I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

September is quickly living up to the billing of the worst month of the year for stocks. Stocks fell Tuesday with the S&P 500 down 0.7%, the Nasdaq down 1%, the Dow down 0.8%, after two supertankers were struck crossing the Strait of Hormuz and sent oil up around 6%. That was the second straight day of a crude surge on the renewed US-Iran fighting, with Brent into the $94 area and WTI over $90.

Futures are lower again with the Nasdaq down 0.6%, as bond yields keep climbing. The US 10-year hit 4.81% this morning, its highest since late 2023, with the 30-year near 5.29%. The same move is playing out everywhere with the UK 10-year gilts at an 18-year high, Japan’s 10-year above 3% for the first time since 1996, and German and French yields higher after eurozone inflation came in at a three year high. Asia took it hard, Japan down 2.85% and Korea 4%. Palo Alto and Dell both reported strong quarters after the close, which I’ll get to.

The Bond Market Keeps Sending the Same Message

Oil rising on the Hormuz strikes feeds into inflation, and stickier inflation pushes yields up, and the whole thing lands on a Fed already leaning toward a hike. Iran is only part of it though. The move is being driven as much by mounting government debt, entrenched inflation worry, and the borrowing behind the AI buildout, and it’s happening across every major market at once. That global character is what makes this more than a US story.

When yields rise on a government already running large deficits, the cost of servicing existing debt goes up, which can push it toward borrowing more just to cover the interest, which widens the deficit further. That is the debt spiral worry, and while we’re not in one, it’s the risk the bond market is starting to price when it demands a higher premium to hold long dated debt. Warsh said nothing about the debt at Jackson Hole, and the long end has given no ground since.

For stocks, the mechanism is straightforward even if the timing never is. Higher yields force analysts to discount future earnings more heavily, which pressures the multiple the market is willing to pay. The old question of when this bull finally cares about rising yields got a partial answer Tuesday. It cared a little. Higher yields don’t matter for stocks until they do but I have said that I believe we could be in a new normal for a while with 4-5% yields. My line remains 5% on the 10-year as the point where the pressure turns broad. We’re at 4.81% and climbing, closer than we’ve been, and this is the risk I watch above all the day to day noise.

The Labor Market Is Stalling

Tuesday’s job openings data kept the low-hire, low-fire pattern going, with almost no one quitting, even in construction, which would be cold if the AI data center buildout weren’t holding it up with enormous spending. Manufacturing data told the other half of the story, with ISM showing expansion alongside elevated prices and steady demand. A softening job market and firm inflation at the same time is the tension this Fed keeps having to weigh.

Friday’s payrolls is the week’s main read. Bank of America made the point that after Warsh’s recent comments playing up labor market resilience, even a weak jobs number may do little to change September hike pricing. The Fed has told us it’s focused on inflation, so the inflation data next week likely decides the meeting more than Friday’s jobs number does.

Dell and the AI Infrastructure Cycle

Dell delivered an exceptional quarter and the stock jumped around 9% after hours. Revenue came in at $46.97 billion against $44.92 billion expected, adjusted earnings at $7.04 versus $4.92, with revenue up 58% from a year ago. The scale of the guidance increase is the real story. Dell now expects $74 billion in AI optimized server sales this fiscal year, roughly 200% growth, against a 100% estimate just six months ago. Management rewrote its full year outlook materially in the space of two quarters, which tells you how fast this is moving.

Dell is riding the same AI infrastructure cycle we’ve seen across Nvidia, Microsoft, Amazon, and the semiconductor supply chain. It’s becoming one of the companies physically assembling and delivering the hardware that turns all that compute demand into functioning data centers, winning contracts across government, cloud, and enterprise, with traditional server and networking revenue more than doubling in the quarter.

Palo Alto and the Growing Cybersecurity Layer

Palo Alto Networks beat and guided above expectations, with revenue up 34% to $3.41 billion and full year guidance ahead of the Street.

AI is making cyberattacks faster, more sophisticated, and increasingly autonomous, which raises the value of the platforms protecting enterprise systems. Palo Alto has now held more than 2,000 customer briefings following Anthropic’s Mythos launch, up from roughly 1,200 last quarter, and management frames this as a structural shift rather than a short-term spike. CEO Nikesh Arora called it a long term tailwind that plays out over years, not a quarter or two. The takeaway that stays with me is that the more capable AI becomes, the larger and more important the security layer around it grows. CrowdStrike and Okta made the same point with their results last week.

Final Thought

The month opened the way history has told us September would be. The stretch from here into the Fed meeting looks like it could be a genuinely rough one, with Iran headlines lifting oil, yields climbing worldwide, and a rate decision that’s close to a coin toss all landing in the same two weeks. Sentiment has already turned more cautious, which is the sort of thing that surfaces when a market that ran too smoothly meets its historically weakest month.

I still think the eventual move is a hold that becomes a cut. I’ll be honest that the odds of a September hike keep climbing, and the reasons to do it are building too. The Fed has room to hike if it wants, effectively taking back some of the insurance cuts it made in 2024, and plenty of very smart people would bet on exactly that this month. Warsh has successfully cast himself as the hawk, which is how he wanted to be seen, and a lot of tightening has already happened without the Fed lifting rates. Long yields have climbed on their own, financial conditions have firmed, and that does some of the work a hike would do. My view is he can hold, keep the hawkish reputation, and let the market carry the load, even as the case for a move gets harder to dismiss.

