Market Selling As Houthis Open A New Front; Google AI Cash Burn; Tesla Humanoid Spending

Houthi Attacks Please click here for an enlarged chart of Alphabet Inc Class C (NASDAQ: GOOG ).

Note the following: This article is about the big picture, not an individual stock.

The chart of GOOG stock is being used to illustrate the point.

The chart shows GOOG is gapping down after reporting earnings.

The chart shows a downward sloping trendline.

The pattern shown on the GOOG chart is a topping pattern.

Google earnings were better than the consensus and whisper numbers, but here is the rub: Google’s free cash flow for the quarter was negative $5.9B.

Google is projecting capex in the range of $195B – $205B vs. prior guidance of $180B – $190B.

Tesla Inc (NASDAQ: TSLA ) earnings were below consensus but inline with whisper numbers.

Here is the rub: Tesla’s free cash flow was negative $1.09B.

Tesla’s spending on AI, robotaxis, and humanoid robots is going way up.

In our analysis, a very important observation for investors is how semiconductors are trading after Google and Tesla earnings.

Increased spending on AI by Google and Tesla means more business for semiconductors.

As Google and Tesla experience negative cash flow, cash is being transferred to semiconductor companies that are experiencing large positive cash flows.

Expectations were that semiconductors would trade higher on increased spend by Google and Tesla.

Contrary to expectations, in the early trade, semiconductors are seeing selling.

Investors should pay attention when an expected logical relationship breaks down as it often indicates a macro shift.

Texas Instruments Inc (NASDAQ: TXN ) reported earnings better than consensus but below whisper numbers.

Stocks move based on the difference between reported numbers and whisper numbers.

As a result, TXN stock is falling.

Intel Corp (NASDAQ: INTC ) will report earnings after the market close today.

Houthis have opened a new front in the war.

Houthis have fired on two tankers in the Red Sea.

Houthis opening a new front is strengthening Iran’s hand.

President Trump is responding by saying the U.S. will hold Iran responsible for Houthis and that "major military punishment will be inflicted upon Iran and, of course, the Houthis, themselves, who I am very disappointed with in that they have, until now, acted very professionally and smart." Brent oil, which is an international benchmark, is approaching $100 as of this writing.

The U.S. benchmark, WTI oil, has crossed $90.

Rising oil is increasing fears of inflation.

Yields are rising in response.

Initial jobless claims show a very strong jobs picture in spite of continuing layoffs due to AI.

Initial jobless claims came at 187K vs.

214K consensus.

The combination of rising oil and strong jobless claims is increasing the probability of a Fed rate hike.

Europe The European Central Bank (ECB) is leaving its interest rates unchanged.

Some analysts had expected a hike.

Magnificent Seven Money Flows Most portfolios are now heavily concentrated in the Mag 7 stocks.

For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis.