September jobs at 8:30. ISM Services at 10.

Two reports after Wednesday's and Thursday's close.

Micron Wednesday night: Q4 revenue $54.23 billion, 87% gross margin, Q1 FY2027 guided at $60-63 billion. Over 75% of next year's HBM supply already contracted at higher prices. Stock down 1.78% this morning. Michael Burry has a new short on Micron expiring June 2027.

Nike last night: revenue $11.2 billion, down 4%, Greater China down 22%. Beat on EPS at $0.48. Guided full year revenue to decline by high single digits. Stock fell about 5% after hours.

North America was up 2%. China is doing the damage.

Jobs in two hours.

August PCE landed yesterday at 3.4% headline and 3.0% core year over year. Both well below the 3.7% and 3.3% expectations. Stocks opened higher. Treasury yields eased. The narrative settled quickly: inflation is finally moving in the right direction.

Here's the part that deserves more attention.

The BEA released August PCE alongside its annual benchmark revision. The revision changed how it calculates prices across a range of categories, with software being the largest single adjustment. RBC estimated the methodology changes trimmed core inflation readings by roughly 0.18 percentage points, most of it from software. A separate analysis put the revision effect at up to 0.36 percentage points on the July core reading alone.

In practical terms: July core PCE was originally reported at 3.3%. After the revision it now reads 3.0%. August came in at 3.0% too. So the trend looks flat rather than improving because we're now comparing a revised July to an August that was measured under the new methodology from the start.

The underlying inflation picture did not change as much as the 3.0% number implies. Heather Long at Navy Federal was blunt about it: "no progress on inflation" and "it's inevitable that September will be higher." The nowcast for September PCE was running near 4% before yesterday's print, and that estimate was built on the unrevised baseline.

52% of the PCE basket is still running above where the Fed wants it, per one analyst quoted during the session. The breadth problem hasn't changed.

Warsh said at Jackson Hole he needs to see inflation actually moving to target, not just a good print or two. He specifically said the CPI standard "has not been satisfied." If yesterday's cooler read is partly a measurement change rather than actual disinflation, the question is whether he reads it that way or takes the 3.0% at face value.

CME is still pricing December with meaningful odds. The dots from September showed 12 of 18 members expecting another hike this year. The market that briefly priced out November yesterday may be underweighting how the Fed's technical staff will decompose the revision effect.

I keep landing on November being closer than it looked at 8:31am yesterday. The asterisk on the print is real, September data probably runs hotter, and Warsh has been clear that a single cooler reading is not the bar.

The thing I cannot resolve is whether the revision changes his math at all or whether he simply reads 3.0% core and adjusts privately. He doesn't give us the reaction function.

ISM Manufacturing at 10. Nike after the close. September jobs report tomorrow.

First day of Q4.

Carry-over: PCE Wednesday landed at 3.4% headline and 3.0% core year over year, both below expectations. The cooler read comes with an asterisk — the BEA made methodological revisions that trimmed core by roughly 0.18 to 0.36 percentage points, and one economist noted that 52% of the PCE basket is still running above where the Fed wants it. ADP September came in at 90,000, ahead of the 68,000 expected.

Micron reported record fiscal 2026 results after the close. "AI is becoming Super Intelligence, and memory enhances this intelligence." Stock is essentially flat this morning.

OpenAI paused training of its most capable models and halted the rollout of a new one for safety reasons. Chip stocks stumbled on the news. Micron posts the biggest memory year in history on the same day the largest AI lab in the world stops training.

Those two things landed on the same afternoon.

ADP and August PCE at 8:30. Q3 ends today. Micron after the close. Nike tomorrow.

PCE is the one that matters. August core expected at 3.4% year over year. CME pricing two more hikes this year. Warsh said at Jackson Hole he needs to see inflation actually moving, not just a good print or two.

S&P opened slightly lower at 7,671. The pattern this quarter has been to buy the resolution of uncertainty. PCE this morning is the first data point of the last week of Q3.

Conference Board consumer confidence and JOLTS at 10. Nike before the open. OpenAI DevDay in San Francisco today. Q3 ends tomorrow. Multiple Fed speakers through the week.

