This week, the major banks kicked off earnings season, and the common thread was that the consumer remains strong. People are still spending—on travel, restaurants, and everyday items—and they’re paying their bills. Airline stocks also posted bullish earnings. United Airlines says that less uncertainty opens the door to a “strong finish” to 2025. Most important, people are paying their bills, and this is seen by banks setting aside less in loan‑loss reserves right now. There just isn’t much stress in the system. JPMorgan, Bank of America, and Wells Fargo all pointed to healthy credit conditions, and while delinquencies are inching higher from historic lows, they’re still at manageable levels. The takeaway is that the U.S. economy, at least from the consumer’s side, looks solid. Credit remains widely available, and there’s no broad signal of economic distress coming from the banking sector, which is usually one of the first places cracks start to show.

Not every sector is feeling the same lift, though. Retailers are in a tougher spot, especially those dealing with higher input costs or importing goods now facing tariffs. We’re seeing some of that pressure show up in weaker guidance from companies like Best Buy and others in discretionary categories. Margins are getting squeezed, and it’s becoming harder for companies to pass higher costs onto customers without hurting demand. If there’s going to be weakness this earnings season, that’s where it likely shows up—companies that are more exposed to import costs and can’t easily reprice.

The AI Infrastructure Boom

The hottest area of the market remains AI. President Trump visited Pennsylvania this week and announced $92 billion in investments in “cutting-edge technology.” Most of that is targeted toward AI infrastructure — including data centers, power generation, and the buildout of the physical backbone needed for future growth. Trump seized the moment following Amazon’s $20 billion cloud campus announcement last month and ahead of Blackstone’s upcoming gas-to-data center project. The location was chosen for a reason: the region has some of the cheapest energy in the country, thanks to Marcellus Shale gas. Companies are actively seeking out areas with low-cost power to support energy-hungry AI workloads. The bulk of the funding is going toward energy development and transmission. Investors cheered the news, adding more fuel to an already hot sector. But the real story is who benefits. It’s not just the AI headline names. It’s the companies actually spending the money and doing the building. That’s where the market is rewarding investors right now.

You can see it in the price action—large-cap growth stocks surged again, with many reaching all-time highs. At this point, a few of the valuations are outright head-scratchers, and traditional fundamental analysis has taken a back seat. It’s not about earnings right now, it’s about announcements, narratives, and momentum. That said, tech still has room to run, but the bar is now extremely high. The earnings will likely be strong, but the risk is that forward guidance doesn’t live up to elevated expectations. Netflix was the first major tech name to report. It beat on earnings but the stock still dropped 5%. This is a clear sign that valuation is stretched and the market only wants AI investments.

We also got a bit of good news on inflation. Both headline and core producer prices (PPI) were unchanged last month, versus expectations for small increases. That helped nudge up expectations that the Fed may be in a position to start cutting rates later this year. The question remains if inflation continues to cooperate and tariffs have limited impact. However, there’s still a lot of noise coming out of Washington. Trump continues to float the idea of firing Powell, and that’s been a source of intraday volatility. So far, it looks more like a political trial balloon than a serious move, but markets are paying attention. If he were to actually fire him, I’d expect bond yields to spike and risk assets to sell off quickly. There’s no clean legal path to remove a Fed Chair, so the White House has been exploring other options. This week, there were reports that advisors are looking into whether Powell could be forced out over the Fed’s real estate construction project—which has gone wildly over budget. The idea is that they could paint it as a case of “financial mismanagement” and use it as the legal rationale to challenge his position. That’s still speculative, but it shows how far the administration may be willing to go to put someone more aligned with its agenda in charge of monetary policy.

While the market keeps pushing toward new records, the 10-year Treasury yield is holding around 4.40%. I continue to believe Trump will eventually get his way, and short-term interest rates will come down either through policy pressure or a new Fed appointment. If that happens, I’d expect the yield curve to steepen. But if the economy stays strong and investors think the Fed is losing independence, long-term rates could rise as well, which would put pressure on bond prices especially on the long end of the curve.

Crypto Entering the Mainstream

The hottest investment this year remains crypto. The big headline was the GENIUS Act. This stands for “Guiding and Establishing National Innovation for U.S. Stablecoins Act.” This is the first major piece of federal legislation on cryptocurrency to pass both chambers of Congress. It’s now heading to Trump’s desk for signature. The bill establishes a full regulatory framework for U.S. dollar–backed stablecoins and effectively legitimizes them under federal law. The crypto industry, which has quietly become one of the largest sources of Super PAC money, is now politically entrenched. Their lobbying efforts paid off. This wasn’t just about regulation but more about credibility. Coins with no intrinsic value are now being treated like legitimate financial instruments, and the industry has found its seat at the table. The younger generation, in particular, has embraced this shift. They’ve seen how quickly wealth can be built in crypto, and for many, it’s been life-changing. That kind of momentum is hard to stop, and politically, it now has real staying power. Crypto investing comes down to supply and demand. Supply is limited, and when people see others making money out of seemingly nothing, demand spikes. Traditional investors see no ownership, no capital return, and no company growing earnings. That’s exactly where the appeal lies.

Take a stock like Netflix. It’s arguably one of the best, but it’s still tethered to fundamentals. Growth has a ceiling, and investors are only willing to pay so much. A token doesn’t have that constraint. Its price is driven entirely by what someone else is willing to pay. Without earnings or any check on value, it can grow into a massive bubble. Crypto investors understand this. Most have lived through 50 percent drawdowns. It’s part of the deal. All it takes is more people buying the dip. We are clearly in the bubble phase, but bubbles can stretch far beyond reason before they burst. Timing it is nearly impossible. This time, the hype is coming from the top. The government is backing it, and the president is leading the charge with his own crypto investments.

