The Rotation Feast: Who's Eating Whom

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The Rotation Feast: Who's Eating Whom

Internal memo from the Trading Floor

TO: Portfolio Committee
FROM: Chief Strategist
RE: Monday's Carnage and Tuesday's Hangover
DATE: July 22, 2025

Gentlemen,

Yesterday's session proved once again that markets are cannibalistic ecosystems where the fat get fatter and the loved get slaughtered. While retail darlings Tesla and Nvidia got their lunch money stolen, the Alphabet-Amazon-Meta triumvirate gorged themselves on fresh highs, dragging the S&P 500 and Nasdaq to record territory like they owned the place.

Which, frankly, they do.

The numbers tell a surgical story. Tesla and Nvidia underperformed as the market rose to all-time highs on Monday. The S&P 500 and Nasdaq Composite touched fresh record levels in the session, lifted by gains of more than 1% in tech stocks such as Alphabet, Amazon and Meta. This isn't rotation — it's execution. The meme stocks that carried us through the AI bubble are being methodically dismembered by algorithms that have decided their utility has expired.

Consider the beautiful brutality of it: while retail investors clutch their TSLA calls and whisper prayers to Elon, institutional money flows into the adults' table. Alphabet benefits from AI without the manufacturing headaches. Amazon harvests cloud profits while everyone else fights over semiconductor scraps. Meta monetizes human attention at a scale that makes central bankers weep with envy.

The Nasdaq closed at fresh record highs while its former poster children bled in the corner. Poetry in motion.

But here's where Monday's feast becomes Tuesday's indigestion. The consumer price index, a broad-based measure of goods and services costs, increased 0.3% on the month, putting the 12-month inflation rate at 2.7%, in line with expectations. Core inflation picked up 0.2% on the month, with the annual rate moving to 2.9% — numbers that would have triggered market hysteria two years ago now barely register as background noise.

Powell's data dependency has trained markets to parse every decimal point for signals, but the real signal is the silence. When inflation prints in-line and markets shrug, when the Fed funds rate sits at 4.50% and nobody panics, when Treasury yields fall alongside the dollar and risk assets celebrate — this is what financial repression looks like in real time.

The central bank crossroads that analysts keep breathlessly predicting never seem to arrive. Instead, we get this: steady-state monetary theater where every FOMC meeting produces the same careful non-commitments, every data point gets explained away, and every market dislocation gets smoothly ironed out by the invisible hand of algorithmic trading.

RECOMMENDATIONS:

  1. Fade the meme rotation back. Tesla and Nvidia aren't broken; they're just temporarily out of fashion. When retail capitulates completely, institutions will quietly rebuild positions at better prices.

  2. The inflation trade is dead. Stop positioning for breakouts that won't come. Core PCE will dance around 2.5-3.0% for months while everyone pretends this is temporary.

  3. Follow the flow, not the narrative. Yesterday's winners (GOOGL, AMZN, META) win because they're winning, not because of some grand strategic vision. Momentum is its own fundamental in this market.

The beautiful irony of our current moment: markets have achieved perfect efficiency at being inefficient. Asset prices reflect everything except reality, central banks control everything except actual outcomes, and the smartest money in history keeps chasing the same predictable rotations like hamsters on a wheel made of hundred-dollar bills.

But the wheel keeps turning, and the bills keep printing, so we keep dancing.

Stay liquid,
The Strategist

P.S. — Watch for earnings season to accelerate the tech rotation. When companies start missing on margin compression, yesterday's feast becomes tomorrow's famine. The question isn't whether the music stops, but whether you're still dancing when it does.


This memo reflects market conditions as of July 22, 2025, and should not be construed as investment advice, though it probably contains more truth than most official research reports.



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