Weekly Playbook: August 4th

Figma Takes the Belt, Tariffs Go Lucha Libre, and Traders Tap Out Before the Tacos Arrive

Key Takeaways This Week

• Trump’s tariff hikes and a dismal jobs print triggered the biggest weekly market drop since May. Powell held rates steady, but internal Fed dissent and political pressure are reshaping the policy narrative.

• SPY, QQQ, IWM, and DIA all lost key support levels. Trapped longs and poor hedging could fuel more follow-through if bulls don’t step in fast.

• FIG’s explosive debut highlighted crowding and reactive auction mechanics. A broader late-summer lull is expected, but names like Klarna and StubHub are lining up.

• Reddit rips, UNH dips. Other notable movers: SPOT, UPS, ARM, AMZN, and COIN.

• PLTR, HIMS, AMD, SMCI, DIS, SHOP, OSCR, UBER, APP, LLY, XYZ, and TTD headline this week’s earnings. Key focus: guidance, margin trends, and tape reactions.

Market Overview

I wanted to start with a few thoughts on hedging. I’m not here to tell you when to be fearful or greedy, leave that to the books. I had no idea what the job numbers would be, what Powell would say, or the latest on Trump’s diet. But sometimes, the mix of implied volatility, market location, and the sheer number of expected events just doesn’t add up. That’s when it makes sense to grab some cheap downside protection.

Not every attempt works, and I won’t pretend otherwise. But when a hedge does land, it usually pays well. One win can easily cover a few failed tries. And for what it's worth, that’s pretty much what trading is all about.

Markets finally blinked. The S&P 500 and Nasdaq notched fresh highs early in the week, but by Friday, it was a different picture. Trump’s latest tariff blitz and a dismal jobs report crushed sentiment, pushing all three major indexes to their worst weekly drop since May. The S&P fell 2.4%, Nasdaq slid 2.2%, and the Dow shed nearly 3%. Big Tech’s blowout earnings couldn’t save the tape this time, and that’s the real story.

Under the hood, the labor market broke down. July payrolls came in at a meager +73K, with steep downward revisions to May and June. Outside healthcare and education, private hiring was nearly zero. The unemployment rate ticked up to 4.2%, and the reaction from the White House was swift and political. Trump fired the head of the Bureau of Labor Statistics and accused the agency of cooking the books. That spectacle aside, traders are now betting heavily on a September rate cut, though the Fed’s path is looking more complicated by the day.

Powell held rates steady, but a double dissent from Trump-appointed Fed governors marked the first split in over three decades. It’s more than just a messaging headache. With GDP bouncing back 3% in Q2 and inflation still sticky, the Fed’s credibility is now being tested from both the market and the administration. Trump has made it clear he wants deep rate cuts and fast. His shortlist for future Fed leadership reads like a who’s who of monetary regime change: monetarists, mandate-cutters, and Powell antagonists. The next 12 months could fundamentally reshape the Fed’s independence.

Then came the tariff shock. Trump unleashed a new wave of duties, raising tariffs on countries like Brazil and Canada by as much as 50%. The effective tariff rate has now hit 18.3%, the highest since the 1930s. While headline inflation hasn’t spiked yet, corporate America is sounding the alarm. P&G, Hershey, Stellantis, and others are warning about rising input costs and margin pressure. Even Big Tech isn’t immune. Apple flagged tariff exposure as a key risk despite a strong quarter, and Amazon’s downbeat margin guidance sent its stock tumbling.

It’s not just the cost of goods going up, it’s uncertainty that’s doing the real damage. Hiring is slowing, capex plans are in flux, and pricing remains murky. Corporate tax receipts fell $30 billion in Q2, a sign that margin compression is already in motion. The hope that bad news equals Fed cut equals good news for stocks is fading. We’re drifting into something murkier: slowing growth, persistent inflation, and policy volatility. In short, stagflation risk is back on the table.

M&A, however, is heating up. Over $1 trillion in deals have been announced since April as regulatory friction eases. Freight rail (Norfolk Southern and Union Pacific), energy (Baker Hughes and Chart), and healthcare (KKR and HealthCare Royalty) are leading the charge. Tech and biotech names are firmly on the radar too, with small caps in particular getting attention from acquirers hungry for growth. If the deal boom continues, it may provide a bid under some of the most beaten-down names.

Big Tech held its ground, sort of. All five megacaps beat Q2 estimates, with Meta delivering standout ad growth and margins. Capex remains on fire, with the group spending over $95 billion last quarter. But higher spending is beginning to weigh on cash returns. Only Microsoft managed to grow free cash flow year over year. Apple’s iPhone numbers were solid, but its reliance on tariff-exempt sourcing may be tested if the trade war escalates. Meanwhile, Amazon’s revenue outlook was fine, but investors focused on the sharp drop in profitability.

Outside the U.S., China’s market continues to rally, but it’s AI hype masking macro rot. Deflationary pressures are deepening, growth is undershooting targets, and real estate remains in a years-long funk. Beijing’s response remains measured, with stimulus used sparingly and overcapacity still rampant in EVs and industrials. The yuan’s weakness is helping exports for now, but structural cracks are forming. If domestic demand doesn’t pick up soon, the rally may lose its footing.

