This Week

In last week’s preview, we wondered whether the recent pullback marked “a real shift in tone and potential exhaustion to the rally, or just another quick bout of volatility on the way higher.” That question was mostly answered, with stocks climbing nearly 2.5% and the SPX now just shy of all-time highs, while the QQQ set a new record on Friday. This week’s main test for equities comes from the CPI and PPI inflation data. We’ll get to the week ahead shortly, but first, let’s catch up on the weekend news—including more on tariffs and the latest policy moves around chips and China.

• Stock market pullbacks will be 'short-lived': Wall Street sees AI, rate-cut optimism fueling rally (Yahoo Finance)

  • President Trump's tariffs weren't enough to derail the stock market rally last week as the S&P 500 and Nasdaq Composite continued to hover near record highs. Wall Street strategists point to other factors fueling the major averages higher: optimism over the AI trade and expectations that the Federal Reserve will cut rates in September. Strategists also point to companies' ability to navigate the tariff front, with heavyweights like Apple (AAPL) and TSMC (TSM) receiving exemptions due to their US investment commitments.

• Computer-Driven Traders Are Bullish on Stocks, Humans Are Bears (Bloomberg)

  • The thing about trading stocks is everyone has an opinion. And right now there’s an unusual divergence in the market that’s as stark as man versus machine. Computer-guided traders haven’t been this bullish on stocks compared to their human counterparts since early 2020, before the depths of the Covid pandemic, according to Parag Thatte, a strategist at Deutsche Bank AG. The two groups look at different cues to form their opinions, so it’s not a shock that they see the market differently. While computer-driven fast-money quants use systematic strategies based on momentum and volatility signals, discretionary money managers are individuals looking at economic and earnings trends to guide their moves.

    Still, this degree of disagreement is rare — and historically, it doesn’t last long, Thatte said.

• Nvidia and AMD to pay 15% of China chip sale revenues to US government (FT)

  • Nvidia and AMD have agreed to give the US government 15 per cent of the revenues from chip sales in China, as part of an unusual arrangement with the Trump administration to obtain export licences for the semiconductors. The two chipmakers agreed to the financial arrangement as a condition for obtaining export licences for the Chinese market that were granted last week, according to people familiar with the situation, including a US official. The US official said Nvidia agreed to share 15 per cent of the revenues from H20 chip sales in China and AMD will provide the same percentage from MI308 chip revenues. Two people familiar with the arrangement said the Trump administration had not yet determined how to use the money.

• Nvidia claps back against Chinese accusations its H20 chips pose a security risk (CNBC)

  • Chip giant Nvidia pushed back Sunday in response to allegations from Chinese state media that its H20 artificial intelligence chips are a national security risk for China. Earlier in the day, Reuters reported Yuyuan Tantian, an account affiliated with Chinese state broadcaster CCTV, said in an article published on WeChat that the Nvidia H20 chips are not technologically advanced or environmentally friendly. “When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it,” the Yuyuan Tantian article reportedly said, adding that the article said chips could achieve functions including “remote shutdown” through a hardware “backdoor.” In response, a Nvidia spokesperson told CNBC that “cybersecurity is critically important to us. NVIDIA does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them.”

• China wants U.S. to relax AI chip-export controls for trade deal, FT reports (Reuters)

  • China wants the United States to ease export controls on chips critical for artificial intelligence as part of a trade deal before a possible summit between Presidents Donald Trump and Xi Jinping, the Financial Times reported on Sunday. Chinese officials have told experts in Washington that Beijing wants the Trump administration to relax export restrictions on high-bandwidth memory chips, the newspaper reported, citing unnamed people familiar with the matter. The White House, State Department and China’s foreign ministry did not immediately respond to requests for comment on the report.

    HBM chips, which help perform data-intensive AI tasks quickly, are closely watched by investors due to their use alongside AI graphic processors, particularly Nvidia ’s. The FT said China is concerned because the U.S. HBM controls hamper the ability of Chinese companies such as Huawei to develop their own AI chips.

• Intel CEO Singled Out by Trump to Visit White House on Monday (WSJ)

  • Intel CEO Lip-Bu Tan is set to visit the White House Monday after President Trump called for his removal last week over ties to Chinese businesses, according to people familiar with the matter. Tan is expected to have a wide-ranging conversation with Trump, with the intent of explaining his personal and professional background, the people said. He could also propose ways that the government and Intel could work together, they said.

• Billions Flow to New Hedge Funds Focused on AI-Related Bets (WSJ)

  • Leopold Aschenbrenner emerged last year as a precocious artificial-intelligence influencer after publishing a widely read manifesto. Then he decided to try his hand at stock picking. The 23-year-old with no professional investing experience quickly raised more money for a hedge fund than most pedigreed portfolio managers can when they strike out on their own.What a difference a week makes. This time last week, we were staring down a packed calendar — FOMC, GDP, PCE, mega-cap earnings, new tariffs, and a jobs number — yet options were pricing in some of the lowest short-dated volatility of the year. Implied vols were higher into the back half of the week, but still ended up underestimating just how bumpy things got.

Implied vols got crushed into the end of last week as the market was able to recover losses from the bout of volatility the prior week. Last week, the SPX was pricing in a 1.9% move. This week’s is just 1.2%.

This Week’s Expected Moves:

• SPX/SPY: 1.2% (3100-6475)

  • QQQ: 1.5%

  • IWM: 2.4%

  • TLT: 1.2%

  • USO: 3.5%

IWM options have been pricing in elevated movement for weeks, and while expectations eased slightly over the past few sessions, small caps remain the volatility leader among the major indices. Last week featured multiple days where IWM noticeably out- or underperformed—often moving in the opposite direction of the QQQs.

This week’s economic calendar is headlined by the midweek inflation data. The recent volatility has been fueled by worries about slowing growth alongside rising prices. A couple of cooler CPI and PPI prints could give the market the spark it needs for a breakout, while hotter numbers risk snapping us right back into the higher vol chop.

Economic Calendar: 

• Tuesday

  • 8:30am - CPI

  • 10am - Fed Barkin Speech

  • 10:30am - Fed Schmid Speech

  • 2pm - Monthly Budget Statement

• Wednesday

  • 1pm - Fed Goolsbee speech

  • 1:30pm - Fed Bostic speech

• Thursday

  • 8:30am - PPI

  • 8:30am - Initial Jobless Claims

• Friday

  • 8:30am - Retail Sales

  • 8:30am - NY Manufacturing

  • 10am - UoM Consumer Sentiment

We’re getting towards the end of the earnings calendar as far as megacap market movers, with NVDA the highlight the last week of August. But still, alot of names to report between now and then, with this week not only seeing CSCO and AMAT, but also some vibe checks of story stocks in CRCL and CRWV:

Earnings (with expected moves):

• Monday

  • Pre-market: B 4%

  • After-hours: BBAI 18%, OKLO 12%, AMC 14%

• Tuesday

  • Pre-market: CRCL 10%, SE 10%

  • After-hours: CRWV 17%

• Wednesday

  • After-hours: CSCO 4.8%

• Thursday

  • Pre-market: JD 5.8%, DE 5%

  • After-hours: AMAT 5.5%, NU 8%

We’ve got a great lineup this week on RiskReversal Media. Kicking things off tomorrow morning, David Rosenberg of Rosenberg Research joins for a wide-ranging conversation—including his thoughts on the BLS firing following the recent Jobs report. Catch the preview here:

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