☕️ This is why we buy the best, ignore the rest®: JPM & Apple

Howdy! 👋  

And we’re off... 

All three indices are green in the early going.  

That tracks.  

Wholesale inflation in June fell 0.3% month over month, versus expectations of being flat. 

That follows yesterday’s consumer price index report, which also came in cooler than expected.  

Between the two of ‘em – those inflation readings – traders have interpreted that as a sign they can borrow more money and get to work as a function of falling US10YR yields. 

Good news, sure.  

But here's what two soft inflation reports don't change.  

Companies that can raise prices without losing customers are still rare. Companies that can do it for decades, not quarters?  

Rarer still. 

My point? 

At the risk of sounding like a broken record… 

Stick to the companies making "must have" products and services the world can't live without because those have the potential to protect margins and generate gobs of profit potential for years to come. 

It's a short list, btw. 

Here's my playbook. 

1 – Warren Buffett just said what I’ve been saying for years 

The Oracle of Omaha told CNBC’s Becky Quick, "It's tough to find values when everybody is preferring gambling." (Watch) 

This isn't a new complaint from him nor a new observation. Back in May, Buffett compared the market to "a church with a casino attached," calling out the explosion in same-day options trading specifically. 

I thought to myself, gee that sounds familiar. 

MyPOV: Despite what many think and social media encourages, real investing is quiet, patient, and mostly uneventful. Like watching grass grow, according to my grandmother, Virginia “Mimi” Gruner, who was widowed at a very young age and who used a small life insurance settlement to become a very successful global investor before the term came into vogue. It's supposed to be boring. The goal was never to trade every headline or chase every hot name. It's to find a handful of exceptional businesses and stay with 'em. 

If you have this covered, great! If not, and you’d like some help, I’ll be here.  

2 – Team Dimon posted the biggest quarter in JPMorgan history 

I had a hunch JPM’s numbers would be good, but I had no idea that they’d be the highest quarterly profit any U.S. bank has ever posted. (Read) 

Hooyah! 

I hope you paid attention on Monday when I spoke about what I saw coming with the super savvy Stuart Varney (Watch). And I hope even more that you did something about it. 

• Adjusted earnings came in at $6.14 a share, blowing past the $5.85 Wall Street expected 
• Net income was $21.2 billion, +41% YoY 
• Investment banking fees jumped 30% YoY 
• Equities trading revenue exploded 86% YoY 
• Managed revenue was $58.0 billion, +27% YoY   

Every single line of business posted a record. 

There's another thread here worth watching – one that we have talked about many times. 

Dimon confirmed AI has already helped the bank cut certain roles by 30-40%, with most of those folks moved elsewhere in the company. This isn't a "robots are coming for your job" story but a "the most powerful bank in America is already running on AI efficiency, quietly, at scale" story. 

Keith’s Investing Tip: JPMorgan isn't winning because the environment is easy. It's winning because Dimon runs the best-managed bank in America, in good times and bad. Quality compounds. Buy the best, ignore the rest!® 

3 – What’s next for PainPal? 

PayPal shares are jumping ~19% in premarket trading as I type after news broke that Stripe – yes that company that was supposed to be eating PayPal’s lunch – and private equity firm Advent International made a joint offer to buy the company for $60.50 a share. That values PayPal at more than $53 billion, a 28% premium to Tuesday's close. (Read) 

Hmmm.  

PayPal has struggled to reignite growth, issued weak 2026 profit guidance earlier this year and has experienced 3 CEOs in the last 5 years.  

Here’s the thing. 

I don’t think PayPal is broken per se, it’s just been drifting, and drifting companies eventually get bought by people who aren't afraid to steer. And yes, that’s when the real value tends to show up. 

$6B in free cash flow might actually be worth something!  

Funny how that works. 😆 

4 – IBM, big avoid or buying opportunity?  

IBM shares cratered as much as 25% yesterday after the company warned of a weak second quarter, blaming a shift in corporate spending away from its software and mainframe business. (Read) 

Streamrolled – ouch! 

I've warned investors to stay away from this one for years because the company has always struck me as a company defending yesterday rather than building tomorrow. 

I prefer to invest in where the world is going, not where it’s been.  

And believe you me, I hope you have a similar outlook for your own portfolio because we stand on the cusp of what just may be one of the most transformative moments in human history, what I call the “6th Wave.” 

I believe there will be more profits created in the next 10 years than the last 50 combined.  

That's how innovation works.  

Keith’s Investing Tip: You can fight this all you want or listen to the “yeah but” crowd if you’d prefer – a lot of people do. Either way and regardless of how you feel about it personally, innovation will continue and – you guessed it – profits will follow. Getting your money there first can make all the difference, especially if you’re using the right tactics to control risk every step of the way.  

Btw and while we’re at it, if you have no idea what to do next or what to buy, I’d like to toss my hat in the ring. You may find One Bar Ahead® helpful. If you’ve got this covered and you’re achieving the results you want – excellent!!!! 

5 – Apple just found its AI sidekick in China 

This I didn’t see coming. 

It’s a true holy smokes moment, or 不会吧 if you prefer (if my rusty Mandarin is correct, that’s Bù huì ba which is sorta like “No way” or “It can’t be happening”). 

Alibaba confirmed Wednesday that its Qwen AI model will be integrated into Apple's systems in China, powering Apple Intelligence across iOS, iPadOS, macOS, and visionOS for Chinese users. (Read) 

Beijing's regulators gave the green light after nearly two years of waiting since Apple first announced its AI ambitions back in 2024.  

Here's the part that matters most for U.S. investors.  

Apple isn't trying to build the single best AI model on Earth and never has been. 

It won the AI wars long ago, a thought that makes the AI apparatus positively apoplectic. 

Apple owns the device, the ecosystem, and the customer relationship… and whoever makes the sharpest models gets plugged in underneath, market by market… on 2.5 billion+ devices worldwide. 

Here's the bigger thread worth watching.  

As I have long insisted would be the case, the Dragon is coming to dinner.  

The choice that you’ve got to make as an investor is simple… do you want to be at the table or on the menu. 

The AI world is splitting into two separate stacks, one built around U.S. models, one built around Chinese-approved alternatives.  

Companies operating globally increasingly need both, so it makes all kinds of sense to cover both from an investing perspective. 

MyPOV: This is a good reminder of why I like Apple's setup. The company doesn't need to win the AI model race outright and never has. It owns the device and the relationship with the customer, and it can plug in whichever engine works best for wherever it's operating. That flexibility matters more than any single model's benchmark scores. 

Bottom Line 

The world is reorganizing itself around themes and in ways that don’t respect Wall Street’s old categories.  

Invest accordingly. 

Now and as always, let's MAKE it a great day. 💯 

You got this — I promise! 

Keith 😀