MARKET RECAP
😰 S&P 500 and Nasdaq Have Their Worst Day of the Year

🥲 The green streak is sadly over… after 9 straight weeks of gains, and more gains Monday to Thursday this week, markets got pummelled on Friday in the worst day of the year for both the S&P 500 and the Nasdaq.

📊 Across the indexes this week:

• The S&P 500 fell -2.6%

• The Nasdaq 100 fell -4.5%

• The TSX fell -1%

🟢 Now, it’s worth noting that the indexes are still squarely in the green year-to-date, with the Nasdaq still up +10.7% and the S&P 500 up 7.7%, but with such a sudden drop causing panic, let’s talk about what’s going on and whether the panic is justified…

📉 Broadcom Crashes 20% After Earnings Show Potential Cracks In AI Growth

😰 One of the biggest reasons for the crash this week was Broadcom ($AVGO), one of the key AI infrastructure players, reporting disappointing earnings on Wednesday and crashing 20% as a result.

😅 The earnings call started with a major fumble, as CEO Hock Tan accidentally read the Q1 numbers. The real Q2 numbers were still strong, with revenue growth beating analyst expectations and AI revenue soaring 143%, but the AI chip revenue projected for Q3 was weaker than expected at only $16B vs the $17.2B expected.

🤖 AI stocks crashed in response on Thursday/Friday. Across the AI leaders:

• Broadcom ($AVGO) fell 20%

• Micron ($MU) fell 20%

• Advanced Micro Devices ($AMD) fell 14%

• Intel ($INTC) fell 12%

• Nvidia ($NVDA) was hurt the least, falling only 4.5%

👀 But many think the reaction was overblown, with the CEO calling the selloff an “overreaction to conservative guidance” and some analysts like KeyBanc even raising their price targets.

🥗 And while 20% drops seem drastic, they can sometimes be healthy for the market. Broadcom has soared +58% in the past year (even with the drop) and is still up 11% year-to-date, so most of the story here is likely a slight correction from a high-flying stock.

😬 But Broadcom wasn’t the only factor at play this week…

👷‍♂️ A Great Jobs Report… Crashes the Market?

👏 The other biggest driver of Friday’s crash was, ironically, a stellar jobs report.

📋 The May jobs report showed the economy added 172,000 jobs last month, more than double the 80,000 economists were forecasting.

⭐️ Under normal circumstances, that's great news, but for investors it means the Fed has less reason to cut rates and more reason to raise them (which is bad for stocks).

🏦 The markets responded immediately, with the 10-year Treasury yield jumping past 4.5% and the 2-year yield climbing to 4.16%, its highest level in a year, with the odds of a Fed rate hike by year-end jumping from less than 50% before the report to roughly 70% after it, according to CME data.

💬 Nigel Green, CEO at deVere Group, put it plainly:

🫧 Now for the big question: is Friday’s crash the start of the bubble popping? Some say yes, pointing to the fact that the Shiller PE ratio is just 3.5% away from passing the dot-com bubble as the most expensive stock market in history… but before we dive in, a quick word from our sponsor Global X!

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MACRO OUTLOOK CONT.
🫧 Bubble Fears Reignite: Here Are The Arguments For And Against

😰 Whenever the market falls like this, calls that the market is in a bubble skyrocket (likely because they get clicks and reads), but even so it’s worth paying attention to the arguments for/against the bubble-believers.

🔍 First, the arguments for the bubble. Coinciding with the selloff, Macquarie strategist Viktor Shvets published a note summarizing the main metrics supporting the bubble narrative:

• US equity value is at 2.5x GDP (the historical average is 1x).

• The Shiller CAPE ratio, a measure of how expensive stocks are relative to average inflation-adjusted earnings over the past 10 years, sits at 42x, double the average since 1950 and only higher in the lead-up to the dot-com crash.

• The top 10 S&P 500 stocks now account for over 40% of total market cap, the highest concentration in the modern era.

💬 According to Shvets:

🤑 The Bull Case

✨ But not everyone is so pessimistic. Team bubble is loud right now, but the optimists have strong arguments too. Here are their main arguments:

• 📊 Yardeni Research says the earnings case is unusually strong, S&P 500 forward earnings are up 26.6% year-over-year through May, one of the strongest readings on record outside of post-recession recoveries. Yardeni calls any pullback a buying opportunity and maintains the Street's most bullish S&P year-end target at 8,250 (12% above current levels).