I keep the closest watch on the 10-year and that 5% level, since the global bond move is the real risk if it keeps building.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

After I mentioned I was Asheville this week, a few of you asked whether I was here for the G20 meeting which is also in Asheville. I can confirm I am not quite important enough for that invite yet, give me a year or two! Scott Bessent got the nod ahead of me this time.

September wasted no time living up to its reputation. Nasdaq futures are down more than 1% this morning after two oil tankers were struck in the Strait of Hormuz, extending the weekend’s escalation between the US and Iran. The whole complex is under pressure, with the S&P and Dow futures off around 0.5% to 0.6%. Brent moved past $92 and WTI near $88. Bond yields are climbing worldwide, the US 10-year at a 20-month high near 4.79%, Japan’s 10-year above 3% for the first time since 1996, and UK gilts at their highest since the financial crisis. It’s a rough open to the month, and it fits everything I wrote yesterday about September being the trickier stretch.

Oil, Yields, and the Fed All Pull the Same Way

The renewed fighting has set off a chain that runs straight to the market’s main worry. Strikes around Hormuz push oil higher, higher oil feeds inflation, and stickier inflation strengthens the case for a Fed already leaning toward a hike after Warsh’s hawkish turn Friday. That’s why a geopolitical headline is moving stocks, oil, and bonds together this morning rather than staying contained to energy.

This isn’t a US story alone with yields hitting multi-decade or multi-year highs across Japan, the UK, Germany, and Australia at the same time, which tells you it’s a global repricing rather than a reaction to any single data point. Investors are reassessing what a neutral policy rate looks like and demanding more to hold long-dated debt, partly on inflation and partly on the government spending piling up in Japan, the UK, and here. The bond market is sending a clear message that stickier inflation means higher for longer rates as a baseline. The 10-year at a 20-month high, with no relief after Warsh declined to address the debt, keeps the pressure exactly where I’ve said it sits.

Bessent, from the G20 meeting here in Asheville, called the US bond market the best performing in the world and pointed to Fitch reaffirming its AA+ rating. He also signaled he expects Japan and the Bank of Japan to act to support a weakening yen, which sits at 160 to the dollar.

The Earnings Floor Under All of It

This market runs on earnings, and the earnings picture is unusually strong right where it normally softens. Evercore’s Julian Emanuel mention that this time of year typically brings downward revisions as companies temper expectations into the back half. We’re seeing the opposite, with estimates rising and fewer cuts than usual. The quarter is pacing toward 86% of the S&P beating on earnings, well above the five and ten year averages.

This gives a level of foundation to the upside bias we are seeing within the market. It is why I read the current set up as a volatile stretch rather than the start of something worse. Higher oil and higher rates are genuine headwinds, and if they run far enough they’d change the calculus. As long as they stay manageable, the earnings strength is the thing that keeps the longer-term case intact through a choppy month.

I believe the market remains choppy until the fed meeting in the middle of the month and then the market gets some direction. I still do not think the fed are going to hike in September.

Final Thought

The month opened the way I expected, with an increase in volatility. Iran strikes pushing oil up, yields climbing worldwide, a Fed leaning hawkish into a coin toss decision, and a market that hadn’t pulled back in weeks giving a little back. Sentiment has turned noticeably more nervous, with survey data showing investors trimming risk, which is the kind of thing that shows up right as a market that ran too smoothly meets its historically weakest month.

I keep the closest watch on the 10-year and that 5% level, since the global bond move is the real risk if it keeps building.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

This is my 500th edition of this newsletter and I couldn’t be more grateful for every reader, whether it is your first, or 500th for some!

August is set to close out as a strong month despite the constant noise we have had to deal with. The S&P is up about 3% on the month and the Nasdaq 4%, both their first monthly gains since May, with the Dow up 2.1% for a fifth straight advance. Tech carried the rally with the sector up nearly 6%, Nvidia more than 8%, Micron 13%. Both the S&P and Dow hit records along the way. Not bad for a month that also handed us multi-decade highs in bond yields and a hawkish turn from the Fed.

The mood this morning is different after the US and Iran resumed striking each other over the weekend for the first time in a month, with US forces hitting rocket launchers on Iran’s Larak Island and Tehran reportedly retaliating against US bases in Jordan. Oil jumped, WTI up more than 3% to $86 and Brent past $91. Short term government yields hit multi-year highs across Europe and Japan on the renewed inflation worry. It’s a fitting start to a month I’ve been flagging as the trickier one.

September Is Set Up to Be Bumpy

I wrote a few weeks ago that I expected August to hold up and September to be the harder month, and the setup going in supports that. This is historically the weakest month of the year, and now it arrives with real headlines to go with the seasonal odds. We have a September rate hike sitting at roughly a coin toss, questions about how the market handles it if it comes, the US and Iran striking each other again, and a creeping worry about buying stocks at what may be the peak of earnings expectations. Any one of them is manageable for the market but together they make for a month that could be a good deal choppier than the calm we’ve had.

We’re about where we were three weeks ago, and the S&P hasn’t had a 1% or great pullback in a while. A market that hasn’t dropped in some time, sitting near record highs, heading into its historically weakest stretch with live geopolitical and rate risk is one where I’d expect more movement in both directions. None of this means September has to be a down month. My read is simply that it’s likely to be a more volatile one, and I’d rather set that expectation now than react to it later.

The seasonal numbers are worth knowing, and Ryan Detrick, CMT laid them out well. Since 1950, September has been the worst month for stocks, and that holds over the past 10 and 20 years too. The S&P has finished September higher only 45% of the time, the lowest of any month, with an average loss of 0.6%. In midterm years it’s mixed, ranking tenth worst, with only January and June worse. There’s a wrinkle that cuts against the gloom, though, and it’s one Detrick makes. The worst Septembers have usually come when the market was already weak heading into the month. Years like 1974, 2002, and 2022 were struggling before September arrived. We aren’t. We’re coming in near highs with strong earnings behind us, which isn’t the profile that has historically produced the ugly months. So I hold the seasonal caution without treating it as a forecast of a decline.

