September 3rd Pre-Market Brief

Good Morning

Oil is up a fourth straight day, and Hormuz traffic is thinning out even though nobody is talking about it. Six vessels crossed yesterday against a ten day average of thirteen.

That's a slow bleed, and will start messing with market if another deal doesn’t lighten this up soon.

Let's dig in...

Today's Big Picture

1. Two Fed Officials In Two Days Have Now Pushed Back On The Hike

Governor Christopher Waller said this morning he is inclined to hold on September 16 unless August inflation reverses, pointing to the Fed's preferred three month inflation pace falling from 4.76 percent in February to 3.05 now. John Williams said Wednesday the case for action is not firm. The hike pricing traces back to one speech, Chairman Kevin Warsh at Jackson Hole, and three officials voted to raise in July, meaning nine did not.

2. Nvidia's second biggest deal ever isn't about chips

The $12.9 billion Hugging Face deal is Nvidia's second largest ever, behind the $20 billion Groq purchase in December. Hugging Face is where 18 million developers pull three million open models, which makes it distribution, not product. Nvidia's real competitive risk is developers standardizing on cheap Chinese open weight models that run on anyone's hardware, and it just bought the place those get downloaded.

3. The Yen Is Moving Treasury Yields More Than The Fed Is

The yen is up more than two percent in two days on bets the Bank of Japan hikes September 18, and yields eased across the curve as it firmed. Japan holds about $1.1 trillion in Treasurys, and a stronger yen removes the reason to raise dollars by selling them. The forced selling everyone fears has not actually shown up.

Market Overview

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Stock Spotlight (pre-market)

Snowflake $SNOW ( ▼ 4.37% )  
Up on a beat and raise. Second quarter adjusted earnings of 62 cents on $1.55 billion in revenue against forecasts of 45 cents and $1.48 billion, with full year product revenue guidance raised. Management credited its AI coding business, and the CEO is on CNBC at 10 a.m. ET.

Broadcom $AVGO ( ▼ 5.68% )  
Down on the forward guide, not the quarter. Third quarter revenue was $29.59 billion with adjusted earnings of $3.32 per share, but fourth quarter revenue guidance of $34.8 billion came in under the $35.03 billion consensus. The margin outlook also landed light at 66 percent against 66.5 expected.

Hewlett Packard Enterprise $HPE ( ▼ 9.99% )  
Down despite beating the quarter on AI demand. The new fiscal 2027 earnings growth target of 16 to 20 percent carries an 18 percent midpoint, just under the 18.7 percent analysts modeled. Cash flow guidance came in above the Street's $4.79 billion and the stock is lower anyway.

Ultragenyx $RARE ( ▲ 2.79% )  
Sharply lower on a failed trial. The Phase 3 study of its Angelman syndrome treatment missed its primary endpoint. The company said it will reassess the program and make significant cost reductions.

T-Mobile $TMUS ( ▲ 2.82% )  
Up because a merger looks less likely. Elliott Investment Management built a stake in Deutsche Telekom, which owns 54 percent of T-Mobile, and is pushing it to abandon combination talks in favor of buybacks. Both stocks fell when those talks first surfaced in April.

What to Watch

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Tesla's Cybercab Event In Austin (Today)
Texas records show 45 Cybercabs cleared for driverless operation as of Wednesday night. Waymo runs about 4,000 driverless vehicles across 14 cities. Morgan Stanley, at hold with a $400 target, said a meaningful rollout of unsupervised cars could get the stock moving.

Lululemon And DocuSign After The Close
Both report into a tape that spent this morning selling beats with soft guides. Lululemon is the cleanest read on discretionary spending in a week when Campbell's and Victoria's Secret both guided down. DocuSign tests whether Snowflake's move was software wide or company specific.

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