Intel Is a Warning
Two more generals shot this week... The market's potentially devastating new phase... Intel's bad news is worse than you think... The assault on free markets... The Fed is trapped... It's a process, not an event... My presentation with Ron Paul...
Last week, I (Dan Ferris) told you the beginning of the end had arrived...
In the October 23 Digest, I noted that Meta Platforms (META) shares fell 7% after the company reported earnings. Similarly, the market turned on Alphabet (GOOGL) in July after the company reported its first quarter ever of negative free cash flow.
As usual, I stopped short of making an outright prediction, but I did say that perhaps the market was "shooting the generals"...
As a bull market winds down, the market shoots the soldiers in front first – the lower-quality stocks – as investors rotate into higher-quality names as safe havens. But eventually, there's nowhere to hide, and even the big, safe-haven names – the generals – peak and begin declining. When those supposedly safer mega-cap names start dropping, you know the bull is dead.
I noted that Alphabet and Meta are both in bear market territory, having failed to fully recover after falling 20% or more.
On Wednesday, Alphabet reported earnings and got hammered again.
Its shareholders watched nearly half a trillion dollars of market cap evaporate as Alphabet's share price fell roughly 12% on Thursday.
Its results were good, with Google Cloud revenue more than doubling to $31 billion and the Gemini app passing 1 billion users.
But Alphabet once again reported negative quarterly free cash flow due to big investments in data centers and AI. And investors didn't like it.
A double-digit price drop is a big one-day hit for a stalwart like Alphabet. Intel (INTC) took an even worse shellacking...
Yesterday after market close, Intel's share price dropped as much as 23%. The stock opened this morning down 26%. And it closed the day with a 29% drop.
And just like Alphabet, Intel's earnings report was good. It reported a 78% increase in data-center revenue, part of total sales that rose 21%.
It was the forecast the market didn't like. Intel expects fourth-quarter revenue, gross margin, and earnings to be lower than it enjoyed in the third quarter.
Here's the thing. With the enormous collapse in the value of Intel shares, the market has entered a new and potentially more devastating phase, and I'm willing to bet most people still haven't figured it out yet...
You see, Intel isn't merely one of the market's AI darlings.
Yes, it's a chip company, and chips are super important for AI.
But Intel isn't just any chip company...
Intel is the Trump administration's most highly touted investment...
You may recall that on August 22, 2025, Intel announced that the U.S. government would buy 433.3 million shares of the company at $20.47 per share. That was a 13% discount relative to the market price at that time.
This $8.9 billion investment gave the U.S. government 9.9% of Intel's outstanding shares – making it the company's largest shareholder.
The government also got a warrant to buy another 5% of the company's shares if Intel ceases to own at least 51% of its foundry business. In other words, if Intel doesn't do what the government wants, the government will have the right to buy an even bigger stake in the company.
Intel's press release on the deal included statements of support from the CEOs of Microsoft (MSFT), Dell Technologies (DELL), HP (HPQ), and Amazon Web Services.
The market loved it. Intel had been a disaster for years, with its shares trading as much as 74% below its January 2020 high. In the wake of the government's deal, the stock finally surpassed its 2000 dot-com-era peak, rising as much as 499.7% from its pre-deal price, according to data compiled by Bloomberg.
President Donald Trump has enjoyed touting the stock's big gains in the wake of the deal. Well, yesterday knocked nearly $10 billion off the value of the government's stake.
Maybe it's not just the beginning of the end of the AI stock market boom. Maybe the government's investment program is starting to unravel, too...
I suspect that many of those government investments will require bailouts one day...
That's usually what happens when capitalism turns to corporatism.
Corporatism is when ownership of a business remains nominally in private hands, but the government gains significant control through ownership stakes (including golden shares), taxes, subsidies, and regulations.
In fact, former Congressman Ron Paul and I just released a video presentation focused entirely on the corporatist bubble. And yes, it is a bubble.
Here's some context that I covered in my new book, Capitalism in Crisis: America's New Survival Blueprint for the Crack-Up Boom...
The Council on Foreign Relations summarized the deals that took place between January 2025 and July 30, 2026...