You should definitely check out Ryan’s twitter account if you don’t follow already. Some incredible stats.

Warsh Leans Hawkish

Warsh’s Jackson Hole speech Friday gave the market more than most expected, and I would say landed on the hawkish side of things. He defended the Fed’s new habit of keeping its intentions quiet, so there was no forward guidance, but he made three things clear. He’s watching a range of inflation measures with PCE featured prominently, he agrees with the rest of the committee that inflation is too high, and he doesn’t see current policy as particularly restrictive. That last point is the one that moved things, because it implies rates could go up rather than down.

The bond market repriced quickly and the odds of a September hike jumped to around 60% right after the speech, up from 35% the day before, though that’s still close to a coin flip. Not everyone reads it as a done deal with BlackRock’s Rick Rieder calling the speech rightly hawkish while doubting it forces a September move, especially with more jobs and inflation data still to come before the meeting. Barclays went the other way, seeing a hike as more likely than not now, with another possible in December. Long yields got no relief, partly because Warsh said nothing about the debt and deficits that have been driving them. The 10-year is back above 4.7%. The bond problem I keep coming back to isn’t going anywhere, and a hawkish Fed that stays quiet on the fiscal picture doesn’t ease it.

Friday’s Jobs Report

Friday’s payrolls are the main event this week, and with the Fed’s decision only a couple of weeks out, the report could matter a little bit more this week. Expectations are modest, something like 58,000 jobs after July’s contraction, with unemployment holding around 4.1%. ING is looking for a similarly soft recovery near 65,000 and expects the low-hire, low-fire pattern to persist through the year, with tariff caution and higher borrowing costs keeping companies cautious.

The report has become an odd gauge to read as it shows a labor market that’s still creating jobs, but with a falling participation rate underneath that may reflect people giving up amid the lack of hiring. For the Fed, a hot number would hand ammunition to the officials who want to hike but worry about the cost, while a soft one complicates the case for tightening into a slowing job market. Either way, it’s the most important data point of the week and the last major labor read before the September meeting.

Final Thought

We’re entering a more volatile stretch. September’s seasonal weakness, a coin toss rate hike, renewed fighting with Iran pushing oil and inflation the wrong way, and a market sitting near highs after a long stretch without a pullback. That’s a setup for more movement, not a reason to head for the exits.

The long term case hasn’t changed, and it’s worth holding onto through a bumpy month. Earnings carried this market all year, with Q3 growth projected around 23%, and stocks have historically done well in real terms even with inflation above 3%. The S&P beat inflation in all but four of the last twenty years. I’d treat any pullback as the opportunity it usually turns out to be rather than something to run from, especially since we haven’t had one worth the name in a while. I keep the closest watch on the 10-year and that 5% level, since Warsh gave the long end no relief and the fiscal picture behind it is untouched.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors.

I’m writing this on my way to Jackson Ho... no, I’m kidding, I’m heading to Asheville to work. I’ll leave the mountain symposium to Kevin Warsh, maybe another time for me.

Yesterday belonged to Nvidia, and its he post earnings rally of around 9% pulled the whole market up with it. The S&P gained 0.7% and the Nasdaq gained 1.2% for their best day since early August. The Dow added 0.2% and is on track for its first winning week in three. Futures are slightly softer this morning as everyone waits on Warsh. Yields are barely moved, the 10-year at 4.68% and the 30-year at 5.20%.

Warsh Takes the Stage

Warsh gives his first Jackson Hole keynote as chair at 10am. Two press conferences into the job, and Warsh still hasn’t given much sense of how he reads the economy or what would move him in either direction, so investors are still trying to read into his words, a little too much at times if you ask me.

The likeliest outcome is a high level speech about the work of his five task forces and how he thinks the Fed should operate, rather than a real read on inflation or where rates go next. Bank of America laid out that if Warsh sticks entirely to broad themes like productivity and demographics and says nothing about being willing to raise rates if inflation stays sticky, the market could take the silence as dovish, and you could see long dated Treasurys sell off, with the 30-year pushing toward 5.5%.

The hawkish commentary is already out. Kansas City’s Jeff Schmid said Thursday that 2% remains the target and the Fed isn’t there, and that he sees current rates as very accommodating rather than restrictive. It’s a reminder that this is a committee, and the chair’s view is one vote among several. Futures put the odds of a hold next month at around 64%, so the base case is still that the Fed sits, but the September question isn’t closed.

The Treasury spent last week trying to push long yields down with its expanded buyback, while Warsh has signaled he’s content to let those yields run and do some tightening for him. The two are working against each other, which puts Warsh in an awkward spot heading into a speech. Whether he addresses that or stays above it will tell us something.

Marvell Runs Into the Bar

Marvell beat on revenue, up 37% to $2.7 billion, and raised its full year outlook to around $18 billion, roughly 50% growth. The stock fell 8% anyway as expectations had run so high coming in, helped by a Google partnership worth up to $12 billion in stock, that a raised forecast still wasn’t enough.

When a stock has run hard, up 184% on the year in Marvell’s case, good results can still disappoint if they don’t clear a bar that keeps climbing. It’s worth remembering right after a night when Nvidia cleared its bar and got rewarded that the two aren’t a contradiction, but more they’re the market being selective, paying for the companies that beat elevated expectations and marking down the ones that merely meet them. The AI demand underneath is real in both cases, with Marvell calling its AI bookings exceptionally robust. The stock reactions are about price and positioning, not the fundamentals.

