DHUnplugged Podcast

It’s the end of the world and we know it…

CPI numbers – HOT – Markets think hit a top – or just options Friday?

Sell Rosh Hashana and Buy Yom Kippur?

Plenty of AI

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

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Warm-Up

- Follow Up - I am the House! - 10YR shot above 5% on Monday

- Follow Up 2 - Straight of Hormuz - NO Boats passing (can we please stick to the facts?)

- CPI numbers - HOT - Markets think hit a top

- Let's talk end of the works - Cyberdyne IRL

Markets

- 100% Probability of a rate hike this week

- Sell Rosh Hashana, Buy Yom Kippur

- HACK ETF - Cybersecurity name up 49% YTD

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FED HIKE IS BACK

- Fed meets Tuesday-Wednesday, with a 25 bp hike to 3.75%-4.00% now the dominant expectation.

- 85% of economists surveyed expect a hike; futures moved to roughly 90% odds after the latest inflation data.

- August CPI rose 0.4% month-over-month and 3.4% year-over-year; core rose 0.3% for the month and 2.4% annually.

- Markets are increasingly pricing additional tightening beyond September rather than this being a one-and-done move.

AND -> THE 5% TREASURY IS BACK

- The 10-year Treasury yield briefly crossed 5% Monday for the first time since 2023.

- Higher oil prices, hotter inflation, heavy bond supply and expectations for more Fed tightening are all pushing yields higher.

- The move raises the hurdle rate for stocks while feeding directly into mortgages, corporate borrowing and other credit.

- Bonds are becoming meaningful competition for equities again at a time when stock valuations remain elevated.

SLOW DOWN THE AI

- Anthropic CEO Dario Amodei called for deliberately slowing frontier-model advancement to create more time for safety controls.

- Sam Altman and Elon Musk publicly backed the push for more caution; Microsoft separately released a draft AI code requiring models to remain under human control.

- Microsoft says its models must accept shutdowns and corrections and should not be designed around claims of consciousness or legal rights.

- The semiconductor index dropped more than 5% Monday; Nvidia, Broadcom, Micron and AMD were among the major casualties.

DEEPSEEK CHANGES THE MEMORY MATH

- DeepSeek's latest architecture sharply lowers the amount of memory required to run inference, including a major reduction in KV-cache requirements.

- This is not simply HBM being replaced by SSD: the architecture reduces both high-speed memory and persistent-storage requirements per inference.

- That complicates the straight-line thesis that every incremental AI token requires proportionally more HBM and storage.

- Micron, Samsung and SK Hynix still benefit from enormous AI memory demand, but will efficiency gains become an important counterweight to unlimited-demand forecasts?

V4V - What is it and how can you participate?

TOKENS - A Quick Tutorial

ORACLE SAYS THE AI SPENDING IS REAL

- Oracle booked more than $30 billion of new AI cloud contracts during the quarter, taking total backlog to $664 billion.

- Revenue rose 30% to $19.3 billion and adjusted EPS came in at $1.92 versus $1.74 expected.

- Oracle spent $28.5 billion on capex, but about $11.36 billion was offset by customer prepayments.

- Most new AI orders use prepayments, customer-owned hardware or similar arrangements, reducing the amount Oracle itself must finance.

AI STOCKS MEET THEIR FIRST REAL NARRATIVE PROBLEM

- The Philadelphia semiconductor index dropped roughly 5.4% Monday even though it remains up about 58% for the year.

- Nvidia fell roughly 2.6%; Broadcom, Micron and AMD were each down around 4% during the session.

- The new concern is not whether AI works, but whether safety restrictions could slow the pace of model releases and infrastructure spending.

- Software names including Adobe, ServiceNow and Workday initially benefited as investors reconsidered how quickly AI might disrupt incumbent software.

CHATGPT INVENTS THE WITNESSES

- A New Mexico defense lawyer was fined $5,000 and held in contempt after submitting fabricated police testimony and nonexistent witnesses generated by ChatGPT.

- The attorney had used ChatGPT to summarize trial proceedings and failed to verify the output before filing it with the court.

- The appeal was reassigned to a public defender and the attorney was referred for further disciplinary review.

- This goes beyond fake case citations: the system generated supposed factual evidence and attributed it to witnesses who did not exist.

HUMANOID ROBOTS: FROM IPO MANIA TO THE BATTLEFIELD

- China is researching humanoid robots for reconnaissance, logistics, hazardous missions and potentially urban combat.

- Separately, Chinese regulators are tightening scrutiny of humanoid-robot IPOs after extreme volatility surrounding Unitree Robotics.

- Unitree shares reportedly fell roughly 45% after initially increasing fivefold following its listing.

- Hyundai-owned Boston Dynamics also said a 2027 IPO is unlikely; Hyundai wants production capacity of roughly 30,000 robots annually by 2028.

CHINA GETS ACCUSED OF INDUSTRIAL-SCALE AI COPYING

- U.S. officials accused six Chinese AI companies, including DeepSeek, Moonshot and Alibaba, of using U.S. models for large-scale distillation.

- Distillation trains smaller models using outputs from more powerful models, dramatically reducing development cost and time.

- U.S. officials said the activity targeted technology from Anthropic, OpenAI, Google and SpaceX.