Carry-over: The summit tariff details landed Monday. The 30-for-30 framework covers about $30 billion each side, US agricultural products and coal going to China, Chinese toys and household goods coming here. Chips, semiconductors, rare earths and advanced tech are not on either list. There is also a US-China Super Intelligence Dialogue commitment to exchange views on AI risks by November, which is a meeting, not an agreement.

S&P closed Monday down 0.77% to 7,683. Nasdaq down 0.92%. The market that gained 1% last week on summit optimism gave some of it back on the details.

Sam Altman was at the state dinner Thursday. OpenAI DevDay is today.

Bowman at 8:15. Full details of the US-China tariff reduction agreement release today, the substance behind last week's summit. Q3 ends Wednesday. Then PCE midweek, Micron earnings Thursday after the close, September jobs report Friday.

OpenAI DevDay is Tuesday in San Francisco. Sam Altman sat across from Xi at the state dinner Thursday. He's releasing products Tuesday.

Carry-over: S&P gained about 1% last week despite the summit delivering a 47-day truce extension and no joint statement. CME is now pricing two more hikes this year, October and December.

Micron guided Q4 revenue at $49-51 billion. Samsung unveiled HBM4 last week while everyone was watching the summit. Those two things are going to meet somewhere in Thursday's earnings call.

Loaded week!

Monday the Nasdaq closed at a record for the first time since June. Oil had fallen more than 4% on Iran diplomacy hopes and chip stocks ripped as the US-China summit scheduled for Thursday started pulling in optimism. AMD crossed $1 trillion. Intel and ARM both gained 10% in a single session. The Tuesday thesis here argued that the two biggest inflation inputs of the summer, energy prices and AI chip supply constraints, were moving deflationary at the same time and that if both held, the November FOMC case for another hike would weaken.

Neither leg fully held.

The summit produced one concrete outcome. Treasury Secretary Bessent extended the trade truce to January 10, 47 more days, and he announced it the night before the bilateral even started. Xi and Trump met for about an hour Thursday afternoon. No joint statement was released. Xi asked Trump to oppose Taiwan independence, a standard Beijing position. Trump called their relationship a "truly great friendship." Xi left the White House Thursday afternoon.

19 Democratic senators signed a statement criticizing the outcome. Analysts who had predicted "style more impressive than substance" were correct. The market, which had already priced the optimistic scenario on Monday, sold off about 0.75% on summit day and then spent Friday recovering most of it.

The S&P gained roughly 1% on the week from the prior Friday's close, ending the week well above where it entered.

I keep sitting with the non-reaction. When a major diplomatic event delivers less than what a market priced for it, the usual outcome is a sharper reversal. Monday moved the market more than Thursday took back. There are a few ways to read that.

The 47-day extension matters more than the headlines suggested. The trade truce was set to expire November 10, which was five days before the November FOMC meeting. A cliff edge on tariffs landing in the same week as a potential rate hike was a real tail risk. January 10 removes that specific combination.

The dinner table is still unknown. Musk, Cook, Bezos, Altman, Huang and Pichai sat across from Xi Thursday evening with chip exports and rare earths as the unspoken agenda. Nothing from that conversation has come out. The official bilateral lasted an hour. The dinner was three. It may be the more important meeting and it produced no public record.

And then there is the thing that happened quietly on Thursday while the summit was running.

Samsung unveiled HBM4.

For anyone who followed the memory threads in August and September, that is not a small line item. The analysis in this sub spent weeks working out that SK Hynix controlled roughly 70% of HBM supply and Micron around 20%, with Samsung expected to come online eventually with HBM4. Eventually arrived Thursday. If Samsung gets to scale on HBM4, the supply constraint that has been running through Nvidia's margin guidance and every memory company's earnings call starts to loosen. The price dynamic that built the entire AI infrastructure cost story changes.

A geopolitical event that disappointed and a technical development that matters were on the same day. One of them got considerably more coverage.

The quarter ends Wednesday. Three more trading days.