Final Thought

Nvidia answered the week’s big question and the buildout looks like it’s still accelerating, which is the foundation under everything I’ve said this year. The strength broadened into software and the chips, and the market is heading into the weekend firmer than it came in.

The near term stays choppy, and I’d keep that in view. Warsh could move things either way this morning, PCE ticked the wrong direction, and we’re still in the historically rough stretch that runs into the midterms. None of that changes the long term case. I’d treat weakness as opportunity, keep the closest watch on the 10-year and that 5% level. Bitcoin, for what it’s worth, ran into resistance around $80,000 this week and slipped back below it, and I’d watch that level as a real test for the reason bounce.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

I feel like the market can now take a big sigh of relief after Nvidia did what it always does, and delivers a simply incredible earnings report. Nvidia closed out Big Tech earnings last night with the quarter people were waiting for. The stock dipped at first in after-hours then turned sharply higher once Jensen Huang started the call. It’s up more than 7% in the premarket and has added over $400 billion in market value since the print.

The market spent Wednesday waiting on it. The S&P closed flat, the Nasdaq down 0.1%, the Dow off 0.2%, and Nvidia itself fell more than 1% into the report, its eighth down day in nine.

The Quarter and What Stood Out

The numbers were enormous as expected but it is hard not to be impressed each time. Revenue came in at $96.2 billion against $92.2 billion expected, adjusted earnings at $2.22 versus $2.10, with revenue up 106% from a year ago and data center revenue up 117% to $89 billion. Gross margin held at 75%. At this point the scale of the growth is almost as crazy as the rate. This is a company already worth more than $5 trillion still more than doubling its revenue.

The standout for me was the guidance, where Nvidia expects around $108 billion in revenue next quarter, well above the $104 billion Wall Street was looking for, and that figure is assuming zero data center compute revenue from China, yet another incredible stat. There’s a whole market sitting outside the forecast that could be added later. Combine this quarter and next and the company is on track for more than $200 billion of revenue in six months. Operating income rose 124%, and the next-generation Vera Rubin chips are already moving into full production.

Huang framed it as AI crossing from experimentation into doing economically useful work, which turns compute itself into something that generates revenue rather than just consuming capital. He also made a point of the customer base widening. A year ago he said that a single lab was driving the buildout but now it’s multiple frontier labs scaling at once, a growing open-model ecosystem, and physical AI starting to come online. You could see that in the numbers, with the AI cloud, industrial, and enterprise segment up 138% to $40 billion, evidence the revenue is spreading beyond the handful of hyperscalers.

Nearly four years on from ChatGPT, the read from these numbers is that the buildout isn’t slowing and I’d argue it’s still accelerating.

The honest counterweight is that expectations for this company are about as high as they get, competition from AMD and from the custom chips the hyperscalers are designing keeps building, and memory costs remain elevated. OpenAI said this week its in-house silicon beats Nvidia’s, and there’s a reported $12.9 billion deal for Nvidia to buy Hugging Face, the main open-source model platform, which shows Nvidia pushing to own more of the software stack rather than just the chips. The near-monopoly on the most advanced AI chips is the thing to watch over time. For now, the quarter and the guidance answer the question that mattered coming in, which was whether the demand is real and still growing.

Concentration That the Earnings Actually Support

The top 10 stocks in the S&P now make up 40% of its market value, which is near a record, and they generate 38% of the index’s total earnings, also a record and double what it was at the 2022 low. At the dot-com peak, the 10 largest companies were about 27% of the market’s value but only 15% of its profits. Today the earnings are keeping pace with the market weight rather than trailing far behind it.

That’s the difference between concentration built on results and concentration built on hope. It doesn’t remove the risk that comes with a market leaning this heavily on a few names, and a stumble at the top would be felt everywhere. It does mean the profits are there to back the prices, which is the healthier version of a top heavy market and fits what I’ve said all year about earnings doing the work.

Software Joins In

The AI story showed up beyond the chips last night when Salesforce delivered its best second quarter ever, with shares up around 11% in the premarket on better guidance, stronger free cash flow of $1.1 billion against $643 million expected, and revenue up 11%. The part that mattered was the acceleration in AI, with its Agentforce product now at more than $1.5 billion in annualized revenue, up 240% from a year ago. That’s still small next to the overall business, but it’s growing fast enough to start pushing back on the idea that AI is purely a threat to the established software companies.

The new Claudeforce integration brings Salesforce data and workflows directly into Anthropic’s Claude, so users can write emails, update records, and pull customer information through the chatbot. There was also a $2.6 billion gain from Salesforce’s stake in Anthropic that improved the reported earnings, and I’d separate that from the operating performance the same way we did with the investment gains at Microsoft and Google. Strip it out and the combination of higher guidance, strong contracted revenue, and much better cash generation is what encouraged me. Salesforce sits right in the middle of the debate over whether AI breaks the old software model or hands those companies a new growth engine. This quarter argues it can be both, that AI eats at parts of the legacy business while creating a new opportunity for the firms that own the data and the customer relationships. My one lasting gripe with Salesforce hasn’t changed, which is that it still feels like you need a PhD and six months to learn anything on the platform.

CrowdStrike rounded it out, up more than 11% after hours on a record quarter, revenue up 26%, and raised guidance, with demand driven by the rush to secure AI systems. Software as a group caught a bid on the back of it.