- China rejected the allegations and argued that distillation is a normal industry technique also used by American companies.

OIL BACK ABOVE $100

- Brent traded around $107 Monday and WTI around $103 after fresh attacks on Saudi infrastructure and Middle East shipping.

- Saudi Arabia's East-West pipeline was temporarily disabled, threatening a route capable of carrying roughly 4% of global crude supply.

- Gulf states postponed planned talks with Iran over the Strait of Hormuz as regional tensions widened.

- Physical crude prices are becoming highly location-dependent: barrels with secure export routes command major premiums while trapped grades trade at steep discounts.

COPPER GOES VERTICAL

- Copper has recently traded near record territory around $14,500-$14,700 per metric ton.

- Tight mine supply is colliding with demand from electric grids, data centers, renewable power and other electrification projects.

- Tariff uncertainty has also distorted flows as traders move available metal toward markets offering the highest prices.

- Copper's surge makes proposed mining combinations such as Anglo American-Teck increasingly valuable; that roughly $54 billion deal is still awaiting Chinese regulatory approval.

THE BIG MYSTERY BANK SANCTION

- Treasury Secretary Scott Bessent said the U.S. would sanction a large bank as part of increased financial pressure on Iran.

- He initially declined to identify the bank or its country.

- The campaign has already targeted oil, shipping, finance, aviation, weapons procurement and digital-asset channels connected to Iran.

- The market question is whether secondary sanctions begin touching larger banks or companies outside Iran that facilitate trade.

APPLE'S $1,999 FOLDING BET

- Apple launched the iPhone Duo, its first folding iPhone, priced at $1,999.

- It opens to a 7.6-inch display and represents one of Apple's biggest changes to the iPhone form factor in years.

- The launch puts Apple directly into a market dominated by Samsung and Huawei and could help push foldables beyond their current niche.

- It is also arriving during a severe memory-and-storage chip shortage that has already forced higher pricing elsewhere in Apple's product lineup.

PRIVATE CREDIT REDEMPTION PRESSURE EASES

- Investors in BlackRock's $23.1 billion HPS Corporate Lending Fund requested withdrawals equal to about 11.5% of shares, down from 13.3% the prior quarter - BUT, is this just a rounding error?

- The fund will repurchase only 5%, the normal quarterly limit, leaving some redemption requests unfilled.

- Other BlackRock private-credit vehicles also showed lower withdrawal requests during the quarter.

- Private-credit investors have been worried about lending standards and heavy exposure to software companies potentially disrupted by AI.

DID WE DISCUSS >>> THE $50 BILLION DATA-CENTER IPO

- SB Energy is reportedly seeking a valuation above $50 billion despite having no operational data centers.

- It reported about $139 million of first-half revenue against a $3.21 billion net loss.

- The company claims roughly $439 billion of project backlog.

- OpenAI is an investor, warrant holder and major future customer; Nvidia is also providing capital while supplying the chips.

- Soooooo...... No operating data centers, billions in losses and a possible $50 billion valuation. At least they remembered to build the valuation first.

 

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FED AND CRYPTO LIMERICKS

 

See this week’s stock picks HERE

Follow John C. Dvorak on Twitter

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I am the House! Bessent on Yen and other matters (he has inside information).

Straight of Hormuz – There is no movement people.

CPI coming Friday – many say ultimate Fed test.

Gen-Z Dumps the bubbles.

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

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Warm-Up

- I am the House! Bessent tonight on Yen and other matters (he has inside information)

- Straight of Hormuz - There is no movement people

- CPI coming Friday - many say ultimate Fed test

- Gen-Z Dumps the bubbles

Markets

- Chips up, making up for some time

- Oil UP! and UP!

- Yields keep climbing

DHU MAILING LIST! - Go to DHUnplugged.com

BOND YIELDS KEEP CLIMBING

- Japan now has a 3% 10-year yield while carrying government debt above 200% of GDP.

- Higher Japanese yields also create an incentive for domestic investors to bring money home rather than reaching overseas for returns.

- The broader bond selloff is hitting the U.S., Germany, U.K. and Japan at the same time.

FED HIKE ODDS RISE

- Warsh said the Fed still has “work to do” if officials are not confident inflation is returning to 2%.

- Fed Governor Christopher Waller has left open the possibility of holding rates steady if inflation cools.

- The September decision is increasingly being dictated by incoming inflation data and oil.

-  It is kinda funny.... The “data-dependent Fed” is now apparently oil-dependent, jobs-dependent and whatever-CPI-says-next-week-dependent.

OIL KEEPS PRESSURE ON INFLATION

- Renewed U.S.-Iran tensions have pushed oil higher and revived fears about supply through the Strait of Hormuz.

- The Strait remains one of the most important chokepoints for global energy flows.

- Oil is working directly against central banks trying to bring inflation back toward target.

-  Basically, central banks can raise rates all they want yet it is too bad that the the Strait of Hormuz does not attend FOMC meetings.

SCHWAB VOLATILITY TRADE

- Barron's argues low market volatility may not last as fall seasonality and macro risks build.

- Schwab could benefit if volatility drives heavier customer trading activity.

- The suggested trade used an October risk reversal built around $110 puts and $120 calls.

