Futures are lower with Tech underperforming as the market focuses on NVDA / MRVL earnings this week; while the AI theme is pressured globally and memory stocks slump driven by a slide in the Kospi. Futures got a boost just after 7am when CNBC reported that the Treasury could use the General Account ($935BN as of today) to fund bond buybacks. As of 8:00am ET, S&P futures are down 0.
2%, rising from a session low hit this morning around -0.4%. Nasdaq futures are down 0.
4% with Mag7 names mixed and Software up. In premarket trading, Memory/Semis are weaker, dragging down the Tech tape. Defensives are leading Cyclicals ex-Materials as Metals/Miners look to extend their bullish run.
European stocks are lower, dragged down by tech while\South Korea’s Kospi was once again Asia's top loser, sliding 3.1%. Shares of SK Hynix also lost more than 3%.
Bond yields are lower, down 3-4bp as the curve shifts lower and USD is bid with the Dollar stronger versus G7. In commodities, oil and ags are pulling the group lower on reports of more than 15mm bbl leaving SoH over the weekend; gold / base are bid as silver sells off as part of AI weakness. Warsh’s speech Friday at 10am is the macro focus for the week but we also get updates on PCE, which has been de-risked with the CPI/PPI prints, income / spending, housing data, and some regional Fed activity indicators.
US session has few scheduled events Monday; ahead this week are coupon auctions, July personal income and spending data including PCE price indexes, and Federal Reserve Chairman Kevin Warsh speech at Jackson Hole Symposium.In premarket trading, Mag 7 stocks are mixed (Alphabet -0.3%, Amazon +0.
3%, Apple +0.4%, Meta +0.2%, Microsoft unchanged, Nvidia -0.
2%, Tesla -0.3)Watch US and Canadian metals, lumber, dairy, automotive and equipment maker stocks as Canada is set to apply counter-tariffs on $20 billion of US products on Sept. 8 after the US implemented a new 50% tax on imports of hundreds of Canadian items.
Alibaba ADRs (BABA) fall 2% after raising $10.2 billion in Hong Kong’s biggest follow-on offering, underscoring its willingness to amass and spend vast sums to take the lead in global artificial intelligence.Applied Optoelectronics (AAOI) tumbles 12% after the company filed for a possible offering of shares.
NVent Electric (NVT) slips 1% the maker of cabinets and racks for data centers agreed to buy Maverick Power for $1.75 billion.PDD Holdings ADRs (PDD) rise 2% after the owner of Temu reported second quarter earnings that beat the average analyst estimate.
Regenxbio (RGNX) tumbles 25% after the drug developer said the FDA placed a clinical hold on its investigational gene therapy RGX-121 for Hunter Syndrome. The hold follows the discovery of either a small nodules or a cystic mass in spine MRIs of five trial participants.In other corporate news, Alibaba raised HK$80 billion ($10.
2 billion) in Hong Kong’s biggest secondary share sale, underscoring its willingness to amass and spend vast sums to take the lead in global AI. Nvidia is discussing investing in Perplexity in an equity round valuing the AI startup at more than $30 billion, The Information reported. QXO, the building products conglomerate founded and led by billionaire Brad Jacobs, is hiring a onetime contender for the top job at Honeywell International.
Brent snapped a six-day run of gains, falling to around $93 a barrel as traders waited for details of Treasury Secretary Scott Bessent’s plan to economically isolate Iran. Treasury yields declined, with the longer end extending the move after CNBC reported Bessent could tap the near-$1 trillion Treasury General Account to fund bond buybacks. The greenback firmed, while the Canadian dollar was the worst-performing major currency after the country rejected a US tariff deal.
Traders are prepping for Fed Chair Kevin Warsh to speak at Jackson Hole on Friday, an event that takes on added significance after concerns over ballooning budget deficits and persistent inflation sent long-dated yields to multi-decade highs. The yield surge has already prompted an intervention by Bessent, who also pledged measures to shore up US finances. Meanwhile, Wednesday’s release of the Fed’s preferred inflation gauge will shape expectations for near-term interest-rate decisions after some officials recently reaffirmed concerns about stubborn price pressures.
AI bellwether Nvidia Corp. is scheduled to report earnings the same day.“This is set to be a pivotal week for asset markets, since there is still a chance the US Treasury selloff becomes a full-blown crisis,” wrote Kathleen Brooks, research director at XTB.
Bessent “is highly likely to underwhelm” given the scale of fiscal consolidation needed, said Emma Moriarty at CG Asset Management. Traders are unsure what to expect from Warsh given his reluctance to issue guidance and the view that Bessent’s intervention encroached on the Fed chief’s remit, she said.Besides the Fed, we also have the most important AI company reporting earnings on Wednesday.
For Nvidia, options markets are pricing in a 4.6% move following its results. The firm is not only a key pillar of the global buildout of artificial intelligence but is also increasingly orchestrating funding for AI projects.
“Nvidia is now so powerful and cash-rich that it is almost like a central bank to the tech industry,” Brooks noted.Elsewhere, as we reported on Sunday, clients of Goldman Sachs’ Prime Services desk net sold global equities in the week through Thursday for the first time in a month and at the fastest pace in two months, a -2.3 standard deviation move against the past year.
The relentless rise of the momentum factor had been a core tenant of factor investing, but a rapid unwind has pressured the strategy, Bloomberg warns. If this continues, value investing may come back into vogue, index rebalancing trades could become difficult and retail traders might need to slow down. In an astonishing change of fortunes, the tortoise pulls ahead of the hare, with the equal weighted S&P 500 Index outperforming momentum over the last year.
The absence of a spot-up/vol-up dynamic in chips may have two causes, according to Liquidnet Alpha cross-asset sales specialist Anthony Benichou. TMT hedge funds badly bruised in July are unlikely to redeploy leverage with the same aggression and momentum has broadened elsewhere, particularly into gold, gold miners and Bitcoin, which is “competing for marginal capital,” writes Benichou.But while stock volatility takes a breather, bond traders are getting more than their share.
Bessent’s bold intervention to stem a rise in yields last week has yet to pay off and could confuse the signal that markets send to the Fed. As noted earlier, investors are looking for Warsh to clarify his views on how the US central bank should react to stubborn inflation when he speaks on Friday at the annual gathering in Jackson Hole, Wyoming.Credit spreads of hyperscalers also underscore growing costs for the AI buildout.
JPMorgan strategists including Bram Kaplan note that on several AI-linked names, the left-tail of the implied volatility surface has “repriced lower even as CDS has moved wider.” That’s as prices of servers with Nvidia chips could be set for a 15% hike. Junk bond “tourists” are adding to the volatile mix as they wade into the financing splurge on data center projects.
In other assets, Pimco continues to view bonds as attractive and “would look to add if yields continue to rise, given the opportunity higher yields present for income, carry, and rolling down a steeper yield curve.”Tech names have underperformed in Europe too where the Stoxx 600 is little changed with the macro outlook back in focus as traders looked to data for clues about the health of the region’s economy. Here are the biggest movers Monday:European steel firm SSAB and aluminum supplier Norsk Hydro traded higher after the US and Canada failed to agree on a tariff deal, which analysts say leaves the status-quo intact and is positive