August 17th Market Overview

Happy Monday

Quiet volume day, busy day underneath it. Chipmakers led on a revenue number out of Anthropic, a private company most people cannot even buy. Money went where the receipts were (AI, chips) and left almost everything else alone for the day.

Let’s dig in...

Today's Big Picture

1. AI Spending Finally Has Revenue Behind It

Bloomberg reported Anthropic's preliminary second quarter revenue at $11.5 billion, fourteen times last year. Nobody has confirmed it yet. Sandisk, Marvell and Coherent led the Nasdaq 100 anyway, because the number answers the question hanging over every data center deal this year. Someone is paying.

2. The Consumer Is Running On Last Spring's Money

Goldman's Jan Hatzius traced spring's spending strength to bigger tax refunds, not bigger paychecks. July retail sales came in soft on Friday, and China's July retail sales missed too. Demand borrowed from earlier in the year has to be paid back at some point, and the back to school quarter is where we find out how much.

3. Oil Back Near $90 As The Iran Clock Runs Out

The 60-day understanding between the US and Iran expired today, even after early reports said an extension had been approved. Talks to reopen the Strait of Hormuz have stalled, and Iran can now charge tolls to move oil through it. Trump threatened to bomb Oman if it helps Iran take control of the waterway. Brent traded near $90.

Market Overview

Index Performance

Stock Spotlight

SpaceX $SPCX ( ▲ 4.3% )  
ownership went public for the first time since June's listing, and it is held by very few hands. Alphabet leads with more than 551 million shares, and 23 managers own most of the reported total.

Micron Technology $MU ( ▲ 4.21% )  
crossed $1,000 for the first time since July 6. BofA kept its Buy and a $1,550 target, arguing memory is entering a structurally better stretch than the old boom and bust cycle.

Alibaba $BABA ( ▲ 0.76% )  
is selling its videogame business for $1.5 billion to put more money behind AI.

Big Name Updates

Nvidia $NVDA ( ▲ 0.24% )  
disclosed close to 123 million SpaceX shares, and SpaceX agreed this month to buy its chips exclusively. Separately, its expected guarantee on AI infrastructure financing came down to under $120 billion from the $250 billion first discussed.

Apple $AAPL ( ▼ 0.17% )  
was upgraded to Buy at Rothschild with a $400 target. The case is 2.55 billion devices in use and a services business earning roughly double the margin of the hardware.

Amazon $AMZN ( ▼ 0.81% )  
drew a $500 bull case at Morgan Stanley on the idea that AWS becomes a $1 trillion revenue business, six times its current run rate. Capacity is the limit, not customers.

Meta $META ( ▼ 3.62% )  
now earns about $125 a year per US user, well clear of every other social platform. Its $14 billion Texas data center with BlackRock carries about $450 million of property insurance, which is a fraction of the build.

Other Notable Company News

RTX $RTX ( ▼ 0.48% )  
won a $22.9 billion Navy contract for Tomahawk missiles.

L3Harris $LHX ( ▼ 4.69% )  
removed chief executive Christopher Kubasik over his conduct and left its revenue outlook for the year unchanged.

Rocket Lab $RKLB ( ▲ 1.91% )  
will build an anti-jam satellite for the Space Force after Viasat picked it for the job.

Vista Energy $VIST ( ▲ 5.48% )  
gained after Peter Thiel's fund disclosed a $76 million stake in the Argentine oil producer.

Blue Chip Stocks
MarketBeat names and lists “7 Blue-Chip Stocks to Add To Your Forever Portfolio”

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Sector Watch

Bond Market

Long term Treasury yields rose again, with the 10-year near 4.73 and the 30-year above 5.25, while short yields eased. Investors will still lend Washington money for two years.

Policy Watch

Fed

Raising money in markets has not been this easy since 1996, by Bloomberg's measure. Two weeks ago Kevin Warsh said markets had done a chunk of the Fed's tightening for it. They have taken all of it back since, which is why a September increase is still on the table.

• Traders put the odds of that increase at less than one in three.

• The easing is on Wall Street, not Main Street. Mortgage and long term borrowing costs are still high.

Fiscal and Trade

Companies have gotten more than $100 billion back in tariff refunds. Goldman says they treated it as one time money and spent it covering costs, funding marketing and cutting prices for customers.

• Second quarter revenue across the S&P 500 grew at its fastest pace in five years.

• Take tech out and the median company grew far slower, so the headline flatters the average business.

International

• Japan's 10-year government bond yield hit its highest level since September 1996, and swap markets lean toward a Bank of Japan rate increase next month.

• Tokyo and Washington intervened together this month to stop the yen sliding, their first joint move since the late 1990s. A rate increase would do the same job without spending reserves.

• Canadian inflation came in a touch hot at three percent, mostly gasoline. Nobody expects the Bank of Canada to move on it.

What to Watch

The AI Infrastructure's Backbone
10 Stocks Powering the AI Buildout

Retail Earnings, Tuesday Through Thursday

Home Depot Tuesday, Target and Lowe's Wednesday, Walmart Thursday. Housing starts land Tuesday morning too, which gives the home improvement numbers their context. Same store sales and second half guidance matter more here than the quarter itself.

Fed Minutes, Wednesday

The July meeting happened before the last inflation and jobs reports. Watch how split the committee was on whether the next move is up at all.

Thanks for reading - you are now the more informed 🙂

- John

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