BEAR INVASION

- Colorado has logged more than 7,000 bear sightings this year, already a record.

- Drought and poor natural food supplies are pushing bears into homes and businesses.

- New Mexico and Utah have also reported unusually high numbers of bears being euthanized.

- One Colorado homeowner found two bears inside his hallway; another wandered into a vape shop.

- Is this a warning for markets?????

META SETTLEMENT

- Meta agreed to pay up to $18 billion over 10 years to settle state claims involving harm to children.

- States had been seeking penalties approaching $200 billion.

- Teen accounts will face time limits, overnight restrictions and muted school-hour notifications.

- Meta did not have to eliminate personalized recommendations or targeted advertising.

BROADCOM: NEXT AI CHECK

- Broadcom reports Wednesday after the close, another major test of AI spending after Nvidia.

- Focus will be on AI semiconductor growth, hyperscaler demand and the outlook for custom AI accelerators.

- Broadcom's guidance matters beyond the stock because it offers a read on whether huge data-center spending plans are still accelerating.

WEIRD ONE: SHEIN'S UPSIDE-DOWN IPO

- Shein is looking to raise about $1.8 billion in its Hong Kong IPO while paying roughly $3.6 billion in cash and stock to early investors.

- The payouts stem from investor protections triggered after Shein's valuation collapsed from about $98 billion in 2022 to roughly $26.8 billion.

- Some of the same early investors receiving compensation are coming back as cornerstone buyers in the IPO.

- Essentially: raise $1.8 billion from new investors while sending twice that amount back to older ones.

GOOD GOOD GOES BAD

- Good Good Golf's controversial Callaway ad showed co-founder Garrett Clark shoving a female creator in a movie spoof, triggering immediate backlash.

- Callaway ended its partnership, Dick's and Golf Galaxy pulled Good Good merchandise, and Golf Channel canceled the current "Big Break x Good Good" season.

- Good Good also stepped away as title sponsor of the PGA Tour's November event in Austin.

- WOW - the company had more than 2 million YouTube followers and become one of golf's fastest-growing media and merchandise businesses before the blowup.

ARGENTINA BEEF PRICE FIX

- Trump expanded lower-tariff beef imports by 300,000 metric tons in an effort to bring down record-high U.S. beef prices.

- The U.S. cattle herd is at its lowest level in 75 years, while USDA expects beef production to fall roughly 4% this year.

- Argentina is one source of additional supply, but U.S. ranchers argue cheaper imports could undercut domestic producers just as they are trying to rebuild herds.

- Trump says imported beef could help lower prices; farm-state lawmakers and ranch groups say the short-term consumer fix could make the long-term supply problem worse.

EUROPE GETS GROWTH AND INFLATION

- Euro-zone manufacturing is expanding at its fastest pace in more than four years as headline inflation moves back above 3%.

- Stronger factories give the ECB more room to tighten without immediately crushing economic activity.

- Much of the new inflation pressure is energy-driven, which higher ECB rates cannot directly fix.

- Europe finally gets better manufacturing numbers, so naturally the reward is another rate hike.

CHINA’S TWO-SPEED ECONOMY

- The private manufacturing PMI showed expansion while the official factory reading remained in contraction.

- Export orders strengthened, but services and domestic demand remain weak.

- The divergence shows the improvement remains concentrated in exporters.

- Alternative Facts: Depending on which PMI you prefer, China’s factory sector is either expanding or contracting. Two economies for the price of one.

THE $50 BILLION DATA-CENTER IPO

- SB Energy is reportedly seeking a valuation above $50 billion despite having no operational data centers.

- It reported about $139 million of first-half revenue against a $3.21 billion net loss.

- The company claims roughly $439 billion of project backlog.

- OpenAI is an investor, warrant holder and major future customer; Nvidia is also providing capital while supplying the chips.

- Soooooo...... No operating data centers, billions in losses and a possible $50 billion valuation. At least they remembered to build the valuation first.

NVIDIA BUYS HUGGING FACE FOR $13 BILLION

- Nvidia agreed to buy Hugging Face for about $12.9 billion.

- Hugging Face was valued at $4.5 billion in 2023 and has about $150 million in annual revenue.

- Nvidia will pay roughly $11.9 billion to shareholders plus $1 billion in employee retention equity.

- Hugging Face will remain open and interoperable.

- JC Called this earlier last week. Obviusly the pressure was on since his scoop and they needed to get this done.

UNCLE SAM'S STOCK PORTFOLIO

- Federal equity positions now include Intel, MP Materials and Trilogy Metals.

- Intel, MP Materials and Trilogy Metals all jumped after their respective government deals.

- An Intel shareholder lawsuit argues the CHIPS Act did not authorize the government to demand an equity stake.

- The case could affect other government investments made using CHIPS Act funding.

GEN Z DUMPS THE BUBBLES

- Non-carbonated drinks accounted for 38% of new premixed-alcohol launches last year, up from 27% in 2021.

- Boston Beer’s Sun Cruiser is growing while Truly slows.

- Mom Water is on pace to exceed 1 million cases this year.

- Lucky One Lemonade sold 1 million cases in its first seven months.

- Gen Z has apparently decided carbonation was the problem.

