brown · Ritholtz Wealth ManagementBearish

  Entergy, the best-looking utility, has looked poor since entering his momentum strategy and will likely be dropped at rebalance.

  Entergy is the only utility in his firm's Porterhouse concentrated momentum strategy and was the best-looking utility in the market to qualify, yet it has looked poor ever since entering the strategy and is likely to be removed at the next rebalance. He reasons that if the best-looking name looks this weak technically, the rest of the group looks worse.

  “this is the best looking utility in the market... since it got into the strategy that we run, it's looked like shit ever since. And I think we're about to kick it unless something radically changes.”at 1:11:15

US stock market outlook

• Matt Cerminaro · Ritholtz Wealth Management

  Multiples bottom only above 7% yields; at about 2.85% real yield, bonds are a legitimate alternative to stocks.

  At ten-year yields above 7%, the median forward P/E bottoms out (13.6x S&P 500, 12.6x Nasdaq 100). The real yield of about 2.85% is the highest since 2008 and offers retirees a legitimate alternative to stocks. Mid-range yields of 3-7% bring investor discipline and can justify higher multiples than a zero-rate regime.

  “You can get a legitimate 2.85% real yield after inflation. That's an alternative.”at 23:39

• Josh Brown · Ritholtz Wealth Management

  A 5% ten-year Treasury yield is not a breaking point for stock market multiples.

  Historical data show stock multiples compress only when the ten-year yield exceeds about 7%. 5% is not a breaking point for multiples, and the 3-7% range actually supports higher NASDAQ multiples than 0-3%, which usually signals economic trouble. Newer investors who have not seen higher rates may overreact, but 5% is historically not abnormal.

  “5% on a ten year treasury is not a breaking point for multiples or for the stock market.”at 27:02

• Matt Cerminaro · Ritholtz Wealth Management

  The S&P 500's breadth washout is more likely a buying opportunity than a signal of a catch-down.

  Breadth has clearly fallen, but he is looking for nuance in the numbers. He relays Michael Batnick's view that breadth washouts are loved and that almost every similar episode in the last decade proved a great buying opportunity, rejecting the bearish catch-down narrative.

  “The bearish case for an S and P catchdown is obvious and intuitive. But almost every time we've seen something like this in the last decade, it's been a great buying opportunity.”at 36:19

• Josh Brown · Ritholtz Wealth Management

  Narrow S&P 500 breadth is not a worry; bears have repeatedly misused narrow leadership to predict a catch-down that never came.

  Five stocks contributed 93% of the S&P's gains since July, and the share above the 200-day average fell from 73% to 51%. Brown dismisses breadth worries, saying bears have repeatedly used narrow-leadership episodes to scare investors out of holdings by predicting an index catch-down that does not follow.

  “I used to care about bread, but then I realized I like money.”at 36:36

• Josh Brown · Ritholtz Wealth Management

  Narrow breadth in US equities has usually resolved with laggards catching up, so staying invested beats selling on weak internals.

  Narrow breadth and weak internals make people nervous, but over the last ten years the divergence has usually resolved with laggards catching up to the AI/mega-cap trade rather than the index falling. He cautions it won't work every time, but history favors staying invested rather than selling because of internals. He also says that with financials and tech showing no 52-week lows, the headline new-lows number should be less worrying and the setup is constructive.

  “in the last ten years, it's been the opposite resolution pretty much every time to catch up... it doesn't mean every single time it works this way forever, but Michael is right. This has been the history.”at 37:18

• Matt Cerminaro · Ritholtz Wealth Management

  Weak US equity breadth is concentrated in defensive sectors while tech and financials are strong, so the rotation reads bullish.

  The negative breadth is concentrated in defensive, rate-sensitive sectors (utilities, staples), while offensive sectors like tech and financials show almost no new 52-week lows. Investors are rotating by choice, which he reads as bullish. In a bearish setup you'd expect defensives to catch a bid, but they're getting hammered. He acknowledges the new-lows spike can't be dismissed, but argues the data is nuanced.

