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June 26 Big Business This Week: Making Sense of Market Volatility In A Turbulent Week

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What the heck, Wall Street? Was there a tech sell-off this week? Perhaps?! Who knows?!

Through Thursday afternoon, some tech shares had dropped, with the Magnificent Seven tech stocks down a collective 6%, the Nasdaq down 4% and the S&P 500 down 2%. But the Dow was up 1%, and given the volatility of all markets these days, trading on everything from the price of oil to the whims of president Trump, it’s no surprise. Amazon dropped 4.75% on Monday. Tesla fell 5.8% on Tuesday. Apple (see our story on the company, below) dropped more than 5% on Thursday. To make sense of what’s going on in the markets, BBTW columnist Peter Green spoke with Jim Cagnina, Senior Market Strategist at NinjaTrader Live, a daily, expert-led livestream and educational platform designed for futures traders.

Why such a big selloff in tech stocks?

Markets generally do not respond well to uncertainty, and right now there’s plenty of it. Geopolitical tensions, lingering inflation concerns, and their impact on interest rate expectations, and end-of-quarter portfolio reshuffling all hit at once in this particular situation. Combined with the fact that tech stocks and AI names have been sitting right around all-time highs for months; you’ve got a recipe for “profit-taking.”

How far down is the selloff likely to go?

According to many pros out there, we haven’t even hit what traders consider the first real test level yet. Using a standard technical measure from the industry called Fibonacci retracement, neither the Nasdaq nor the S&P 500 has pulled back from their recent run-up. Until we see deeper levels tested, this still looks more like a pause than a full collapse.

Was this week’s pullback more of a healthy correction or the start of a broader shift in sentiment?

Only time will tell. The term “correction” can be somewhat misleading because it implies that prices were somehow “incorrect” beforehand, but from a technical standpoint, the recent decline remains relatively modest.

Is it fundamentals — or is AI just getting ahead of itself?

From where I sit everyday, I can confidently say it’s both. The underlying demand for AI infrastructure is real, so components such as copper, data centers, and energy remain critical components in power generation. Those needs aren’t going away any time soon. However, the stock prices of AI-adjacent companies have been running far ahead of the actual revenue those companies are producing, and that gap is what makes investors nervous.

People are saying there’s no evidence companies actually want to use all that AI compute. Is that why it feels like a bubble?

That’s the core tension right now because the infrastructure buildout is massive, but the proof that everyday businesses are adopting and paying for AI tools at scale just isn’t in front of us yet. When you’re spending trillions on capacity before the customers show up, that’s where bubble talk starts.

(This interview has been edited for clarity and condensed)

—Peter S. Green

Big Businesses mentioned this week Brexit, What Was it Good For? Absolutely Nothing?

Ten years ago this week, the United Kingdom voted to leave the European Union and its frictionless, tariff-free single market of 430 million people. Brexit has since turned into a drag on the U.K. economy, and the reasons Brits voted for it are a lot like why Americans voted for Trump and the MAGA movement: The sense that taking back their sovereignty, and sealing their borders would somehow restore high-paying jobs to ordinary citizens. It hasn’t worked out, so far, in either place.

To understand what Brexit could teach the U.S., BBTW columnist Peter Green spoke with former Irish central bank governor Patrick Honohan, now with the Peterson Institute for International Economics, a non-partisan policy center in Washington. (This interview has been edited for clarity and slightly condensed).

Ten years on from the Brexit vote, and a year and a bit from the Trump tariffs, both Britain and the U.S. seem to have trapped themselves into a low-growth, high-inflation scenario while somehow thinking the world needed them more than they needed the world. What are the parallels?

PH: For me the economics policy parallels are not all that close, but there are parallels in the way politics has evolved in both the U.S. and Britain, with populist/nativist narratives becoming dominant. Brexit introduced significant trading barriers between the U.K. and the E.U. and Trump’s tariffs have increased trading barriers between the U.S. and the rest of the World. However, the Brexit motivation was to “take back control” over domestic policy: Brexiteers imagined that they could improve and increase trading with the rest of the world thanks to a supposed ability to reduce onerous E.U. regulation of industry. Any gain on this front (and there has not yet been much deregulation in Britain) has been more than offset by the tariff and especially the administrative barriers to British exports to Europe.

Can the effect be measured?

It’s hard to get a reliable precise estimate of the quantitative impact on the British economy, but few experts would contest a figure of minus 5 percent as the impact of Brexit on the U.K. economy by now. This is in line with the more credible estimates that were made by economists pre-Brexit. And future growth is also likely to be slower than it would have been without Brexit.

One parallel with the U.S. is on migration. Despite immigration from the rest of the EU having been one of the factors leading to a support of the Brexit proposal from nativists, the post Brexit period has seen a massive surge in net immigration, as there was a relaxation of the immigration rules for those coming from other countries. The [current] immigration slowdown reflects nativism in action and will, of course, have an adverse effect on growth in future years in both the U.S. and the U.K.