TRUMP WANTS LOWER RATES

- President Trump called for lower interest rates after the August jobs report.

- Markets moved the other way, increasing expectations for a September Fed hike.

- Kevin Warsh has kept another rate increase on the table.

- Markets were pricing roughly a 60%-plus chance of a quarter-point September hike.

JOBS REPORT CRUSHES ESTIMATES

- August payrolls rose 162,000 versus roughly 56,000 expected.

- July was revised from a 23,000 decline to a 21,000 gain.

- Unemployment held at 4.1%.

- Labor-force participation rose to 61.6%.

- Wage growth eased to 3.1% year over year.

MAPQUEST IS NO. 1 AGAIN

- MapQuest jumped from No. 128 to No. 1 in the U.S. App Store.

- The surge followed its decision to keep the Lake Ontario name.

- More than half of its 2026 U.S. downloads reportedly came in just a few days.

- Google Maps now shows “Lake America” for U.S. users.

AUSTRALIA JOINS THE BOND SELLOFF

- Australia’s 10-year government bond yield climbed above 5.1%, its highest since 2011.

- The three-year yield also jumped as traders priced more central-bank tightening.

- Australia joins the U.S., Japan, Germany and U.K. in the global yield surge.

DICK'S GETS HIT BY FOOTWEAR

- Dick’s shares fell more than 25% after earnings.

- Earnings, revenue and same-store sales missed expectations.

- Foot Locker also disappointed after the acquisition.

- Management cited heavier promotions, fewer product launches and discounting of older shoes.

 

 

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THE CLOSEST TO THE PIN

for SpaceX (SPCX)

Winners will be getting great stuff like the new "OFFICIAL" DHUnplugged Shirt!

 

FED AND CRYPTO LIMERICKS

 

See this week’s stock picks HERE

Follow John C. Dvorak on Twitter

Follow Andrew Horowitz on Twitter

September – here we are and the volatility starts.

Bear Invasions – is this something we should pay attention to?

Target is in the hotseat, Good-Good too.

Bombing Iran again.

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

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Warm-Up

- September - here we are and the volatility starts

- Bear Invasions - is this something we should pay attention to?

- Target is in the hotseat, Good-Good too

- Bombing Iran again - and again.

Markets

- Bonds - moving higher - Warsh and Bessent challenged

- NVDA earnings - price hikes

- Employment Report coming this Friday

- Dell earnings - WOWWWW!

DHU MAILING LIST! - Go to DHUnplugged.com

LAKE AMERICA

- Google Maps now shows "Lake America" to U.S. users after the federal naming change.

- Canadian users still see "Lake Ontario"; users elsewhere see both names.

- Canada did not adopt the change, setting up an easy cross-border naming fight.

OIL / IRAN

- Last week - Oil dropped more than 3% as traders viewed tougher Iran sanctions as less disruptive than renewed military escalation.

- Brent fell to roughly $88.58 and WTI to about $82.36.

- Washington stopped short of immediately targeting major Chinese banks buying Iranian oil.

- Markets also reacted to hopes for improved navigation through the Strait of Hormuz.

----  OH WAIT>>>>

IRAN - FIGHT IS ON

- We are back bombing and they are retaliating

- We retaliate, they bomb

- Threat: President Trump in phone interview with Fox News reporter repeats that if Iran retaliates, they will be hit harder, but he adds that if Iran retaliates for a third time "they will be totally wiped out as a country"; says any deal with Iran will not be "worth the paper it is printed on"

- Oil Up ...

DICK'S / FOOT LOCKER

- Dick's shares plunged about 30% after earnings and guidance disappointed.

- Core Dick's comps rose 4.9%, but Foot Locker comps fell 3.6%.

- Management blamed weak sneaker launches, stale inventory and a highly promotional footwear market.

- Dick's has already taken more than $500 million in charges tied to the Foot Locker turnaround.

BASEBALL CARDS GO CASINO

- Online "repack" platforms let customers buy randomized graded cards and immediately sell them back.

- Prices can range from roughly $25 to thousands of dollars per pack.

- The model increasingly resembles gambling: randomized payoff, instant resale value and repeat play.

- Arena Club, Fanatics and others are pushing deeper into a market already generating billions in transactions.

GOVERNMENT-OWNED STOCKS

- Stocks with U.S. government backing face new legal and political risk around Washington taking equity stakes.

- Intel surged after government investment plans surfaced; MP Materials also jumped after a Pentagon stake.

- Trilogy Metals soared after a government deal, then gave back much of the move.

- A lawsuit challenging the Intel arrangement could have implications for similar federal equity deals.

CHINA INDUSTRIAL PROFITS

- China's industrial profits rose 11.2% year over year in July.

- Profit growth slowed from 15.1% in June but remained strong.

- Manufacturing profits rose nearly 19%, while mining profits jumped roughly 35%.

- Strong factory profits continue to contrast with weak property and domestic-demand signals.

DELL EARNINGS GUIDANCE

- Earnings we great - Guidance out of control

- Dell sees Q3 mid-point EPS of $6.50 vs $4.46 FactSet Consensus; sees mid-point of revs at $49.00 bln vs $41.36 bln FactSet Consensus

- Dell sees FY27 mid-point EPS of $25.50 vs $18.99 FactSet Consensus; sees revs mid-point of $192 bln vs $174.05 bln FactSet Consensus

TARGET HALLOWEEN BACKLASH

- Target pulled a children's clown costume after complaints that it resembled blackface imagery.