The Macro Hedge: Dollar Weakness

I’m sure a few of you are wondering, what’s the catch here? What’s the downside to all of this? It’s the weakening U.S. dollar. You really only feel it when you travel and have to convert dollars to euros. The dollar has depreciated by roughly 9% due to tariffs and deglobalization. Since November 5th, Bitcoin is up 70%. That means the dollar has lost close to 41% of its value relative to Bitcoin. It’s also down about 18% against gold. Value investing still offers the clearest path to long‑term wealth, yet it can be frustrating to watch recent price action. Sometimes the market moves against you. I can’t sell a quality investment like Berkshire Hathaway or Apple to buy Bitcoin or XRP. Every day, one goes up while the other drifts lower. That pattern has held for months. You start to expect this everyday. People are steady rotating out of companies that go down and they are buying the ones that go up. Still, the relative moves are striking: crypto and other “dollar‑hedge” assets have kept climbing while many stalwart equities grind sideways. That steady rotation feels reminiscent of 1999, when money rushed into internet darlings at the expense of everything else.

This cycle is different. In past booms investors hedged against slow‑growing incumbents by buying faster‑growth stocks and shorting the laggards; today the hedge is against a weakening dollar. Monetary policy, persistent tariffs, and deglobalization have already chipped away at dollar strength. Extending the 2017 tax cuts is projected to swell the federal deficit by roughly $3.3 trillion over the next decade, according to the latest CBO estimates, adding even more downward pressure on the currency. Put simply, Washington’s willingness to borrow at scale reinforces the trade: if the government keeps printing IOUs, investors will keep hunting for assets—AI winners, scarce commodities, and especially crypto—that can’t be debased so easily. That doesn’t mean crypto traders or tech bulls are ignoring fundamentals. They are responding to a macro backdrop where monetary policy, tariffs, and deglobalization have chipped away at dollar strength. When an economy’s currency weakens, capital naturally flows to perceived stores of value or to sectors with obvious secular tailwinds. AI fits this bill; the revenue growth is visible, and companies pouring billions into infrastructure signal staying power. Bitcoin, meanwhile, is scarce by design and priced globally, so it rises when confidence in the dollar falls.

The risk comes from how interconnected everything has become. In this new market era, leverage has seeped into every corner—margin loans, collateralized lending, even crypto‑backed credit lines. When speculative assets correct, margin calls hit first. Investors are forced to sell liquid, high‑quality holdings—think Berkshire Hathaway or blue‑chip tech—not because those names are flawed, but because they are easiest to sell fast. The selling pressure cascades, turning a localized drawdown into a broad market slump. We saw shades of this in March 2020, June 2022’s crypto winter, and again during last year’s AI mini‑correction. This has become the real underlying risk to markets. Put differently, low‑quality risk isn’t isolated anymore. Losses in the riskiest pocket can spark forced deleveraging in the safest pocket. That is why the hedge today is less about stock picking between fast and slow growers and more about managing currency exposure and leverage. For long‑term value investors, it means staying disciplined—holding quality companies with real cash flow—and keeping an eye on systemic leverage. The dollar’s path, and how much risk is riding on it through derivatives and margin, will set the tone for the next phase of this cycle.

The biggest winners have been AI plays where the money is being spent and non‑dollar assets appreciating as a store of value when Trump clearly does not want a strong dollar. The administration is anti‑institutions and wants to control the money supply and take power away from the Fed. The only way to invest against this is to buy anything non‑dollar. It’s an under‑reported trend, and most Americans only notice when they travel and discover their dollars don’t stretch as far. The takeaway isn’t to abandon fundamentals—rather, to recognize the macro forces at work. This trend will continue unless the president ends his fight against the Fed or decides he wants a stronger dollar, so expect more of the same. The market going forward is still focused on four things: earnings, tariffs, crypto and the Fed. So far, the earnings picture looks good, especially from the big banks and early tech names. Tariffs remain a wildcard—especially with Trump’s August deadlines looming. If the pattern holds, we’ll see another extension. If not, and new tariffs go into effect, rates could move higher, which would pressure equities, even if tech earnings come in strong. More broadly, this market is being driven more by sentiment than fundamentals. In many cases, traditional analysis doesn’t apply—at least not to the momentum-driven names. The internals of the market are now dominated by daily options activity, where short-term speculation is driving outsized moves. When things are going up, the momentum feeds on itself. But as we’ve seen, that works in both directions. A bad headline or disappointing forward guidance can flip things quickly.

Have a great weekend!

Sources

White House: President Trump Announces $92 Billion in AI & Energy Investments

Governor Shapiro Announces Amazon’s $20 Billion Cloud Campus Investment

PPL Corporation & Blackstone Infrastructure Joint Venture Announcement

Analysis: The Passage of the GENIUS Act (Stablecoin Legislation)

United Airlines Reports Strong 2025 Earnings & Future Guidance

Disclaimer

“The information provided in this communication is for informational purposes only and does not constitute financial, investment, or legal advice. All content is based on data and sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Market conditions and economic factors are subject to rapid change. Past performance is not indicative of future results. The views expressed herein are those of the author and do not necessarily reflect the official policy or position of any other agency, organization, employer, or company. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions. The author may hold positions in securities mentioned in this post.”