Monday Takeaways: Three Key Sectors Reveal True Market Leadership

Shah Gilani|July 21, 2025

A Note From Amanda: Before we get to today’s video… We have an URGENT MARKET WARNING from Chief Investment Strategist Alexander Green of The Oxford Club…

Warren Buffett, Jeff Bezos, and Stanley Druckenmiller – alongside another 16 billionaires – are rapidly moving their money… Many of these billionaires are piling into one “hidden” sector of the market. And Alex believes he knows why.

In short… A rare economic event is unfolding – sparking what could create the biggest “tech boom” in decades. It’s a rare market event that each time – without fail – has minted a new class of millionaires.

Join him July 24 at 2 p.m. ET for his live event: The “Millionaire-Maker” Summit. Don’t miss out. Details here.

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The earnings story just got very interesting…

83% of S&P 500 companies have beaten estimates in early Q2 reporting.

That’s well above the 78% five-year average and the 75% 10-year average.

But there’s a crucial detail the headlines are missing…

The blended earnings growth rate for Q2 is tracking around 5.6% – roughly half of Q1’s actual growth rate.

For stocks “priced to perfection” at current valuations, that could become a problem.

Yet the beat rate quality suggests companies are managing expectations masterfully. And we’re still early in reporting season.

Meanwhile, there are three sectors are absolutely crushing it…

This isn’t just a narrow rally – we’re getting solid support from diverse, important sectors.

I’ll break down why the 83% beat rate matters more than you think and which stocks in these leadership sectors deserve your attention.

Click on the image below to decode the real earnings story.

TRANSCRIPT

Hey, everybody. Shah Gilani here with your Monday Takeaways. It’s Sunday, late afternoon as I’m recording this for you from sunny Southern California. I will be traveling in the morning, so here’s what I have to say about last week.

The takeaway from last week is, yes, stocks just look like they want to go up and they’re going up. Another record high for the S&P, another record high for the NASDAQ Composite, another record high for the NASDAQ 100. So yes, lights out people. So far so good.

Why shouldn’t it be? Because everything seems to be lined up. As far as the economy goes, we got stronger than expected retail sales last week.

Takeaway: consumers are still spending. If they’re spending in an economy that is defined as a consumer-driven economy where, depending on who you listen to, two-thirds to 75% of all consumption, all GDP consumption, growth, productivity, however you want to measure it, is propelled by consumer spending in this country. So they’re out there spending, things aren’t bad. Next up, retail sales.

Besides that being really good folks, producer prices were flat last week. Takeaway there: we’re not seeing much of an impact of tariff inflation. We’re seeing very little tariff inflation so far. Doesn’t mean we’re not going to see it later, we’re not seeing it now. Jobless claims fell.

So what does that mean? The economy is doing well. Consumers are spending. And as far as producer prices go, they’re under control.

As far as CPI, PCE, and the measures of inflation that the Fed watches, we’re not at 2%, which is their target. We’re about 2.7% and that’s still elevated, but nothing to sneeze at because the trend so far has been pretty good downward for the most part, little dribs and drabs lower, little pops higher. But generally speaking, we’re kind of in a safe zone here. So takeaway from there is the Fed not likely to cut rates anytime soon.

Why? Because they’re still hanging on to see if we’re going to get any tariff-led inflation. And another reason I don’t think they’re going to cut anytime soon: politics.

Yes, lots of pressure being put on Chairman Jerome Powell. Now the latest push by the Trump administration and Trump himself is that the Fed has spent wantonly on refurbishing the Eccles building that houses the Fed in Washington and he’s saying, you know, the president is saying, administration, some officials are saying that’s perhaps the reason that the Federal Reserve chairman can be fired. I don’t think so. In other words, good luck with that. Why?

Yes, they spent a heck of a lot on that. Just a couple of little numbers and tidbits here.

It was Trump’s appointees from his first term to the Commission of Fine Arts in 2020 that approved the white Georgia marble that the Fed is using on the facade of the building as opposed to a glass facade which would have been a lot cheaper. $2.5 billion on the remodeling, holy mackerel, that’s more than $600 million over budget. Is that a reason to fire the guy when the appointees who were on the commission that oversaw the likelihood of what they wanted to do in terms of the fine art aspect of the building? Pretty hard to push against Trump’s own appointees. So where’s that really going? I think it’s a lot of bluster and I don’t think Chairman Powell’s position is going to be threatened. It’s going to be threatened, but there’s nothing they can do about it until he is out next year. So the other reason I don’t see the Fed cutting rates is they don’t want to look like they’re succumbing to political pressure.

