Welcome to the Chip Crash (FvF Ep. 198)

In this episode of Facts vs Feelings, Ryan Detrick, Chief Market Strategist at Carson Group, and Sonu Varghese, Chief Macro Strategist at Carson Group, dig into Apple reclaiming its title as the world's largest company by market cap after sitting out the AI spending race, while hyperscalers like Google, Amazon, and Microsoft pour ever-larger sums into CapEx. They break down record Q2 blended earnings growth of 38% year-over-year, the outsized role investment gains in private holdings like SpaceX and Anthropic played in Google's headline profit beat, and
why core net income tells a different story. 

The conversation shifts to the "chip crash" playing out in South Korea, where the KOSPI has fallen more than 30% from its June 22 peak amid margin calls and central bank rate hikes, and what that says about crowded momentum trades and the explosion of leveraged ETF products tied to tech and semis. Ryan and Sonu also cover the rotation into low volatility, financials, and healthcare, why flows into tech remain historically stretched even after the pullback, and preview this week's Fed decision amid unusually high rate-hike odds. They close with a
personal update on Ryan's eye surgery, a shoutout to guest and TrendLabs Founder JC Parets' record-breaking episode, and details on the live 200th episode show in Boston.

[Key Takeaways]

• Apple overtook NVIDIA as the world's largest company by market cap (~$4.9 trillion) after largely sitting out heavy AI CapEx spending, while free cash flow for semiconductor companies surpassed hyperscaler free cash flow for the first time this quarter.
• Q2 blended S&P 500 earnings growth hit 38% year-over-year, the best pace since Q3 2021, driven largely by tech (+65%), energy (+128%), and communication services (+112%); excluding Google, growth drops to 26%.
• A large share of Google's reported profit surge came from investment gains in private holdings (SpaceX, Anthropic) rather than core operations, a pattern also inflating net income at Amazon, NVIDIA, and Microsoft.
• South Korea's KOSPI fell roughly 33% from its June 22nd peak (before a further 10% one-day drop) as margin calls and a Bank of Korea rate hike hit heavily levered chip and momentum trades.
• Momentum's one-year excess return over the S&P 500 pulled back from the 96th to the 75th percentile relative to the last 40 years, while low volatility stocks are up 8% and financials up 11% since the market's June 2nd peak.
• Fed rate-hike odds this week sit near their highest pre-meeting level in recent memory, with the committee reportedly divided as inflation, a resilient labor market, and AI/Middle East-driven cost pressures complicate the outlook.

Jump to:

0:00 - Welcome And Quick Setup

0:31 - Apple Reclaims Top Market Cap

5:16 - AI Capex Arms Race Reality Check

8:35 - Record Margins And Earnings Surge

16:44 - South Korea Sparks Chip Crash

23:49 - Ryan’s Eye Patch Surgery Story

29:58 - Why Tech Flows Look Crowded

35:28 - Leveraged Products And Margin Call Risk

42:40 - Rotation Into Low Vol And Defensives

46:57 - Contrarian Thinking Versus Momentum

54:41 - Interstellar Detour And Time Talk

57:19 - Fed Uncertainty And Rate Hike Odds

1:02:16 - Live Boston Show And Final Thanks

Connect with Ryan:

• LinkedIn: https://www.linkedin.com/in/ryandetrick/

• X: https://x.com/RyanDetrick

Connect with Sonu:

• LinkedIn: https://www.linkedin.com/in/sonu-varghese-phd/

• X: https://x.com/sonusvarghese?lang=en

Questions about the show? We’d love to hear from you! factsvsfeelings@carsongroup.com