TQ Morning Briefing
Something changed between Wednesday night and Thursday night. Nvidia beat and had its biggest session in more than a year. Then most of the companies that beat after Thursday's close got sold for it.
Nvidia (NVDA) had its biggest session in more than a year on Thursday. The Nasdaq went with it.
Almost nothing else did. The Dow finished near where it opened, and the Russell 2000 added a rounding error.
Then the mood turned after the bell. Nasdaq futures are the only ones lower.
PayPal (PYPL) is sharply lower too. The group trying to buy it walked away overnight.
The ten year Treasury yield sat still for a second session. The dollar went nowhere into a speech it cannot price.
Copper is bid. Asia closed higher and Germany is at a record.
Market Implication
The selling never left American technology. Almost everything around it went the other way overnight, which makes this a rotation rather than a de-rating. PayPal is the purest case, a stock owned for a buyer who is gone.
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The Number Was Never The Problem
Marvell Technology (MRVL) reported after the close. Revenue was a record, and data center grew fastest of all.
It guided this quarter above the street and raised next fiscal year's revenue outlook too.
It fell hard in the dark.
A chipmaker raised two years of revenue guidance and lost value on it.
The result was not the problem. The ownership was.
Marvell has nearly tripled this year. A single digit beat cannot pay for a move like that.
Both Ends Gave Up Margin
Marvell also guided revenue up and gross margin down in the same release.
The company named the cause. Custom silicon is built for one buyer. The faster it grows, the harder it pulls the blended margin down.
Nvidia sells the same part to everybody and earns far more on it. It guided margin down too, and by more, on memory prices.
One designer is paying for the work it won. The other is paying for what it has to buy.
Structural Setup
Both ends of the AI chip trade guided margin lower in the same week, for opposite reasons. Track that line across the supply chain. Revenue can accelerate for years after earnings stop scaling with it.
Ulta Beauty (ULTA) beat, raised guidance, and reversed to a loss after hours.
Comparable sales rose. Transaction counts held flat.
The same number of people spent more. That is price doing the work traffic used to do.
Two software names did the same thing. Autodesk (ADSK) lifted its revenue guide and cut its cash flow guide. Workday (WDAY) raised its subscription line and gave a backlog number nobody wanted.
Both fell.
One name went the other way. Elastic (ESTC) beat, raised, and rose more than anything that reported. It came in beaten down and behind the index.
Sector Read
A beat only pays when somebody still has to buy it. How a name traded into its print now matters more than the print. The crowded ones are handing it back.
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The Loaf Has Its Own War
Wheat locked limit up on Wednesday and held it on Thursday, at its highest since 2023.
The crop is part of it. American winter wheat came in the smallest in over sixty years.
But this week was about moving grain rather than growing it. Ukraine and Russia have spent the month striking each other's grain infrastructure.
Russia is the largest exporter on earth. Together the two move more than a quarter of the world's wheat trade.
Food inflation is now running on a war rather than on a rate.
Households build inflation expectations from the two prices they meet every week. Fuel is one. Food is the other.
The University of Michigan publishes its final August survey this morning. Its one year inflation expectation ticked up in the preliminary.
Watch Signal
A grain shock reaches a household survey in weeks. A core price index strips food out and never sees it. Watch the one year number rather than the headline. A confirmed tick gives the Federal Reserve members who voted to raise rates in July something firmer to point at.
Where The Profit Came From
Gap (GAP) sold less clothing last quarter than it did a year ago.
Comparable sales fell. Old Navy, which is more than half the company, fell harder. Revenue missed.
The stock rose sharply after the bell. Nothing in those numbers explains it.
Here is why. The company booked a large recovery of tariffs it had already paid. It ran that money through cost of goods sold.
Reported gross margin jumped by more than any clothing retailer reaches by selling clothes.
Take the customs money out and it was a revenue miss with a small beat. Gap showed both numbers. Most have not.
The company has not been paid most of that money yet.
And it handed a slice of what did arrive back to its suppliers. The release calls this a commitment of appreciation. It does not say what for.
The Read
Customs money is a one time payment sitting inside a recurring line. Look at which importers spend it on price this autumn and which bank it. The spenders are buying volume that runs out in the fourth quarter.
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Economic Data: Chicago PMI, 9:45am ET. Preliminary payroll benchmark revision for the March 2026 benchmark, 10:00am ET. University of Michigan consumer sentiment and inflation expectations, final August reading, 10:00am ET. Baker Hughes rig count, 1:00pm ET. CFTC Commitments of Traders, 3:30pm ET. Note the three way collision at ten: the benchmark revision, the Michigan final and the Jackson Hole keynote all land in the same minute.
Fed Speakers: Chair Kevin Warsh gives the opening keynote at the Jackson Hole symposium, 10:00am ET. No title has been published for his remarks. Kenneth Rogoff delivers the luncheon address, 3:00pm ET.
Earnings: No major US company reports. Chagee (CHA) and MINISO (MNSO) before open; Frontline (FRO) with a 9:00am ET webcast. The slate has moved to Hong Kong and mainland China, where interim results are due by August 31: BYD, Meituan, PetroChina, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of China, COSCO Shipping, Air China and Sany Heavy Industry all report.
Overnight: Nikkei 225 +0.4%, Shanghai Composite −0.1%, FTSE 100 +0.2%, DAX +0.6% at a record high.
Last night the market changed what a good quarter is worth.
Two ways to read that.
The first is mechanical. August is thin, and positioning ran long into a week of prints.
An unwind is arithmetic. It ends when the crowd is out.
The second is a repricing. If a record quarter and a raised two year outlook cannot hold a bid, the question under the AI trade has moved.
It used to be whether the revenue would show up. Now it is what that revenue costs to make.
Nothing large reports today to settle it. The earnings tape has moved to Hong Kong and Shanghai. China's half year results are due Monday.
So the market gets a full session with nothing to hide behind.
That is usually when it tells you the truth.