00:00 Speaker B
coming off of a big sell off, particularly in technology, particularly in chips, which entered a bare market last week. The chips are bouncing back here this morning. And Jake, I liked your piece um over the weekend, kind of looking ahead to earnings this week where you talked about, you know, there’s been this rotation trade under the surface. Now we’re going to start to get um the big companies that are coming out and reporting Tesla and Alphabet on Wednesday, Intel on Thursday, let’s start to, you know, once again, every earning season is out like the test of the AI trade. So here it is again.
00:39 Jake
Right. We’ve seen at the start of this earnings report, earnings season, a lot of strong reports. Taiwan semi, strong numbers. ASML, strong numbers, but it still wasn’t enough to cushion the tech trade and stop all the motion and commotion and volatility that we’ve seen. Everything that I keep hearing from people I talk to, comes back to the question that we just keep dancing around and asking, how long can the spending go on? How far can we push that? We’re going to get Alphabet on Wednesday,
01:21 Jake
the only number that people are going to care about there is how much are you spending? What is your target? And then secondly, are you actually starting to see some return on that capital? Because we’re past the, oh, you’re spending a lot of money, that’s great phase. Right. We’re now in the show me phase.
01:40 Speaker A
One thing that I think has been lost, strangely, I’m not sure why. Maybe we’ve gotten too pessimistic. Um we last quarter for the second quarter, and now potentially into this quarter for a third quarter, are seeing record profit margins at S&P 500 companies.
01:58 Speaker B
Yeah, we
01:58 Speaker A
Yeah. In spite of tariffs, in spite of uncertainty, um I think that’s an early return on AI. It’s kind of hard to quantify. But you say, so, wait, if if all these costs are going up from fuel to fertilizer, uh labor, etc., why are why are your profit margins um starting to max um and and go, you know, 13.3, 13.4%. We have never seen profit margins that high in the S&P 500 ever.