- The company apologized and said it was reviewing how the product cleared internal approval.

- The controversy adds another brand-management problem after several politically charged merchandise fights.

LEGO BOOM

- Lego first-half revenue jumped 21% to about $6.5 billion.

- Net profit rose 32%, while consumer sales increased 22%.

- More than 330 new products helped drive demand across Star Wars, Formula 1, Botanicals and other franchises.

- Lego continues gaining share while expanding stores and manufacturing capacity.

WAIT - WE'RE BOMBING IRAN AGAIN

- U.S. forces struck Iranian rocket launchers on Larak Island near the Strait of Hormuz, the first U.S. attack on Iran in several weeks.

- Iran retaliated with missile attacks targeting U.S. bases in Jordan, restarting direct military exchanges.

- Oil jumped more than 2%; Brent moved back above $90 and WTI above $85.

- The Strait remains the key issue: roughly 20% of global oil shipments pass through it, so actual disruption to tanker traffic matters more than the headlines.

IRAN SANCTIONS

- Treasury warned countries doing business with Iran could face secondary sanctions and loss of access to the dollar system.

- Scott Bessent described the campaign as an "economic D-Day."

- Treasury sanctioned dozens of people, companies and vessels but initially avoided major Chinese financial institutions.

- The expanded sanctions reach oil, shipping, gold, aviation, technology and digital assets.

JOBS REPORT / FED TEST

- August payrolls hit Friday after July shocked with a 23,000 job decline.

- Expectations are for only modest job growth, making revisions and the unemployment rate especially important.

- Fed rate-hike odds jumped after Kevin Warsh's hawkish Jackson Hole comments; a strong jobs number could push them higher.

- JOLTS, ADP and ISM data provide several previews before Friday.

 

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THE CLOSEST TO THE PIN

for SpaceX (SPCX)

Winners will be getting great stuff like the new "OFFICIAL" DHUnplugged Shirt!

 

FED AND CRYPTO LIMERICKS

 

See this week’s stock picks HERE

Follow John C. Dvorak on Twitter

Follow Andrew Horowitz on Twitter

Things are getting weird – looks like someone is panicking.

The Dumber side of finance – let’s dig in.

A big week ahead – major earnings could move markets.

– Gold, Bitcoin moving on a lower USD.

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

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Warm-Up

- Things are getting weird - looks like someone is panicking

- The Dumber side of finance - let's dig in (5 top items)

- Cold War and Hot War - Canada, China and Iran

- Economic "D" day - no one cares

- Saying goodbye to Dolly Parton

Markets

- Gold, Bitcoin moving on a lower USD

- Oil starting to settle

- Big Week - NVDA earnings on tap - all eyes!

STUPID IS WHAT STUPID DOES - A DHU One-Time Series On The Dumber Side of Finance

1) LOWER BEEF PRICES

- Trump plans temporary tariff relief for certain ground-beef imports as U.S. beef prices remain near record highs.

- The plan would allow up to 300,000 metric tons of discounted imported ground beef over roughly 90 days.

- Supposedly this will reduce the prices for consumers

- Ranchers and several farm-state Republicans are pushing back, arguing cheaper imports could hurt domestic producers.

---- Question: Tariff reduction is going to reduce prices for consumers? Didn't someone say that tariffs are paid by the companies and exporting countries???

2) IRAN SANCTIONS - BIG THREAT, LIMITED IMMEDIATE ACTION

- Treasury warned countries doing business with Iran that they could face secondary sanctions, calling it an "economic D-Day."

- New sanctions hit about 60 individuals, companies and vessels, but major Chinese financial institutions were not targeted.

- China remains the biggest buyer of Iranian oil, making Chinese banks the potential pressure point.

- Treasury says sanctions could expand into gold, digital assets, aviation, shipping and other sectors.

3) TREASURY TRIES TO TAME LONG-TERM YIELDS

- Treasury will at least double the maximum size of certain long-term bond buybacks to $4 billion per operation.

- The announcement briefly knocked nearly 10 basis points off the 30-year Treasury yield.

- Critics say this treats the symptom rather than the cause - huge deficits, heavy issuance and persistent inflation risk.

------Bessent had to come out on Friday to say "at least" $4B - as bind yields moved back up

-------Maybe there is a concern over the $40TRILLION debt we have amassed as a country?

4) SOMEONE GOT LONG BONDS AT THE RIGHT TIME

- TLT took in roughly $529 million of net inflows on August 18, one day before Treasury's surprise bond-buyback announcement.

- The next day Bessent doubled planned buybacks of 10- to 30-year Treasurys, immediately pushing long yields lower.

- TLT jumped about 1.7% on the announcement.

- No public evidence identifies a single buyer - but the timing of the unusually large inflow is certainly worth noting.

5) DOLLAR GETS HIT BY THE BOND RESCUE

- The dollar weakened as investors questioned Treasury's expanded bond-buyback strategy.

- The concern is that suppressing yields without fixing fiscal problems simply transfers pressure from bonds to the currency.