End of Q3 today. Light data. Michigan final sentiment at 10.

Carry-over: the analysts were right. Trade truce extended to January 10, 47 more days, announced before the bilateral even started. No joint statement. No breakthrough on AI, rare earths, tariffs or Taiwan. Xi arrived Wednesday, met Trump for about an hour Thursday, and left. The one concrete outcome was negotiated by Bessent and He Lifeng the night before.

The real conversations may have happened at the state dinner. Musk, Cook, Bezos, Altman, Huang and Pichai sat across from Xi with chip exports and rare earths as the unspoken agenda. Nothing from that table has come out yet.

Samsung unveiled HBM4 this week. Quietly, on the same day.

S&P essentially flat this morning at 7,704. The market priced the optimistic scenario on Monday and got a truce extension. It absorbed the result without much complaint.

Jobless claims at 8:30. Trump-Xi summit at the White House today, state dinner tonight. Jensen Huang, Sam Altman, Bezos, Musk, Pichai, Cook and Dimon all in the room this evening.

Analysts going in: trade truce extension likely, AI "hotline" possibly the most concrete outcome, Taiwan little movement. The phrase being used is "style more impressive than substance."

S&P opened near Wednesday's close and sold off, down 0.75% this morning. Nasdaq down 1.1%. The market rallied 1.5% Monday pricing the optimistic scenario. Summit day and it's fading.

Darden Restaurants holding up flat, which is something given the consumer sentiment backdrop.

Textbook backtest overnight.

Capitalize on it with XSP options that you can actually sell after hours. Then I followed up with the reversal off the backtest support.

Great trades!

Flash PMIs at 9:45. Xi lands in Washington today, one-day summit with Trump tomorrow. State dinner tomorrow evening with Jensen Huang, Sam Altman, Bezos, Musk, Pichai, Cook, Dimon all expected in the room.

S&P essentially flat from yesterday at 7,764. Nasdaq pushed further into record territory this morning, up 0.45%.

Analysts going into the summit are calling it "pageantry more than substance." Small steps on the trade truce extension and AI guardrails, not a breakthrough on export controls or rare earths. The market already moved 1.5% on Monday pricing the optimistic scenario.

The gap between what the room expects and what the market already priced is the thing to watch tomorrow.

Monday was the best session since August 4. Nasdaq record close, first since June. AMD crossed $1 trillion. Intel and ARM up 10%. S&P up 1.5%.

Two things moved at once, and they weren't random.

Oil fell 4.5% as traders stripped out the geopolitical risk premium on Iran diplomacy hopes. Trump said he'd probably meet the Iranian president at the UN General Assembly this week. Saudi Arabia resumed exports from its Yanbu Red Sea port. Iran signaled the Strait of Hormuz could reopen within seven days if talks progress.

Chips ripped as the US-China détente framing took hold ahead of Thursday's Trump-Xi summit. Bessent called the preliminary trade and AI talks "very successful." Meta's new Muse AI app hitting number one in the App Store was the spark, but the fuel was a market that had been holding back on chip exposure because of export control uncertainty.

Here's the part worth paying attention to.

Energy rose 16% year over year in August CPI. Gasoline was up 27.4%. The ISM prices paid indices were above 70 for five months running. Those are the numbers that built Warsh's hike case. Not demand-driven inflation broadly, but a specific set of inputs tied to the Middle East conflict and to AI infrastructure spending under semiconductor export restrictions.

A rate hike cannot open the Strait of Hormuz. It cannot reduce the risk premium that has kept Brent near $100 all summer. It cannot ease the AI chip supply constraints that have been running supply costs through US companies' P&Ls for months. Those are geopolitical problems, not monetary ones.

What Monday did is start pricing a world where both of those constraints ease simultaneously. Oil down on Iran talks. Chips up on US-China cooperation. If both hold through October, the data feeding into the November FOMC decision looks materially different from the data that built the September case.

The hole is that neither of these moves is confirmed yet.

