THE DEAN’S LIST: The Long Bond Sends a Warning

Last week, I told you the next three days would decide more than usual, and they did. Microsoft blew past every number that mattered. Amazon did too. Meta stumbled on a legal bill, not the business. Apple's iPhones sold well, and its Services line did not. Then the bond market elbowed past all four of them and pushed the 30-year yield to a level it has not touched since 2007. That is this week's real headline. Look at how the Single-Digit Millionaire portfolio is built to sit through a week exactly like this one.

Dean’s note:
Two weeks ago, I told you the giants would report, and the early scorecard would be mixed. Last week, the rest of the scorecard came in, and "mixed" is still the right word, just not in the way most headlines put it. Microsoft and Amazon reported growth that beat what anyone had priced in. Meta and Apple both stumbled, but for two completely different reasons, and lumping their stumbles together is exactly the kind of lazy reading that costs people money.

Read past the stock move and into the actual number before you decide what any of this means for what you hold.

Microsoft went first on Wednesday night and gave the cleanest answer of the season. Azure grew 43%, up from 40% the previous quarter, and crossed $ 100 billion in revenue for the full year for the first time. The stock jumped 16% Thursday, adding close to half a trillion dollars in value in a single session, Microsoft's best one-day gain since 2008. Amazon told a similar story a night later. AWS grew 37%, its fastest pace in 18 quarters, and total company revenue crossed 200 billion dollars in a single quarter for the first time. The stock surged as much as 15% before settling into a strong close. Two companies that have spent years pouring money into cloud and AI just showed you the bill coming due, in the right direction.

Meta and Apple did not get the same reaction, and here is where you have to slow down and read the actual line items. Meta's revenue grew 28% and beat Wall Street's estimates. Still, earnings per share landed well short of estimates due to 2.4 billion dollars in legal expenses, severance tied to 8,000 layoffs, and higher depreciation as its AI buildout ages onto the books. None of those three things is a customer walking away. Apple's story is a different animal. Revenue beat and iPhone sales did their job, but Services revenue and Greater China revenue both came in soft against expectations that were not even that aggressive. One of these misses is a bill that does not repeat. The other is two growth engines coming up short. Do not treat them the same.

The bigger story of the week did not come from any earnings call. It came from Washington and the bond market on Wednesday afternoon. The Fed held its benchmark rate at 3.50 to 3.75% for a fifth straight meeting, exactly what most experts expected. What nobody fully priced in was three regional bank presidents dissenting in favor of a hike, the sharpest break inside this committee since Chair Warsh took over. The 10-year yield jumped to its highest close since January 2025 within hours.

Oil added to the week's weight. Iran struck tankers transiting the Strait of Hormuz on Friday, and both WTI and Brent extended their rally, pushing oil up more than 20% for the month. That is the fourth straight weekly gain for crude, and it is happening at the same time the bond market is telling you inflation risk has not gone away. Two different markets, one message. The Fed can hold the short end of the curve wherever it likes. It cannot force long-term creditors or the oil market to agree that the fight is over.

So here is where I land. Two giants answered with real growth. One answered with a bill that does not repeat. One answered with a soft spot underneath a decent headline. None of that adds up to a verdict on the whole AI story; it is four separate report cards from four separate businesses. The real number to watch this week is not on any earnings slide. It is the 30-year Treasury yield, sitting at a level it has not touched since 2007, telling you exactly how much the bond market believes the Fed's patience is working. Stay invested. Stay selective. And watch the yield curve as closely as you watch the next earnings date.

A week where four giants answered, the Fed held with real dissent for the first time under its new chair, and the bond market decided it knew better. Here is how it played out.

Monday (July 27): The pause between the US and Iran held for a second night, and oil tumbled more than 5%, with WTI near $84 and Brent easing toward $91. Futures pointed higher into a week carrying four earnings reports and a Fed decision.

Tuesday (July 28): Stocks drifted into the Fed's two-day meeting. The S&P added a whisper, up 0.02% to 7,413, and the Nasdaq slipped 0.63% as chip names cooled off the prior week's bounce.

Wednesday (July 29): The Fed held rates at 3.50%-3.75% for a fifth straight meeting, but three regional presidents dissented, calling for a rate hike. The 10-year yield jumped on the news. Microsoft and Meta reported after the close.

Thursday (July 30): Microsoft's Azure number sent the stock up 16% and added roughly half a trillion dollars in value in a single day, its best one-day gain since 2008. The Nasdaq jumped 2.8% and snapped a six-day losing streak. Apple and Amazon reported after the close.