The Inflation Read and Jackson Hole

PCE, the Fed’s preferred inflation gauge, came in a touch warm yesterday. Headline rose to 3.7% from 3.6%, with core holding at 3.3%. No large surprise, since CPI already gave us most of the picture, but enough to move the odds of a September hike from 36% to 44% on the FedWatch tool. It keeps the rate question open rather than settling it.

That sets up Jackson Hole, which starts today, with Warsh due to speak Friday. The expectation is that he stays broad, leaning on supply-side themes rather than tipping his hand on September, in keeping with how little he offered at his last two presses. It’s still the clearest look we’ll get at how this Fed thinks heading into the meeting.

Where I Land

Nvidia answered the question that hung over the market coming into the week, and the read is that the buildout is still accelerating rather than fading. That’s the foundation under everything I’ve said this year, earnings carrying the market with the multiple actually lower than it was, and last night reinforced it. The concentration at the top is backed by real profits, and the strength is broadening into software rather than staying penned in the chips.

The near term stays choppy. PCE ticked the wrong way, the September hike question is live again into Warsh’s speech, and we’re still in the historically rough stretch that runs into the midterms. I’d treat weakness as opportunity rather than something to run from. I keep the closest watch on the 10-year and that 5% level, since that’s where the pressure on stocks turns broad, and I still like gold here as ballast as it holds its four-month highs. The long term case is intact and, if anything, firmer after last night.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

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Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

The main event is tonight after the bell with Nvidia reporting. I have always found the scenes from NYC where traders are in bars watching Nvidia earnings to be fascinating.

The report will come after the PCE inflation number this morning, with Warsh at Jackson Hole still to come Friday. The stakes on the Nvidia print aren’t quite what they were a year or two ago, when every quarter felt like it could make or break the whole market. It’s still the largest company in the world at more than $5 trillion and the center of the AI trade, so anything Jensen says will be taken as a signal for the AI trade.

The S&P and Dow each rose 0.3% yesterday, the Nasdaq 0.7%, the Dow’s third straight up day, helped by lower yields and softer oil. Futures are flat this morning. Yields kept falling Tuesday, the 10-year down almost 8 basis points to 4.67%, after last week’s run to multi-decade highs. Gold pushed to a fresh four-month high.

What I’m Watching Tonight

Nvidia is the last of the big names to report, and the earnings arrive after a rough stretch for the stock, seven straight down days before Tuesday, its longest losing run since 2022. The chip group has struggled broadly, though Nvidia’s spot at the center of the AI build out has kept it more sheltered than most. Wall Street expects around $92 billion in revenue and earnings per share near $2.09.

The earnings themselves will be incredible but I’m focused on the stocks reaction after the numbers come out. A great quarter and a poor response would tell us more about where sentiment sits than the numbers would. I’m also keeping a small eye on the short interest in this market, which has built up again. If Nvidia delivers a real catalyst tonight, some of those short positions may be forced to cover, and that could give the market a lift.

The competitive landscape of the market has changed with more of Nvidia’s biggest customers are designing their own chips, and OpenAI said Tuesday that its in-house silicon outperforms Nvidia’s. It is the sort of claim that’s easy to make and harder to prove at scale. How Jensen Huang addresses that shift on the call matters as much as the guidance, because the long term bull case rests on Nvidia staying the default rather than getting engineered around.

The Consumer Is Getting More Careful

Away from Nvidia, the read on the consumer turned softer this week. Dick’s Sporting Goods fell more than 30% yesterday after a weak quarter and a cut to its full year outlook, blaming fewer product launches and heavier discounting from rivals.

Dick’s didn’t come out of nowhere, as consumer confidence fell for a second straight month in August to a seven month low, with people more downbeat about business conditions and jobs over the next six months. Walmart last week posted its slowest US same-store sales growth since late 2020, with lighter traffic and smaller baskets as shoppers made trade-offs. Home Depot and Lowe’s both described customers picking and choosing which projects to take on. The picture is a consumer who is still spending but doing it more carefully, leaning toward value and cutting back where they can. Dollar General and Dollar Tree report Thursday and will fill in how far up the income scale that trading down goes.

This fits something I’ve written about before, that the economy has been leaning less on the consumer and more on corporate investment and the AI build-out. A more cautious shopper matters less to earnings when the spending engine has broadened, but it’s not something to wave away either. The consumer is two-thirds of the economy, and a second month of falling confidence alongside a retailer losing a third of its value is worth tracking rather than dismissing.

The Inflation Read and Friday’s Speech

This morning’s PCE is the Fed’s preferred inflation gauge. Economists look for 0.1% on the month and around 3.6% on the year. A soft number supports the case for holding in September and keeps some pressure off the long end. A hot one revives the calls for a hike that the July dissenters were pushing for.

Warsh speaks Friday, and the expectation is that he stays guarded rather than laying out where policy goes, given how little he offered at his last two presses. Whatever Warsh delivers, it will be the clearest look we’ll get at how this Fed thinks, and with the Treasury having spent last week trying to push yields down while Warsh has said he’s content to let them run, the tension between the two makes for an interesting speech.

Final Thought

The numbers will be strong. The stocks reaction will tell us more about the market’s appetite here than the revenue line does. I’d stay patient rather than position hard ahead of a print that could break either way.