  “if you wanted to get bearish on the market, you would probably wanna see the stocks in these sectors actually catching some sort of a bid right now, and they're getting hammered. And so I'm not like... Investors are choosing what they want right now, and that's rotation, which is bullish.”at 44:49

• Josh Brown · Ritholtz Wealth Management

  Historical breadth analogs suggest the US equity market eventually drops, averaging a roughly 5% drawdown over the next 21 days.

  He cites Barclays quant research: since 2004, when cumulative NYSE spread fell by about 5,300 over 21 days, the S&P fell 9.6% on average, but this time the S&P is flat. The only precedent is October 2014, which was followed by a drop of over 5%. Fifty-two-week highs versus lows are at the same level as the March Iran-war trough, and historically the S&P is unchanged-to-down with a 5.2% average peak-to-trough drawdown over the next 21 days. He calls this the historical analog, while noting the research is aimed at short-term traders.

  “historically, this does lead to an eventual drop in the market.”at 49:42

• Matt Cerminaro · Ritholtz Wealth Management

  This is a Teflon US equity market, repeatedly shrugging off poor breadth; he'd have expected a 15-20% drawdown.

  He calls this a 'Teflon market' that keeps shrugging off bad breadth, with about 90% of the S&P 500 rally since June coming from the Mag Seven. Given negative breadth and the flip in the rate narrative, he would have guessed a 15-20% drawdown. Josh agrees the right move is to take the signal from the market's resilience rather than extrapolate the negative stories.

  “We are also living through a period where this is the Teflon market. Truly, what is gonna bring stocks down?”at 49:52

US Treasuries & yields

• Matt Cerminaro · Ritholtz Wealth Management

  After rare long ten-year yield rising streaks, yields have usually been lower twelve months later, by about 90bp on average.

  The ten-year yield rose on 18 of the last 24 trading days, a streak seen only about 11 times since 1965. After such streaks, yields were lower twelve months later about 80% of the time, by roughly 90bp on average, with a caveat about the long secular decline in yields. Inflation breakevens are anchored, so the move is not about inflation expectations. Possible driver is weak demand as foreign central banks stop buying and domestic investors need more compensation.

  “This has happened 11 times since 1965... 80% of the time over the next twelve months, you see yields that are lower.”at 16:37

• Josh Brown · Ritholtz Wealth Management

  Rising US yields have no single cause; foreign buying, corporate issuance, yen carry unwind and oil inflation all contribute.

  No single cause explains rising yields. Candidates include reduced foreign buying, doubled corporate debt issuance competing with Treasuries, unwinding of the yen carry trade, and oil-driven inflation from the Hormuz war. He cites Ed Yardeni as constructive overall. The reasons are a mix, none pinned down, and he calls the 'asset allocation' explanation the best-case one.

  “The truth is some mixture of all those things.”at 21:12

• Josh Brown · Ritholtz Wealth Management

  With Treasuries yielding about 5-5.25%, dividend sectors face tough competition and bonds are a credible alternative, with roughly 6% expected returns.

  With Treasury yields around 5% to 5.25%, dividend-oriented sectors (staples, utilities, real estate) have to compete with risk-free government yields, which explains their weakness. Matt adds that starting ten-year yield historically predicts the subsequent ten-year annualized return almost reliably, putting expected bond returns around 6% today. Josh calls it one of the few relationships in markets that works, making bonds a credible alternative.

  “So unless you have reason to believe that you're going to get a good total return because the ketchup and mustard company's stock is going go up 15%, Fuck it. Give me the 5% on the bonds.”at 41:53

AI bubble & tech valuations

• Josh Brown · Ritholtz Wealth Management

  AI's capital appetite ties equities, credit, dollar and foreign flows together, making diversification away from AI risk harder.

  Summarizing AllianceBernstein's note, AI's capital appetite now ties together equities, credit, the dollar and foreign flows, so diversifying away from AI risk is harder. Bond funds hold AI debt, foreign investors buy US stocks, and AI is diverting cash from buybacks. The note stays overweight equities and US assets but suggests healthcare, energy, gold, value, yen and active bonds as hedges.