- The 30-year yield has remained elevated despite Treasury intervention.

- Bitcoin rallied as investors looked toward alternatives to traditional fiat assets.

- PEOPLE: This is NOT Quantitative Easing - Just a move to buy longer dated and issue more short dated

WALMART FLASHES A CONSUMER WARNING

- Walmart U.S. comparable sales grew just 2.6%, its slowest pace in roughly six years and below expectations.

- Shares dropped sharply after the report.

- E-commerce remained strong, while store traffic and discretionary spending showed more weakness.

- Walmart raised full-year guidance but gave a softer-than-expected third-quarter outlook.

- As America's biggest retailer, Walmart's slowdown is an important read on the broader consumer.

VENEZUELA HAS OIL - BUT CAN'T SHIP IT FAST ENOUGH

- Tankers are waiting as long as 30 days to load Venezuelan crude because of aging ports, outages and equipment failures.

- Venezuela has struggled to push exports much higher despite rising production and strong demand.

- The Jose terminal handles about 70% of exports and has become a major bottleneck.

- Venezuela's ports may impose a physical ceiling on production growth until infrastructure is upgraded.

JANE STREET'S $15 BILLION AI HIT

- Jane Street reportedly lost about $15 billion in July as AI and technology positions moved sharply against the firm.

- A major source of the damage was exposure to concentrated AI trades that were forced to unwind.

- Jane Street posted its first negative month of trading revenue since 2016.

- As a reminder: this episode highlights how quickly crowded AI trades can overwhelm even sophisticated risk-management systems.

LEAVITT LEAVES THE WHITE HOUSE

- Karoline Leavitt resigned as White House press secretary after returning from maternity leave.

- Trump said she would become a top outside adviser and prominent Republican voice heading into the midterms.

- Looking fior a kinder and gentler replacement? HA! probably not

OFF THE HIGHS

NVDA - 9% off high

AMD - 19% off high

AVGO - 23% off high

MU - 23% off high

TSM - 13% off high

MRVL - 28% off high

INTC - 35% off high

NVIDIA - THE MARKET'S NEXT STRESS TEST

- Nvidia reports Wednesday - now basically a referendum on the entire AI trade.

- Blackwell demand and hyperscaler spending are the key tells.

- A strong guide could quickly reset tech sentiment.

- A miss would raise the uncomfortable question: how much AI optimism is already priced in?

- Revenue expected around $92.1 billion, up roughly 97% year over year.

- Adjusted EPS expected around $2.09, nearly double last year.

- Data Center revenue expected around $85.7 billion - still the main engine.

- Biggest watch items: Blackwell demand, Vera Rubin timing, China sales and hyperscaler capex.

- Options imply roughly a 5%-6% move after earnings.

- Discussion ....

NVIDIA - AI SERVERS GETTING EVEN MORE EXPENSIVE

- Major Nvidia customers have reportedly been warned that AI server prices could rise more than 15% beginning early next year.

- Higher memory costs are the main driver, affecting Grace Blackwell and upcoming Vera Rubin systems.

- Nvidia is effectively passing higher component costs through despite gross margins around 75%.

- ALWAYS INTERESTING THESE ANNOUNCEMENTS SO CLOSE TO EARNINGS - HMMMM

CANADA-U.S. TRADE FIGHT GETS WORSE

- Canada announced retaliatory tariffs on about $20 billion of U.S. goods after Washington imposed new 50% tariffs on Canadian imports.

- Canada's tariffs range from 15% to 50% across roughly 700 products and begin September 8.

- Canada also announced a C$7.5 billion support package for affected businesses and workers.

- Another escalation that could hit autos, manufacturing costs and cross-border supply chains.

HOUSING - BUYERS KEEP DISAPPEARING

- July new-home sales plunged 10.5% to a 607,000 annual rate, the weakest since January.

- Median new-home price fell to $393,800, the lowest in four years.

- Mortgage rates are still around 6.8%, keeping affordability under pressure.

- Only 5.2% of consumers said they expect to buy a home in the next six months - the sharpest drop in more than five years.

JACKSON HOLE - WARSH GETS THE MICROPHONE

- Kevin Warsh speaks next week at Jackson Hole.

- Markets want to know whether sticky inflation, oil and tariffs are enough to keep the Fed in tightening mode.

- Long yields are already doing some of the Fed's work.

- One sentence could move bonds, the dollar and stocks.

- Friday, August 28 at 10:00 a.m. ET.

--- BUT - Didn't Warsh say less communication is more? They can't keep put of the spotlight.

PCE - THE FED'S FAVORITE INFLATION READ

- "The Fed's preferred gauge/measure of inflation"

- July PCE lands next week.

- Watch for tariff, energy and goods inflation creeping back into the numbers.

- A hot print revives hike fears.

- A soft print gives risk assets some breathing room - especially with long yields already elevated.

THE CONSUMER VS. THE AI BOOM - MORE EARNINGS COMING

- Salesforce, CrowdStrike and Marvell give another read on corporate AI spending.

- Dollar General, Dollar Tree, Best Buy and Ulta test the other side of the economy.

- The setup is getting interesting: companies are still spending aggressively on AI while consumers look increasingly selective.