Yields easing this week is welcome, but I keep the closest watch on the 10-year and that 5% level, because that’s where the pressure on stocks turns broad. Gold continues to work, pushing to new four month highs while the dollar softens and the debt questions linger. The near term stays choppy through this historically rough stretch into the midterms, and I’d treat weakness as opportunity rather than something to run from. The bull case underneath, earnings carrying the market with the multiple actually lower than it was, hasn’t changed through any of this.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

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Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

The market is waiting around for Nvidia to report tomorrow after the close. We will also get the PCE inflation number on the same day, and Warsh speaks at Jackson Hole Friday. Three events that each matter on their own, packed into a 3 day period, and I expect to see a little bit of a wait and see market until Nvidia minimally.

You could see the caution in the markets yesterday, with the S&P falling 0.3% and the Nasdaq 0.8%, with the selling concentrated in the names most exposed to Nvidia’s print, semiconductors and memory. The Dow went the other way, up 0.3%. That split tells you this was positioning ahead of Wednesday rather than a broad move. Futures have turned higher this morning, the Nasdaq up around 1%, after CNBC reported the Treasury could tap its $1 trillion cash account to fund the bond buybacks. Yields eased on that, the 10-year back to 4.67% and the 30-year to 5.20%. Bitcoin ran to $81,000 overnight before settling back near $79,300 as I write.

The Setup Into Nvidia

I’m treating this as a wait and see market into Nvidia, and the pullbacks yesterday in semis and memory were the names most in the crosshairs getting marked down ahead of the number. That’s normal before a print this size. The question isn’t really the result, which should be strong, but how the stock trades on it after a run into the report.

I wrote yesterday about the earnings call having the potential to move half the S&P directly, and what I’d add is that Nvidia tends to climb into these prints and then face a high bar on the day, so a good quarter can still bring a sell-off if it doesn’t clear expectations that have already built up. I’m watching the reaction more than the headline figures.

A Higher Yield World

My bigger picture view is that we’re in a high-yield environment for a while, and I agree with Edward Yardeni that something like 4% to 5% is becoming the new normal. This isn’t a spike that reverses in a quarter. It’s a change in the level that rates settle around, and it has real consequences for how portfolios get built and how much bonds compete with stocks for a place in them.

Mike Wilson at Morgan Stanley put out a piece on this that I thought was worth reading. His argument is that the economy has shifted out of the disinflationary run that held from roughly 1982 to 2020, the long stretch that gave us falling yields and a multi-decade bond bull market with rates eventually down near half a percent. He sees us in something closer to the post-war period from 1945 to 1982, with higher nominal growth, inflation that runs above 2% and ebbs and flows, more economic volatility, and a Fed that has to react to it rather than sit still. If that framing is right, the trend in long yields stays higher over time, with cyclical rallies along the way rather than a return to the old regime. It lines up with what I’ve been saying about the long end being the thing I watch most, and it’s part of why I don’t treat the current yield levels as an anomaly waiting to correct.

Wilson also said equities have shrugged off yields pushing well past 4.5%, which he’d flagged as a warning line, and haven’t blinked. His caution is that borrowing costs this high eventually bite if they stay here, and that another leg up in oil could force the issue, potentially leaving a dovish Fed with no choice but to hike. I don’t think we’re there, and the resilience has been real, but it’s a risk worth holding in view rather than dismissing because the market has been strong.

The Treasury Keeps Pulling Levers

Scott Bessent unveiled a plan to isolate Iran by pressuring the countries that still buy its oil, notably China, which took a little heat out of crude, and the reporting that the Treasury might use its cash reserves to fund the buybacks helped yields lower this morning. The consistent thread is a government signaling it will step in to hold borrowing costs down.

Wall Street doesn’t think it works, and I lean that way too. Goldman said plainly that the buybacks don’t address the main sources of the volatility at the long end and are unlikely to reset rate levels even if scaled up. Wells Fargo argued you’d need an actual macro change to bring long yields down, a slowdown in growth or inflation, less uncertainty around the Fed, real fiscal discipline, or a slowdown in the investment grade issuance funding all the AI build out. Several desks expect the curve to keep steepening, which is the opposite of what Bessent is after. The tools can move yields for a day. They don’t touch the deficit, the inflation, or the wave of corporate borrowing underneath the move.

That credibility gap is feeding what people are calling the debasement trade, money moving into assets that hold value when faith in the currency and in policy softens. Gold is at a three-month high, Bitcoin had a huge week, and the dollar is at its weakest since May, down almost 3% over two months with hedge funds now positioned against it. When investors start questioning whether Washington can fund itself at a price it likes, they look for things that sit outside that system. I continue to like gold for exactly this reason, and the move this month has rewarded it.

Final Thought

The setup into the back half of the week is the whole story. PCE and Nvidia Wednesday, Warsh Friday, any of which could set the tone into September. I’d stay patient rather than position hard ahead of events that could break either way. The pullbacks in semis and memory yesterday were the market bracing for Nvidia, not a verdict on it.

Earnings have carried this market, the multiple has come down even as prices rose, and a high-yield world doesn’t sink stocks on its own when growth and earnings hold up. The near term stays choppy, we’re in the historically rough mid-August to October window, and I continue to expect moves both ways into the midterms. I’d treat weakness as opportunity, keep the closest watch on the long end, and hold gold while the dollar softens and the debt questions build.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

There are two events this week that will set the tone for the rest of the year, with both of them happening on Wednesday. Nvidia will report their earnings and the Fed’s Jackson Hole symposium gets underway with Kevin Warsh due to speak. Nvidia will tell us whether the AI trade still has the numbers to justify itself and Jackson Hole will give us the clearest look yet at how this Fed thinks, at a moment when the bond market is doing a good deal of its work for it.

