August 28th Market Overview

Happy Thursday

Market's feeling pretty good about itself today, pushing the S&P past 6,500 for the first time. Earnings season is keeping everyone busy, and the economic data keeps coming in stronger than expected. Feels like one of those days where the market just wants to go higher, even when there's plenty to worry about.

Let's dig in...

Today's Big Picture

The AI Trade Just Got Validated Nvidia 
$46.74 billion in revenue.
Two customers →likely Amazon and Microsoft, bought $18.3 billion worth, nearly 40% of total sales. Data center sales missed estimates by $240 million, yet chip stocks rose anyway. Management said everything is "sold out" with a $3-4 trillion infrastructure build ahead. China sales are excluded from guidance, creating upside if trade tensions ease.

Economy Stronger Than Anyone Thought
GDP got revised up to 3.3% from 3.0% while jobless claims held steady at 229,000. Business investment and consumer spending both beat expectations. That's growth without inflation fears that would force Fed panic moves. This expansion has legs.

Fed Independence
Lisa Cook sued Trump over her firing - the first Fed governor to ever challenge a president in court. Friday's hearing sets precedent on whether presidents can fire Fed governors at will. If Trump wins, he could reshape the entire Fed board. Markets are under-pricing this risk imho. Politicized monetary policy would fundamentally alter bond markets and dollar strength. The case outcome matters a lot more then most folks realize.

Market Overview

U.S. Stock Indexes

Stock Spotlight

Nvidia $NVDA ( ▼ 0.66% ) disclosed two customers bought $18.3 billion worth of chips - nearly 40% of total sales. Management estimates China represents a $50 billion annual opportunity, with $2-5 billion in immediate H20 chip sales possible if trade tensions ease. That’s pure upside not in current guidance.

Snowflake $SNOW ( ▲ 21.34% ) posted 32% revenue growth with earnings doubling expectations at 38 cents versus 27 cents forecasted. The data cloud company raised Q3 product revenue guidance above estimates, proving AI demand flows through the entire software stack.

Hormel Foods $HRL ( ▼ 12.42% ) warned Q4 earnings would hit 38-40 cents per share, well below the 49 cents analysts expected. Rising commodity costs are crushing food companies without pricing power.

Best Buy $BBY ( ▼ 3.87% ) beat earnings at $1.28 per share but kept conservative guidance citing tariff uncertainty.

Big Name Updates

Apple $AAPL ( ▲ 1.15% ) secured nearly half of Taiwan Semiconductor’s 2nm production capacity for iPhone 18, paying premium rates of $30,000 per substrate. That’s expensive insurance to maintain the processing power edge that justifies Apple’s pricing premium over Android.

Tesla $TSLA ( ▼ 1.4% ) saw European sales down 40% in July to 8,837 units - the seventh straight monthly decline. Meanwhile, the overall European EV market expanded, highlighting Tesla’s specific competitive weakness rather than category problems.

CoreWeave $CRWV ( ▲ 6.13% ) rose after Nvidia management highlighted the seamless transition to Blackwell GB300 GPUs, with 10x performance improvements over H100 chips. Cloud providers with Nvidia partnerships capture AI infrastructure spending directly.

Other Notable Company News

CrowdStrike $CRWD ( ▲ 4.59% ) posted record $221 million in net new annual recurring revenue but guided Q3 revenue below estimates at $1.208-1.218 billion versus $1.23 billion expected. Even cybersecurity leaders face enterprise budget scrutiny.

International Paper $IP ( ▲ 1.41% ) got upgraded to Buy after industry capacity reductions tightened supply. When competitors shut plants, survivors gain pricing power - basic economics that works especially well in commodity industries.

Wynn Resorts $WYNN ( ▲ 2.52% ) received a Buy upgrade at UBS with the price target raised to $147 from $101. Las Vegas recovery and Macau reopening create the perfect setup for casino operators with premium properties.

Today’s Sponsor

Sector Watch

Bond Market

The 10-year Treasury yield held steady around 4.22% as investors balanced stronger GDP data against Fed independence concerns.
Societe Generale (top tier European bank) expects over 100 basis points in rate cuts over the next year, while fed funds futures price high probability of a September cut.

Policy Watch

Fed Independence Fight Heads to Court Friday Cook's lawsuit could establish whether presidents can fire Fed governors at will. If Trump wins, he could reshape the entire seven-member board.

EU Offers Trade Deal to Avoid Tariff War

• The EU proposed eliminating tariffs on U.S. cars, machinery, and plastics to get the U.S. to cut auto tariffs from 27.5% to 15%

• The proposal needs European Parliament approval but only formal introduction for U.S. action

• EU has until month-end to introduce legislation for the U.S. to make retroactive cuts to August 1st

Nvidia's China Sales Negotiations Continue

• Management estimates China represents $50 billion annually in AI chip opportunity

• Immediate H20 chip sales could reach $2-5 billion if approved

• White House discussions include potential 15% revenue-sharing with U.S. government

• No timeline given, but exclusion from Q3 guidance suggests resolution unlikely before October

What to Watch

Friday's Inflation Data 
PCE index for July drops at 8:30 AM - the Fed's preferred inflation measure. Economists expect 2.6% annual reading, matching June. Below 2.6% increases September rate cut odds, above 2.6% reduces them.

Fed Court Hearing Friday 
Judge decides whether presidents can fire Fed governors at will. If Trump wins, he could remake the entire Fed board. If Cook wins, Fed independence stays protected. Bond markets haven't priced this risk properly.

Nvidia China Deal Timeline 
Nvidia excluded China from Q3 guidance, but $50 billion annual opportunity and $2-5 billion immediate H20 sales wait for approval. Any White House breakthrough moves semiconductor stocks, but Q3 exclusion suggests no deal before October.

Thanks for reading 🙂

- John

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