• 📈 Lombard Odier points out that 80% of S&P 500 companies beat expectations in Q1, the sixth consecutive quarter of double-digit earnings growth. Net income margins are running at 14.5%, the highest level in around 15 years.

• 💰 Corporate America is putting its money where its mouth is, with S&P 500 companies on track to authorize a record $1.2 trillion in share buybacks in 2026, up from $1.1 trillion last year.

• 😬 For those calling this dot-com 2.0, Invesco points out that the U.S. tech sector's forward P/E is only half of what it was at the dot-com peak in 2000, arguing the high-flying tech companies have real cash flows and are funding their AI buildout from profits, not debt.

💸 John Flood, Head of American Equities Execution at Goldman Sachs, basically came out and flat-out said ‘buy the dip’:

💡 With the SpaceX IPO pricing on Thursday, Apple's WWDC kicking off on Monday, and Oracle reporting earnings next week, the next five days will test whether Friday was a healthy reset or the beginning of something choppier.

🤔 What to Do About the Crash

⚖️ Unfortunately for us investors, there are solid arguments on both sides, and it is notoriously hard to predict what the market will do next.

😱 But if you're a beginner investor who’s panicking right now, use this dip as a reset to review your investments and make sure your portfolio actually matches your risk tolerance and time horizons. If a one-day pullback from all-time highs is keeping you up at night, it’s probably a sign that you’ve taken on more risk than you can handle.

🪙 Now that we’ve covered the macro picture, let’s switch gears to the other big story: crypto, which arguably has had an even rougher week than the stock market after long-time crypto bull Michael Saylor sold some of his bitcoin. But first, a word from our other sponsor this week Dynamic Funds!

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TOP STORY
🩸 Michael Saylor Murders Bitcoin

🤯 This week, Michael Saylor (the CEO of MicroStrategy) did something he’s never done since the company started accumulating Bitcoin in August 2020: he sold.

To be fair, the sale was tiny - Saylor sold just 32 Bitcoins of MicroStrategy’s 843,706, but given Saylor has long been one of crypto’s biggest advocates and has said many times he would ‘never sell’, the crypto market panicked:

• 📉 Bitcoin ($BTC) fell -16% this week, dipping below $60,000 intraday for the first time since October 2024 and putting it more than 52% below its all-time high of $126,198 set in October last year.

• MicroStrategy ($MSTR) closed the week at its lowest level since November 2022, now down 73% from all time highs.

 😅 CNBC's Jim Cramer put it bluntly, tweeting: "Saylor murdered Bitcoin."

🔍 What's Going On With MicroStrategy

💸 Over the past 10 months, Saylor raised $10.3 billion by selling a product called STRC, a perpetual preferred stock that pays a fixed 11.5% annual dividend and has no upside tied to Bitcoin's price. The pitch to investors is you get a stable yield while Saylor uses the cash to buy more Bitcoin.

💸 The problem is Strategy now needs cash to pay those dividends, and its USD reserves have fallen from $2.25 billion at the start of 2026 to just $900 million as of May 31. So Saylor sold 32 BTC at an average price of $77,135 per coin ($2.5 million total) to cover the payment.

💬 David Tawil, CIO at Quantify Funds, explained the concern:

🤔 Popular financial watchdog Coffeezilla released a deep-dive on STRC earlier this year, and his central concern is exactly what’s playing out: the 11.5% dividend is only sustainable if Bitcoin keeps going up.

💸 As Coffeezilla points out, Strategy has no yielding assets, Bitcoin doesn't pay interest or dividends, so the only way to keep funding those 11.5% annual payments is to keep raising new capital from new STRC buyers, or sell Bitcoin. And to keep the stock trading at its $100 par value, Saylor has already had to raise the dividend rate five times to attract enough buyers.

⚠️ And that's where the doom loop risk comes in. The moment Bitcoin falls far enough that new investors stop buying STRC, Strategy's only remaining option to fund the dividend is to sell Bitcoin, which pushes Bitcoin's price down further, making STRC even less attractive and forcing more selling.

🔄 It's a self-reinforcing spiral, and this week's 32 BTC sale, tiny as it was, is exactly the kind of move that makes the crypto market nervous.

🪙 Why Bitcoin Is Struggling

😰 But the Saylor drama is really just a symptom of a broader problem: Bitcoin is struggling with a story problem right now. The combined crypto market cap has fallen to $2.22 trillion, down $4.3 trillion from its October 2025 peak.