The S&P fell 1.4% to 7,674, its worst week since mid-July, with the tech sector down 3.2% and the Nasdaq off 2%. Futures are slightly lower again this morning, tech leading the declines with names like Coherent, Lumentum, and SanDisk down 4% to 5%. Yields have eased slightly with the 10-year near 4.71% and the 30-year at 5.25%, after the 30-year topped 5.3% last week for the first time in nearly two decades. Korea fell more than 3% overnight and Gold keeps climbing, up again this morning to a three-month high.

Jensen’s Turn

I heard Joshua Brown call Jensen Huang the AI Fed chair recently, and I think there’s something to it. Side note, I have been a fan of Josh for a while, so I think there’s something to most things he says. Wednesday’s Nvidia print has the potential to move half the companies in the S&P 500 directly, given how much of the market’s earnings and capex now runs through this one company.

I believe Nvidia needs to deliver the numbers we’re already expecting, and then the more interesting part is how the stock reacts to them. Expectations are set at roughly $92 billion in quarterly revenue, up around 97% from a year ago, with earnings close to doubling. The stock is having its best month since April, which isn’t a surprise because it tends to run into its prints. That run is part of what makes the reaction so hard to call. When a stock has already climbed into the number, a good result can still sell off simply because perfection was priced in. We saw exactly that with Samsung and others earlier in the summer.

What keeps Nvidia interesting despite all this is the valuation is that it trades at roughly a market multiple, which for a company growing this fast is not where you’d expect it after the run it has had. Bloomberg reported over the weekend that Nvidia has told customers its next-generation Vera Rubin and Blackwell servers will see price increases north of 15%, which speaks to demand that still outstrips supply. It is also worth watching how / if Nvidia pushes into open-source AI and widens its customer base from a handful of hyperscalers to millions of individual developers and even governments. That would change the shape of the business. For now, the job Wednesday is simpler. Show the demand is real and let the reaction tell us where sentiment actually sits.

The Bond Market Is Fun to Watch and Hard to Manage Around

The bond market has been the most interesting thing in markets for two weeks, and I’ll be honest that as someone who writes about this every morning, that makes the job of market commentator a whole lot more enjoyable. As the person actually managing money, it’s far less enjoybale! The swings in long yields are driving volatility in equities, and they’re also hitting the part of a portfolio that’s supposed to be the stabilizer. When bonds move like this, the defensive side stops playing defense.

This has real consequences for how retirement portfolios have behaved this year. When the safe part of the portfolio is swinging around alongside stocks, the diversification you were relying on isn’t doing its job in the way it used to. This is why having more than one source of income in retirement has mattered so much this year. Leaning entirely on the bond side for income and stability has been a rougher ride than most people expected, and spreading those income streams across different sources has been one of the more important things we’ve worked on with clients through this stretch.

As for what’s driving the yields, the Treasury tried to step in last week. It expanded its buyback of longer-dated debt from $2 billion to at least $4 billion, and Bessent later said it could go higher. Yields fell the day of the announcement and were climbing again within 48 hours. The reasons behind the selling don’t bend to a buyback. US debt crossed $40 trillion last week, the deficit keeps growing, oil is elevated with the Iran conflict unresolved, and a large new factor sits underneath all of it.

A meaningful part of the pressure on yields now comes from the large amount of borrowing tied to AI infrastructure. Companies are issuing record amounts of debt to fund data centers, and that supply competes with the government for the same pool of money. You can see an example of this this morning with SoftBank issuing around $6.3 billion in bonds, and Alibaba fell as much as 10% in Hong Kong after announcing a $10.2 billion share sale to fund its own AI push, days after its capex jumped 75% and profit dropped by the same amount. The money to build all this has to come from somewhere, and increasingly it’s coming from the bond and equity markets at the same time.

I will add that my view on the debt is that it worries me less than it worries most people. I’m not saying it never matters but it has been a source of worry for several decades and the economy has kept working through it. Debt is approaching roughly 100% of GDP, close to a one to one ratio with the economy. When you break down who actually owns it, a large share is held domestically, which means much of what the government pays in interest flows back to American investors rather than out of the country. That changes the math on how much it drags, and it’s why I treat it as a long term issue to monitor rather than a near term threat.

What the Treasury Move Does to the Fed

The buyback created an odd tension with the Fed that will carry into this week. Warsh has said he’s content to let higher yields tighten conditions on their own, which spares the Fed from having to raise rates itself. The Treasury just tried to push those same yields down. Two arms of policy pulling in opposite directions.

The read that matters most this week is Wednesday’s PCE inflation number which is the Fed’s preferred gauge. A soft print supports the case for holding in September and takes some pressure off the long end. A hot one revives the calls for a hike. Goldman’s Jan Hatzius thinks the temporary drivers like tariffs and energy fade from here, which would help. Warsh’s speech at Jackson Hole will fill in the rest of the picture, and given how little he’s given the market to work with so far, it carries more weight than a chairman’s remarks usually would.

Bonds Versus Stocks Looks Like a Real Choice Again

One consequence of higher yields changes how a portfolio gets built. With the 10-year near 5% and equities trading around 19 times earnings, the two are offering something close to the same yield. A 19 multiple works out to an earnings yield of roughly 5.3%, so you can hold a Treasury paying about 5% with reasonable predictability, or hold stocks yielding about 5.3% with earnings growth and upside on top, but a lot more volatility to sit through.

For most of the past 15 years, with bonds paying 1% or 2%, there wasn’t much to weigh. Now there is, and it makes allocation more interesting than it’s been in a long time. It also pushes back against the idea that high yields have to sink stocks. Strong growth, strong earnings, and heavy AI investment can keep equities rising even with yields where they are. Only about 3% of S&P 500 stocks now yield more than the 10-year, the lowest since 2007, which tells you how far the income comparison has shifted toward bonds.

