Transcript of THE AI AGENT DISRUPTION: Why Meta Ripped as 10-Year Yields Hit 5.18%!
Wall Street Truthbombs
0:00Hello everyone, I'm Mark Malik, founder0:02of Wall Street Truth Bombs and CIO at0:04Sebert Financial. This recap is0:07sponsored by Sebert Financial, where0:08investing is for everyone. Now, let's0:11break down the big themes that drove the0:13markets this week, the top three stocks0:15that matter the most, and the key0:17economic data behind it all, and what's0:20coming up next week that you absolutely0:22positively need to have on your radar.0:26My friends, this was a week of two0:28markets living in the same building.0:31Upstairs, stocks were throwing a massive0:34house party with the S&P 500 up 1.2% to0:387743.0:39The Nasdaq up 2.1% and the first winning0:42week in three. Downstairs, we got the0:46bond market and it was sounding the0:48alarm. And the 10-year Treasury yield0:50hit its highest level since, get this,0:532007.0:55And in the middle of it all, a single0:57app rewrote the AI trade. That app is1:02Muse. I'm sure you heard by now. Meta's1:04new AI agent. It doesn't just answer1:07questions. It completes tasks on your1:10behalf, connecting to services like1:12Gmail and Open Table. And it shot to the1:15top of Apple's App Store. No surprises1:18there. On Monday, the market treated1:20that as proof that AI spending is1:23turning into real consumer demand. The1:26Nasdaq jumped 2.3%. Chip stocks, well,1:29they ripped and the S&P 500 closed1:32within 4/10en of a percent of its1:35all-time high. Then on Tuesday, the1:37market flipped the question around. If1:40an AI agent can shop for you, switch1:42providers for you, and cancel that1:44subscription you forgot all about. You1:46know who you are. Who actually loses?1:50Well, the answer is any business that1:53depends on consumer inertia. That's the1:56habit of staying put because switching1:58is well a hassle. You know what I'm2:01talking about. Brokers, insurers, banks,2:04travel sites, and gyms all got sold off2:07big time. Investors started pricing in2:10who gets disrupted by AI. Remember that2:13kind of trade? I bet you do. If you like2:15this type of content, my friends, please2:17click like and don't forget to2:19subscribe. It's really important to be2:20in the know about this stuff and this is2:23exactly how you do it. Now, let's dig2:25deeper here. The AI buildout kept2:27writing big checks, too, my friends. On2:29Thursday, after the close, Okami2:32announced a 1.6 billion 7-year deal to2:37supply computing power to, well, guess2:39who? Anthropic. The twist is that this2:43deal is about CPUs, not GPUs. Take note2:48because AI agents spend much of their2:50time running tools, executing code, and2:53searching the web. The third theme was2:56the party upstairs kept is what the2:58party upstairs kept ignoring. And of3:02course, guess what that is? It is oil.3:04Oil gave us real relief with West Texas3:06crude falling 7.87% 87% on the week to3:0992 bucks41 on hopes that Washington and3:14Thrron are exploring a path to reopen3:16the straight of Hormuz and still yields3:19went up. The 10-year climb from 4.96 on3:22Monday to 518 on Thursday and finished3:26at 517 when oil falls and yields still3:30rise. My friends, the bond market is3:32telling you the inflation problem is not3:34just about oil anymore.3:37Okay, here's your truth bomb on that.3:39The same AI agent that made Meta a hero3:42this week is going to make a lot of3:44companies villains because any business3:47that profits from customers who forget3:49to cancel just found out that the3:51customer has a robot that never never3:55forgets. And those themes showed up3:57pretty clearly in the individual names4:00that moved this week, which brings me to4:03this week's top three stocks. One is a4:07casualty of the AI agent. One is the4:09hardware behind it. And one is the4:12company that lit the fuse. Think about4:15it for a second and see if you can guess4:17which companies I'm talking about. Okay,4:20let's start with stock number three.4:23That is Planet Fitness, PL NT. Planet4:28Fitness fell 9.46% on Tuesday to 4260.4:33And by Thursday, it had sunk to $40.72,4:37about 10% above its 52-W week low. Even4:42with a 4.81% bounce on Friday, the stock4:45still finished the week down 13.76%.4:49The low cause gym model leans on these4:51so-called ghost members, people who keep4:54paying but rarely show up because4:56cancelling is a pain. And for the4:58record, so is showing up at the gym. I'm5:01just saying. JP Morgan kept its5:03overnight rating uh excuse me, its5:05overweight rating at at its $62 target,5:09but it pointed directly to the personal5:11AI agents like Muse making5:13cancellations. Well, just a bit easier.5:16Okay, truth bomb. This is what you got5:18for