Dear Trader,
Mark and Hans are live at 10 this morning, and below are the three stories they're diving into.
The Nvidia print is the obvious one.
The Schmid interview matters because Jackson Hole starts today and one Fed president just said the quiet part about rates out loud (which we’ll be covering in detail on Monday).
And Anthropic's $45 billion compute deal fits into the same question everybody's been asking chip stocks for three months: who's actually paying for all this, and for how long.
This link adds State of the Market to your calendar.
The Daily News Breakdown
SIREN: Nvidia (NVDA) put up $96.2 billion in revenue for the quarter, and the first reaction was a selloff. By Thursday's premarket the stock was up more than 7%, so somebody read the release twice. Adjusted earnings came in at $2.22 a share against the $2.09 Wall Street wanted, and management guided third-quarter revenue to between $105.8 billion and $110.1 billion. Data center did $89 billion, with hyperscale revenue more than doubling. Jensen Huang says AI has reached its inflection point and compute is now revenue, which is a convenient thing to believe when you sell the compute. Chip stocks have spent three months getting punished over whether any of this spending pays back. Nvidia's answer is that it pays back to Nvidia.
SNEAKER: Kansas City Fed President Jeff Schmid sat down with Yahoo Finance the day before Jackson Hole and said the policy rate is too accommodative. He's not a voter this year, so weight it accordingly. He also dissented twice against cuts last year, he'd have joined the three dissents in July, and core PCE (the Fed's preferred inflation gauge, stripped of food and energy) just printed 3.3% with the monthly pace ticking up to 0.2% from 0.1%. Farm commodities up 20% to 30% in a few weeks have his attention too. Asked whether the Fed needs to hike 25 or 50 basis points, he said we'll see. That's a sitting Fed president floating hikes out loud on the way into Wyoming.
SIGN: Anthropic has reportedly signed a roughly $45 billion cloud computing deal with Nscale, a U.K. infrastructure company. Two people told CNBC the agreement runs six years and gives Anthropic about 460 megawatts of capacity at an Nscale data center in West Virginia. The unit of measurement here is worth a second look: these deals get priced in megawatts now, which tells you where the real constraint sits. West Virginia gets the data center. Anthropic gets six years of compute it doesn't have to build or power itself, which is a fine trade if the crunch lasts that long. The AI buildout keeps outsourcing itself to whoever can get electricity connected fastest, and that list stays short.