[T]he U.S. government has announced investments worth $27.6 billion across thirty-seven deals involving direct ownership, broadening a toolkit that has traditionally focused on grants, loans, and tax incentives.
The deals include direct equity investments, loans, warrants, grants, and guaranteed price floors.
Some folks might view this as a simple case of the government encouraging U.S. industry and trying to compete with China's heavily subsidized industries.
But that's not what it is at all. In fact...
Corporatism has its roots in the fascism of Benito Mussolini's Italy...
In fascist Italy, the term "corporate state" didn't mean the same as what our government is doing by investing in modern corporations, though the implications are identical.
Back then, "corporate" referred to the amalgamation of people, labor guilds, government, and industry as one unified body. In October 1926, Mussolini wrote...
[T]here is not one working Italian today who does not seek a place in his Corporation or federation, who does not wish to be a living atom of that great, immense, living organization which is the national Corporate State of Fascism.
I can hardly think of anything more un-American than wanting to be "a living atom" of any "national Corporate State of Fascism." Our country was founded with precisely the opposite idea in mind: that the individual is sovereign.
The Bill of Rights was added to the Constitution not to tell individual citizens what they were allowed to do, but to protect individuals' inalienable rights from government infringement. That idea has weakened over time and the founders have been rolling over in their graves for decades.
Corporatism... fascism... socialism... communism... It hardly matters which term you use. At the core, they're all the same. They are all attempts to abolish individual rights and make the state all-powerful. In his 1932 book, The Doctrine of Fascism, Mussolini and co-author Giovanni Gentile wrote...
The Fascist State... makes its action felt throughout the length and breadth of the country by means of its corporative, social, and educational institutions, and all the political, economic, and spiritual forces of the nation, organized in their respective associations, circulate within the State. A State based on millions of individuals who recognize its authority, feel its action, and are ready to serve its ends is not the tyrannical state of a mediaeval lordling.
"Better than medieval" is a low bar for economic freedom. The bottom line is that Mussolini's corporate state swallows all economic, cultural, educational, and spiritual activity. In a May 1927 speech, Mussolini made that clear...
Here I wish to reaffirm solemnly our doctrine of the State... everything in the state, nothing against the State, nothing outside the state.
Today's American corporatism is headed in exactly that direction at breakneck speed...
It is nothing less than a government program to control the free markets, like I described in my book.
That fact alone is deeply troubling. Free markets have single-handedly lifted more people out of starvation and degradation than any other political or economic development in human history. They're the greatest boon humankind has ever seen, and they're the direct target of the corporatists.
This isn't a partisan issue. No matter which side is in office, the spending and debts keep rising, the bombs keep dropping on foreign lands, and you and I keep paying more and more for everything from property taxes and mortgages to toothpaste and ground beef.
That's why the D.C.-based policy think tank American Action Forum calls today's corporatism "a complete abandonment of free markets." That's a bright-red distress flare, fired straight up over the U.S. economy.
So you see, the worry isn't merely about the AI boom going bust...
There's potential for a broader crisis to emerge if more of the government's investments start going sour. I'm worried that the market's brutal assessment of Intel is the beginning of the end of the corporatist bubble.
And, of course, that assessment is far more in line with the company's actual lousy performance over the past decade or so. The government has spoken and sent the stock soaring. Now the market is taking over again and telling the government what it thinks of its $9 billion investment. The verdict is not pretty.
I wasn't even thinking about corporatism last week when I talked about the beginning of the end of the AI boom. I was worried about a bear market. This week I'm in full-blown crisis mode.
Government-sponsored mortgage-guarantee companies Fannie Mae (FNMA) and Freddie Mac (FMCC) provide a perfect example of why I'm feeling this way...
In the leadup to the 2008 financial crisis, they lowered their mortgage underwriting standards for political purposes. The government told them to accommodate low-cost housing... and they did, which led directly to their business blowing sky-high, causing their stock prices to tank 99%.
Then the government bailed them out to the tune of more than $180 billion. They're still under government conservatorship today.
Those two companies took the opposite of the usual corporatist route. They started out as government agencies, then became publicly traded companies with government backing.