What lessons should the U.S. have absorbed from Brexit and its economic fallout? What might have been different had those lessons been absorbed?

[The] biggest impact of the Brexit debate and outcome was the political polarization that it both reflected and exacerbated. Centrist politicians in the U.S. could have seen this (also from the election leading to Trump 1) and worked to seriously address the concerns of the “left behind”. Instead they continued to treat them as deplorables.

What story do the numbers tell?

As mentioned, the GDP impact of Brexit is serious but not catastrophic. Catastrophist forecasters who anticipated a financial meltdown were proved wrong. But the deteriorating fiscal situation has made bond markets jumpy in the UK (as witness the mini-crisis that brought down Liz Truss’s government in 2022.) This could increasingly become a risk for the U.S. the way the Federal debt is growing.

Canada and the E.U. were our biggest trading partners in the U.S. — That’s in jeopardy (in fact Canada still has a massive surplus with the U.S.). What can or should we do now about it?

This one is easy. Stop imposing tariffs and stop insulting these trading partners, just as the Labour Party in the UK are gradually rebuilding relations with the E.U., potentially rejoining the single market in a limited way before too long.

What effect has the Iran war had on all this?

It certainly worsens the environment for U.K. policy makers, especially given their high indebtedness. For the U.S. it’s not as bad, despite their high indebtedness, given the degree to which the U.S. is an energy exporter.

Stepping back for the big picture, what is it that the U.S. policymakers don’t understand?

International collaboration based on the predictable application of trade law offers the best growth opportunities—not only for middle-size countries like the U.K., but also for the U.S.

So where do we go from here, and what happens if we don’t mend our ways?

I’ll pass on this one, if you don’t mind.

(This interview has been edited for clarity and condensed)