that one. For years, the most5:20profitable member at the gym was the one5:22who never came. And this week, the5:24market started pricing in a world where5:26that member finally sends an agent to5:29cancel. Now, let's get to stock number5:31two. And stock number two is5:34Advanced Micro Devices, AMD. That's5:38right. AMD surged 9.99, excuse me, 9.95%5:42on Monday to 615 bucks 52. Guess what?5:46It crossed the $1 trillion market cap5:49for the first time. The catalyst, well,5:51that was a report that AMD is raising5:53prices by 10% on some fourth quarter AI5:56accelerators and graphics chips tied5:59well unfortunately to higher6:01manufacturing costs at Taiwan6:03Semiconductors, TSMC. A chip maker that6:06my friends that can raise prices is not6:09worried about demand and it fits the6:11agent story. AI that acts for you needs6:14more computing power of every single6:16kind. This story made a lot of sense.6:19Okay, let's get a truth bomb on that.6:21When a company announces a price hike6:23and a stock actually jumps almost 10%.6:26That's not just a chip stock anymore.6:27That is pricing power. We talk about6:29that a lot over here at Wall Street6:31Truth Bombs. And pricing power is the6:34rarest thing in this market. Okay, let's6:38move down to stock number one.6:42Drum roll, please. And that one is I bet6:45you know this one. Meta Platforms. Meta6:48META Meta my friends soared 11.34% on6:53Monday from $665.756:56to $741 bucks256:59as Muse topped the app store and anal7:03and that topped the app store lists7:05excuse me and analysts rushed to raise7:07their price targets immediately the7:09stock kept climbing into Thursday before7:11giving back more than 3% on Friday the7:14same day a New Mexico jury found that7:16Meta misled consumers in a case tied to7:19the Cambridge Analytica scandal.7:22Remember that one? Yeah. A judge will7:24now decide the damages. Here's why Meta7:26is the number one story. Because, my7:29friends, investors keep asking where the7:31payoff is from AI spending. Muse is the7:34clearest sign yet of consumers embracing7:37an AI agent. Not a chatbot that you talk7:41to to. Those are pretty cool, but this7:43is quite different. this is a tool that7:45actually acts for you. That one product7:49moved Meta uh lifted the chip stocks and7:52knocked down the subscription economy7:54pretty much all in the same week. And I7:57have a truth bomb on that one. Of7:58course, the biggest AI launch of the8:01year did not come from a chip company or8:03an AI lab. It came from the company that8:06owns the most human attention on this8:09planet. And that tells you where the AI8:12money goes next to whoever owns the8:15customer. That's not actually really8:17unique if you really think about it.8:19That's always been the case. Pretty8:20solid business plan. Okay, those, my8:23friends, are your top three stocks of8:25the week. And if you want my daily deep8:27dives into any of these tickers or any8:29more or you have other tickers that8:31you're interested in, please do us a8:32favor. Drop those uh stock uh tickers in8:36the comments below and we will try to8:38get to those stocks as well. Investing8:40in your future doesn't have to feel8:42intimidating. At SERT, you're never on8:44this journey alone. Our team of8:46adviserss, brokers, investment managers,8:49and insurance professionals is with you8:51every step of the way. We believe your8:53financial plan should be as unique as8:55you are, not a one-sizefits-all8:57template. As a leading brokerage and8:58financial services firm, we tailor our9:01solutions to your goals, your timeline,9:04and the life you're building. If you're9:06ready to take the next step toward true9:08financial freedom, visit sever.com to9:10learn more.9:15Now, let's get under the hood on the9:18data. the data that explains why this9:21week played out the way it did. And9:22we're going to start with doing a review9:24of last week's economic data. Um the9:27report that shook the bond market came9:29out actually on Wednesday. That was the9:32S&P Global Flash PMI for September. Uh9:35remember that company comes out with two9:37separate releases of that PMI in a9:39month. There's an early release and we9:41call that inside Wall Street. We call9:43that a flash PMI. That's just his first9:46estimate. We'll come up with a final9:48number at the end of the month. Anyway,9:50the composite index, the flash index9:53jumped to 58.4 from 56.0 in August.9:56That's the fastest growth in business9:58activity since July 2021. And of course,10:02far above what analysts were expecting.10:04But the part that mattered most was10:06inside the report. If you look at it,10:08you can see that input costs rose at the10:11fastest pace since October 2022, driven10:14by, if this shocks