The market bottomed at the end of the

first quarter and has staged a very

powerful rally. The S&P was up 15% and

NASDAQ was up 23%. However, this week

the market started to correct. Micron

reported and their numbers were

incredibly powerful. Accenture reported

last week and it was quite disastrous.

It looks like SpaceX is going to be a

very volatile stock. But the new capital

intensity of the hyperscalers combined

with a lack of moes has destroyed the

momentum in these stocks. It looks like

this week the market started to really

worry about these arguments. So much for

the rally.

Hi, this is Steve Eisman and welcome to

another edition of the weekly rap. This

is for the week ending Friday, June 26,

but recorded on Thursday night, June 25.

Before we start, we want to let everyone

know we will not not be dropping a wrap

for July 3rd, as we will be traveling.

We want to wish everyone a wonderful

holiday weekend in advance. One more

note before we start the wrap. If you're

a premium subscriber or you've been

thinking about joining, we have some

important news. We're moving your

subscriptions to the Real Eyesman

Playbook Premium over to Substack. Same

subscription, same price, and same great

content. The bonus episodes, the deep

dives, just plain more, just on a better

platform that makes it easier for you to

access everything in one place. If

you're already a premium subscriber,

you'll be hearing from us directly with

everything you need to make the

transition seamlessly and at no

additional costs. If you are a paid

subscriber, you keep your membership and

we are giving you a bonus month for

making the transition with us. And if

you've been on the fence about joining,

now is a great time. Head to our

Substack at

realismanplaybook.substack.com

to sign up. More details coming soon.

Also, I want to flag this past

Wednesday, June 24 on Premium. We

dropped an interview with the head of

investor relations at Glass House

Brands, a cannabis company whose stock I

own. We moved this episode up because a

lot has changed in the world of cannabis

over the past few months. All for the

better, and we explore it all. Also, the

company just announced it will be listed

on the New York Stock Exchange because

of the rescheduling of medical cannabis

to class 3. The ticker GLAS will begin

trading June 30th. As I said, I own this

stock and this is not meant as a

recommendation. Now, we are releasing my

personal portfolio lecture this coming

Wednesday, July 1. I will disclose my

personal portfolio, why I own what I

own, and how I think about investing.

This deep dive is forformational and

educational purposes only. I'm also

flagging the July 8th premium episode

which will be a deep dive with Kathleen

Kelly and Nancy Flynn of Queen Anne's

Gate Capital about the impact of the war

on oil and commodities. They think oil

prices will be dropping due to over

supply. Hope you tune in. Now let's get

into this week's rap. On this week's

rap, we explore the following. One, the

war in Iran. Two, Accentra's disastrous

quarter, what it means. Three, good news

for GE Vernova. Four, volatility in

Space X's stock price. Five, bad news at

Google. Six, good news for Micron.

Seven, bad news for Nike. Eight, the

tech leadership rollover which we

discussed in the June 12th weekly rap

and review of the second quarter. And

nine, some thoughts about Alan

Greenspan. And 10, one mailbag. Let's

get started. The US and Iran signed anou

last Friday. This week, Vice President

Vance led a team of negotiators to iron

out the details. I'm sure the markets

will trade every headline for weeks.

Next up, Accenture reported last week

and it was quite disastrous. Now,

Accenture is a large management

consulting company. Originally, it was

called Arthur Anderson Consulting. They

spun off in 2001, narrowly avoiding the

collapse of its parent company during

the Enron scandal. The fear about this

sector is that AI will reduce the need

for consulting services. Essential's

results did absolutely nothing to

alleviate those fears. Revenue was up a

poultry 3%. Bookings declined declined

3% as several contracts have shifted to

fiscal 27 or so. management says what

seems to be happening is that companies

are spending more on AI and they are

somewhat hiring Accenture to help them

but they are cutting back on everything

else so that netnet overall results for

Accenture remain weak simultaneously the

company announced three acquisitions in

one day that looks like buying stuff to

hide weakness the stock was down 18% on

Friday and is down over 50% this year

ugly G Vernova received some good news

on Monday. Chevron announced that it has

signed a 20-year power purchase

agreement with Microsoft to develop a

power facility in West Texas that will

supply electricity to a Microsoft data

center. A majority of the facility's

power generation will come from GEV's

turbines and electrical infrastructure.

