Welcome to the Steroid Era | WAYT?

Summary

Spencer Jakab argues S&P 500 earnings are on steroids, inflated by accounting boosts from AI investment and private stake revaluations, making the market overvalued. Josh Brown and Michael Batnick highlight a powerful broad market breakout across transports, regional banks, and small caps, while calling the Magnificent Seven the worst trade of the year. They dissect the unraveling of MicroStrategy's Bitcoin strategy, warn of rampant hidden leverage in ETFs, and Josh makes bullish cases for AI semiconductors, Toast, and a washed-out Nike.

• S&P 500 net margins hit a record 14.8%, temporarily inflated by slow depreciation of AI chips and revaluation of private AI company stakes.
• The bull market is broadening, with equal-weight S&P, transports, regional banks, and small caps hitting all-time highs.
• Magnificent Seven are underperforming as capital rotates to the broader market, making them the worst trade this year.
• MicroStrategy's thesis breaks down; it must sell Bitcoin to support its preferred stock dividends, losing its levered Bitcoin appeal.
• Leveraged ETF volumes and notional values have surged, introducing hidden speculative leverage not captured by traditional margin data.
• The AI semiconductor cycle is historically unique, with Micron guiding to record revenue and margins, validating a 'different this time' thesis.
• Toast's installed restaurant base and AI product position it as an AI beneficiary, not a casualty, as the stock breaks a long downtrend.
• Nike stock is judged washed out after a massive drawdown, offering a potential buying opportunity for a turnaround.