1. Recap and the View for This Week

Week of Jul 15–19, 2024: US equities and the Nasdaq were broadly weak. After the Trump assassination attempt, his election odds surged and a "Trump trade" emerged — rotation out of the tech that dominates S&P 500 / Nasdaq 100 market cap into energy, nuclear, utilities, and financials. After the June CPI, cut expectations rose and small caps rallied, with the Russell 2000 spiking 10%+ in a week. The S&P 500 and Nasdaq 100 both took a short-term correction.

So how do I see the fourth week of July? Citing BlackRock CIS Wei Li's interview: the small-cap move is not fundamentally supported (no earnings growth) and is short-term noise. I agree, and I see the Trump-trade-driven tech correction as transient noise too. The mega-cap quarterly season starts this week and, on broadly solid earnings, equities should resume their uptrend — I currently hold this view.

Per FactSet, ~14% of the S&P 500 has reported; 80%+ beat Street EPS and 62% beat revenue. Notably, the average S&P 500 EPS YoY growth so far is 9.7% — if held or higher, it would be the strongest growth quarter since Q4 2021 (avg +31.4%). It is an earnings-backed rally. In a high-rate environment, the companies most likely to deliver are those with high free cash flow, steadily growing business models, or large cash and low debt/equity.

If through June 2024 the tape was undervalued companies (post-2022 correction) reverting to fair value, then July through year-end will be a trade-driven tape led by companies with the capacity to sustain that growth — the large S&P 500 / Nasdaq leaders with liquidity momentum. Through June moved on a valuation frame; from July, a trader's lens — earnings, momentum, industry, macro frame.

2. [Mon, Jul 22]

Biden withdrew and the Democratic ticket switched to Kamala Harris. The market seems to have judged "the Democrats' polling is competitive enough vs Republicans." Funds rotated back into tech, and the S&P 500 / Nasdaq 100 bounced modestly.

The switch to Harris strongly reinforces the probability of the macro scenario I hold most fundamentally — Yellen's TGA re-election play (the Treasury raising the TGA balance via bill issuance, to be used gradually to supply market liquidity — for a Democratic re-election, effectively to block Trump). There had been uncertainty about maintaining the scenario after the Trump assassination attempt, but I judge it remains valid to carry. (The scenario is detailed later.)

3. [Tue, Jul 23]

After the close: Tesla, Alphabet (Google), Visa.

(1) Tesla ($TSLA, Q2 2024)

Revenue slightly beat Street (inferable from delivery and energy-deployment data), but net income did not beat. The headline numbers disappoint, but the overall engineering performance is, in my view, solid.

• Revenue: $25.5B vs $24.33B (Beat)
• Gross Profit Margin: 18.0% vs 17.2% (Beat)
• Adj EBITDA: 14.4% vs 16.3% (Miss)
• EPS: $0.52 vs cons. $0.61 (Miss)
• Operating margin: 6%
• Operating Cash Flow: $3.61B vs $4.17B (Miss)
• Free Cash Flow: $1.3B vs $1.95B (Miss)

Highlights:

• FSD mileage rising exponentially (training-data volume ∝ mileage; data volume typically drives autonomy-model improvement).
• ESS (Energy Storage System) +100% YoY, though small as a share of total revenue.
• Cybertruck / Optimus updates — two Optimus units doing real automation work in a Tesla factory.
• Guidance: Cybertruck profitability by year-end; Semi plant production ~end-2025; AI training compute ~90,000 H100s by year-end + 40,000 HW4(AI4) in the training loop, Dojo 1 ≈ ~8,000 H100s' worth; 2Q24 4680 cells QoQ +50%+; Shanghai megafactory production from 1Q25; 2024 vehicle-sales growth "notably lower" than 2023 as focus shifts to next-gen; cheaper-model production from 1H25.

Market reaction: many key misses, negative; the stock fell 15–16% post-print. The market's question on FSD / Optimus / robotaxi: "when does this actually show up in earnings?" Engineering progress is clear, but the short term is a hard period to prove it numerically.

The numbers prove Tesla can no longer be valued on EVs alone. EV revenue fell, but strong growth in energy generation / storage covers total revenue. Net income −42.8% YoY but operating cash flow +17.8% — the latter is tax-driven extra cash flow, so sustainability is questionable. Cash: $17.2B (Q4'23) → $12.5B (Q1, −27.4%) → $15.4B (Q2, +23.2%), stable. Net: the revenue mix diversified into actual revenue growth, but shrinking EV net margin is the core investor concern. Just HOLD.

(2) Google ($GOOGL)

Revenue and EPS both beat, but expectations ran too hot. Core: "the infrastructure of AI integration is, ultimately, Google."

• Search & Other: $48.5B vs cons. $47.7B (Beat)
• YouTube Ads: $8.66B vs $8.94B (Miss)
• Google Network: $7.44B vs $7.89B (Miss)
• Subscription, Platforms, Devices: $9.31B vs $9.36B (Miss)
• Google Cloud: $10.35B vs $10.10B (Beat)

Market reaction: YouTube-ad miss + AI-capex commentary → −7–8% post-print. The market's question: "does AI make money?" As the core AI-infrastructure player with cloud capability and vast data, Google is an AI winner. Revenue +14% YoY, operating income +25.5% YoY, operating margin +3pp to 32% (33% in Q1 2024, the year's high).