This deal is another example of GEV's

bundled offering of turbines and

electrification equipment. GEV remains,

in my view, one of the better AI power

stories. Moving on, it looks like SpaceX

is going to be a very volatile stock. On

its opening day, Friday, June 12th, it

climbed 19% from the IPO price. On

Monday of last week, it increased

another 20% and on Tuesday of last week,

another 5%. Since then, it has basically

gone straight down. On Wednesday of last

week, it was down 5%. On Thursday of

last week, it was down 4%. And on Monday

of this week, it was down 16%. Tuesday

and Wednesday, stock did almost nothing.

After all this movement, the stock is

now only 14.5% higher than its IPO

price. By the way, the stock was down

16% on Monday because the company

announced a 20 billion bond sale, which

supports our thesis that SpaceX has

become a very capitalintensive business.

The bond issue in size was increased to

25 billion. There was some bad news from

Google on Monday that drives home some

negative aspects to the hyperscaler

story which I'll discuss in a few

minutes. These negative changes to the

hyperscaler story were partially driven

home on Monday when it was reported that

two Google senior officers left to go to

open AI and anthropic. Google's co-head

of its Gemini AI models left to go to

open AI and a senior engineer in

Google's deep mind left to go to

anthropic. Good news from Micro. Micron

reported and their numbers were

incredibly powerful. Because of the

growth in AI data centers, there is a

shortage of every kind of semiconductor.

Prices have soared. Micron beat on both

revenue and earnings. But that statement

does not even begin to capture what is

happening here. The company reported EPS

for the quarter of $251,

which was a get this 1,215%

year-over-year increase. The company

posted revenue of 41.5 billion, a get

this, 345%

year-over-year increase. Prior to the

earnings report, Micron was up 267%.

The 2027 PE, however, is only 8.7 times

as the increase in earnings has more

than kept up with the stock price. One

more point on the conference call,

management stated that they believe that

chip supply will remain constrained past

2027. Moving on, there was some news on

Nike this week. Nike has been a

turnaround story for 2 years that has

not turned around. On Monday, June 22nd,

we hosted three consumer analysts from

Evercore. one of whom, Michael Benetti,

covers Nike. And on Tuesday, Michael

downgraded Nike from buy to hold because

there is just no evidence that the

turnaround is taking hold. Quite the

opposite, actually. Now, let's discuss

the second quarter. Normally, I would

discuss the results of the second

quarter in early July, but because I

will be traveling, by the time I get

back, that will be stale. So, I'm going

to do it now. I'm putting on the screen

a table that shows the second quarter

and year-to-ate performance of the S&P

500, NASDAQ, and all 11 sectors of the

S&P. The data is as of Wednesday, June

24th. For you audio listeners who cannot

see the screen, let me give you a few

key stats for the second quarter. The

market bottomed at the end of the first

quarter and has staged a very powerful

rally. As of last Friday, the S&P was up

15% and NASDAQ was up 23% for the second

quarter alone. However, this week, the

market, especially NASDAQ, started to

correct. The result is that by the end

of this Wednesday, the S&P was up 13%

and NASDAQ was up 18% for the quarter.

Let me just point out that Micron's

results reported Wednesday night did

trigger something of a tech rally on

Thursday. Well, not exactly a rally.

Micron was up over 15% on Thursday.

However, and perhaps more importantly,

the rally on Thursday was confined

largely to chips and power related

companies like GE for Nova. The

hyperscalers, Amazon, Meta, Oracle,

Google, and Microsoft were all down on

Thursday. Apple also was down as it

raised prices on its MacBook and iPad

because of higher memory chip prices.

