Transcript of THE FED HIKES INTO $100 OIL: Why the 10-Year Treasury Just Hit 5%!
Wall Street Truthbombs
0:00Hello everyone, I'm Mark Malik, founder0:02of Wall Street Truth Bombs and CIO at0:04Sebert Financial. This recap is0:06sponsored by Sebert Financial, where0:08investing is for everyone. Now, let's0:11break down the big themes that drove the0:13markets this week and the top three0:15stocks that mattered the most and the0:17key economic data behind it all. What's0:20coming up next week that you need to0:22have on your radar? My friends, this was0:26the week the Fed stopped talking and0:29started hiking. The S&P 500 was down0:321.4% through Wednesday. Then Thursday0:35delivered its best day in 6 weeks and0:39the index finished down just about0:41onetenth of a percent at 7650 and 50.0:45The Dow was 890 points or 1.7% and the0:48small cap Russell 2000, well it dropped0:511.5%.0:53And the NASDAQ, well, that was the loan0:55winner. It was up 7/10en of a percent on0:58Wednesday. The Federal Reserve raised1:00rates by 25 basis points to a range of1:043.75%1:06to 4%. A unanimous unanimous 12 to1:10nothing vote and the first hike since1:132023. The new dot plot, that's pretty1:16cool, puts the median year-end rate at1:194.1%.1:21which implies one more hike this year.1:23The hike was priced in. The press1:25conference was not. Chair Kevin Walsh1:28said he would be hardressed to describe1:30broad financial conditions as1:32restrictive, calling the projections the1:35forecast of his 18 colleagues and said1:38his is not in the forward guidance1:40business. Now, translation of that, no1:43promises and no ceiling. The Dow fell1:46631 points that day alone, and the bond1:49market heard him pretty loudly and1:52pretty clearly. The 10-year Treasury1:53yield hit 5.01% on Wednesday by the1:56Fed's own data and the highest since1:592007, and it closed the week right at2:025%. The 2-year climb from 4.63% to2:06roughly 4.74%.2:08That's a 52-W week high. And on Friday,2:12the Bank of Japan, well, it hiked too.2:14uh not unexpectedly to 1.25%.2:18That's its highest rate in 31 years. My2:22friends, we're going to dig deeper into2:23this stuff, but if you like this type of2:25content, please click like and don't2:27forget to subscribe. It's important to2:28be in the know. And this is exactly how2:31you do it. Okay, underneath all of it is2:35well, oil. Late last week, drones shut2:38down Saudi Arabia's East West pipeline,2:40the kingdom's main route around the2:42Straight of Hormuz, and Brent crude ran2:44to nearly 110 bucks this week. It cooled2:48after a Ramco said it would partially2:50restart the line within days. Let's see2:52what happens. And Brent settled Friday2:54at 103 bucks. 87 while WTI settled at2:59$10030.3:01Still above 100 bucks. with diesel.3:03Well, that's at record highs at the3:05moment. And then there was the AI story.3:09Over last weekend, anthropic CEO Dario3:11Ammedday published an essay calling for3:14a slower pace of frontier AI3:16development. And Sam Alman and Elon3:19Musk, well, they kind of backed the3:21idea. On Monday, chip stock sold off3:24hard, led by Intel and AMD. But the3:27money didn't leave AI at all. It just3:29moved to the companies that secure it3:32and the companies that power it. So, put3:35it all together, an oil shock keeps3:37inflation hot. A Fed chair refuses to3:40promise a stopping point and the 10-year3:42sits at 5%. In that world, the market3:46stops paying for stories and starts3:47paying for signed contracts. I got a3:50truth bomb for you on that. Everyone3:53watched the hike, but the bond market3:55was watching the chairman. And when the3:58man running the Fed says he's not in the4:00forward guidance business, well, the4:0210-year becomes the forward guidance.4:04Right now, it says 5%. And those themes4:08showed up pretty clearly in the4:10individual names that moved this week as4:12well, which brings me to this week's top4:15three stocks. All three were repriced by4:17forces they don't control. Diesel, AI4:21Safety, and well, Amazon's Checkbook.4:25Let's start with stock number three.4:28That is JB Hunt Transport. That's JBHT.4:33And JB Hunt fell 13.3% on Wednesday and4:37finished the week down 13.39% at4:40$234.25.4:42At a Morgan Stanley Investor conference,4:44CFO Brad Delko warned that third quarter4:47earnings will come in 5% to 10% below4:51the second quarter. the culprits. Okay,4:54don't be surprised now. Roughly 254:56million in extra driving driver hiring4:59costs and at least 10 million more in5:02fuel because the fuel sir charges it5:04bills customers lag the price of diesel.5:08Now, it's important to remember that,5:09right? Because they do actually get to5:12make themselves whole