The tape remains euphoric on the surface, but the macro is fraying underneath. This week was a reminder: even in a liquidity-fueled market, reality catches up. The Fed is boxed in, fiscal policy is weaponized, and the runway for earnings-driven upside is narrowing. Momentum’s still alive, but the setup is getting trickier.

For more details, visit Barron’s.

The 2025 IPO market is red hot, driven by momentum names with big revenue potential. With the Nasdaq hovering near record highs and heavyweights like Nvidia, Microsoft, and Meta fueling sentiment, investor appetite is clearly back. Circle Internet Group and CoreWeave had delivered explosive debuts, and the pipeline isn’t slowing down. While a late summer lull is typical, names like Firefly Aerospace, Klarna, and StubHub are already lining up for fall.

Among the recent standouts, Figma’s IPO deserves a closer look. By now, everyone has seen the chart, so no need to spam it again. What’s more interesting is the opening process. The 36,937,080 share IPO was priced at 33, and demand was clearly off the charts. Some say it was oversubscribed up to 40 times, with many retail orders for a few thousand shares filled with just one share or ignored completely.

The initial imbalance, calculated from the $33 reference price, showed 44 million shares and climbing, which exceeded the total offering. But once the reference price was moved up to $65, the updated imbalance dropped to just 3.5 million. That suggests a large cluster of limit orders just above the original reference price, likely from those who didn’t get filled and still wanted in.

After a few more reference price adjustments, the stock finally opened at $85 and was immediately halted on volatility after ripping higher. The post halt reopening on NYSE follows a process similar to the opening auction, but with one big caveat: during the halt, you cannot trade on other ECNs or actively manage your position to capture the spread between the reopening price and current levels.

I’m thinking of writing a deep dive on opening auctions in general, but that will have to wait until earnings season winds down and I have time to structure it properly for readers at different experience levels. Make sure to subscribe so you don’t miss it.

As for FIG, it is one to watch. The IPO high, low, extensions of the 33 issue price, and developing points of control all matter here. These levels can be highly reactive and offer solid trading setups.

For those who missed it, we’ve published the first in our series of deep dives that will serve as building blocks for our Fundamentals Playbook. It’s free, and we’re still refining the format to deliver the most value. If you have suggestions or want us to tweak anything in future editions, feel free to drop a comment or DM. Feedback is always appreciated.

International Business Machines (IBM): A Century of Reinvention, Resilience, and Future Potential

Episode 202 of The Compound and Friends tackled two major forces reshaping markets right now: UnitedHealth’s collapse and the rise of short term quant flows.

First, UNH. It's not just down, it's crashing while the Dow hovers near all time highs. That’s rare. The crew unpacked why, pointing to a broken healthcare model where UNH has long monetized denial systems and premium hikes with little transparency. Now regulators and investors are asking tougher questions. Too much money for too little value sums it up.

Then there’s the other force distorting price action, quant funds with ultra short holding periods. When trades last hours instead of months, fundamentals take a back seat. Stocks that beat get faded, and misses can rally simply because liquidity opens the door for rebalancing.

The real insight? What you’re seeing post-earnings isn’t price discovery, it’s price distortion. Especially when massive firms rotate capital faster than the news cycle can catch up.

Elsewhere, the episode touched on AI capex, Microsoft’s Azure strength, Meta’s margin flex, and the new wave of meme stock momentum. Some funds now systematically chase squeezes like OPEN and KSS, not for value, but for volatility.

Between UNH’s unraveling, short term quant flows, and the institutionalization of meme trades, markets feel more like a game of positioning than investing. If your stock fades post earnings, it might not be about your thesis, it might just be the flows.

Watch the full episode here:

Now, if you prefer your market commentary with a side of sarcasm, this week’s Prof G Markets is also worth a listen. I already recommended it on X and Substack, and I’ll double down here. It opens with a nonalcoholic beer comparison, and since I’ve recently made the switch myself, the timing felt oddly personal, though only the beer part. The punchline hit harder than most IPAs.

Ed and Scott make a sharp case that meme stocks aren’t just back, they’re now a structural part of the market. GoPro, Kohl’s, OpenDoor, and American Eagle have all been moving on zero fundamental news. The only real driver is Reddit fueled sentiment.

They frame it as a generational response. Shut out of housing, locked out of private AI, and staring at bloated public valuations, younger investors are building their own playgrounds. Meme stocks, crypto, anything that moves. It’s about dopamine, narrative, and reclaiming agency in a system they don’t trust.

But this isn’t 2021. Institutions are already in the game, tracking sentiment flows, deploying social algos, and front running the same trades. It’s no longer David vs Goliath, it’s David with a hoodie and a quant model.

Which loops us neatly back to the Compound episode. Meme momentum is being weaponized by funds chasing short term volatility, while legacy names get punished for structural drag. Add in earnings season tape distortion, and price action starts to look more like a liquidity puzzle than a reflection of business fundamentals.

The takeaway Markets are shifting from fundamentals to flows, from patience to positioning. Meme mania, margin compression, and market mechanics are all colliding. Ignore that at your own risk.

