Wednesday Watch

Around X:

• @Business

• Trump welcomed Israeli Prime Minister Netanyahu to the White House Tuesday as the US leader sought to avoid renewed bombing in Iran and instead laid the ground for further diplomacy after both sides paused tit-for-tat strikes. 
• Goldman Sachs Japan says a sharp selloff in Japan’s artificial intelligence-related stocks has created a buying opportunity, arguing that strong earnings could revive investor appetite for semiconductor shares. 
• The Pentagon’s weapons buyer signed off on a deal with General Dynamics Corp. to build nine next-generation attack submarines, even as the company struggles to stay on schedule with an earlier order for nine less advanced subs. 
• ASM forecast revenue for the third quarter that beat analyst estimates, with the artificial intelligence infrastructure build-out driving demand for the chip-equipment maker’s tools. 
• Momentum behind the Clarity Act is fading on Capitol Hill and among crypto watchers. 
• Nvidia CEO Jensen Huang defended open-weight artificial intelligence systems as crucial to developing the nascent AI industry, as officials in Washington consider how to respond to a surprise breakthrough from Chinese startup Moonshot.
  
• Here’s what you need to know to start your day.     

• @ZeroHedge

• Emails show leading officials at NIH, including Fauci, knew the best data indicated no benefit from masks. Why did they proclaim great benefits of masks then? Because these officials were not managing a virus using science. They were managing a population using psychology. (pic)
• Fact check: true. July was the worst month for momentum on record (excluding covid crash). (graph)
• *US, SAUDI ARABIA STRIKE IRAN-BACKED WEAPONS SITES IN IRAQ. 
• Historic Carnage: Worst Day For Hedge Funds Since The Covid Crash. (graph)
• Federal Court Rules For Woman Fired For Refusing COVID-19 Vaccine.
• Decent arb: rate hike odds (per SOFR) for tomorrow's Fed meeting at 32% while http://Polymarket.com has 24%. In either case, would be a market shock as gap between market pricing and Fed decisions one day before meeting has almost never been this wide.
• Previewing The Fed's "Extremely Uncertain" July Decision, And How JPM and Goldman Are Trading It.
• Detroit Gets Drafted: Ford And GM Head Back To The Battlefield.
• Fragile Iran 'Pause' Shattered As US Base In Jordan Comes Under Attack, Oil Jumps.
• The State Of American Elections: For The Left, 'The Worse, The Better'.
• NEW: Dr. Fauci writes in his diary that in June 2021, he received a (classified?) briefing from the CIA on the origins of COVID-19 while in a SCIF (Sensitive Compartmented Information Facility) at NIH, and reveals that the CIA told him they had intercepted Chinese communications in Wuhan, including indications that the Chinese had transferred pangolin viruses from Beijing to Wuhan. Additionally, Fauci writes that the CIA had information from sources that the Chinese military had conducted unknown experiments in Wuhan, and that the CIA had information about a "super spreader" event in China in July 2020 in relation to "passage of a virus in a laboratory." Fauci writes that the CIA briefer, who he names, was "almost pathetic in her naivety and obvious lack of appreciation of any of the science of what she was talking about.". (pic)
• Wouldn't be pressing shorts here.
• RFK Jr. Says HHS Found Fauci Diaries Across 11 Different Servers.
• NYC Councilwoman Sounds Alarm: Mamdani's Property Database Puts Wealthy Homeowners In Crosshairs Of "Luigi-Worshipping Leftist Thugs".
• The same mainstream media that demanded we all trust the science can't bring themselves to report what their favorite scientist wrote in his own diary. I wonder why.
• New Biden Tapes Reveal Hur's "Well-Meaning Elderly Man" Had An $8 Million Motive To Keep Classified Docs.
• The Socialist Monster Awakens.
• Was assured by Ukrainian FM @andrii_sybiha that the attack on an Iranian ship was unintentional and Ukraine seeks no escalation. Iran does not seek escalation either, but made clear any attack on our citizens or interests is unacceptable. There must be restitution for losses. 
• Semis Slammed, Momo Mullered, & AI Credit Cracks; Black Gold & Bond Yields Drop On Deal Hopes.             