Friday (July 31): Amazon surged on a 37% jump in AWS revenue, its fastest cloud growth in 18 quarters, while Apple slid on soft Services and China numbers. The S&P closed at 7,490, and oil climbed again after Iran struck tankers in the Strait of Hormuz.

Monday (August 3, yesterday): Futures are pointing higher again as Palantir reports and the market braces for a data-heavy week that ends with Friday's jobs report. Oil is finally below $80 on WTI again, driven by optimism about US-Iran talks this week, but still closely watching the Strait of Hormuz.

Microsoft reported Wednesday night and gave the cleanest answer of the whole earnings season. Azure revenue grew 43%, up from 40% the quarter before, and crossed 100 billion dollars in revenue for the full year for the first time. Total company revenue grew 18% to just under $ 90 billion.

The stock jumped 16% Thursday, adding close to half a trillion dollars in value in a single session, Microsoft's best one-day gain since 2008. It dragged the entire Nasdaq out of a six-day losing streak and set the tone for the rest of the week.

Dean’s note:
This is the answer Alphabet's spending number was trying to buy two weeks ago, and Microsoft delivered it in one quarter. Faster growth, not slower, is what turns a big spending number from a worry into a bet that is paying off.

I have watched plenty of good quarters get buried under a bad week around them. This one did not get buried. It was noticed and rewarded in a single afternoon. Watch whether the chipmakers keep riding this number into next week, because a cloud growth rate this strong is no longer just Microsoft's story.

Amazon's total revenue crossed 200 billion dollars in a single quarter for the first time, up 20% from a year ago. AWS grew 37%, its fastest pace in 18 quarters, and operating income at the cloud unit jumped to 16.6 billion dollars from 10.2 billion a year earlier.

The stock surged as much as 15% after the report, then settled into a strong close. Operating income across the company rose 43% even as capital spending climbed toward 169 billion dollars over the trailing year, most of it directed toward AI infrastructure.

Dean’s note:
Two giants, two clean answers, one week. Amazon spent heavily building AWS for years while investors kept asking whether the bill would ever come due. This quarter, is that bill arriving in the right direction? A 37% growth rate at a business already running at a $169 billion annual pace is not a rounding error; it is a business hitting its stride at real scale.

I do not chase a stock because of one strong quarter. I pay attention when the growth rate itself is accelerating, and that is exactly what AWS just did in front of everyone.

Meta's revenue came in at $ 60.8 billion, up 28% from a year ago and ahead of Wall Street's expectations. Earnings per share landed well short of estimates, and the stock fell hard the night of the report before finding its footing later in the week.

Read past the headline number, and the whole gap traces back to three items. Legal expenses of $ 2.4 billion, severance tied to 8,000 layoffs, and higher depreciation as the AI buildout ages onto the books. None of those three things is a customer walking away or an ad slowing down.

Dean’s note:
This is the same trap I warned you about with Tesla two weeks ago, just wearing a different suit. A profit miss and a demand miss are not the same animal, and the market constantly conflates the two in the first ten minutes of after-hours trading. Meta's advertising business grew just fine, up 28% and ahead of estimates. What hit the bottom line were legal bills and severance checks, one-time costs that do not repeat every quarter. The stock clawed most of the drop back by Friday.

Read the line item before you read the headline, every single time.

Apple beat the top line, with revenue up 16% to 109.4 billion dollars and earnings per share up 29% from a year earlier. iPhone sales did their job, pushing the headline number past analyst expectations.

Underneath that beat, two numbers came in soft. Services revenue landed at 30.74 billion dollars against a 31.22 billion dollar estimate, and Greater China revenue came in at 18.8 billion against 19.5 billion expected. The stock slid through the back half of the week on both misses.

Dean’s note:
Here is the difference between this one and Meta's. Meta's gap came from bills that do not repeat next quarter. Apple's gap came from two businesses, Services and China, that were supposed to be growing, but fell short of expectations that were not even that aggressive. A hardware beat with a demand-side miss underneath it is not the kind of quarter that a bigger buyback can fix on its own. I am not writing Apple off over one soft Services print. But it’s morphing into a consumer staple over a discretionary or tech play. Safety is the single word most often used when talking heads discuss Apple.  You should watch the next earnings report before you decide this was a blip and not the start of a pattern.

The Fed held rates at 3.50 to 3.75% on Wednesday, the fifth straight meeting without a move. Three regional bank presidents dissented and wanted a quarter-point hike, the sharpest break inside this committee since Chair Warsh took over a year ago.