- If that gap widens, it could become one of the bigger market themes into the fall.

AROUND THE WORLD

EUROPE - QUIETLY GETTING INTERESTING

- European stocks slipped this week, but money has started flowing back into the region.

- Euro-zone business activity is growing at its fastest pace this year, while Q2 earnings growth for STOXX 600 companies is running surprisingly strong.

- CONCEPT: Europe may be turning into the anti-U.S. trade - less AI concentration, cheaper valuations, but more sensitivity to energy.

JAPAN - BETTER DATA, WORSE MARKET

- Japan's Nikkei lost about 4% this week even as the economic data improved.

- August manufacturing PMI jumped to 55.1, with new orders rising at the fastest pace since 2018.

- Semiconductors and AI-related demand are helping drive the factory rebound.

- Stronger growth also keeps the BOJ rate-hike discussion alive - good economy, potentially tougher market.

BIG PHARMA - CHINA'S WEIGHT-LOSS GOLD RUSH

- Lilly, Novo Nordisk and others are aggressively targeting China's obesity market, where obesity rates are projected to top 65% by 2030.

- China bans direct prescription-drug advertising, so companies are using subway ads, gyms, influencers and "disease awareness" campaigns instead.

- China's GLP-1 market could reach roughly 30 billion yuan over the next 5-7 years.

- Interesting regulatory gray area: education campaigns that look a lot like drug advertising without actually naming the drug.

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Oil Reserves taking a hit.

Finally getting to the recent high profile earnings.

Market Top Calls (again).

ALL TIME HIGHS – Then some consolidation (then highs again).

Situational Awareness Update.

SpaceX Bounces…

PLUS we are now on Spotify and Amazon Music/Podcasts!

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Warm-Up

- Oil Reserves taking a hit

- Getting to the recent high profile earnings

- Market Top Calls (again)

Markets

- ALL TIME HIGHS - Then some consolidation

- Lets round out earnings

- Situational Awareness Update

- SpaceX Bounces...

Etsy - Layoffs With Better Numbers

- Etsy is cutting about 220 jobs, or 12% of its workforce.

- Management said the cuts were not primarily about cost savings or AI.

----- CEO Kruti Patel Goyal stated the restructuring aims to simplify the organization, remove management layers, and speed up decision-making to better compete against massive rivals like Amazon, Temu, and TikTok Shop

- Q2 revenue was about $668 million and core marketplace sales improved.

- Etsy also authorized another $2 billion share buyback.

- Comes after selling Depop to eBay for about $1.4 billion.

Polysilicon - Tariffs Plus Price Floors

- U.S. policy adds a 15% tariff and minimum import prices on polysilicon and solar products.

- Goal is to protect domestic production from low-cost foreign competition.

- U.S. share of global polysilicon capacity fell from about 50% in 2005 to under 2% in 2024.

- First Solar and T1 Energy jumped on the announcement.

---- The same playbook - rinse and repeat

Chipotle - Salmonella Returns

- Minnesota officials linked a salmonella outbreak to jalapenos served at Chipotle.

- Chipotle removed the affected pepper supply and switched growers.

- Shares fell roughly 8%-10% as investors remembered the company's earlier food-safety problems.

- This is on top of the lettuce situation with Sweetgreen- look at  STOCK CHART FOR SG

Michael Burry - Calling a Major Top

- Michael Burry says the market may be near a "major top."

- Warned of the possibility of a 1987-style market drop.

- He is short names including Nvidia, Palantir, Tesla and semiconductor stocks.

- Main concern is stretched valuations and crowded trades unwinding quickly.

- This may be the 100th top he has called since the GFC ----

NVIDIA TURNS GPUs INTO AN ASSET CLASS

- Nvidia signed preliminary agreements with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to mobilize more than $500 billion for AI infrastructure.

- The Wall Street firms would create dedicated pools of capital to finance Nvidia-based data centers and compute infrastructure at what Nvidia calls attractive rates for customers.

- Jensen Huang: “This is really the first time that technology chips have become an investable asset class.” Nvidia says the compute assets now generate revenue and can increasingly be financed like infrastructure.

- Nvidia could backstop as much as 25% of individual investments on a case-by-case basis - potentially up to about $125 billion if applied across the full program.

STRATEGIC PETROLEUM RESERVE BREAKS 300 MILLION

- The Strategic Petroleum Reserve fell by 6.1 million barrels to 298.7 million barrels for the week ended Aug. 7 - below 300 million for the first time since January 1983.

- The SPR started 2026 around 415 million barrels, meaning more than 100 million barrels have already come out this year as releases were used to offset disruptions from the Iran conflict.

- The reserve's authorized storage capacity is roughly 714 million barrels, leaving current inventories at about 42% of capacity.

- Oil on the rise last week

Earnings and such

Toyota - Big Buyback, Better Outlook

- Toyota raised its annual operating-profit forecast 13%, helped by the weaker yen.

- Announced a share buyback worth up to $6.3 billion.

- Quarterly operating profit still fell 9%, hurt by China weakness and higher Middle East-related costs.

McDonald's - Value Problem

- U.S. same-store sales rose just 0.8%, below expectations and well below last year's 2.5% growth.

