tom keene

Within the Commute: listen on @apple carplay @android auto. on 99.1 FM WDC, 1130 AM NYC and 92.9 FM Boston. and, @SIRIUSXM 121. Then, watch on @YouTube. SUBSCRIBE to Bloomberg Podcasts. 7 to 10 a.m. Economics, Finance, Investment, International Relations. Bloomberg Surveillance. @YouTube Podcasts, @Apple Podcasts and @SpotifyPodcasts. youtube.com/watch?v=f39oHo…

The President reaching for Stan the Man. Even Camelot wanted an audience with number 6.

Adley Rutschman has been wildly disappointing for what he was supposed to be, but you have to understand just how big of an upgrade this would be over Carlos Narváez and Connor Wong. If they can unlock his power on the right side, he's the best guy they've had behind the dish since Jason Varitek.

There are those way smarter: to me it is cultural and appropriate this day of remembrance of Munson. ‘Since Varitek’s retirement, the position has been more of a platoon/defense‑offense balance, without a single long‑term icon yet matching those two (Fisk) in tenure or profile.’ @perplexity_ai

@IanCundall I’m largely indifferent. Adley can be a special player in Boston for a long time.

tweet of the jersey street.

Big thanks to @johnauthers for including me in this great @business piece on the latest round of intervention to lift the Yen. This marks the 3rd time there’s been major intervention to lift the Yen. The previous two didn’t work and this one won’t either. bloomberg.com/opinion/newsle…

—make the goal bigger.

My one ask at the deadline is that the Sox trade for a new plane. If it takes Arias, Eyanson, and Roman… do it. If they need more, I’ll throw in my first born and my chili recipe.

France's 30-Year Yield hits highest level since the Global Financial Crisis 🚨 🚨

Larry Bird took the final shot as Boston Garden said goodbye in 1995. Celtics legends gathered on the court one last time for a moment that will never be forgotten. ☘️

this is true

"Radiologists were supposed to go extinct." Jason Furman (@jasonfurman), former chief economist to the President, on why predictions about AI and work keep missing.

‘Following the 1980 season, Boston failed to mail contract tenders to Fisk by the required December deadline set in the collective bargaining agreement. This clerical error led an arbitrator to declare Fisk a free agent rather than a controlled player under Red Sox contract.´ as big a deal as the white Sox, 1980.

Adley Rutschman playing for the Falmouth Commodores on Cape Cod. (2017)

tweet of the day

Some people in the game are completely stunned by what the Red Sox gave up for Adley Rutschman. Said one evaluator from another org.: "I'm absolutely dumbfounded by this...This is literally one of the most ridiculous trades I've seen in 30 years."

🚨 BREAKING: Japan's 2-year and 5-year bond yields just hit their highest levels in 31 years. The 2-year is at 1.579% and the 5-year at 2.098%. Both were near zero just two years ago. Japan's bond market crisis keeps getting worse.

Ceddanne Rafaela has won the AL Player of the Week Award. He hit .419 with 5 homers and a 1.387 OPS. An absolutely monstrous week.

Construction underway on the first John Hancock building in the 1940s.

Last wk S&P/Nas/Mag7 +1.0%/+1.6%/+4.7%. The forced asset sale by Situational Awareness helped drive a sharp rally on 7/30. On 7/29, I wrote, “From a technical standpoint, I believe forced liquidations and margin calls in both retail accounts and hedge funds that typically run with leverage over the past couple of weeks is leading to a technical bottom… In summary, my view is that we could have seen at least a short-term bottom today with a strong rally ahead of us in the sectors most caught in the latest speedbump.” On Thursday 7/30, the Morgan Stanley TMT (Tech Media and Telecom) Momentum Index rebounded a record 19% on Thursday and added another 1% on Friday. This followed a decline of 54% from 6/22-7/29. It is now down 44% from 6/22. This is why I focus on avoiding “speed bumps” as I warned about on my 6/20 post. It is hard to predict how bad they will be and down 50% requires a 100% gain to get back to even. I feel like the near-term low on the current speedbump was seen on 7/29. Looking at Mag7 results this earnings season, stock reaction to earnings results mostly came down to two factors: 1) did estimates go up for CQ3 if capex went up and 2) did you report results before or after the Situational Awareness (SA) forced sale. $MSFT results strengthened my recent view that co-Pilot could be a winner in enterprise AI longer-term. As I wrote in my earnings preview. “It operates natively within the Microsoft 365 ecosystem where enterprise work already happens.” There are ~450M M365 paid seats but only ~30M Co-Pilot. Microsoft guided above consensus for CQ3 while capex remained unchanged. Azure also saw growth improve sequentially from 39% to 43% y/y with guidance to 45% for CQ3. Helped by the SA forced sale, the stock saw the 5th highest one day percentage stock move in history at +16% on Thursday. $META unfortunately had both revs & operating income go down for Q3 while revising up capex & opex. They also did not announce any definitive plans around a public cloud offering or API for their foundational models to monetize this spend. The stock declined 8% in reaction on Thursday which likely would have been worse if not for the SA forced sale. $AMZN while guiding both revs & operating income below consensus for Q3 and increasing capex, had AWS rev growth accelerate from 28% in Q1 to 37% in Q2 which was the highest growth rate since Covid in Q4:2021. AWS normalized operating margins expanded 1% sequentially. The stock rallied 15% on Friday in reaction to earnings following a 4% rally on Thursday as investors continued to regross in the AI names. But this brings me to $GOOGL which remains my long-term winner in consumer AI with the complete AI stack. Google like Amazon guided capex higher while implied revs & operating income declined for Q3. But Google Cloud Platform performance crushed AWS performance. GCP saw revs accelerate from 63% in CQ1 to 82% in CQ2 while operating margins expanded 3% sequentially. But Google unfortunately reported a week prior to the SA forced sale and saw their stock decline 7% in reaction the next day. $AAPL was the anti-AI trade leading up to their results and their stock hit an all-time high intra-day on Wednesday. The stock as a result declined 1% on Thursday as investors regrossed AI names on the SA forced sale and fell 7% on Friday in reaction to revenue & gross margin guidance that was below consensus. Big picture, I think the severe drawdown in the AI favorites from 6/22-7/29 was good for the market. It reminded investors of the need to be vigilant and the perils of excessive leverage/risk taking. Long-term bond yields hitting new 20 year highs last week and the unresolved Iran war are factors I am monitoring. In summary, out of the mega-cap earnings the past two weeks and the forced SA sale, my favorites are $GOOGL, $AMZN and $MSFT. I increasingly view value as shifting from the model layer which is increasingly getting commoditized to the infrastructure layer which includes the public clouds. I think the short-term bottom in the current speed bump was on 7/29. Best of luck in the week ahead.