Wednesday Watch

Around X:

• @Business

• OPEC’s oil production rose again last month, with gains in Kuwait, Saudi Arabia and Iraq, though opaque shipping data made the group’s output harder to track, a Bloomberg survey found.
• The losses that forced Situational Awareness to sell stocks at deep discounts appear to be the result of highly concentrated positions in crowded trades, according to the founder of a company that analyzes short positioning data.
• Whale Rock’s flagship hedge fund is one of the biggest losers in last month’s AI selloff, with a 21.7% drop in July erasing about half of its gains for the year.
• Palantir’s stock surge has wiped out all of the year-to-date paper gains for short sellers, saddling them with billions in losses. 
• US telecom companies connected systems to data centers in ways that exposed cybersecurity vulnerabilities, potentially enabling the Salt Typhoon hacks, a House report says.
• Fidelity, the world’s third-largest money manager, reported that its assets under management rose to $7.8 trillion in the second quarter, up 23% from a year ago. 
• US pipeline operators are racing to expand their capacity to help power new data centers. 
• The flood of AI spending by big tech companies is “trickling down to the broader economy,” according to Wells Fargo & Co., which says that’s poised to push up industrial stocks.
• Get up to speed on what's moving global markets. 

• @ZeroHedge

• Is 'Communist' No Longer A Slur?
• Physical AI Faces One Critical Chokepoint, And Here's How To Profit. 
• The New McCarthys: 40% Of Professors Against Hiring A Trump-Voter.
• "It Could Be Tomorrow": California's Top Earthquake Expert Sounds Alarm On "The Big One".
• This Is The Income Needed To Be Happy In 50 US Cities.
• From Forward Guidance To Market Guidance: Warsh's Reflexive Wrecking Ball?
• Darline Graham Stumbles Out Of Gate In Bid For Lindsey's Senate Seat.
• For months, Wall Street worried AI capex had gone too far. Now it's paying a premium to get long again.
• The US told ⁠leading AI companies that it will not safety-test open-weight ‌AI ⁠models: Reuters.
• Nick Shirley's New Video Dismantles The Left's Narrative On Ceuta's Migrant Crisis.
• *VERIZON, AT&T, T-MOBILE FALL MORE THAN 4% ON SPACEX COMMENTS.
• *OPENAI SAYS MODELS BREACHED TESTING BOUNDARIES IN CYBER EVALS. *OPENAI MODEL EXPLOITED REAL SITE IN IRREGULAR TESTING MISHAP. *OPENAI TO REVIEW THIRD-PARTY TESTING SCOPE AND SAFEGUARDS.      
• World's Largest PC Makers Start Using Memory Chips From China's CXMT.   
• Goldman's Peter Callahan: "V-Shaped: NDX now up ~945 bps in just 4 sessions (since last Thursday), punching back above its 50-dma to the upside. This 4-day move stacks up with how Tech has traded out of (or during) other notable market “events” over the last 20 years (GFC, COVID, ’22 Hiking Cyle, Liberation Day, et al). Why the big move? Cleaner positioning + improved technicals [Mo’ factor bounce and/or reduced levered ETF footprints, et al] + tidier valuations [NDX fwd P/E at a ~10% discount to its 5 year avg] + strong(er) fundamentals / visibility [e.g improved ROIC sentiments post earnings last week]. As a sentiment check, i would note a number of investor questions yday/today on the “feel” out there – e.g. squeezy? hated rally? Signs of re-risking? Catalysts? Semis vs Hyperscalers? Chase or technical bounce?"     
• "Full F**king FOMO": Stocks Rip To Record Highs On Massive Squeeze, Crude Crash As Bessent Teases 'Imminent Deal'. 

• @CNBC  

• CNBC Daily Open: Mixed messaging on Iran-U.S. possible deal — but markets are cheering. 
• U.S. says Strait of Hormuz is 'free and open' as Bessent says deal with Iran is close.
• SoftBank jumps 10% as Asia tech stocks track Wall Street AI rally. 
• Wednesday's big stock stories: What’s likely to move the market in the next trading session. 
• S&P 500 futures are little changed after massive rally lifts index to fresh record: Live updates. 
• Stocks making the biggest moves after the bell: SpaceX, AMD, Pinterest, Arista Networks, Wynn Resorts & more. 
• Here's Todd Gordon's case for why this stock market breakout is not an August head fake and is likely to continue higher.
• Dow surges 900 points, S&P 500 closes above 7,700 for first time in booming Wall Street rally.  
• China's super-rich 'in shock' and hunting for cash as Beijing issues surprise tax on offshore trusts. 

