MARKET WRAP

Markets drifted through a quiet session today, with both volume and volatility extremely low. Traders remain in wait-and-see mode with the SPX just below all-time highs and potential catalysts on deck the rest of the week. On the day: SPX flat, QQQ flat, and IWM +0.4%.

Elsewhere, also extremely quiet with the US10YY up a tick to 4.34%, Gold slightly lower with the dollar slightly higher, Oil slightly higher as well and the VIX hovering near 15.

Notable Gainers: LULU +3%, SBUX +2.5%,  DAY +28%, FSLR +9%, TTD +5%

Notable Losers: INTC -3.5%, BA -2%,  EA +3.2%, PLTR -2%, META -2%, HD -1.2%

After hours: PANW is +5% following earnings.

• MRKT Call: Guy and Dan discuss the upcoming Jackson Hole Symposium and why it may be more important this year than most, also a look ahead at the retailers reporting this week. Carter joins to look at the charts of GOOGL, META, TSLA and more.

• RiskReversal Pod: Gene Munster joins Dan to talk the AI Capex spend and his expectations for an increase next year, Nvidia’s role in US/China relations, Apple’s upcoming product launches, and the potential for more IPO’s in AI.

MRKT MATRIX: TODAY’S TOP STORIES

•  Stocks flat to start the week as traders await Powell speech, retail earnings (CNBC)

• Powell Has Reason to Hedge Jackson Hole Signal as Data Zigzags (Bloomberg)

• Strong Crop of Earnings Eases Investors’ Economic Concerns (WSJ)

• OpenAI’s Sam Altman sees AI bubble forming as industry spending surges (CNBC)

• Bitcoin sinks to $115,000 after hitting its newest record, as macro concerns spark liquidation wave (CNBC)

• ‘I almost fell off my chair’: Investors lose billions on meme stocks as ‘pump and dump’ scams multiple (Financial Times)

• Soho House Agrees to Be Taken Private in $2.7 Billion Deal (Bloomberg)

• US Allies Set to Plead With Trump to Stand Behind Ukraine (Bloomberg)

WHAT’S NEXT?

This week brings earnings from the big-box retailers—starting with Home Depot tomorrow morning, offering a read on both the consumer and housing, (alongside housing starts and building permits at 8:30am)—followed by Target, TJ Maxx, Walmart, and others later in the week. Looking slightly further out, Nvidia reports next week, which will be a major vibe check on the health of the AI trade.

Options are reflecting the lull for now, especially after two straight 6450 pins, with SPX implied volatility sitting in single digits until Friday. The gap between Thursday’s IV at ~9 and Friday’s at nearly 13 underscores the weight being placed on Powell’s speech at Jackson Hole, albeit relatively to an extremely low vol environment near term. Keep an eye out for Friday’s vol to drift even higher as the week goes on.

Overall, the option backdrop has a ton of overhead supply at the 6500 level. It would take a lot of momentum to get above that near term, with Powell and Nvidia the obvious potential catalysts for that if it were to happen. To the downside, it’s less clear, with near term support for at least 100-150 points but a bit of a vacuum below that. If we did see a move like that over the next week or so, traders would likely begin to reach for some put protection, driving vols up quickly, something that has been non-existent recently.

• Tuesday, August 19th

  • Pre-market: HD 3.5%, XPEV 8.5%

  • 8:30am - Housing Starts (1.3m)

  • 8:30am - Building Permits (1.39m)

  • 2pm - Fed Bowman Speech

  • After-hours: TOL 4.5%

TODAY’S EPISODES

Watch MRKT Call’s newest episode: Alphabet’s Hidden Potential with Carter Worth

Guy and Dan discuss the upcoming Jackson Hole Symposium and why it may be more important this year than most, also a look ahead at the retailers reporting this week. Carter joins to look at the charts of GOOGL, META, TSLA and more.

• Analysis - SPX, GOOGL, META, TSLA, TTD, LULU, NVO, LLY, PLTR, TGT, CRM, ADBE, BTC, PANW, HD

• Your Questions

  • WAVY MCFLY - @riskreversalmedia UBS, McKinsey, and MIT in the last week have pretty much said that AI has had 0 effect on corporate bottom lines, the narrative is unraveling, am I too early to go short responsibly

  • Toby - Can we do a chart check on LLY?

  • STEVE Z - thoughts on PANW going into earnings this afternoon? thanks

Learn more about our sponsor, MoneyLion.

Watch RiskReversal Podcast’s newest episode: AI CapEx Spending Can't Stop, Won't Stop with Gene Munster

Dan Nathan is joined by ⁠Gene Munster⁠, managing partner at ⁠Deepwater Asset Management⁠. The discussion centers around the dominance of major tech stocks, their rapidly evolving dynamics, and substantial capital expenditures, exemplified by an expected $300 billion increase next year. They delve into the transformative impact of artificial intelligence on markets, with Munster drawing parallels to the tech boom from 1995 to 2000. The conversation also covers geopolitical implications for U.S. tech firms, focusing on Nvidia's crucial role in the U.S.-China tech rivalry. The episode concludes with thoughts on Apple's upcoming launches, the potential for significant IPOs in the AI realm, and the broader economic factors influencing market strategies.

Timecodes 0:00 - CapEx Boom 11:20 - NVDA & Rev Sharing 20:30 - Apple's Big Week 26:30 - OpenAI

Learn more about our sponsor CME Group, iConnections, and SoFi.

A MESSAGE FROM OUR PARTNER

Subscribe to the RiskReversal YouTube Channel and drop a comment/like to show your support

Want to check out past podcast episodes? Go to wherever you get your podcasts and type in “RiskReversal Media”

We want to hear your feedback! Reply to this email with any comments or questions