September 1st Pre-Market Brief

Good Morning

Welcome to September, historically the grumpiest month on the calendar.
The S&P has gone essentially nowhere since June. We have basically been in a whipsaw since June until that early August push. We have oil up, rate hike fears, and over seas tension this AM.

Let's dig in...

Today's Big Picture

1. Two Reads On The Same Yield Move

September hike odds went from just under two in five a week ago to better than two in three now, all of it after Fed Chair Kevin Warsh spoke at Jackson Hole on Friday. JPMorgan's Mislav Matejka and economist Matthew Klein argue yields are climbing on strong growth and heavy demand for capital, which stocks can absorb. Robin Brooks at Brookings notes US data surprises have been negative the entire climb, which points to soft Treasury demand instead.

2. The Hormuz Supply Shock Already Happened

Two supertankers carrying Saudi crude were struck by projectiles in the strait Monday, minutes apart. Kpler counted about five commodity vessels through Hormuz that day against a ten-day average near fourteen, and none carried liquid cargo. The strait moved roughly a fifth of global oil supply before the war and has been effectively shut for seven months, so the disruption traders keep bracing for is already in the price. Qatar and Oman are working a reopening deal.

3. Chip Demand Set A Record While Chip Stocks Sold Off

Since August 17, 58 of 61 semiconductor names in a Yahoo Finance basket have fallen, taking about $1.1 trillion off the group. Over the same stretch South Korea posted its best month of semiconductor exports on record, which its trade ministry credited to capital spending by Google and Amazon. Orders are not the problem, which makes this a positioning move, and JPMorgan is now telling clients to favor software over semis and memory.

Market Overview

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Stock Spotlight (pre-market)

Apple $AAPL ( ▼ 0.89% )  
John Ternus replaces Tim Cook as chief executive this morning, with Cook staying on as executive chairman. The handover was announced back in April and shares are close to flat premarket, with the September 9 product event the next scheduled catalyst.

Nvidia $NVDA ( ▲ 1.49% )  
Lower premarket with the chip group as Treasury yields rose. The Journal reported a $35 billion cloud deal in which Nvidia sits on every side: Anthropic rents capacity from Nvidia backed Lambda, inside a Texas data center Nvidia leases from Hut 8 and fills with Nvidia chips.

Robinhood $HOOD ( ▲ 0.53% )  
Higher premarket after Morgan Stanley upgraded the stock to overweight from equal weight and set a $150 target. The bank said the broadening product lineup is producing better economics per customer.

Novartis $NVS ( ▼ 1.14% )  
Higher premarket after remibrutinib, its multiple sclerosis drug, cut relapse rates against an established treatment in two late stage trials. Novartis put peak sales above $3 billion, and separately confirmed it paused enrollment in a cell therapy study after three patients died from severe immune reactions. Citi says the readout that settles it comes in October, when the drug is measured against Roche's competing candidate.

Duolingo $DUOL ( ▲ 0.94% )  
Higher premarket after Evercore ISI upgraded the stock to outperform from in line, citing its survey data on user trends.

What to Watch

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Dell After The Close, Broadcom Wednesday
Dell is tonight's cleanest read on whether AI spending is actually landing in enterprise servers. Palo Alto Networks and MongoDB also report after the bell. If Dell comes in soft, Broadcom Wednesday stops being a chip print and becomes the referendum on the whole physical AI trade.

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