Catch the full podcast here:

Earnings & Interesting Movers Recap

Spotify SPOT 0.00%↑ -9.52% 1W

Spotify slipped after missing Q2 revenue and guiding Q3 below consensus, despite strong subscriber growth and free cash flow. A fresh $1B buyback authorization offered some support, but the overall tone was cautious.

The stock gave up the key 660 area in early premarket trading and offered a clean backtest right at the open. Buyers stepped in around the 627 zone and pushed back into 660, but couldn’t hold the gains. The stock faded with the broader tape and closed right at 627. If that level doesn’t hold, sellers may press toward 594, with stronger support sitting closer to 560.

UnitedHealth UNH 0.00%↑ -15.40% 1W

UnitedHealth missed Q2 EPS by $0.40 and guided FY25 well below consensus, cutting EPS to at least $16 (vs $20.64 expected) on a $6.5B spike in medical costs. The company cited misjudged Medicare cost trends, particularly around outpatient utilization, behavioral health, and pharmacy services. It’s making operational changes, exiting underperforming Medicare plans, and paring back individual exchange exposure. Optum also fell short of internal goals, with value-based care and GLP-1 drugs weighing heavily on results. CFO transition and margin reset into 2026 underscore the scale of the reset in progress.

The stock broke below the key 271 level on a heavy opening sell imbalance, with multiple failed reclaim attempts confirming sellers in control. The stock slid below May lows, with next support near 230. It's getting oversold into that zone, which could trigger a tactical bounce, but don’t confuse that with being undervalued.

UPS UPS 0.00%↑ -18.40% 1W

UPS posted a slight Q2 miss on EPS but beat on revenue, with sales down 2.7% YoY. Management reaffirmed its full-year savings plan tied to network reconfiguration and cost efficiency. Still, the market wasn’t convinced. Multiple downgrades followed the report, and the stock broke sharply, slicing through support levels and forming a large red candle across all timeframes.

It opened just under the first support, quickly lost the key POC and secondary zone, and saw strong follow-through in the next sessions as sellers stayed in control. The next meaningful support stands around the $70 area, with the 1999 IPO high of 70.31 potentially reactive despite its age.

Arm Holdings ARM 0.00%↑ -15.68% 1W

ARM posted in-line Q1 results and guidance, with 12% Y/Y revenue growth and EPS matching estimates. While top-line trends are tracking to 16% growth for FY26, another increase in operating expenses weighed on sentiment. Design service revenue from SoftBank was flagged as lower margin near term, but analysts remain positive on longer-term upside from gen2 IP adoption and rising CSS royalties.

The stock dropped sharply after the open, slicing through initial support around 147 and landing on the second key area at 140.5 before briefly bouncing. The lower zone gave out again on Friday as the broader market sold off, but buyers stepped in right at the 200-day moving average. The next few sessions will be key as it either reclaims the broken zone or flips the moving average into resistance, setting up for another leg lower.

Amazon AMZN 0.00%↑ -7.21% 1W

Amazon delivered strong Q2 results, with 13.3% revenue growth and a fifth straight EPS beat, but shares sold off sharply as investors focused on AWS. Despite 17.5% Y/Y growth, AWS lagged Azure and Google Cloud, raising questions about cloud momentum. Advertising stayed hot with 22% growth, and both North America and international retail accelerated. Still, the AWS growth gap took center stage.

The stock sold off after Q2 earnings, breaking down the key 223 level during Thursday's call in aftermarket trading. While it initially bounced off the 216 support area, the move quickly faded as sellers took control. A break below Friday’s low could open the door to a retest of the 200-day moving average, which may act as the next reactive zone.

Coinbase COIN 0.00%↑ -19.65% 1W

Coinbase cratered after Q2 results disappointed. Despite a $5.14 EPS print, most of it came from unrealized gains tied to strategic investments like Circle’s IPO. Core transaction revenue dropped 39% Q/Q as consumer trading volume collapsed 45%, exposing the business’s sensitivity to crypto volatility. Guidance for Q3 didn’t calm nerves, and the miss came after a big run and SPX inclusion.

The stock failed to even backtest the key 348 area in Friday’s premarket, signaling aggressive selling pressure. The 325 support zone didn’t attract buyers either. COIN closed just above its IPO low of 310, keeping the door open for a potential breakdown if that level gives way.

Reddit RDDT 0.00%↑ +26.05% 1W

Reddit crushed Q2 expectations with 78% revenue growth, a big beat on EPS, and strong guidance for Q3. Ad revenue surged 84% to $465M, powered by AI tools like Reddit Insights and Reddit Answers that drive engagement and monetization. DAUs jumped 21% to 110M. Margins expanded with EBITDA hitting $167M at 33%. A solid beat-and-raise quarter that positions RDDT as a rising force in digital ads.

The stock held up impressively in a weak tape, with buyers stepping in early to frontrun the 175 support and absorbing supply around the prior resistance at 180.75. It closed above the key 187 level, showing strength despite broad selling pressure. If it can clear the earnings day high, it may open the door to further upside with momentum behind it.

Key Index Charts