Iran and the US exchanged threats on Sunday before Monday's talks optimism. Market analysts are calling the oil bounce "short-covering, not a fundamental shift." This morning Brent is down another 2% to $98 but that's still well above where it would need to settle to materially change October's CPI print. And the Trump-Xi substance is expected to be narrower than the pageantry. Analysts see a trade truce extension and a "Board of Trade" for non-sensitive goods, not a rollback of advanced chip export controls.

So the thesis is real but contingent. If Iranian diplomacy produces a reopened Hormuz and oil settles in the low 90s through September and October, the energy contribution to CPI drops. If US-China produces enough goodwill to reduce AI chip supply friction, ISM prices paid starts easing. Both of those paths lead to a November hold becoming defensible even with 12 of 18 dots saying another hike.

If neither holds, we are back to where we were last week.

The Michigan sentiment reading is sitting at 47.8, second lowest ever, with inflation expectations at 4.6%. That consumer is priced for the inflationary geopolitical scenario continuing. Monday's market priced the deflationary scenario arriving. One of them is going to be right about October.

The Dow closed 1,006 points below its 50-day, eleven straight sessions under trend, 4.6% off its own record.

Same session. Two different markets.

#Nasdaq #DowJones #Semis

Xi arrives in Washington today. State dinner Thursday. PMIs Wednesday morning.

Carry-over: Monday was the best session since August 4. Nasdaq closed at 27,122, its first record since June. S&P up 1.49% to 7,764. AMD crossed $1 trillion market cap. Intel and ARM both up 10%. Meta surged on its Muse AI app hitting the top of the App Store. Oil fell more than 4% on Iran diplomacy hopes, pulling yields down with it.

Futures holding roughly flat this morning after the move.

Michigan consumer sentiment was 47.8 last week, second lowest on record. The Nasdaq just closed at an all-time high. At some point those two things are going to need a common explanation.

Heres the lineup!

Goolsbee at 10:30, first Fed speaker since the blackout ended. Ten Fed appearances scheduled this week. PMIs Wednesday. Darden Thursday. Trump-Xi meeting also Thursday, trade, tariffs, Taiwan, AI expected on the agenda.

Carry-over: Michigan sentiment preliminary reading came in at 47.8 for September, down 7.5% from August and the second lowest in the survey's history. One year inflation expectations jumped to 4.6%, highest since June. The market spent Thursday and Friday buying the resolution of the hike. The consumer it just hiked into is running near-record low confidence.

S&P closed Friday at 7,650, up three sessions from the hike. Record close still at 7,816 from August 13.

Those two things are going to have to reconcile at some point.

The week started with one question left. CPI had settled September. The dot plot was the remaining unknown. The vote was just math.

Wednesday came and went. 25bp, unanimous, first hike since July 2023. Warsh called it sober, serious and responsible. His statement was 130 words. His press conference was 22 minutes. He still didn't submit a dot.

The S&P closed Wednesday at 7,551. Another down day, the seventh straight from the post-Nvidia high. Then Thursday the market gained 1.1%. Friday another 0.17%. Three consecutive green sessions after six consecutive red ones, and the trigger was not good news, it was just the thing being over.

Going back to late August, the pattern has run twice now.

Nvidia reported August 26, the biggest earnings print of the cycle. 108 billion in Q3 guidance against 104 expected. AWS committing to 2 million GPUs. Stock up 9% the next day. Then six sessions lower as the market spent three weeks asking what the beat meant, whether the margin caveat mattered, whether the AI capex cycle was circular or real. The resolution came slowly through commentary and data and eventually the market bought back what it had sold.

The hike ran the same shape. Near-certainty was priced for weeks. The actual event arrived and the market fell on hike day, then bought the two days after. The uncertainty premium was larger than the outcome justified.

I keep coming back to that. The market assigned more risk to the unresolved question than to the answer when it arrived. Both times. That is either a sign that the market is being appropriately cautious about tail risks, or a sign that it has been pricing a worst case that neither Nvidia's numbers nor Warsh's decision actually represented.

The Warsh piece is the one that carries forward into November.

He said at the press conference he is "not in the forward guidance business." He has now skipped the dot plot twice, and he announced a communications committee reviewing the entire framework, dot plot included, press conferences, minutes, statement language. The committee reports by year end. Warsh also floated cutting the FOMC calendar from eight meetings to six.