And now, here we are again, with the government picking winners (whose competitors then become relative losers)...
Honestly, I don't know why folks aren't marching in the streets by now. Asking the government to allocate capital to businesses is like going to the Department of Motor Vehicles for dental work.
Meanwhile, something else is happening right now that tends to lead to a washout in both equity and debt markets.
The Federal Reserve's rate hikes have begun...
Sure, on Wednesday, the Fed chose to keep rates steady. But historically, that's just part of the typical process. It hikes, then holds, then hikes again, then holds.
It's all an attempt to appear measured and gradual. It tiptoes into the market to try not to disturb the status quo too much.
But there's a problem the Fed is facing this time that it didn't face during the dot-com era.
Wonky types will know it as fiscal dominance.
That just means that the Fed is stuck between a rock and a hard place. If it cuts rates or even keeps them steady, it will inflate a bigger asset bubble. And inflation will soon be headed back toward 9% (the consumer price index's 2022 peak level).
If it raises rates, that'll hit stock prices sooner or later (and based on this week, it's looking like sooner). Perhaps worst of all, it'll make the government's massive and growing debt pile more expensive to service.
So the Fed is in an impossible place.
That, of course, is where the Fed will always eventually find itself. When you choose fiat currency and central-bank management, you also choose periodic crises that tend to get bigger over time.
The 2008 financial crisis was the biggest economic blowout since the Great Depression. I shudder at the thought of how devastating the next crisis might be.
Since Kevin Warsh took over as Fed chair, its monetary-policy statements have become terse. The latest one contains four paragraphs, ending with the following two:
Economic activity is expanding at a strong pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
Inflation remains elevated. The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal. The Committee will deliver price stability.
Let me interpret that for you.
A strong economy, inflation, and price stability mean the Fed has to raise rates again. Its preferred inflation gauge – core personal consumption expenditures – has been solidly above its 2% target since March 2021. That's five years! And it has bounced back off its March 2025 lows.
Also, here's what the financial press never tells you... The 2% target is pure nonsense. It doesn't come from economic research, studying inflation data, or anything rational.
It was plucked out of nowhere.
A few decades ago, New Zealand's central bank started using this standard. From there, it just sort of caught on. It has no scientific basis whatsoever.
It's impossible to hit a precise inflation target anyway. Manipulating the short end of the bond market won't let you place a $33 trillion economy exactly where you want it.
The folks in charge of the Fed either don't know that or don't care.
So we will get more inflation or a fiscal, economic, and financial crisis.
And remember... The dot-com boom didn't top out until the Fed had hiked rates three times. Its first hike during that period was in June 1999 – nine months before the Nasdaq Composite Index peaked. It hiked again that August, and the market went sideways until October.
So if the next few months look like all my worrying and warning was for naught, maybe I need to repeat what I said last week...
A market top is a process, not an event...
And yes, specific predictions aren't my thing.
My thing is showing folks risks others don't see. And you have to admit, absolutely nobody else is telling you there's a corporatist bubble. I bet even many Digest readers have never even heard the term "corporatism" before.
But that's how big crises happen. Nobody sees them coming. I remember when folks were worried about the Y2K problem. I hadn't really heard much about it when I met Porter Stansberry for the first time in the late '90s. But he dismissed it out of hand. As I recall it, he said something like, "You can't schedule a crisis."
The flip side of that is that the biggest crises tend to come from places nobody expects. Everybody was in love with the idea that U.S. home prices couldn't fall... until they started falling, igniting the 2008 crisis.
Likewise, nobody is worried that the government's investments will just create a whole new swath of taxpayer-funded bailouts.
Regular readers know that's where I live: in the places nobody talks about that have the potential to create massive crises – and, if you're able to take advantage, massive opportunities.
With each day that passes, it's looking more and more like we're up to our knees in such a crisis right now.
In my presentation with Dr. Paul, we explain more about what's happening, why it's happening, and how to prepare for it. Folks who sign up for The Ferris Report will get a free copy of my new Capitalism in Crisis book (unavailable anywhere else).
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Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
Good investing,
Dan Ferris
Medford, Oregon
October 30, 2026