Buffett calls the market a casino.

Good morning, Slaters!

There's a kind of quarter that used to be unimpeachable. Revenue at the top of guidance, margins ahead of plan, profit at a record. Yesterday, three companies delivered some version of it. Two got sold anyway.

Taiwan Semiconductor (TSM) posted a 77% profit jump and fell. Netflix (NFLX) beat on earnings and dropped 9% after hours. Strong is no longer the same as safe this earnings season.

Warren Buffett has a name for what's underneath that. He told CNBC the market has become a casino, hard to find value "when everybody is preferring gambling." Investors aren't pricing the quarter that happened. They're pricing the one after that.

UnitedHealth (UNH) is this morning's counterexample, up sharply on a clean beat. Good numbers still matter. They just only matter when nothing else needs explaining.

TSMC just gave the bears their best argument yet

TSMC's second quarter revenue hit a record $40.2 billion, top of its own guidance. Net profit jumped 77% year over year to $21.99 billion, comfortably clearing estimates. Gross margin: 67.7%. On paper, a flawless quarter from the company every AI chip runs through eventually.

The stock fell anyway, dragging the chip complex with it.

The reason sits one paragraph past the headline. TSMC raised its 2026 capex plan to $60-64 billion, roughly 15% above its prior range, and warned new overseas fabs will dilute margins 2-3 points as they ramp. Chip stocks slid on the guidance,

Second time in three sessions a dominant chip name has beaten and been punished for its spending, after ASML's own capex wobble Wednesday. Vital Knowledge's Adam Crisafulli named the real debate: if AI spending is cyclical rather than secular, "accelerating capacity additions are usually a sign to fade the group instead of chase it."

The S&P 500 slipped 0.37% Thursday, the Nasdaq fell 0.76% on the chip drag, and the Dow eked out a 0.14% gain as money rotated into insurers instead.

The market signal?

Watch the gap between TSMC's free cash flow and its capex next two quarters. Revenue tells you the factories are busy. The gap tells you if the busyness is making money.

Retail sales say the consumer is tired, not broke

June retail sales rose 0.2% month over month, a touch below the 0.3% expected. Read only the headline and consumers look like they're cracking.

Read one line further and the picture changes. Gasoline receipts fell 5.3%, almost entirely a price effect from cheaper crude, not less driving. Strip out gas stations and sales rose 0.7%. The "control group" feeding GDP, which excludes gas, autos and building materials, climbed a healthier 0.5%. Nonstore retail, largely e-commerce, posted the biggest gain at 1.9%. Auto sales rose 1.9%, up 3% for the quarter.

None of that is a blowout. But it isn't the soft-landing scare the headline implied either. This is a consumer still spending, just more selectively and increasingly online.

The market signal?

As long as the control group holds above 0.4% monthly, the Fed treats consumer demand as a non-issue. Two straight prints below that moves Warsh's rate calculus faster than any single CPI report.

Buffett just called the whole market a casino

Warren Buffett doesn't do this often, which is exactly why it lands when he does.

Sitting with CNBC's Becky Quick Wednesday, Buffett said flatly: "It's tough to find values when everybody is preferring gambling." He pointed at the explosion of zero-day options and leveraged retail trading, calling that gambling rather than investing. "There's more money in cultivating gamblers than there are cultivating investors," he added.

The numbers behind the quote are the real story. Berkshire has been a net seller of equities for roughly three straight years, a gap of about $187 billion between what it sold and bought. His own Buffett Indicator, total market cap against GDP, sits at its highest reading on record. Berkshire holds $397 billion in cash.

Not a crash call, Buffett said so himself.

It's narrower: when a market runs on momentum rather than business quality, price stops telling you much about value. That's the exact dynamic behind TSMC and Netflix selling off on good numbers a day apart.

The market signal?

Berkshire's $397 billion is the largest bet in markets that this correction in judgment eventually pays off. Watch what Greg Abel does with it before watching the market.

Netflix beat again. Investors punished it again.

Second-quarter revenue of $12.56 billion, a hair below the $12.59 billion Wall Street wanted. EPS of $0.80, ahead of the $0.79 consensus. On a scorecard, that's a narrow miss and a modest beat, roughly a wash.

The stock fell close to 9% in after-hours trading anyway, erasing something near $28 billion in market value on one print.

This is now a recurring script. Netflix has fallen on its last several reports even with defensible numbers, first on light Q2 guidance and Reed Hastings' board exit in April, then the abandoned Warner Bros. Discovery bid, now again despite an EPS beat. The explanation shifts each time. The through-line doesn't: a premium-multiple stock gets no benefit of the doubt short of acceleration, and Netflix keeps delivering steady instead.

The company no longer discloses subscriber counts, which settles the debate with narrative instead of data. Not comfortable for a stock down more than 20% this year.

The market signal?

Netflix's ad tier and its $25 billion-plus buyback are the real bull case now, not subscriber growth. Until one clean quarter breaks the pattern, expect the stock priced like disappointment is inevitable.

• UnitedHealth (UNH) had the morning everyone else wanted. Adjusted earnings of $6.38 a share blew past the $4.90 estimate, and the company raised its guidance to $19.50-$20.00. Stock up more than 6% premarket.
• Anthropic is quickening its path to public markets. Bankers including Goldman Sachs, Morgan Stanley and JPMorgan are lining up investor meetings ahead of a possible October listing, putting the Claude maker ahead of OpenAI, now pushed to 2027, at a last valuation of $965 billion.
• The Iran conflict is into its sixth straight day of strikes, oil near recent highs with the Hormuz naval blockade active. Markets have mostly looked past it this week for earnings. That won't last if crude keeps climbing.
• The market signal across all three?
• Healthcare just had its best week of earnings season, the AI trade is about to get its first public test beyond the chip layer, and energy remains the one risk nobody has actually priced out.

Determining Market Value 👀

That's it for today's Slate. Big earnings week continues, stay close to the tape.