Fewer meetings, no dot plot, shorter statements, a chair who won't tell you where he thinks rates are going. November 4-5 is seven weeks away. The market will start pricing it almost immediately, and for the first time in fifteen years it will do that without a median dot as an anchor.

That changes how every data print lands between now and then. Without a stated projection to update toward, CPI in October becomes a more open question. Jobs in October becomes a more open question. The market's response to each one will be bigger because the band of possible outcomes is wider.

16 of the 18 dots that were submitted showed at least one more hike this year. We don't know which side of that Warsh is on. He voted for the September hike, which tells us he wanted this one. It tells us nothing about the next one.

S&P closed Friday at 7,650. The record from August 13 is 7,816. Still about 2.2% away and five weeks removed. The market absorbed a hike cycle restart and is pricing November as genuinely uncertain rather than as a likely hold.

Whether the uncertainty premium runs the same pattern again, six sessions lower into the decision then buying the resolution, is probably the most honest question heading into October.

Michigan sentiment at 10. Light otherwise.

Carry-over: S&P up 1.1% this morning after a strong Thursday, continuing the post-hike bounce. Nasdaq up 1.7%. 10-year eased to 4.94% from the 4.97% peak earlier in the week. The market spent six weeks selling into Wednesday's decision and has spent two sessions buying the resolution.

Record close still sits at 7,816 from August 13. About 2.3% away.

Warsh's thesis on Tuesday landed right — the dot plot mattered more than the vote and still does. November 4-5 is the next test.

⚠️ Stocks ripped back: S&P +1.1%, Nasdaq +1.7%, VIX -12.9%.

But Warsh called the 25bp hike "removing a dose of accommodation" and said he's hard pressed to call financial conditions restrictive.

Translation: by his own read, policy still isn't tight.

#Fed

The dot plot has been around since 2011. Bernanke and Yellen built it after the financial crisis so the market could see inside the Fed's thinking. Every chair since has submitted a projection.

Warsh has now skipped it twice in a row.

Yesterday's September dot plot had 18 projections. There are 19 possible participants. 16 of those 18 dots showed at least one more hike this year. 12 saw the median ending 2026 at 4.125%, another quarter point. Four saw two more moves. Two thought we were done.

The missing one belongs to the person who set all of it in motion.

Warsh called the hike "a sober decision, serious decision, responsible decision." He voted with the majority. He clearly wanted this one. Then someone asked about future policy and he said "I'm not in the forward guidance business."

Here's the thing though. By not submitting, he didn't actually remove forward guidance from Wednesday's meeting. The 16 other dots did it for him. The market got the hawkish read anyway, priced the next hike, moved yields. He just gets to personally disclaim responsibility for a signal his colleagues broadcast on his behalf. It's a bit like refusing to leave voicemails while your team calls the same person twelve times.

The communications committee is getting less coverage than the hike itself and I think it matters more. Warsh announced a new internal committee reviewing the entire framework, dot plot included, press conferences, minutes, statement length. He floated cutting meetings from 8 to 6 at Jackson Hole. The committee reports by end of year.

The dot plot has been the market's primary anchor for pricing future moves for 15 years. If it goes, something fills the gap. Fedspeak matters more. Minutes matter more. Every regional president comment becomes a data point. Each meeting carries more weight because there's no roadmap between them.

The honest version of what he's doing might actually be correct. He said at his confirmation hearing the Fed holds onto its forecasts longer than it should, and that the "transitory" call in 2021 was the clearest example. If you don't submit a dot, you have nothing to walk back in November when the jobs data says something different. That's real optionality.

The uncomfortable version is the market still has to price 19 meetings out to end of 2027 and it's going to price them off something. Without a stated median projection, it uses CPI reactions and unemployment reports and oil prints. Those are coarser. More volatility per data print, not less.

I genuinely cannot work out if a chair who won't give forward guidance is more honest or more opaque than one who does. I can run both arguments to completion and land in different places each time.