Thursday Watch

Around X:

• @Business

• The US military said it had launched a new wave of strikes against Iranian targets, following a threat from President Donald Trump to retaliate forcibly for a recent attack. 
• The message from the bond market was clear: For all of Federal Reserve Chairman Kevin Warsh’s tough talk about taming inflation, he’s in no rush to use the power of the central bank to do it. 
• The Nasdaq 100 Index closed in correction territory, pushing the broader stock market lower as the Federal Reserve refrained from raising interest rates but a trio of dissents signaled support for tighter monetary policy.
• Jersey Mike’s Subs and some of its shareholders raised $1 billion in an IPO that priced at the midpoint of its marketed range.
• The Pentagon awarded Lockheed Martin a $59 billion deal to triple Patriot missile production over the next seven years, as the Trump administration works to boost a munitions stockpile drained by the Iran war.
• Banks, private equity and capital markets show very little sign of slowing down on financing the massive AI infrastructure build-out that is thriving in the US, according to Stonepeak Infrastructure Partners CEO Mike Dorrell. 
• The Trump administration restored $600 million in funding to the organization responsible for vaccinating children in poor countries after the group agreed to changes to its vaccine-distribution plans. 
• Touted by their makers as “truth machines,” election prediction markets are increasingly cited as political barometers. But new evidence shows they’re susceptible to manipulation. 
• Goldman is gauging investor appetite for a potential $5.4 billion debt offering to help fund a Blackstone-backed QTS data center tied to Microsoft, as bubble concerns push up costs for artificial intelligence infrastructure financings. 
• Here’s what you need to know to start your day.        
• Get up to speed on what's moving global markets. 

• @ZeroHedge

• US Launches New Airstrikes On Iran After Trump Warned "They're Going To Get A Beating". 
• China To Arm Iran With Hundreds Of MANPADS Despite Trump Warnings: Report. 
• Red Sea Redux: Saudis Call For 'Coalition Of The Willing' To Protect Shipping From Houthis.             
• California Democrats Attempt To Sabotage Voter ID Initiative.
• Jack Reacher Star's Latest Movie Flops After Unhinged Anti-Trump Rant.
• MSFT Spikes After Leaving CapEx Outllok Unchanged.
• HHS Unveils Policy To End Funding For 'Dangerous Gain-Of-Function Research'.
• We first pointed out the June SOFR/Polymarket rate hike arb. Here is another: September rate hike odds are 65% per SOFR, and 53% per Polymarket⁠.com (liquidity arb). First size entrant picks up the arb.
• @berniemoreno: "Who the fuck do you think you were for doing that? It is a total disgrace what you did to this country." (video)
• Ahead of Thursday’s advance release of Q2 GDP growth, we are lowering our Q2 GDP growth forecast by 0.8pp to +1.8%, reflecting the incorporation of Tuesday’s trade and inventories data as well as the impact of recent drawdowns of the US Strategic Petroleum Reserve"- Goldman. 
• Meta Plunges After Capex Forecast Hiked Again, But Revenue Guidance Misses Bad.
• Energy Department Issues Emergency Order To Secure Power Grid In 17 US States.
• META continues to increase its Capex cash incineration and show nothing for it, in fact revenue forecast missed bad. ROIC here remains a shitshow.
• *MICROSOFT: LEASES THAT HADN'T COMMENCED $329.1B AS OF JUNE 30. we will be updating the off balance sheet obligations/debt for Q2 soon. It will probably rise by $1TN+ to $3TN.
• *NASDAQ 100 DROPS 11% FROM JUNE RECORD TO ENTER CORRECTION.
• 'Hawkish' Hold, AI Angst, & Tehran Tremors Trigger Tantrum Amid Massive Market De-Grossing.    

• @CNBC  

• CNBC Daily Open: From geopolitics to monetary policy, fighting takes center stage. 
• SpaceX faces House Energy Committee demand to tour its AI data centers in Memphis.    
• Thursday's big stock stories: What’s likely to move the market in the next trading session.
• Samsung Electronics second-quarter operating profit beats estimates on soaring AI chip demand.
• OpenAI CFO Sarah Friar tells employees that annualized revenue in July topped all of Q2.
• What a divided Fed means for investors.
• Stock futures are little changed as traders weigh Meta and Microsoft results, big Fed Day sell-off: Live updates.       
• Stocks making the biggest moves after hours: Microsoft, Meta, Starbucks, Carvana and more. 
• Here are the five big takeaways from this week's Fed meeting. 
• Jeffrey Gundlach says the bond market is telling Warsh the Fed has to start acting on inflation. 

