Capital WealthWarsh Put a Hike on the Table. Wall Street’s Hottest Trade Fell Off It.
- Fed Chairman Kevin Warsh at Jackson Hole: “Otherwise, we have work to do.” Traders now price a September hike at 58%, up from 35%.
- The momentum trade — up 44% last quarter — is down 9% since July 1 and on track for its worst quarter against the S&P 500 in 25 years.
- U.S. forces hit Iranian mine launchers in Hormuz; oil rose 2.8% to $85.76 and Brent closed August above $90.
- Nvidia is now backstopping $105 billion of one data-center campus and holds the lease on another for Anthropic’s $35 billion cloud deal.
- Google’s Personal Intelligence reads your inbox, calendar and Fitbit for $5 a month; the Journal’s privacy skeptic says it works. The FDA authorized Juul’s menthol pods: the benefit to adult smokers “outweighs the risks, including youth appeal.”
“Committed to a discipline, not to a decision.” The market heard: hike.
Kevin Warsh gave his first Jackson Hole speech as Federal Reserve chairman on Friday and said he was “hard-pressed to describe broad financial conditions as restrictive.” About half the items in the Fed’s preferred inflation basket are still rising faster than 3%, against roughly a third before the pandemic, and better summer readings “do not tell me that underlying trends have meaningfully improved.” Interest-rate futures moved the odds of a September increase to 58% from 35% in one afternoon. The two-year yield jumped; the ten-year followed Monday to 4.757%. Treasury Secretary Scott Bessent, on television Monday, argued the other side: a supply shock is not something you hike into. The next meeting is September 16. By Monday night the Dow had shed 374 points, the momentum trade had lost its footing, and oil was back at $85.
The week answered the question everyone asked in June — is any of this earning money? — and this weekend the Fed reopened the harder one: what does money cost? Action: we keep the nominal ladder short (USFR, SGOV), hold the inflation-linked long horizon (LTPZ, TIP), add a 1.5% equal-weight sleeve to the two biggest tactical tiers as the momentum trade unwinds, and leave long nominal Treasuries and the utilities the California Legislature just repriced alone.
The hottest trade on Wall Street went cold. The boring index quietly won.
Momentum rose 44% last quarter and is down 9% since July 1, its worst run against the market in 25 years; equal-weight S&P 500 is up 16.3% against 13.5%.
Our TakeCrowds reverse in a month. We added a 1.5% equal-weight sleeve to the biggest tiers and refused every momentum basket.
Mines in the strait, $85 oil, and a missile cupboard that is “beyond critical.”
U.S. strikes on Iranian mine launchers sent WTI up 2.8% to $85.76 and Brent over $90; European Patriot stocks are “beyond critical” and L3Harris trades under 16 times cash flow.
Our TakeWe own the toll on oil that already moves and the motors that refill the cupboard. Chevron, Exxon, Schlumberger and L3Harris reinforced.
Nvidia is now the chip seller, the investor, the landlord and the lender. Nerd camp is nervous.
A $105 billion backstop, the lease on Anthropic’s $35 billion data center, $3 billion into SB Energy’s IPO — and at Camp Kotok nobody could say whether the trillions will earn a return.
Our TakeSupplier, investor, landlord and lender to its own market is a reason to size Nvidia, not to avoid it or to enlarge it. Held at checklist weight.
The FTC says Amazon secretly raised the price of its own ad auctions. The stock lost 2.5%.
A “soft reserve” slipped into auctions since 2018, intervention 70% to 80% of the time, $20 billion of alleged harm against $68 billion of ad revenue.
Our TakeA surcharge in the auction is a fine and a consent decree, not a change in the business. Amazon held; the cumulative regulatory drag is watched.
Tim Cook turned 72 million iPhones into 255 million and 2,200%. Now Apple needs to invent something.
John Ternus takes over a $5 trillion company at 33 times earnings, with hyperscalers eating its chips, a judge trimming the App Store toll and a foldable iPhone due September 9.
Our TakeA great company at a full price. Held at weight; not added at 33 times earnings for half the market’s growth.
$500 billion of drug sales walk off a cliff by 2033. The industry is shopping for a ladder.
Keytruda expires in 2028, Novo has 77% of sales exposed, deals hit $114 billion last quarter, and Merck added $40 billion in a day when a cancer vaccine worked.
Our TakeOwn the industry, not the molecule. Lilly, the one without a near-term cliff, stays the anchor; Merck goes on the watch.
Sacramento decided who pays for the next wildfire. PG&E lost 20% in a day.
Lawmakers refused to shield utilities from insurer lawsuits, L.A. County sued State Farm and is paying $5 billion on abuse claims its DA calls mostly suspect, and Prop 40’s fine print lets the Legislature widen the tax.
Our TakeUncapped liability is not a dividend story. PG&E and Edison stay out; for Los Angeles households the checks are insurance, muni exposure and the Prop 40 amendment clause.
Everybody wants the AI. Nobody wants the data center next door.
70% oppose one nearby, power bills are up 35% in five years, governors are pausing approvals, the unions are switching sides — and Westinghouse, half-owned by Cameco, filed for an IPO.
Our TakePolicy is now an input to the power sleeve. Held at weight; Cameco reinforced on a reactor maker filing to go public with Washington as a shareholder.
Google now reads your inbox, your calendar and your sleep for $5 a month. The Journal’s skeptic says it works.
A columnist who rejects every cookie let Google’s Personal Intelligence into his email, calendar and Fitbit. Daily Brief at $5, Dreambeans at $20, and the reason ChatGPT and Claude can’t easily do the same.
Our TakeHold Alphabet at checklist weight; the moat is distribution, not the model.
The FDA just said menthol vapes are worth the youth risk. That is the whole smoke-free thesis in one sentence.
Juul2 and its tobacco and menthol pods are authorized because a substantial share of adult smokers switched completely. Philip Morris, BAT and Altria are the public companies built on that sentence.
Our TakeHold the tobacco sleeve; the regulator just endorsed the replacement.
Jason Zweig says this market feels like 1901. Then came 1907, and Hetty Green had the cash.
Bucket shops became prediction markets and 319% turnover became three million same-day option trades; the bull ran six more years and the Panic of 1907 took it back.
Our TakeThe bills sleeve is Hetty Green’s cash: it pays while the fever runs and it is what everyone has to come to when it breaks.
“Every draft is that year’s mutual fund.” The Rams GM who runs a football team like Warren Buffett.
He traded his quarterback and seven picks, won a Super Bowl, then hoarded the picks nobody valued — because one bad stock sinks the portfolio.
Our TakePay for the positions that decide outcomes; size the rest like third-round picks. The checklist is a pay scale agreed before the season.
Dan Neil let the new Model Y drive him around Charlotte. Then Tesla made the best part $99 a month.
Cheaper, lighter, smarter — and 140 miles short of BMW’s range. Without Full Self-Driving it wouldn’t keep its lead, and FSD is now a subscription.
Our TakeThe car is the trial; the subscription is the business. Tesla stays a watch until the month-thirteen number exists.