The Spending Shift, Model Mayhem, and Wrong on Warsh? 7/31/26

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**Kate Rooney** (0:07)
You can keep your phone and your number, and T-Mobile helps pay it off.

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Up to $800 per line.

**Greg Ip** (0:12)
So I wouldn't have to buy a new phone?

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Yep.

**Kate Rooney** (0:14)
Plus, your plan price stays the same for five years on experience plans.

**Greg Ip** (0:18)
Nice.

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**Kelly Evans** (1:03)
Thank you very much, Mike. The broader averages are pretty resilient today as Amazon soars, Apple falls and shadow yields seem to be bursting to the floor. I'm Kelly Evans and welcome to The Exchange. Don't look now, but treasury yields are jumping today. The 10-year above 4.7% and the long bond eyeing 5.3%.
It feels like the new Fed chair is winging it, or so says the Wall Street Journal's Greg Ip. He joins us in just a moment. Plus the implosion of the Mag 7, at least as a trading moniker. Today, it's Amazon soaring while Apple sinks after their earnings last night. Matt Maile weighs in on the trade and the AI race. Look at these moves for chips and software this week. Sand is swinging from a multi-month load to a historic high.
That's where we begin today, because here is where our first guest is seeing the biggest opportunity. Stephen Whiting is Chief Investment Strategist at CIO Group. It's great to have you here.

**Stephen Whiting** (1:53)
Thank you.

**Kelly Evans** (1:53)
So is it the software part of the market? Should we back out for a second and just what is the lay of the land now?

**Stephen Whiting** (2:00)
Big picture. This is a little bit of hardware mania. If you think semiconductors, tech hardware, are at about 30 percent of the S&P market cap.
What that's really telling you, a close approximation is that this is really the market saying that 30 percent of all future US corporate profits are going to be tech hardware makers.

**Kelly Evans** (2:21)
And may that be true or no?

**Stephen Whiting** (2:23)
No. The last time we did that was like right at the peak of 2000 Now, I do think that we have a near-term opportunity here in semiconductors for the companies that are really the innovators, not necessarily the commodity makers.
You're looking at all of these hyperscalar capex numbers come in up 85% growth this year.
Amazon, again, so one of them, Apple was minus 15, by the way, on its capex plan. But the important thing is that next year is firming up. Those estimates are going up for their spending to finish their projects, 26% growth. And that's just going to mean that this will be a period of incredibly heightened profits. But then you take a look at the disconnect with software being treated like, we're not going to use it anymore.

**Kelly Evans** (3:08)
Right, but before we get into software, so what you're saying is you've been expecting bigger capex plans.

**Greg Ip** (3:15)
Right.

**Kelly Evans** (3:16)
We talk to a lot of people who are waiting for the street as high as these numbers are to really go up as high as. So you're in that camp, you're taking over.

**Greg Ip** (3:22)
I think so, yes.

**Stephen Whiting** (3:23)
So at CIO Group, we've done some cuts to semis at the end of May. On the US side, we've added back at the beginning of the month. On international, we've cut some because this is really, again, the commodity-related trade. If you think about DRAM producers having a massive leap in profits on A-high and other things, that again doesn't mean long-term growth.
The fact is that they're highly cyclical and we just saw those stocks levitate, get everything Nvidia had in its entire A run-up. So that's going to be still, I think, a more troubled part of the semiconductor trade. Even if the spending pushes it up in the near term, it's going to be more vulnerable. I think in the longer-