  “AI's appetite for capital has now gotten so large that it is tying together equities, credit, the dollar, and foreign flows, and it's basically made everything into all one big bet.”at 28:14

AI infrastructure & data centers

• Josh Brown · Ritholtz Wealth Management

  The right amount of AI data-center debt is unknowable now; it may prove underinvestment, and the answer comes in about five years.

  About 45% of 2026-2028 AI capex funding is expected from equity capital and the rest from private credit, bonds and loans. Brown cannot say whether that debt level is prudent since the opportunity set is unprecedented. OpenAI's new enterprise agent product shows potentially unlimited demand, so it may even prove underinvestment, and the answer will be known in about five years.

  “I don't know what the right amount of debt for companies to take on in order to invest in this technology is. We'll know in five years, I guess.”at 32:55

Credit markets

• Matt Cerminaro · Ritholtz Wealth Management

  Hyperscaler credit default swaps are flat or lower, suggesting bondholders aren't pricing stress from AI capex borrowing.

  Credit default swaps on hyperscaler bonds are not blowing out. They are flat, in some cases trading lower, with Meta's briefly rising and then stabilizing. This suggests debt holders are not pricing stress from the AI capex borrowing wave.

  “If you look at the credit default swaps on the different bonds for these hyperscalers, they are not blowing out. They are flat. In some cases, they are actually trading below.”at 33:15

US consumer

• Josh Brown · Ritholtz Wealth Management

  Consumer confidence at a twelve-year low adds to a cautious setup, though drivers are mostly non-economic and may improve after midterms.

  Conference Board consumer confidence fell 6.7 points to 81.9, the lowest since 2014, driven by high prices (especially oil and gas), politics, trade and employment concerns. Combined with narrowing breadth, a pre-earnings air pocket, and October's reputation for volatility, it adds to a cautious setup. He notes the labor picture is solid, the drivers are mostly non-economic headlines, and sentiment could improve after the midterms, and he frames this as playing devil's advocate rather than his own conviction.

  “We have just slammed down to a twelve year low. The overall index just fell 6.7 points to 81.9, which is the lowest level since 2014.”at 45:54

Market sentiment, positioning & volatility

• Josh Brown · Ritholtz Wealth Management

  Narrowing breadth, a pre-earnings air pocket and weak September/October seasonality make for a cautious near-term US equity setup.

  He lays out a cautious setup: narrowing breadth, a few weeks' air pocket before earnings season (no KLA or Lam Research reports yet), September's weak seasonality, and October's reputation for surprises (1929, 1987, TARP, Lehman). He presents this as what people are starting to notice rather than something he believes outright.

  “September is not a great month for stocks. October can be a good month, historically, but seasonally... it's also been a month where crazy things have happened... People have a little bit of muscle memory around October being a wild time.”at 47:35

US housing

• Josh Brown · Ritholtz Wealth Management

  Homebuilder and mortgage stock weakness is explained by mortgage rates near 7% heading toward 8%, not a broad market signal.

  Mortgage stocks and anything tied to borrowing to buy a house are down because mortgage rates were at 7% and heading toward 8%. Real estate is yield-sensitive and competes with Treasuries, with 0% of real estate stocks above their 50-day average. He treats the weakness as explicable by rates rather than a broad market signal.

  “Mortgage stocks, anything related to borrowing to buy a house, of course. Mortgage rates were at 7% on their way to 8%. Of course, those stocks are down.”at 50:49

Earnings & corporate profits

• Matt Cerminaro · Ritholtz Wealth Management

  With forward earnings up 36.7% against 17.9% market return, earnings growth supports higher US equity prices.

  Forward 12-month earnings are up 36.7% year over year versus an S&P 500 return of 17.9%, so earnings growth is more than double the market's return. Stocks historically follow earnings, and forward earnings estimates tend to land within about 1% of actuals, so the earnings backdrop supports higher prices. Josh summarizes it as the bet that prices will rise because earnings rise.

  “forward earnings have grown 36.7 year over year, and the S and P 500 is up 17.9% year over year. So forward earnings are more than doubling the actual stock market return over the past year, which is incredible.”at 1:04:01