The bond market did not wait for permission to react. The 10-year yield jumped to its highest close since January 2025 within hours of the decision, and the 30-year crossed 5.2%, a level it has not touched since 2007. 

Dean’s note:
I keep telling you the bond market is the adult in the room, and this week it acted like one in front of everybody. The Fed can hold the short end of the curve wherever it wants. It cannot force long-term creditors to agree that inflation is under control, and right now, they clearly do not. Three dissents in one meeting are not noise; they are a committee starting to split in public for the first time under its new chair.

Watch the 30-year yield over the next month more closely than you watch the next Fed statement. It is telling you what bond buyers actually believe, not what a press release wants you to believe. Are they right about inflation? I don’t think so. We will see, but I bet on the midterms forcing the administration’s hand and, in turn, cooling geopolitical tensions and oil prices in one fell swoop.

Stay invested. Stay selective. Watch the bond market, not the Fed statement.

Four giants answered this week, and the two cleanest answers came from the two companies spending the most. The loudest story of the week did not come from any of them.

•   Microsoft and Amazon gave the market exactly what it wanted: faster growth from the businesses they have poured money into for years. Watch whether that growth rate holds next quarter before you decide the AI spending story is settled for good.

•   Meta's earnings miss was a paper miss, built from legal costs and severance, not a demand problem. The advertising business grew 28%. Do not let one bad headline number chase you out of a business that is still growing at that pace.

•   Apple's miss was a real one. Services and China both came in soft against modest expectations. Watch the next quarter's Services number before you decide whether this is a blip or the start of a pattern.

•   The Fed held rates for a fifth straight meeting, but three dissents inside the room are the first real crack in this committee. A quiet chair does not mean a united one, and it is worth knowing the difference.

•   The 30-year Treasury yield crossed 5.2%, its highest level since 2007. That is the bond market telling you it does not fully believe the inflation fight is won, no matter what the Fed's own statement says.

•   Oil climbed again after Iran struck tankers in the Strait of Hormuz, up more than 20% for the month. Watch the ships moving through that strait, not the diplomatic statements written about it.

•   Keep contributing to your 401(k). The limit is 24,500 dollars, and if you are 60 to 63, you get a super catch-up to 35,750. A week this loud is exactly when the automatic paycheck contribution keeps doing its job without you having to feel brave about anything.

Here is where I land. Two giants answered with growth, one answered with a bill that does not repeat, and one answered with a real soft spot sitting underneath a decent headline. That is not a verdict on the whole AI story. It is four separate report cards from four separate businesses, and they do not all read the same. The bigger story this week was a bond market that priced in more inflation risk than the Fed's own statement admitted to, sitting right alongside an oil market still watching one narrow strait for its next headline. Stay invested, stay selective, and watch the yield curve as closely as you watch the next earnings date on your calendar.

- Dean

P.S. The number that sticks with me this week is 5.2. That is the yield on the 30-year Treasury bond, its highest level since 2007. Almost twenty years back. I was not writing this newsletter then, and most people reading this today were not thinking much about a bond yield either. But that number is the clearest vote of the whole week. It says long-term creditors want a higher return to hold government debt for three decades, and that is not a vote of confidence in how quickly inflation comes down from here. Watch that number more closely than you watch the next headline out of Washington.

And one more thought. The market spent last week deciding what four earnings reports meant. This week, it has to decide what a jobs report means, with Friday's payroll numbers landing alongside a full slate of manufacturing and services data and a fresh round of earnings from Palantir, AMD, Disney, and Uber. Oil is sitting near $80 a barrel on one narrow strait's worth of geopolitical risk, and it would not take much news to send it back toward $100 again. The bond market just told the Fed it is not fully convinced the inflation fight is over. A soft jobs number would tell a very different story than a hot one, and either one could move the 30-year yield more than a full week of earnings just did. I don't know which way it breaks before Friday. I am going to watch the number the same way you do, and make the next move based on what actually lands, not on what I expect to land.

👉 How would I handle a week like this one, where two giants beat? Two stumbled for two different reasons, the Fed held but split three ways, and the bond market quietly forced its way to a level not seen since 2007. It is not about picking the right earnings call, but about holding a plan that does not require you to be right about any one of them. My Single-Digit Millionaire portfolio blends stocks, cash, gold, and a little bitcoin, so one earnings report or one bond auction does not decide your whole year.

This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.