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The Usual Suspects

Apple Sauced: Don’t say you weren’t warned. Last week, Apple $AAPL CEO Tim Cook said competition from the AI buildout was raising the price of chips and other components in Apple’s devices, and a price hike was coming. That hike came Thursday, as Apple briefly shut its online store to reprice, and when the lights came back on, Macbooks were $100 more expensive. iPads got pricer, too, but iPhones did not. That’s expected for the next version of the iPhone, due out sometime soon-ish. Cook made the move in part because Apple’s hefty profit margins are what keep its share price and its P/E ratio (35.4 x on Wednesday) aloft. The price hikes put a quick damper on Apple’s price, but it’s likely that will wear off as consumers budget for the higher prices, analysts say. In afternoon trading Thursday, Apple was down about 5.6%, and that P/E ratio had shrunk to 33.45. So, at least Apple’s shares are on sale.
What brands will do for eyeballs! Fast-moving consumer goods company Procter&Gamble $PG has teamed up with the Albertson’s $ACI grocery store chain for a sitcom micro-series called “Rico’s Tacos” about, of course, the cutest Mexican taqueria, with Dad Rico behind the counter, his daughter and the abuela. It’s a scripted show that aims, ultimately, to sell P&G products. Screens in Albertson’s 2,244 stores will show clips and a QR code to the Albertson’s app, where shoppers can watch “full” episodes that last up to two minutes each. Call it a modern-day soap opera. Currently, about 3% of all retail media advertising budget is spent on in-store advertising, or about $600 million. Emarketer says that could hit 1.1 billion in 2029.
Trying harder will do that for you. Perennial second-place car rentals company Avis $CAR just scored a major win: A $650 million payment from one of its own major shareholders, hedge fund Pentwater Capital Management, which Avis blamed on Pentwater trying to short the company’s stock. Avis noted Pentwater was the only major trader in its shares when they rocketed up 560% in mid-April, then plummeting in a matter of days. Unfortunately for Pentwater, a little used SEC rule called the Short Swing Profit Rule, forbids shorts by big shareholders, and requires them to forfeit their gains to the company. Ka-ching! Avis’ shares dropped 65% from the shorting-induced high, but they’re still up 75% from where they were before the shorting began.
Raking it in. CEO’s are raking in the dough again, with more than two dozen making more than $100 million a year, and nearly a dozen topping $200 million. Sounds like a lot, but then, of course, there’s Elon Musk, who secured a $158 billion pay package last year at Tesla $TSLA. How does that make you feel? Even the second highest-paid CEO in the country, Shank Mitra, got only $821 million last year from the senior housing and healthcare real estate firm he runs called Welltower $WELL. That’s as the share of corporate income used to pay workers has dropped from 84% in 2008 to 71% today, and the war in Iran has wiped out the wage gains of U.S. workers since January 2025. The Wall Street Journal has diced the data in some cool charts.
M&M’s Get the blues with a MAHA makeover: Under pressure from Trump health secretary RFK Jr.’s “purity of essence” campaign to rid American food of artificial dyes, Mars, the privately owned maker of M&Ms says it’s having a harder time than it expected coming up with the requisite colors “au naturel.” Yellow, red and orange were easy, but blue and green (aka “the best color,” by popular consensus) have been a lot harder to create from organic matter. Now, Mars may have crossed that bar: It’s found a solution for blue and green: a plant called “spirulina,” better known as algae. If only there were somewhere they could go to find an excess of algae this week, huh?
Predictably: Buying SpaceX $SPCX wasn’t enough of a gamble for you? Now online prediction market $KALSHI says it’s prepping to take investors’ money on a ride to the moon and back. CEO Tarek Mansour said an IPO won’t happen this year, but reports say the company may sell shares by 2028. A year ago, Kalshi raised $185 million at a $2 billion valuation. In May it announced a funding round that valued the whole firm at $22 billion. With Facebook $META struggling to find new sources of revenue as its advertising sales begin to stagnate, that kind of money has drawn the attention of CEO and founder Mark Zuckerberg. After failing to convince the world to don AI goggles, Zuck now thinks the next cool thing is prediction markets, and has developers creating an online app for just that, called “Arena.” At first it will use only points, but a company spokesperson told the New York Times it could eventually take bets in real money. Back in 2020, Facebook tested a prediction app called Forecast, that started with asking participants to make forecasts about Covid. But the app failed (it was too complex to explain here) and was pulled in 2022. Over at Polymarket $POLYMARKET, the other big prediction market, the Wall Street Journal found that the company has been paying social media influencers to make videos that look like they’ve just made a killing on Polymarket. Instead, they made fake trades on a cloned website. It all sounds a bit cheeky, really.
IBM’s Quantum leap: After selling its laptop brand to Lenovo, IBM $IBM is actually still making computers. Mostly the kind that companies buy to do really big math problems. And now it’s preparing to tackle the biggest math problems at scale. IBM says it’s creating a foundry for making quantum computing chips in upstate New York, which it will both sell to rivals and use for its own applied quantum computing. IBM is looking at 2029 to launch a reliable quantum computer called Starling, and an even bigger one in 2033. The Trump Administration has pledged $1 billion in the IBM venture.
OpenAi Unplugged? An Amazon-funded biopic of OpenAI founder Sam Altman and his travails at the AI firm has been dropped by Amazon’s $AMZN film studio division, after being filmed, cut and shown in test screenings. “Artificial” is directed by Luca Guadagnino, who made “Call Me by Your Name,” and was scheduled to premier at SXSW next year. Amazon would only say that the movie would “be better served if it were released by a different studio.” A possible reason for the axing: Amazon has pledged $50 billion of investments in OpenAI this year.
Toyota looming in GM’s rear view mirror. As the Iran war pushes consumers to hybrids, Japanese automaker Toyota $TM is poised to once again overtake General Motors $GM as the best-selling carmaker in the U.S. market. Analysts expect GM to outsell Toyota by only 83,000 vehicles in the first half of the year, and it could get tighter. “GM may be looking over their shoulder here when we get to the year’s end, that Toyota could potentially overtake them as the top selling manufacturer here in the U.S. market,” said Charlie Chesbrough, senior economist at Cox Automotive. Toyota beat out GM in U.S. sales once before, as supply chain woes devastated the car industry in 2021. GM has put its money on all-electric vehicles, and its only hybrid is a Corvette. Toyota makes some EVs, but continues its focus on hybrids. Speaking of EVs, Jeff Bezos-backed Slate Automotive has set a price for its stripped down two-seat EV pickup truck, with hand crank windows and no radio: $24,950. Sales are expected to start this fall. EV stalwart Tesla’s $TSLA sales across Europe doubled in May from a year earlier, to 28,610 units.
Sometimes, it’s easy to forget that SpaceX $SPCX makes rockets. And rockets do one thing really well, go up and come down. That’s a trait apparently baked into the DNA of SpaceX shares as well. Two weeks on from its IPO, the shares are within spitting distance of Earth again. From a quick high of $225, they’ve dropped to $152, and briefly ducked below $150, the price when it began trading last week. Shares fell 16.4% on Monday, after SpaceX floated the idea of bond sale, borrowing money right after its $85.7 billion IPO. Retail investors are now nervously awaiting the end of the various lockup periods when early private investors and institutions will get to cash out the stakes they bought at tenth or less of the IPO price. While SpaceX has yet to be profitable, it has found a new revenue stream: Renting out its AI data centers to other AI companies. Next month it will start booking $150 million a month from renting compute to startup Reflection AI. That follows rental deals with rivals Anthropic and OpenAI. So what’s behind this? Yann LeCun, founder of AI company AMI Labs, says SpaceX’s xAI business is failing because Musk has driven away the talent the company needs to be an AI heavyweight. “Elon is now in a position that is very, very difficult for him to kind of hire top people in AI, because he’s kind of, you know, not behaved in sort of very good ways toward the ... previous team,” LeDuc told CNBC.

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