Even though there is political pressure galore on them, they’re going to just go, no, we don’t adhere to what the president says, that’s not our job, we’re independent, we want to remain independent. Then yes, we are hearing some internal voices from the Fed saying we should cut, it’s time to cut. Maybe those folks, no names mentioned, are vying for the Fed chairmanship next year, if not sooner. I say good luck with that.

So we’re not likely to get a rate cut, but we don’t need a rate cut. Okay? Things are going along great. The market’s making new highs.

What do we need a rate cut for? Right? So that’s not going to help stocks. By the way, they don’t look like they need a whole lot of help.

Earnings are helping because we’re getting a slew of Q2 earnings coming up. So far, 12% of S&P 500 companies have reported Q2 earnings and the numbers are pretty good. Eighty-three percent of just that smallest 12% sample of S&P companies that have reported have beaten analysts’ consensus estimates for their numbers. Eighty-three percent.

The five-year average at this early stage of the game is 78% beat. The ten-year average is 75% beat. We’re at 83%. Yes, it’s early in the season as far as earnings reporting goes.

And the bottom line there is earnings are working. So markets are doing well for all the right reasons. The only caveat and it’s an important takeaway I believe is that so far it looks like the blended earnings growth rate, again, means the actual companies that have reported along with analysts’ estimates for the remainder that have yet to report, looks to show about 5.6% earnings growth for the second quarter. Now that’s the blended rate.

We won’t know until we get to actual, we’ll know. But 5.6% people is about half of what first quarter earnings actual growth was. If we are half of what the first quarter’s earnings growth rate was, that could be a problem for stocks that are priced to perfection in my opinion.

But we’re not there yet. But the numbers so far look good as far as beats go, and let’s just go with that for now because that’s all we’ve got. Another thing that I think is important to bring up as far as takeaways, we’re seeing volatility compression.

When we see volatility compression, the level we’re seeing it, that supports systematic buying.

Whether it’s risk parity funds, whether it’s all of these funds, institutions, hedge funds that buy based on low volatility. So in the equities asset class, when volatility gets compressed and we’re looking at in terms of compression, we can look at the VIX sporting a 16 handle, got down to 14 handle recently, that’s volatility compression.

That brings in the risk parity funds, that brings in institutions looking to buy stuff with low volatility and that is equities. The equities asset class has got some of the lowest volatility around right now, a lot lower than bonds. Even the bond volatility has become somewhat compressed, it can pop a lot easier given some issues we have the debt, the deficit, the Federal Reserve, etc. But volatility compression in equities is very supportive of systematic buying by funds that buy based on systems and algorithms on volatility compression.

So again, takeaway that’s supportive of more buying: trillions of dollars, seven plus trillion dollars on the sidelines, people. Plenty of dry powder to continue this market. What’s been doing really well? Financials have been doing well.

Just take a look at Goldman. Take a look at JPMorgan. Financials have been right up there with the leadership sectors which are tech, no surprise there. When it comes to tech, the big boys are doing extremely well.

Have you looked at Microsoft lately? Have you looked at Broadcom lately? How about Oracle? So when talking tech, take a look at those names, people, and you understand why tech is once again leading.

Consumer discretionary.

Another leadership group just behind tech. And all you have to do there is take a look, people, at Netflix. Yes, I know they had a little bit of a takedown 5% plus on Friday, but Netflix skyrocketed. The stock has just taken off.

Disney taken off.

Royal Caribbean RCL. Have you seen the stock chart lately, people? Yeah. Talk about a rocket launch.

So consumer discretionary doing well, financials really doing well, and tech leading the pack. Those are pretty diverse sectors that are doing extremely well. So we’re getting not broad support, but we’re getting pretty good support from important areas and that tells me stocks can go higher. So what do you take away from all this stuff?

Yes, same thing I’ve been saying for weeks and now since April.

Stocks just look like they want to go up. Okay. Yes, we had a dustup and that has passed us now. Everything else looks pretty good.

There’s always a black swan out there, so I don’t see one. If one flies overhead, we won’t know until it spreads its wings and casts its shadow on the market. The only thing I am concerned about is yes, we’re priced to perfection.

Valuations are getting somewhat stretched. Some stocks look like they’ve gone parabolic. That’s the kind of stuff that worries me. But that’s tactical.

We don’t have fundamental reasons to back off here. So guess what? We’re probably going another leg higher, and that’s all good. Catch you guys next week.

Cheers.