The ad-services operating income grows strongly too, but the standout is Google Cloud's growth — demand rose that much. One of the true AI-boom beneficiaries. Cash is ample; no big-tech worry needed.

4. [Wed, Jul 24]

After close, of note: ServiceNow ($NOW, barometer for AI-applied SaaS profitability), Chipotle ($CMG, consumer-sentiment barometer).

(1) ServiceNow ($NOW)

ServiceNow is a Digital Workflow Automation SaaS company; having applied generative AI directly into its solution, whether that converts to profitability is answered by $NOW / $CRM results. Key metrics: Subscription Revenue, cRPO, RPO (Remaining Performance Obligations) — proxies for client demand and SaaS-profitability resilience. RPO is contractual potential revenue not yet recognized; cRPO is RPO to be recognized within 12 months.

All Q1 consensus beaten (Subscription Rev YoY +23% vs cons. 21–22%; cRPO YoY +22% vs 20.5%). Growth has cooled somewhat vs Q2 last year, but the market focused on the beat + higher growth vs last year's RPO YoY +24%. Stock +13–14% post-print. Short-term proof: underlying SaaS demand has not broken and the applied generative AI also contributes to profitability (gen-AI-related deals 2x vs Q1). Guggenheim's John Difucci had switched to SELL citing possible disappointment / guidance cut; in the end results met expectations and the full-year Subscription Revenue guidance was raised to 22%. Note both growth and guidance slipped modestly vs the year-ago quarter.

(2) Chipotle ($CMG)

Fast-food-chain results ($MCD, QSR — parent of Burger King / Popeyes / Tim Hortons, $CMG) are an indirect barometer of the US economy and consumer sentiment. In a high-rate era: if the economy is decent, consumers don't mind dining-out spend; if it's truly bad (extreme inflation), sentiment contracts enough to avoid even cheap fast-food dining — sentiment shows up immediately there.

Overall a Street beat: revenue +18.2% YoY, operating margin 17.2% → 19.7%, EPS +32% YoY. Market reaction: +14% right after the print but −17% after the regular open — likely unease about the result's durability given current consumer sentiment. The call's key point: store traffic / demand trending up, but not because the economy improved — because Chipotle's operations were strong. While peers wage fierce price-cut competition, Chipotle competes via marketing and operational efficiency, not price cuts. CEO Brian Niccol told CNBC that overall restaurant traffic is declining amid high prices and dining-out spend is felt as a burden, and Chipotle is responding accordingly. In short: not an economic improvement, but Chipotle's operating excellence.

5. [Thu, Jul 25]

Today, just the S&P 500 / Nasdaq 100. In April 2024, escalating Iran–Israel tension pressured oil; on inflation-reignition fear the S&P 500 fell ~6% and the Nasdaq 100 ~8% from the then-high, a correction that started early April, lasted ~2 weeks, then bounced.

April had a clear basis ("oil": tension → oil up → US inflation reignition → equity worry). The July correction is hard to pin to a clear basis. If forced: election uncertainty, big-tech earnings short of "expectations" (quantitatively mostly above estimates), (weakly grounded) AI-monetization uncertainty — just a short-term excuse to cool the unbroken May–early-July run; underlying earnings are solid.

Currently S&P 500 −4.5%, Nasdaq 100 −9.5% from the high (Nasdaq nearly double the drop), Russell 2000 steadily up. Unlike April, not the whole market but only AI-related tech is correcting — a rotation where liquidity out of tech flows into financials, energy, small caps.

Technicals:

• S&P 500: bounced off the daily 50-DMA after the open, broke below it after the close — bounce failed.
• Nasdaq 100: broke below the 50-DMA yesterday, heading toward the 120-DMA — small bounce just above the 120-DMA after the close.
• Thursday-morning futures bounced modestly: S&P 500 E-mini showing a convergence signal at the 4h 325-hour MA; NASDAQ 100 E-mini, after breaking below the 325-hour MA, a small bounce at the May-2024-high level.

No firm reversal signal yet. Wednesday's quarterly GDP / jobless data were solid (a "good is good" phase; the market somewhat fears recession) but the bounce failed. June PCE and the UMich consumer-sentiment index are due before Thursday's open — to watch closely.

6. Synthesis

As gauged from TSMC's prior results, semiconductor demand has no decline worry this year — positive. The major mega-cap results are fundamentally positive too, but expectations ran too high. With no fundamental issue, price moves are short-term noise. The mega-cap season has just begun, so no clear picture yet. Beats above Street that still fell short of "market expectations," dragging the stock down short-term, were frequent this year; how that expectation converges has to be watched over time. Amid election uncertainty, valuation revisions may be unavoidable — at least short-term, risk management is warranted.

In the short run, the market is a voting machine but in the long run, it is a weighing machine.

View the current market through "voting," but "weighing" is inevitable before entering any position.

— This note is a personal record of market views, investment, and trades; it is not a solicitation to buy or sell anything.