💬 Jasper de Maere, strategist at crypto trading firm Wintermuts, put it plainly:

🤖 The culprit is attention. The Iran war drove sharp moves in defense and energy stocks. Nvidia's AI infrastructure boom has captured growth investors. And now SpaceX, OpenAI, and Anthropic are all lining up trillion-dollar IPOs, pulling capital away from speculative assets.

💬 Gustavo de Palmas, analyst at ArbiTrader, summed it up:

⭐️ Some Say The Bigger Picture Still Looks Bullish

📈 But others argue that Wall Street hasn't given up on crypto. JPMorgan, Bank of America, Citi, and Wells Fargo are jointly building a tokenized deposit network expected to launch as early as 2027, enabling instant settlement of transactions on the blockchain.

💡 Jamie Dimon, who famously called Bitcoin a "fraud" in 2017, wrote in his annual shareholder letter this year that "a whole new set of competitors is emerging based on blockchain" and that JPMorgan must move faster to keep up.

🏆 BlackRock has now built a $1 trillion Bitcoin ETF, the fastest any ETF in history has reached that milestone, with CEO Larry Fink calling tokenization a coming "revolution" for the finance industry.

🧪 Saylor's core thesis, that institutions will be forced to own Bitcoin, still has a lot of evidence in it’s favour, but his financing model is being tested.

OTHER HEADLINES
🗞️ Other Top Stories of the Week

✨ While the market crash and Saylor selling bitcoin stole the headlines this week, there were quite a few other major stories worth mentioning quickly, so here’s a rapid rundown:

• 🚀 SpaceX ($SPCX) added another blockbuster compute deal to its amended S-1 this week, with Google agreeing to pay $920 million per month for access to ~110,000 Nvidia GPUs at xAI data centers through June 2029. Combined with last month's Anthropic deal at $1.25 billion per month, SpaceX will collect roughly $2 billion a month in AI infrastructure revenue through 2029. The company prices its IPO Thursday at a $1.75 trillion valuation, with trading beginning June 12.

• 💾 Marvell Technology ($MRVL) was the wildest ride in large-cap tech this week. Shares surged 32.5% on Monday after Nvidia CEO Jensen Huang called Marvell the "next trillion-dollar company" at Computex in Taipei, crediting its connectivity chips as essential AI infrastructure and citing Nvidia's recent $2 billion strategic investment, sending MRVL to an all-time high of $316. The stock then gave back some of those gains in Friday's broad tech selloff, closing the week around $263 (ending the week up 32%), but it still stands as one of the biggest weekly moves in large-cap tech in recent memory.

• 👚 Lululemon ($LULU) fell roughly 10% this week after slashing its full-year guidance, cutting revenue expectations to $11.0-11.15 billion (from $11.35-11.50 billion) and EPS by more than $1 per share, while offering little explanation beyond vague "headwinds." The stock is now down about 40% year-to-date, with incoming permanent CEO Heidi O'Neill not starting until September.

• ⚡ Celsius Holdings ($CELH) dropped 7.5% after Texas AG Ken Paxton launched an investigation into the company and its Alani Nu brand, alleging high-caffeine drinks are being marketed to children and teens. The probe follows a lawsuit tied to the death of a 17-year-old, and comes roughly a year after Celsius acquired Alani Nu for ~$1.8 billion.

• 🛡️ CrowdStrike ($CRWD) fell 10% this week despite a strong Q1, beating EPS estimates ($1.10 vs. $1.07), reporting record net new ARR of $256 million (+32% YoY), record free cash flow of $468 million, and raising its full-year ARR growth guidance by 520 basis points. The company also announced a 4-for-1 stock split with a record date of June 25.

• 🤖 Anthropic confidentially filed its S-1 with the SEC this week, officially joining the most anticipated IPO race in years alongside SpaceX and OpenAI. The company is valued at $965 billion after closing a $65 billion Series H last week, and is running at a $47 billion annualized revenue run rate, up from just $10 billion a year ago, with a public listing targeting as early as October 2026.

🙏 And that’s a wrap! Thanks for reading to the end. As a reminder, you can get daily and weekly news recaps like this tailored to your actual holdings on Beevis, Blossom’s AI Investing Assistant!

FROM THE BLOSSOM COMMUNITY
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