Net neck NASDAQ was down on Thursday, so

much for the rally. This supports our

thesis that investors are willing to

play scarcity, but the new capital

intensity of the hyperscalers combined

with the lack of moes has destroyed the

momentum in these stocks. One more

point, the capital intensity would not

be so bad if they were large moes. Then

investors could feel comfortable handing

over capital for the sake of protected

franchises. But combination of capital

intensity with no moes is potentially a

race to the bottom. It implies future

price wars. It implies low returns on

capital. Given the trillions being

spent, capital intensity with no moes is

just plain scary. Now, we have been

discussing AI and tech for months now.

And the story, as I just pointed out,

has really begun to change. I reviewed

the arguments at length in last week's

rap and just now a bit too. But I think

the two central points of a contention

are the following. First, AI

hyperscalers have become very very

capital inensive businesses and there is

no end in sight for how much capital

they will need. Second, and perhaps more

importantly, as I said before, there

don't seem to be any moes for AI

creators. Users seem to migrate from one

to the other at will. Trillions are

being spent for LLM models and agentic

AI apps that have no moes and in some

cases no non-competes for senior

engineers. If engineers can switch

companies at will, product

differentiation becomes almost

impossible. It looks like this week the

market started to really worry about

these arguments. Turning to the second

quarter. For the second quarter, the

sector leaders were the same leaders

over the past few years. Infoch led up

28%. Industrials were up 11%. Consumer

discretionary and communication services

were both up 6 to 7% and financials were

up 9%. The energy sector declined 13%

thereby giving back some of its war

gains. The defensive sectors all trailed

badly. Consumer staples was up only 2%,

healthcare was up 5% and utilities were

down 1%. Now let's dig a bit deeper into

the sectors. So once again, tech leads

and pretty much everything else trails.

It's been the same story for quite some

time. First up, Infoch. This year and

this quarter, we have witnessed a sea

change in tech market leadership. The

hyperscalers have transformed their

businesses into capital intensive models

with insatiable needs for capital. And

this has turned investors off for many,

but not all hyperscalers. Since the

hyperscalers have shown no indication of

pulling back on capex, investors have

sought out beneficiaries of this capex

spend. Generally, they have chased

scarcity. And where is their scarcity?

In semiconductors of all kinds. That is

why, for example, SanDisk and Micron are

both up over 200% in the second quarter

alone. By contrast, fears about AI

continue to haunt poor software stocks

and consulting companies. In software,

Salesforce, Adobe, and Intuitit were

down 18%, 19% and 39% respectively. In

consulting, Gartner and Accenture were

down 18% and 35% respectively. In

communication services, the sector was

up 7% for the quarter, but much of that

performance was just from Google being

up 20%. There were quite a few losers.

Netflix seems to have completely lost

its mojo, down 25%. I suppose Netflix's

growth story no longer seems that

powerful. All the cable stocks were down

double digits. Consumer discretionary

was a mixed bag. Yes, it was up 6%, but

there was tremendous dispersion. Ralph

Lauren was up 20%. Royal Caribbean was

up 17% as it rebounded from its war

correction. By contrast, Domino's

continues to suffer from the low-end

consumer pulling back. The stock was

down 20%. Nike and Lululemon are two

turnaround stories that are just not

turning. Nike was down 21% and Lulu was

down 26%. Financials were up 9%. Large

investment banks are bellweather stocks

and how investors feel about the

economy. As recession fears faded, they

rallied with Morgan Stanley up 34%,

Goldman up 27% and City also up 27%. The

payment space remains a place to avoid.

Fiserve was down 14%. As its CEO

resigned to become the CEO of Truist,

PayPal was down 6%. Just about every

payment stock was down for the second

quarter. Also, as Bitcoin and other

digital currencies have corrected,

financial companies devoted to the space

suffered. Coinbase, for example, was

down 14% for the quarter. Monday

morning, it was announced that Alan

Greenspan died at age 100. He was the

second longest serving Fed chair,

serving 18 1/2 years. He was appointed

by four presidents and stepped down at

the end of 2005. During his tenure, he

was viewed as a god of finance. His

every utterance was treated like Moses

coming down from Sinai with the tablets.