you, you have been10:16asleep under a tree somewhere. It was10:18driven by fuel, transport, and of10:21course, and this is the scary one,10:23wages. The S&P 500 fell 8/10en of a10:26percent that day. Small caps dropped10:281.8% and 10-year yields jumped to 5.11%.10:33On Friday, the University of Michigan's10:35final September consumer sentiment10:37reading came in at 48.1.10:40A little better than the 47.810:42preliminary number, but down from the10:4551.7 in August and the lowest10:47unfortunately in 4 months. Year-head10:49inflation expectations, and this is the10:51one we like to watch really closely, it10:53rose to 4.6% from 4.0%. As consumers10:58worried about high fuel prices and10:59renewed trade fights, that is what11:01probably drove that expectation. My11:04friends, if you put that together, you11:06get what we ended up with. Businesses11:08are booming, consumers are miserable,11:10and both, unfortunately, both expect11:12higher prices. That's why yields rose11:15even as oil fell, and why a market that11:18loves the AI story still has to look11:20over its shoulder at the Fed. my11:23friends. Now, we're going to take a look11:25at what is coming in the week ahead. The11:27stuff that I think you really need to11:29have on your radar. It's going to be a11:31pretty packed week and I'm just going to11:32cover the highlights here. Uh in11:34September 30th, my friends, we get the11:36August PCE report. That's the Fed's11:39preferred inflation measure along with a11:42final read on second quarter GDP. With11:44the Fed fresh off a rate hike and11:46businesses uh reporting surging costs, a11:49hot PCE number would put another hike11:52squarely on the table for the October11:5527th 28th meeting which is going to come11:57up pretty quickly. Micron also reports12:01that day. Micron, you heard of it? Of12:03course you have. That's a key check on12:05the AI hardware boom. Then on Friday,12:07October 2nd, Friday, that should ring a12:10bell. We get the September jobs report.12:13The employment situation. August came in12:15hot at 162,000 new non-farm payroll jobs12:19with unemployment at 4.1%. And Wall12:22Street is braced for a slower number12:25this time. And a steady stream of Fed12:28speakers of course will keep bonds on12:30edge all week. They have been pretty12:32hawkish lately. My friends, you better12:34pay attention to what they say. These12:36are the guys and the gals that actually12:38fill in the little uh dots. So what they12:42say or what they think it's probably12:44important to hear. Okay. So here are the12:46questions. Can the economy keep growing12:49this fast without forcing the Fed to12:51keep hiking? And how can the 10-year go12:54before it stops being a bond story? It12:58starts becoming a stock story. Because13:00remember 10-year yields, they also13:02figure and they can impact stocks,13:05right? it it impacts stocks because as I13:07cover all the time uh when you come up13:09with a theoretical stock value we use a13:13uh a discount rate that comes directly13:15from bonds and that fits in the13:18denominator of that equation as that get13:20gets bigger valuations get pressured13:23right so that's an important one but13:26also uh at those yields those yields are13:28competing with stock yields right so as13:32those go up people at some point are13:34going to start pointing to both and13:35saying hey where do we get the best uh13:38return uh at a better risk so13:41riskadjusted return. So that is a big13:44question and you can expect that people13:45are going to be focusing on that in the13:47weeks ahead if bond yields keep creeping13:49higher. But here's the bottom line. This13:52week, the market found its next big AI13:54story in an agent that works for the13:57consumer, rewarding Meta and AMD while14:00punishing the living daylights out of14:01companies that live off of customer14:04inertia. But underneath a booming14:06economy, a rising cost push yields to14:09levels with which we have not seen, my14:11friends, since 2007. The single most14:14important thing to watch next week is,14:16of course, Wednesday's PCE report14:18because it'll decide whether the bond14:20market lets this rally keep going. My14:22friends, uh, I'm Mark Malik. This has14:24been your weekly market recap. It was14:27your top stocks of the week, at least14:28the ones I thought were interesting, and14:30week ahead review. This was sponsored by14:33SB Financial, where investing is for14:36everyone. My friends, please stay14:38disciplined, stay truthful, and I look14:40forward to seeing you in the next one.14:43Meanwhile, join me every day at Wall14:45Street Truth Bombs, where I drop them14:46right here before the market figures14:48them
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