• @CNBC  

• CNBC Daily Open: Renewed fire from Iran, a big quarter for SK Hynix and a quake in Japan. 
• Wednesday's big stock stories: What’s likely to move the market in the next trading session.
• S&P 500 futures are little changed as investors analyze earnings, await Fed decision: Live updates. 
• Stocks making the biggest moves after hours: Ford, Teradyne, Visa, KLA Corp and more. 
• Trump administration to ban new Chinese robots and inverters, protecting U.S. AI.      

• @WallStEngine

• SK Hynix $SKHY on customer memory demand: “Our major customers continue to request more memory supply, including for PC and mobile applications.” “Temporary sales adjustments are occurring due to difficulty securing memory. We expect these segments to gradually regain growth momentum as supply shortages ease and AI services become more widely adopted.”
• SK Hynix $SKHY on AI efficiency and infrastructure demand: “As AI models improve and software optimization advances, the compute volume and cost per task continue to decline.” “We do not expect these efficiency gains to reduce overall infrastructure demand. Instead, they should lower the cost and adoption barriers for AI services, expanding the user base and range of applications.” 
• SK HYNIX $SKHY Q2’26 DETAILED EARNINGS HIGHLIGHTS. Revenue: $54.6B (Est. $57.7B) ; +257% YoY, +51% QoQ. Operating Profit: $41.6B (Est. $44.2B) ; +557% YoY. Operating Margin: 76%; +3,500 bps YoY — record high quarterly OPM. Q3 Guide: DRAM Bit Growth: ~+10% QoQ. NAND Bit Growth: Low-single% QoQ, including Solidigm.
• TERADYNE $TER Q2’26 EARNINGS HIGHLIGHTS. Revenue: $1.33B (Est. $1.22B) ; +104% YoY. Adj. EPS: $2.47 (Est. $2.09). Semiconductor Test Revenue: $1.12B. Q3 Guide: Revenue: $1.20B-$1.30B (Est. $1.04B). Non-GAAP EPS: $1.85-$2.15 (Est. $1.53).
• SEAGATE TECHNOLOGY $STX Q4’26 EARNINGS HIGHLIGHTS. Revenue: $3.63B (Est. $3.48B). Adj. EPS: $5.71 (Est. $5.09). Adj Gross Margin: 52.7%; +1,480 bps YoY. Q1'27 Guide: Revenue: $4.1B +/- $100M (Est. $3.75B). Non-GAAP EPS: $7.30 +/- $0.20 (Est. $5.80). 
• BLOOM ENERGY $BE Q2’26 EARNINGS HIGHLIGHTS. Revenue: $1.07B (Est. $827.6M) ; +166% YoY. Adj. EPS: $0.78 (Est. $0.41) ; +680% YoY. Product: $935.4M; +215.4% YoY. Adj Gross Margin: 34.3%; +604 bps YoY. Raises FY26 Guide (Non-GAAP): EPS: $2.55-$2.85 (Est. $2.16). Revenue: $3.9B-$4.2B (Est. $3.73B). Gross Margin: ~34%. Operating Income: $800M-$900M. 

• @MerengoFS

• $MSFT Earnings Preview. 
• $META Earnings Preview.
• $HOOD Earnings Preview. 

Night Trading 

• Asian equity indices are -.50% to +.50% on average. 
• Asia Ex-Japan Investment Grade CDS Index 70.5 unch. 
• China Sovereign CDS 38.5 unch.
• China Iron Ore Spot 98.20 USD/Metric Tonne +.4%. 
• Crude Oil 83.0/bbl. +4.7% 
• Gold 4,086.0 USD/t oz. -.3%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.27 -.08%.
• Bloomberg Emerging Markets Currency Index 34.47 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 123.1 +.7%.
• US 10-Year Yield 4.62% +1.0 basis point.
• Japan 30-Year Yield 3.99% -2.0 basis points.
• Volatility Index(VIX) futures 19.1 +.3%.
• Euro Stoxx 50 futures -.09%. 
• S&P 500 futures +.09%.
• NASDAQ 100 futures +.02%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.