• @TheTranscript

• $AMD Q2 26 Capex hit $808M, up 108% QoQ, 187% YoY, and nearly 9.4x Dec’21 levels.
• $SPCX CEO: AI compute demand is growing far faster than memory supply. "The memory output is increasing by around 20% per year… Ask yourself, is the demand increasing by 20% a year? No, the demand is increasing by 200% a year, maybe higher. If you have got demand increasing much faster than supply, Economics 101 would suggest that the price increases. It does not decrease." 
• Arista CFO: "Total revenues in Q2 were just over $3 billion, up 37.7% year over year. And above our guidance of 2.8 billion. This significant growth was driven by our AI and enterprise customers". $ANET: +9% AH. 
• SpaceX CFO: "Revenue growth accelerated across all our business segments and we delivered strong operating leverage, with significant margin expansion led by our new AI compute agreements". $SPCX: +1%AH. 
• $AAPL CEO: China has approved earlier Apple Intelligence features, but Siri AI still requires additional regulatory work. “Last week, we received approval to ship sort of the original features of Apple Intelligence. Things like Clean Up and so forth. And so we’re working now through the rollout of those, and there will be more work required down the road for Siri AI.” 

• @WallStEngine

• Rocket Lab $RKLB has won a U.S. Space Force contract valued at up to $397M to develop, launch and operate a Flatellite constellation for real-time airborne threat tracking. The award spans satellite design and manufacturing, Neutron launches and on-orbit operations.
• Elon Musk on $NVDA Rubin compute: “My best guess for monetization per watt would be somewhere between $30 and $50. This is just a guess, so take it as a guess.” 
• Elon Musk on the $SPCX earnings call: SpaceX now expects to reach $1 trillion in revenue in 2030, a year earlier than previously projected, with a “non-zero chance” of reaching it in 2029. 
• Elon Musk: “We’re taking a small amount of the expertise that we use for rockets and satellites and applying that to scaling terrestrial data centers".
• Elon Musk says SpaceX will build exclusively on $NVDA: “We’ve decided to build exclusively on NVIDIA. We think Vera is the best architecture and the best AI computer.” Musk expects more than 2 GW of compute by year-end and closer to 10 GW than 5 GW by the end of 2027.
• ARISTA NETWORKS $ANET Q2’26 EARNINGS HIGHLIGHTS. Revenue: $3.0B (Est. $2.82B) ; +37.7% YoY. Adj. EPS: $1.02 (Est. $0.88) ; +40% YoY. Non-GAAP Operating Margin: 49.9%; +110 bps YoY. First $3B+ Revenue Quarter. Q3 Guide: Revenue: ~$3.3B (Est. $2.94B). Non-GAAP EPS: $1.06-$1.08 (Est. $0.91). Non-GAAP Operating Margin: 48% to 49%.   
• SPACEX $SPCX Q2’26 EARNINGS HIGHLIGHTS. Revenue: $7.8B (Est. $6.93B) ; +92% YoY. EPS: -$0.09 (Est. -$0.26). EBITDA: $3.5B (Est. $2.03B) ; +191% YoY. Net Income: -$541M (Est. -$1.94B). Segment Revenue: Space: $962M; +29% YoY. Connectivity: $4.3B; +66% YoY. AI: $2.6B; +247% YoY. 
• ASTERA LABS $ALAB Q2’26 EARNINGS HIGHLIGHTS. Revenue: $392.4M (Est. $361M) ; +104% YoY. Adj. EPS: $0.80 (Est. $0.69). Op Income: $153.5M (Est. $133M). Net Income: $145.8M (Est. $127M). Q3 Guide: Revenue: $540M-$560M (Est. $417M). Adj. EPS: $1.16-$1.21 (Est. $0.81). Non-GAAP Gross Margin: ~72%. Non-GAAP Opex: $156M-$160M.

• @MerengoFS

• $EXPE Earnings Preview.
• $WDC Earnings Preview.
• $SNDK Earnings Preview.
• $LLY Earnings Preview.  

Night Trading 

• Asian equity indices are unch. to +3.0% on average. 
• Asia Ex-Japan Investment Grade CDS Index 67.5 -1.25 basis points. 
• China Sovereign CDS 37.0 -.5 basis point.
• China Iron Ore Spot 93.75 USD/Metric Tonne -.1%. 
• Crude Oil 75.90/bbl. +.2% 
• Gold 4,149.0 USD/t oz. -.1%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.34 -.01%.
• Bloomberg Emerging Markets Currency Index 34.53 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 126.6 +.8%.
• US 10-Year Yield 4.62% unch.
• Japan 30-Year Yield 4.0% -1.0 basis point.
• Volatility Index(VIX) futures 19.2 -.3%.
• Euro Stoxx 50 futures +.35%. 
• S&P 500 futures +.24%.
• NASDAQ 100 futures +.02%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.