TQ Evening Briefing
PCE held exactly as expected, and gave the market nothing new to trade. Meta settled the child safety trial for $18 billion. Iran and Oman announced a revenue-sharing deal on Hormuz. WTI fell. Warsh speaks Friday.
Three Big Events Landed. The Market Barely Moved. Warsh Remains the Only Catalyst.
The S&P closed essentially flat. The Nasdaq slipped slightly. The Dow fell modestly. The three events that did move things were PCE at 3.7%, Nvidia reported after the close, and a $18 billion legal settlement.
WTI fell to under $82, its third straight decline. A statement from Iran's Revolutionary Guard said Tehran and Oman agreed to share revenue from Hormuz traffic. The details are unclear and no formal toll structure was named. Oil bounced off its session lows on the announcement but stayed lower.
TQ Trade Implication
PCE in-line means no new input for September. Warsh speaks Friday into an inflation reading that did not help him and a Hormuz situation that is moving but not resolved. Position before Friday morning.
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PCE Was 3.7% in July. That Is Still 1.7 Points Above the Fed's Target. Nothing Changed.
Core PCE came in at 3.3% year over year and 0.2% month over month, matching estimates exactly. Headline PCE held at 3.7%. GDP was revised slightly higher to show consumer spending growing a bit faster than the first estimate. Personal income rose 0.4% in July, up from June's pace.
The problem is that none of this helps Warsh. He inherits an inflation rate that is nearly double the Fed's 2% target. The committee has three dissenters who already voted to hike. The July reading from the PCE does not give Warsh a green light on either direction. It was not hot enough to force a hike. It was not cool enough to take one off the table.
Morgan Stanley called it: "not enough to shift the balance for September's FOMC meeting." The market left September hike odds roughly where they were. The 10-year yield ticked back above 4.67%.
TQ Execution Bias
In-line PCE preserves optionality for Warsh but does not resolve it. The only thing that moves September now is Friday's speech. Own short duration into it. Reposition after the podium.
Nvidia Beat, Fell, Then Ripped on the Call. The Guide Did the Work.
Nvidia (NVDA) reported record revenue of $96.2 billion and net income of $59.7 billion, up 126% year over year. That is the fifteenth straight beat. The Q3 guide came in at $108 billion against a $104.9 billion consensus. Gross margin held at 75%.
Shares fell about 1% on the release. Then the call started. CFO Colette Kress guided 70% revenue growth for fiscal 2028 and said Amazon's AWS is deploying an additional 2 million GPUs starting this quarter. The stock reversed to up 4%. Nasdaq 100 futures gained 1%.
Kress also took the circular financing question head on. Nvidia now carries $99 billion in equity investments and $25 billion more committed. She said frontier labs face a compute bottleneck and need the help. "We recognize the scale of this support, and we know some will call this circular financing. We see it differently. The equity returns on our invested capital will be excellent."
One number nobody was looking for. Supplier commitments more than doubled in a quarter to $279 billion, driven by locking up memory. Nvidia projects $92 billion of that spend across the rest of this fiscal year.
TQ Execution Bias
The print was not enough. The guide and the Amazon deal were. That tells you expectations were already at the print and the market is paying for the next two years, not this quarter. The $279 billion supplier line is the read for memory. Samsung and SK Hynix are sitting on a combined $263 billion in net cash and Nvidia just showed you who is writing the checks.
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Meta Paid $18 Billion to End the Child Safety Trial. This Is a New Era for Tech Liability.
Meta (META) reached an $18 billion settlement with 48 state attorneys general, ending the federal trial over social media's harm to teenagers. Shares initially jumped more than 2% and settled around 1% higher. The settlement amount is one of the largest in tech history involving a consumer-harm case.
This matters beyond the dollar amount. The settlement establishes that major tech platforms can be held financially responsible for the psychological impact of their products on minors. That changes how every social media company calculates its legal exposure going forward. TikTok, Snap, YouTube, and X all face similar active litigation. The $18 billion number just became the benchmark for what resolution looks like.
Meta built its ad business partly by optimizing engagement among young users. Agreeing to pay $18 billion is an implicit admission that the optimization had costs the company is now absorbing.
TQ Execution Bias
The liability is now quantified and closed. Uncertainty is more expensive than a known number. The stock's reaction confirms that.
- Boston Scientific (BSX) fell after disclosing a cyberattack that disrupted its ability to process and ship orders. The company has no timeline for restoration. Evercore ISI noted a similar attack on Stryker took three weeks to recover from. If the same applies, third-quarter revenue guidance gets modified.
- Vanguard acquired Altruist, a fintech wealth management platform, sending Charles Schwab (SCHW) and LPL Financial (LPLA) each down around 2%. Altruist competes directly with Schwab for financial adviser custody. Vanguard getting into this space with its brand recognition is a structural threat to existing custodians.
- Nike (NKE) hit a 12-year low after Truist downgraded it to hold, citing Dick's guidance cut as a direct negative signal for Nike, which makes up 35-40% of Dick's merchandise purchases. Nike is now down more than 40% in 2026 and 75% from its all-time high.
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PCE held. Meta settled. Iran and Oman announced a deal with no published terms. WTI fell to $82. The market barely moved.
Warsh speaks Friday into exactly this setup: inflation above target, a Hormuz situation that may or may not be resolving, a bond market that has pushed the 30-year to near 20-year highs, and a committee with three members already in favor of a hike. His speech has no instrument attached to it and no dots to lean on. What he says on the long end of the yield curve is the only new information available before September's meeting.