SATURDAY RECAP
Last Saturday we said the Fed doesn’t control every rate that matters. Friday the chair proved how much influence it still has. Nvidia beat. The average tech stock fell anyway. Six stories made the week.
The week opened with a trade war and closed with a Fed chair who said almost nothing about rates and moved them anyway. In between, the market repriced what a good quarter is worth.
Monday: Canada talks broke, Iran sanctions launched.
Tuesday: Dick’s (DKS) had its worst day on record, and Druckenmiller went after Bessent in print.
Wednesday: PCE held, Nvidia (NVDA) beat after the bell.
Thursday: software ripped, the trade deficit hit its widest mark since March 2025.
Friday: Warsh took the podium. Six themes ran the tape.
Wall Street Owns 88% — Yet Most Investors Don’t Know the Name
Institutions already control 88% of this little-known company.
BlackRock owns roughly 32 million shares. Vanguard owns about 48 million.
And management authorized a 40-million-share buyback.
One man believes Wall Street may see something Main Street has missed.
Warsh did what four billion dollars an operation couldn’t.
He gave no forward guidance, no reaction function. “You can call it an outline, you can call it a trail map, just don’t call it forward guidance.” Then: “I stand here today committed to a discipline, not to a decision.”
The hawkish content arrived anyway. On this summer’s cooler inflation prints, he said they “do not tell me that underlying trends have meaningfully improved.” Then the line that moved the tape: “I would be hard-pressed to describe broad financial conditions as restrictive.”
September hike odds jumped to roughly 60 percent from 35 the day before. The market now prices a hike as more likely than not. Odds of two or more hikes by year end went to 50 from 29. The 2 year Treasury yield ran from 4.22 to 4.31.
Now read the long end. The 30 year fell slightly, to 5.181 percent.
The Read
Sam Goldfarb at the WSJ called it a bear flattening, the exact inverse of what followed July’s meeting, when long yields surged on fear the Fed would wait too long. This time the chair sounded willing to act, and the long end relaxed. Treasury spent a week trying to talk the 30 year down. Warsh did it in one speech, without buying a bond.
Druckenmiller went after his own protégé in print.
Stanley Druckenmiller published a WSJ op-ed Monday calling Bessent’s bond buyback a mistake. Not a concern. A mistake. The two worked together at Soros for years.
His argument wasn’t that the intervention fails. It’s that Treasury intervened in a market that was working. No failed auctions. No dealer seizure. Nothing like March 2020. Treasury justified the operation as liquidity support in sectors with strong sponsorship, and strong sponsorship is the definition of a healthy market.
“The bond market wasn’t being a vigilante,” he wrote. “It was being a pushover that had finally begun to clear its throat, and Treasury moved to quiet even that.”
He named the mechanism too. Buying long bonds funded with bills shifts duration out of public hands. Bessent called it a Treasury Twist himself. The program runs September 9 through November 4, ending the day after the midterms.
The Read
Warsh never mentioned the buybacks Friday. He didn’t need to. Druckenmiller wanted the bond market allowed to impose discipline. Warsh reminded investors the Fed may impose some of its own. The long end responded to the threat of tighter policy more than it responded to Treasury’s purchases.
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A beat stopped paying.
Nvidia beat for the fifteenth straight quarter Wednesday night. Record revenue of $96.2 billion. Net income of $59.7 billion, up 126 percent. The Q3 guide came in at $108 billion against $104.9 billion expected.
The stock fell about 1 percent on the release. It turned only when CFO Colette Kress guided 70 percent revenue growth for fiscal 2028 and said AWS would deploy 2 million additional GPUs. Thursday it had its biggest session in more than a year.
Then Thursday night broke the pattern. Marvell Technology (MRVL) posted record revenue, guided this quarter above the street, and raised next fiscal year. It fell hard. Ulta Beauty (ULTA) beat, raised, and reversed. Autodesk (ADSK) lifted revenue guidance and cut cash flow guidance. Workday (WDAY) raised its subscription line. Both fell.
Marvell has nearly tripled this year. A single-digit beat can’t pay for a move like that.
The Read
The crowded names are handing back beats. Elastic (ESTC) beat, raised, and ripped, because expectations had already been washed out. The earnings trade has shifted from results versus consensus to results versus positioning.
Both ends of the chip trade guided margin lower the same week.
Nvidia guided gross margin down about a point, to 74 percent. Kress named memory pricing that had run past expectations. Supplier commitments more than doubled in a quarter, to $279 billion, most of it locking up high bandwidth memory.
Marvell guided revenue up and margin down in the same release, for the opposite reason. Custom silicon is built for one buyer, so the faster it grows, the harder it pulls the blended margin down.
One designer is paying for what it has to buy. The other is paying for the work it won.
Samsung and SK Hynix will hold a combined $263 billion in net cash by year end. Nvidia’s supplier line shows who is writing those checks.
Watch Signal
Revenue can accelerate for years after earnings stop scaling with it. Track the margin line across the supply chain, not the revenue line. The demand question was answered a year ago. The next one is what that demand is worth.
AI CEO Issues Code Red: Prepare for Meltdown
The CEO of this AI company (click here to get the name, 100% free) just issued a CODE RED in an internal memo…
Warning his employees that they’re dealing with a critical situation.
Another company executive even implied they might need a government bailout.
And now Jim Rickards is predicting this company is about to go bust, in a full-blown AI meltdown that could be 10 times bigger than Lehman Brothers.
The AI buildout showed up in the trade data.
The US goods trade deficit hit $118.8 billion in July, its widest since March 2025. Economists expected it to narrow. Capital goods imports jumped 11 percent in a single month, the largest increase in over 30 years, per Haver Analytics.
Semiconductors and computing equipment drove it. The domestic supply chain can’t match the pace.
Barclays cut its Q3 GDP estimate to 1.8 percent from 2.2 percent on the print. The White House is reportedly weighing semiconductor tariffs extending to laptops, servers and consoles.
The Read
The same buildout lifting the Nasdaq is widening the trade deficit and weighing on headline GDP arithmetic. Both are true. Only one gets written up. A sharp month of AI-related imports is also the cleanest political case anyone could hand a tariff office.
Everything is now financed.
Nvidia disclosed $99 billion in equity investments, with $25 billion more committed. Add sales guarantees for cloud companies buying its chips, data center leases it expects to hand to third parties, and credit support for gigawatts of capacity. Kress addressed it directly: “We recognize the scale of this support, and we know some will call this circular financing. We see it differently.”
Alibaba (BABA) raised $10.2 billion at a discount to fund AI spending, a week after reporting a 75 percent profit drop caused by that same spending.
Corporate bond issuance already hit $1.7 trillion this year, more than all of 2025. Now vendor credit and strategic equity are stacking on top of it.
The Read
The buildout started funded from cash flow. Then bonds. Now the chip supplier is underwriting its own customers. A slowdown that comes out of cash flow shows up in earnings. Financed this way, it shows up in credit first.
The Closest Thing to a Virtual AI Monopoly Wall Street Is Ignoring
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Only 3...
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Last Saturday we ended on control, and said the long end was telling Warsh the Fed doesn’t set every rate that matters.
Friday he answered. No guidance. No path. No dots. Just a chair saying financial conditions don’t look restrictive. The 2 year jumped. The 30 year fell. Warsh moved in minutes what Treasury had spent a week trying to move.
Credibility did what intervention could not. For one day.
Now it has to hold.
September 8, Canada’s tariffs land. September 16, the FOMC meets with a hike now the market's base case. Warsh has told the market he sees room to tighten. He has also told it he won’t say what comes next.