on these search5:14charges because that's how these5:15contracts work with these shippers and5:18their customers. And remember this guy5:21just told us that there was a lag. So5:25that means on the other side of this5:27equation uh when we start to look at5:29earnings and the financials of the5:31companies that pay these search charges,5:34well we can expect despite where things5:36are going at the time that there are5:38going to be lags in expenses. So just5:41write that down in your little notebook5:43and I'm sure we're going to bring it up5:44again as earning season starts. My5:47friends, this is the oil shock showing5:50up in an income statement. And it's5:52really, really important because this is5:55the stuff that's going to last long5:56after all of the headlines fade.6:00Investing in your future doesn't have to6:02feel intimidating. At SERT, you're never6:04on this journey alone. Our team of6:06adviserss, brokers, investment managers,6:09and insurance professionals is with6:10[music] you every step of the way. We6:12believe your financial plan should be as6:14unique as you are, not a6:16one-sizefits-all template. As a leading6:18brokerage and financial services firm,6:20we tailor our solutions to your goals,6:22[music] your timeline, and the life6:24you're building. If you're ready to take6:26the next step toward true financial6:28freedom, visit sever.com to learn more.6:33[music]6:35Okay, I got a truth bomb for you on6:37this. A fuel searchcharge is supposed to6:39be a hedge, but when diesel moves this6:41fast, the search charge becomes a lag.6:44And the lag is where the profits, well,6:46that's where they go to die. Okay, stock6:49number two. This is a favorite ours over6:52here at Wall Street Truth Bombs. And6:54that is Crowdstrike, CRWD.6:59Crowd Strike jumped 13.85% on Monday and7:02finished the week up 14.95% at $237.65.7:0665. The catalyst was the same Amadeday7:10essay that sank the chip makers. Wall7:12Street read it this way. If the people7:14building the most powerful AI systems7:17are worried about what those systems can7:19do, well then the demand for security,7:22well of course it has to go up, not7:24down. Palo Alto Networks, another great7:27one, rallied right alongside it. Crowd7:30Strike, my friends, did give back about7:313.28% 28% on Friday, but this week7:34belonged to security. Truth bomb. I got7:37one for you on that. The market just7:40told you that AI risk is a revenue line7:43and it does not belong to the companies7:45building the models. It belongs to the7:47companies paid to defend against them.7:50My friends, this is some good stuff and7:52I hope you're liking it. Uh, and if you7:54do, please click like. Don't forget to7:56subscribe. Okay, let's go to stock7:58number one. This one's an interesting8:00one. was one that you haven't heard in a8:02while, but you're probably not going to8:04be surprised. And that is, drum roll8:07please, GenerRack Holdings, GNRC. Gener8:11surged 18.34% on Thursday to $27023.8:18Finished the week up 10.94%.8:20After the close on Wednesday, the8:22company announced a deal with Amazon8:25worth up to $8 billion to supply8:27industrial backup generators for8:29Amazon's data centers with 2.4 billion8:32in initial delivery scheduled for 20278:35and 28. Amazon also received warrants to8:39buy nearly 1.7 million Generrack shares8:42at 200 bucks 93. And most of those8:45warrants best only as Amazon's payment8:48hit milestones. Generrack had fallen8:515.35% on Monday that Amazon Signature,8:54well, it pretty much erased it all. A8:57stock most investors filed under8:59hurricane season just got repriced as AI9:02infrastructure. The AI buildout, my9:04friends, it's not slowing down. It's9:06running into physical limits and backup9:09power is now on that list. You better9:12pay attention here because this stuff is9:14moving fast. And as I said the other day9:16when I was on TV that this train it's9:19moving and it's not slowing down. So you9:22better make sure you get on it before it9:23leaves the station. Now I got a [snorts]9:26truth bomb for you on that. Uh on Monday9:29uh the the AI CEOs asked the industry to9:33slow down. On Wednesday, Amazon signed9:35up for as much as $8 billion of9:38generators. So watch what the9:40hyperscalers sign, not what the CEOs9:42write. because contract is the only9:44forecast with well money behind it. And9:48my friends, those are your top three9:50stocks of the week. And if you want9:52daily deep dives on any of these tickers9:54or any others that's on your mind,9:57please drop a comment below. We try to9:59look at that stuff and we try to address10:01that stuff as quickly as possible. Now,10:05let's get under the hood on the data.10:08That