U.S. Futures & World Markets
Stocks are relatively flat premarket ahead of a full slate of economic data. This morning we receive July's Personal Income & Spending Report, Durable Goods, and the PCE Price Index — the Fed's preferred inflation gauge. Toss in Nvidia earnings after the bell, and you can understand investors being a little gun shy.
The CME FedWatch tool shows a 36% chance of a 25 bps rate hike at the September FOMC meeting.
Ben Evans on Nvidia: "Nvidia has a torrent of cash from the hyperscalers and model labs, and it's pumping that cash back into the market — enabling cheaper capital for model labs, strengthening the GPU ecosystem, and pushing into open models. Nvidia is using its customers' money to help its customers — while also making them more dependent." Is Jensen playing the right game?
CORE Headlines
- Canada announced 50% counter-tariffs on over 700 US products — including steel, aluminum, dairy, furniture, smartphones, and video-game consoles — effective September 8.
- Secretary of State Rubio tells allies that "for the time being" the U.S. is not expected to initiate new strikes against Iran. — Axios
- Druckenmiller acknowledged his WSJ Op-Ed critical of Bessent was written with AI. — NOTUS
- SoftBank mulling a $10–20 billion bond sale to finance a stake in OpenAI. — Bloomberg
- ECB poised to raise interest rates at its September meeting due to persistent inflation. — Reuters
- DeepSeek seeking a second funding round at a RMB 500B valuation after revenue surged ~10x. — The Information
Charts & Data
Citi's US Economic Surprise Index still tracking positive but fading as data continues to modestly beat expectations. @lizannsonders.
Citi's global economic surprise index ended last week at its highest level since April 2022. Luke Kawa, Sherwood: the positive surprise story is not just a US phenomenon.
Most investors have never managed money in a rising rate world — their entire career happened inside the bull. What if the biggest bubble of our lifetime is bonds? @thierryborgeat via Daily Chartbook.
Semis and software have historically traded as positioning opposites, but the gap has narrowed recently as the software debate became more two-sided. Goldman via Daily Chartbook: the convergence trade is playing out.
GLD and IBIT back in the top 10 most traded ETFs, knocking down semiconductor ETFs — the debasement trade is starting to replace AI mania. Eric Balchunas via Daily Chartbook.
The compounded annual growth in AI intelligence for all models since 2023 is +167%/year — well over +100% in every case. DataTrek Research: the most important stat for understanding the structural AI investment case.
GPU rental rates, utilization, and long-term compute contract pricing are all rising while average token prices keep falling. Jevons paradox is at work. Bloomberg via Daily Chartbook.
Interesting Reads
- Nvidia's dependence on hyperscalers faces big test in earnings report — CNBC
- The death of Market Street — Noah Smith
- Jevons paradox — Wikipedia
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