Fast Money Traders Discuss Fed Meeting, Tariffs, and Market Reaction to Earnings

Market Setup and Earnings Expectations

• 📈 The market setup going into earnings season is not ideal, with a significant levitation into earning season for the Mag Seven stocks.
• 💡 While Alphabet's earnings were good, the bar is set very high for upcoming reports, and it's uncertain if positive results are already priced in.
• 💰 The Mag Seven collectively has surged over 40% since April lows, with a large amount of money flowing into this trade, raising questions about whether capex spending is justified.

AI's Impact on Search and Stock Performance

• 🤖 Despite Alphabet's earnings putting to rest the existential threat to search from AI, the stock only managed to hold on to 1% of its gains on the day.
• 🔍 The trading action for Google was not disappointing, with its Gemini 2.5 and strong ad search performance (up 12%) beating expectations.
• 📊 While 80% of the S&P 500 have beaten earnings this season, the comparisons are not terrible for many reporting companies.

Macroeconomic Factors and Trade Deals

• 🌍 The market seems to be moving higher on each incremental trade deal, with the EU being the most important outside of China.
• 📉 Stocks sell off on bad news but seem to move higher on positive trade news, indicating a potential sensitivity to these developments.

Market Valuation and Potential Top

• 📊 By all accounts, the market is full, representing a mature intermediate advance from the April low, with many stocks up significantly.
• ⚠️ There's a case to be made that the coming week's earnings could mark an intermediate top, especially if the market spikes further on good news.
• 📉 Alternatively, if earnings are bad, a dip or correction is due after a significant three to four-month move, suggesting it's time to reduce exposure.