Business news tracked how thick his

briefcase appeared, as if that would

provide clues to the Fed's next interest

rate move. In my view, his reputation

has suffered terribly since he left the

Fed, and deservedly so. The Fed has two

major roles. It controls short-term

interest rates as a tool to regulate the

economy and inflation. It also regulates

the financial system and the banks. I

don't have any major problems with how

Greenspan dealt with interest rates. But

when it came to regulating the financial

system and the banks, I think he failed

miserably. Greenspan stepped down before

the great financial crisis. He stepped

down in 2005. But his policies set it

all up. He was a true free markets

acolyte and he viewed everything through

that lens. During his tenure, leverage

in the large banks at least tripled. But

as he himself admitted, that did not

bother him because he believed that the

banks knew how to manage their own

risks. He could not have been more

wrong, something that he himself later

admitted. Also, he turned a blind eye to

what was going on in subprime mortgages.

He was told by multiple parties that the

subprime mortgage was an ethically

horrible financial product that put

consumers on a treadmill where they

could never ever be able to pay off

their mortgages. He did not care. As far

as I can tell, he thought that since

those mortgages were legal, there was

nothing he could do or should do. And

that attitude allowed the subprime

mortgage sector to explode in size where

it then almost took down the global

economy. My view is that history will

not be kind to Alan Greenspan. One

thought about our new Fed share, Kevin

Walsh. I don't think he will be

signaling Fed moves with a briefcase or

any other mechanism. He seems to be

adopting a very different style of

communication close to the vest. And now

for the mailback. We have one mailback

from John who asks, quote, "Really enjoy

your videos, Steve. I have to comment on

something you said. Europe is too

regulated. In what sense is this? The

only way you could argue it's too

regulated is purely financially. But

here we think our government should work

for us, not business. GDP is not a good

metric for the quality of life or

happiness of inhabitants. After all,

many of us, most of us look at how the

US operates with some horror. The USA

has the highest infant mortality rate in

the developed world. What parent would

put GDP over their health of their

newborn? From healthcare to employment

rights to market regulation to gun

control, the USA puts business first.

From what little I know of you, you seem

a very principled man. And so, I'm sure

you'd agree there's more to life than

money and greed. Apologies if I missed

your point. Let me just say this is a

very, very fair question. And there is

no question that Europe has a larger

safety net for its citizens than does

the US. Healthcare is generally free and

the cost of drugs is far lower, for

example. But there is a cost to this

more benevolent system. Government

regulation is far more pervasive and

intrusive. The result is that European

economic growth has become sclerotic.

For example, Germany, the largest

economic country in Europe, has had flat

GDP growth for the past 3 years. As I

said last week, tech is only 18% of the

Euro stock index versus almost 40% for

the S&P 500. It is just a plain fact

that the US economy is more dynamic than

Europe. Now, when I said last week that

I would not invest in Europe, I was not

making a moral judgment. Someone might

prefer to live in a more benevolent

Europe. However, markets are amoral.

Markets don't care if there is a social

safety net. Markets only care about

making money. My argument about the US

versus Europe is simply that the US is a

much more dynamic economy. So, you will

make a lot more money if you invest in

the US. Maybe it's nicer to live in

Europe. Maybe. But we are talking about

investing. This past Monday, June 22nd,

we hosted an interview with three

consumer analysts at Evercore. They

cover the full gamut of the consumer

from restaurants to food to soft lines

to hard lines and big box retailers. We

explore the health of the consumer from

every angle and examine which companies

are doing well and which are not. So,

check it out. This coming Monday, June

29th, we will post an interview with

Todd Zone, chief chartist at Strategus.

Given the tumultuous events of the past

few months, the big rally in the stock

market, I thought this would be a good

time to see what the charts are

revealing. Hope you tune in. Be sure to

check out our website,

realismanplaybook.com.

Thank you for joining. And that's the

wrap.

This podcast is forformational purposes

only and does not constitute investment

advice. The hosts and guests may hold

positions in stocks discussed. Opinions

expressed are their own and not

recommendations. Please do your own due

diligence and consult a licensed

financial adviser before making any

investment decisions.