• @WallStEngine

• US SENATORS WARN APPLE AGAINST CHINESE MEMORY CHIP DEALS. Lawmakers led by Jim Banks and Chuck Schumer urged $AAPL to abandon talks with CXMT and YMTC, even for devices sold only in China. Both chipmakers are on a Pentagon list of Chinese military companies; YMTC is also on the Commerce Department’s Entity List. Senators warned that Apple qualification could enable wider use later. They asked Apple to commit by Aug. 21 not to use the chips and disclose any technical information shared. The talks come amid a global memory shortage.
• $MSFT CEO: "Effective at the start of FY27, we are extending the estimated useful life of our data centers and office buildings from 15 to 25 years".
• DOORDASH BUILDS OWN DELIVERY DRONES AFTER FAA APPROVAL.
  $DASH secured Part 135 air-carrier certification, permitting commercial deliveries beyond visual line of sight.  
• MICROSOFT $MSFT OUTLOOK. FY27 CapEx: Expected to grow YoY. Q1 Revenue: $89.85B-$90.95B (Est. $89.63B). Q1 Azure & Other: ~+45% CC; accel. from +43% CC in Q4. Azure: H1 FY27 growth to accelerate vs H2 FY26. Q1 Guide: Q1 CapEx: Over $50B, incl. lease reclass. from useful-life update. Q1 M365 Commercial Cloud: ~+15% CC (~+16% adj. for prior-yr in-period rev rec). Q1 Operating Margin: Relatively flat YoY. Q1 Effective Tax Rate: ~20%. 
• MICROSOFT
  $MSFT
  FY27 CAPEX EXPECTED TO GROW YEAR-OVER-YEAR.
• $META on financing its AI infrastructure buildout: “We’ve been evolving our capital structure in recent years to include a greater mix of debt as we work to bring down our cost of capital.” “We have generally found it prudent to continue adding cost-efficient, long-duration sources of capital.”  
• Robinhood $HOOD ended Q2 with a record 4.84M Gold subscribers, up 39% YoY. Gold adoption reached 17% of funded customers, while annualized subscription revenue rose to $216M. Compared with the average funded customer, Gold subscribers hold roughly 4.2x more assets, have a 1.1x higher net deposit growth rate and are 3.1x more likely to adopt Robinhood Retirement. 
• $QCOM Q3’26 EARNINGS HIGHLIGHTS. Revenue: $9.95B (Est. $9.62B/$9.67B) ; -4% YoY. Adj. EPS: $2.21 (Est. $2.23) ; -20% YoY. QCT Automotive and IoT: +28% YoY. Automotive: $1.59B; +61% YoY. Handset: $5.09B; -20% YoY. Q4 Guide: Revenue: $9.7B–$10.5B (Est. $9.95B). Adj. EPS: $2.05–$2.25 (Est. $2.35). QCT Revenue: $8.4B–$9.0B. QTL Revenue: $1.2B–$1.4B. 
• FORTINET $FTNT Q2’26 EARNINGS HIGHLIGHTS. Revenue: $2.05B (Est. $1.89B) ; +26% YoY. Adj. EPS: $0.90 (Est. $0.75) ; +41% YoY. Product Revenue: $773.0M; +52% YoY. Billings: $2.37B; +33% YoY. Q3 2026 Guide: Revenue: $2.01B-$2.10B (Est. $1.95B). Adj. EPS: $0.83-$0.87 (Est. $0.76). Billings: $2.25B-$2.35B. Non-GAAP Operating Margin: 35.0% to 37.0%. 

Night Trading 

• Asian equity indices are -.5% to +1.0% on average. 
• Asia Ex-Japan Investment Grade CDS Index 71.75 +1.25 basis points. 
• China Sovereign CDS 39.0 +.5 basis point.
• China Iron Ore Spot 96.80 USD/Metric Tonne -1.1%. 
• Crude Oil 83.60/bbl. -1.0% 
• Gold 4,139.0 USD/t oz. +1.0%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.29 +.2%.
• Bloomberg Emerging Markets Currency Index 34.47 -.03%.
• Bloomberg Global Risk-On/Risk Off Index 122.1 +.7%.
• US 10-Year Yield 4.68% unch..
• Japan 30-Year Yield 3.97% unch.
• Volatility Index(VIX) futures 19.9 +2.0%.
• Euro Stoxx 50 futures +.3%. 
• S&P 500 futures +.5%.
• NASDAQ 100 futures +1.1%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer discretionary shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.