explains why this week played out10:10the way it did. We're going to start by10:12looking back at last week. Let's start10:15with the Fed's new projections, their10:17SEP, their statement of economic10:19projections. The committee now sees PCE10:22inflation at 3.7% for 2026. And that's10:27up from where they thought it was in10:28June. That was at 3.6%.10:30And doesn't see it back at 2% until,10:33well, 2029. It also sees unemployment at10:374.1% and GDP growth at 2.3% this year.10:41That's a Fed looking at a strong economy10:44and a hot inflation at the same time.10:46And that is exactly the combination that10:49justifies well, I'm sorry to say it,10:51more hikes. Then the consumer proved10:54that the Fed they proved the Fed's10:56point, excuse me. August retail sales10:58came out on Wednesday morning just11:00before the Fed announced its decision11:03and it was up 1.2% 2% against analyst11:06expectations of just 8/10 to 9/10 of a11:09percent. That was reversing a 510 of a11:12percent drop that happened in July that11:14was revised from 610 from a 6/10 of a11:18percent drop uh excuse me and online11:20sales uh jumped 2.6%.11:23No surprise there, but read the fine11:25print. This report is not adjusted for11:28inflation. Remember, it's based on11:30dollar changes, not on what you're11:32actually getting for your dollar. And11:35sales at gas stations were up 21% from a11:38year ago. So, part of that strength is11:40simply, well, higher prices at the pump.11:43So, the data closes the loop. The strong11:46consumer and a sticky inflation gave11:48Walsh, well, the cover he needed for a11:50hike, and the hike helped push 10-year11:53yields to 5%. The same oil that inflates11:56the retail sales number is what actually11:59crushed it. JB Hunts outlook got crushed12:03along with it. Okay. Uh if you like this12:06type of stuff, my friends, you know what12:07you got to do. We do this every single12:09week. I hope you come back and check us12:11out again. Okay. The week ahead, uh12:13that's next week. We have no Fed12:16meetings, but we got one coming up in12:18late October. But it still was loaded12:21with events that can absolutely move12:24rates and stocks. So you got to pay12:26close attention. On Thursday, guess12:28what? Chinese President Xi Jinping12:31arrives in Washington for a state visit12:33with President Trump. Trade and not12:35surprisingly, technology will be on the12:38menu. And any headline on chips hits the12:41same AI names we just talked about12:44above. The Treasury also auctions12:472-year, 5-year, and 7-year notes on12:49Thursday, uh, Tuesday through Thursday,12:51and weak demand there would push yields12:54higher. And that's something obviously12:56that's very much on the mind of the12:58market these days. On Friday, we get13:01August durable goods orders and the13:03final September reading from the13:05University of Michigan sentiment survey.13:08The preliminary read put one-year13:10inflation expectations at 4.6% 6%. And13:13if that holds for rises, it hands13:16October hawks, well, another argument.13:19And Costco reports Thursday after the13:21close, that's an important one, a clean13:23read on whether that strong August13:25consumer is still showing up. So, here13:27are the two questions the market will be13:29trying to answer. Can the 10-year hold13:32at 5% without breaking the stock market?13:35That's a big one. We've been watching13:36that closely here at Wall Street Truth13:38Bombs. And is the AI trade really13:40slowing down? Or is it just moving from13:42chips to security and power? Or was all13:46this noise that happened last weekend13:48just a tempest in a teapot? And will the13:51train keep running the way I described13:54above? So here is the bottom line. The13:57Fed hiked into an oil shock, my friends.13:59the chairman refusing to promise a14:01stopping point and the market responded14:03by punishing the companies that pay for14:06the fuel and rewarding the companies14:08that get paid for protection and power.14:11The single most important thing to watch14:12next week is of course the 10-year14:14yield. 5% becomes the floor instead of14:16the ceiling. Well, everything else on14:18the list gets repriced. I'm Mark Malik14:22and this has been your weekly market14:24recap, the top stocks report and the14:26week ahead review. It was sponsored by14:29SER Financial, where investing is for14:31everyone. Stay disciplined, my friends.14:33Stay truthful. And I can't wait to see14:36you in the next one. In the interim,14:38join me every day at Wall Street Truth14:40Bombs, where I drop them right here14:41before the market figures them out.14:46[music]
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