SPEAKER_00 0:00

You know, when you look at a mirage on a hot highway, it uh it looks like an oasis, but as you get closer, you realize it's just a trick of the heat. Well, markets can be exactly like that. Today we are taking a deep dive into a pre-market briefing for July 21, 2026 from Eli Levy at Canon Trading Company. We are going to decode why a flashy tech rebound might just be, you know, a mirage hiding some deep central bank anxiety and massive physical supply shocks.

SPEAKER_01 0:28

Yeah, it is a really fascinating setup today, honestly.

SPEAKER_00 0:31

It really is. But before we get into the heavy stuff, uh, we do need a necessary reality check. Disclaimer, trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, mark-in data, and recommendations are subject to change at any time.

SPEAKER_01 1:02

Right. Definitely important to keep that in mind before we jump in.

SPEAKER_00 1:04

Absolutely. Okay, so let's look at this mirage. On the surface, I mean, the semiconductor complex is absolutely ripping pre-market. You've got AMD and TSMC leading the charge on this massive uh $100 billion build-out in Arizona.

SPEAKER_01 1:21

Yeah, I mean, it looks like a runaway train of growth if you only read the retail headlines. But if you track the institutional money flow, the big players just aren't buying the hype today.

SPEAKER_00 1:31

Oh, really?

SPEAKER_01 1:32

Yeah. In fact, Goldman's Prime Desk actually just logged its largest tech degrossing on record.

SPEAKER_00 1:37

Wait, the largest on record? Let's uh unpack degrossing for a second, because that is crucial for you listening. That basically means institutional investors aren't just, you know, selling their winners to take a little profit.

SPEAKER_01 1:47

Exactly. They are aggressively pulling their chips off the table entirely just to shrink their overall risk footprint. They are actively shedding exposure across the board.

SPEAKER_00 1:55

Aaron Powell Wow. So you really have to ask if tech is supposedly soaring on this Arizona news, why are the smartest desks running for the exits?

SPEAKER_01 2:04

Aaron Powell Right. And it strongly suggests that this isn't a genuine rally at all. It's much more likely to be just algorithmic short covering.

SPEAKER_00 2:11

Aaron Powell Meaning computer programs are just being forced to buy back shares they originally bet against, right?

SPEAKER_01 2:15

Trevor Burrus Exactly, which just bounces the price right up into a ceiling of resistance. The institutional money is fleeing because they're looking straight at the macro anxiety, specifically the bond market and the Federal Reserve.

SPEAKER_00 2:27

Aaron Powell That makes a lot of sense because uh the tenure treasury is sitting at 4.59 percent right now, and the market odds for a July right hike just suddenly spiked to 46 percent.

SPEAKER_01 2:38

Aaron Powell Yeah, which is a huge shift. I mean, just early this month, there is an 80 plus percent probability that the Fed would just hold.

SPEAKER_00 2:44

Aaron Powell It honestly feels like Hawkish Governor Waller is, I don't know, a traumatized driver who braked way too late back in 2021 and 2022.

SPEAKER_01 2:53

Aaron Powell That is a perfect analogy, actually.

SPEAKER_00 2:54

Aaron Powell Right. Like now he's just itching to slam the brakes early at every single stop late, just in case.

SPEAKER_01 2:59

Aaron Powell And what makes that early braking so dangerous today is that they are essentially driving without a map. There's no official summary of economic projections due at this upcoming Fed meeting.

SPEAKER_00 3:10

Oh wow. So when investors don't have that official forward guidance, the market's reaction function becomes historically tight, I imagine.

SPEAKER_01 3:18

Aaron Powell Exactly. Hypersensitive. I mean, every tiny data point or random comment from a Fed speaker causes the market to violently swerve, which points us to where the money is actually moving.

SPEAKER_00 3:30

Aaron Powell Right. Because paper assets like stocks and bonds are so jittery right now. Volatility is shifting heavily into physical commodities.

SPEAKER_01 3:37

Yeah, you see it in energy, which is stuck in this massive tug of war between geopolitical risks like the Houthie shipping bans and OPEC Plus actually pumping more oil.

SPEAKER_00 3:46

But the real star of the briefing is Cocoa, actually. It just surged 4.2% to $55.33 a ton. Why is Coco stealing the spotlight from, you know, traditional safe havens like gold? Gold is honestly just treading water near $4,000 right now.

SPEAKER_01 4:00

Well, this is the ultimate revenge of the physical world over paper markets. I mean, gold is largely a psychological hedge against inflation. Yeah. Yeah, true. But cocoa is reacting to an undeniable physical reality. You have a confirmed El Nino weather pattern colliding with this devastating 18% year-over-year crop decline in the Ivory Coast.

SPEAKER_00 4:18

Ah, got it. You can print more money and algorithms can prop up tech stocks all they want, but you literally cannot print cocoa beans during a drought.

SPEAKER_01 4:29

Precisely. That tangible shortage triggers a massive panic among traders who bet against the crop, and it drives the price through the roof in real time.

SPEAKER_00 4:38

We are definitely entering a gauntlet here. Over the next few days, we've got rate decisions from the Fed, the ECB, the Bank of England, and the Bank of Japan.

SPEAKER_01 4:45

Yeah. It's a low volatility setup on the surface, but packed with fierce event risk underneath. It's a crucial stretch for anyone managing risk right now.

SPEAKER_00 4:53

Absolutely. And a big thanks to Eli Levy at Canon Trading Company for providing the briefing that fueled our deep dive today. You can find more of his insights by reaching out to Eli at Canon Trading.com.

SPEAKER_01 5:04

Yeah, highly recommend checking that up.

SPEAKER_00 5:06

So it really leaves you with a critical question to chew on as you watch the tape this week. With central banks essentially paralyzed by the inflation ghosts of the past, while physical commodities face fresh, completely unpreventable weather and geopolitical shocks today, are traditional market safety nets breaking down in real time. And one last time before we go, disclaimer trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.