- Management blamed weak execution of value promotions and fewer digital deals. (and probably because everyone is taking weight loss drugs - see above)

- Lower-income customer traffic remains a major pressure point.

- McDonald's is bringing back more digital offers and loyalty promotions to drive traffic.

Eli Lilly - Weight-Loss Machine

- Lilly crushed Q2 expectations as Mounjaro and Zepbound drove most of the growth.

- Mounjaro sales hit $9.94 billion; Zepbound brought in $4.93 billion.

- Raised 2026 revenue guidance to $85-$87 billion.

- Verzenio, its major breast-cancer drug, remains one of Lilly's biggest non-obesity products.

- Lilly continues widening its lead over Novo Nordisk in the obesity-drug market.

Disney - Parks Keep Printing Money

- Quarterly adjusted EPS rose 28% to $2.06, beating the $1.86 estimate.

- Parks and experiences revenue increased 10% to nearly $10 billion.

- Global park attendance grew 4%.

- Disney is selling its 50% stake in A+E Networks to Hearst for an estimated $1.2 billion.

Oil - OPEC Adds Barrels, Maybe

- OPEC+ agreed to raise September production targets by another 188,000 barrels per day.

- The increase completes the rollback of a 1.65 million-barrel-per-day supply cut dating back to 2023. (In other words - planned so not a surprise)

- Actual supply remains constrained because several producers are already pumping below quota.

- Any normalization around the Strait of Hormuz could suddenly make OPEC+'s additional barrels much more important.

Berkshire Hathaway - Greg Abel Starts Spending

- Q2 operating earnings rose 16% to about $13 billion.

- Berkshire bought $23.5 billion of stocks and sold just $3.7 billion - its first quarter as a net stock buyer in 14 quarters.

- Bought back $4.5 billion of Berkshire shares, versus only $235 million in Q1.

- Cash dropped from roughly $380 billion to $365 billion as Abel starts putting the massive cash pile to work.

- Important shift: Buffett is still chairman, but this is one of the clearest signs yet of how Greg Abel may allocate capital differently as CEO.

Situational Awareness - Nearly Blows Up, Investors Want Back In

- The fund lost 67% in July after leveraged AI bets collapsed and forced a major stock sale to Citadel.

- Despite the blowup, Situational Awareness was still up about 80% for 2026 because of huge earlier gains.

- Bloomberg says Silicon Valley investors are already asking to put more money into the fund.

- Situational Awareness is currently telling prospective investors it is not accepting new capital.

- The fund has also continued making large private investments even after the near-collapse.

--- Most recent was a $400B

---- There is some talk that Citadel made out like a bandit on the rescue

Mercedes AMG - The Car Literally Brands You

- Two Mercedes AMG owners filed a class-action lawsuit claiming the metal AMG logo embedded in the seat becomes dangerously hot in the sun.

- One driver says he suffered first- and second-degree burns, with a dermatologist describing the injury as "AMG inscribed."

- The lawsuit wants Mercedes to cover damages and remove the metal logos from affected vehicles.

- Hard to beat this one: pay AMG money and get the logo branded into your back.

Europe's Drought - History Starts Popping Out

- Extreme drought and low river levels are exposing things that have been underwater or hidden for decades or centuries.

- In Serbia, sunken German World War II warships have reappeared in the Danube.

- In Britain, dry ground revealed outlines of medieval buildings; mammoth remains and ancient structures have also surfaced elsewhere.

- Serious drought story, but visually one of the strangest side effects of the summer.

Golden Toilet - $6 Million Flush

- The 18-carat gold toilet was ripped out of Blenheim Palace in a five-minute raid and has never been recovered - but there is a conviction.

- Prosecutors used phone data, forensic evidence and planning activity to link the gang to the theft.

- One defendant had cased the palace beforehand and photographed entry points; another man had already pleaded guilty and admitted helping move the stolen gold.

- Prosecutors believe the 98-kilo toilet was quickly cut up or melted down and sold as gold.

- So the conviction was based on evidence of the robbery and disposal - not on recovering the actual toilet.

Final Follow Up

SpaceX - Space Junk Smashes Into the Moon

- A dead SpaceX Falcon 9 rocket stage crashed into the moon at about 5,400 mph after drifting through space since January 2025.

- The roughly 4-ton, school-bus-size object kicked up a lunar dust plume that astronomers detected from Chile.

- The impact was accidental - solar activity and gravity gradually pushed the abandoned rocket stage onto a collision course.

- NASA and SpaceX are now discussing ways to prevent future lunar crashes as more hardware heads toward the moon.

- NEED Space garbage Trucks - something we have discussed on show for years (see next)

Space Garbage Trucks - This Is Becoming a Business

- Astroscale is building spacecraft designed to inspect, capture and remove dead satellites and other orbital debris.

- Its ADRAS-J mission demonstrated close approach and inspection of a large piece of existing space junk - a key step before actually grabbing and removing debris.

- ClearSpace is developing similar debris-removal spacecraft, including missions designed to rendezvous with and capture abandoned rocket hardware.

- The business model is basically orbital towing: governments and satellite operators pay to remove dangerous junk or service aging spacecraft.

- With tens of thousands of tracked objects already in orbit, "space sanitation" could become a real infrastructure business.

 

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