Where I Land

My read on valuation is the anchor here as the market’s multiple has come down even as prices have risen, from about 23.5 times to roughly 19 times. Earnings have done the work, which is the healthy version of a rising market and the reason I stay constructive. That hasn’t changed through two weeks of bond driven selling.

Mid-August through October is historically choppy, and I continue to expect moves in both directions as we head toward the midterms. This week gives the market plenty to react to, with PCE, Jackson Hole, and Nvidia stacked into three days, any one of which could set the tone. I’d treat weakness here as the opportunity it usually turns out to be rather than something to run from.

The Chicago Fed activity index today, consumer confidence Tuesday, then PCE, Warsh, and Nvidia Wednesday. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that’s a conversation I’m always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

The relief that the bond market lasted about 1 day as long yields climb back on Thursday, after brushing aside Scott Bessent and the Treasury. The 30-year rose to 5.24% and the 10-year to 4.70%, erasing the drop that had followed Wednesday’s intervention. The S&P was down 0.9%, the Dow down 1.3% and the Nasdaq down 1%. Bitcoin pushed above $70,000 for the first time since June and traded as high as the $79,000s overnight.

The futures are pointing higher this morning, with the S&P up 0.34% and the Nasdaq up 0.6% as I write this. On the week the S&P is down about 1.9% and the Nasdaq off 2.5%, which would snap a three week winning streak.

Bonds Don’t Accept The Rescue

On Wednesday, the Treasury department stepped in to buy long dated debt, which then drove down yields, but by Thursday, yields had gone back up. With the government intervening directly to push yields down and the market pushing them right back within a session, you are able to see how deep the pressure on the bond market actually is currently.

Treasury Secretary Bessent said part of the point was to signal that the administration believes yields have climbed above what the fundamentals justify, and he made clear he is willing to expand the program beyond its initial size if needed. One round of intervention was not able to do the trick so a bigger round is already on the table. The trouble is that the forces driving yields higher like heavy government spending, sticky inflation, uncertainty about where the Fed is headed, and a wave of corporate borrowing to fund the AI buildout are not things a buyback can fix.

The Fed can create money to buy bonds but the Treasury cannot, so any buyback has to be paid for somewhere else, most likely by issuing more short-term bills, which means the operation shifts the maturity of the debt investors hold rather than shrinking the pile they have to absorb. The long end continues to be the area I watch above all else in this market environment.

SpaceX Meets Another Lockup

SpaceX fell back to its IPO price on Thursday as a fresh batch of shares became eligible to trade. The stock fell 4% and closed just under its $135 offering price. There were roughly 319 million shares held by early employees and investors that were unlocked as part of the staggered schedule that will unlock nearly 90% of the company’s 13 billion shares through 2027. The stock had run into a wall around $150 twice earlier this month, near where it first traded on its debut, before pulling back to this level.

A tranche of 1.3 billion shares unlocks around the company’s earnings in early November, followed by the 180 day expiration in December. Musk’s own 6.42 billion shares stay locked until June 2027, and he, like most equity-rich founders, tends to borrow against his stake when he needs cash rather than sell it outright. My view remains the same as it was heading into the IPO and this is that Spacex is a company with real, valuable assets that I like for the long term, and I have wanted the euphoria and the float to settle before the valuation makes sense.

Bitcoin Rides the Turn

Bitcoin is having its best week for quite a while up around 20% and adding some $450 billion in crypto market value since Monday. The move rode the same falling yields, weaker dollar impulse that lifted risk assets after the Treasury’s intervention, and it got an extra push from the president urging Congress to pass crypto legislation the industry has been waiting on, with a late effort to move the Clarity Act in the coming weeks.

There is a lot of debate currently about where crypto goes from here, since the conditions people long argued would send it higher, friendly policy, heavy government debt, geopolitical stress, and elevated inflation, have largely been in place and for months the price went sideways anyway. The bulls point to this week as the catalyst finally arriving, while the bears counter that if all those favorable forces could not sustain a rally, the real problem is that adoption and genuine use cases have not caught up to the enthusiasm, and that speculative money has drifted toward AI instead.

Where I Land

The bond market is in charge currently and the Treasury’s attempt to tame it this week didn’t work. The forces behind the climb in yields, the deficit, inflation, Fed uncertainty, and the borrowing binge funding AI, are still firmly in place. Stocks fell in sympathy, and a three week winning streak looks set to break. The Iran conflict adds to it, with Washington threatening crushing sanctions and oil holding onto a second weekly gain, which keeps the inflation worry alive.

The earnings underneath this market remain the strongest I have seen outside a recovery, and the resilience it showed earlier in the week, snapping back the moment bond pressure eased, tells you the foundation is sound. What this stretch does is reinforce the caution I have carried into the fall, where the seasonal window is unkind. I stay constructive for the long term while treating this weakness as the opportunity it usually turns out to be rather than something to run from.

The manufacturing PMIs this morning, BJ’s to finish retail week, and next week’s PCE inflation report already shaping up as the read that matters most into the September meeting. Enjoy your weekend. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

The bond market got a reprieve yesterday after the treasury Department stepped in with a plan to more than double its buybacks of long-dated government debt. Yields fell hard on the news and snapped a three day losing streak in stocks. The 30-year dropped 9 basis points to 5.19% after touching a 19 year high earlier in the week, and the 10-year eased to 4.65%. The S&P and Dow each added 0.2%, with the Nasdaq just behind.

Futures are near flat this morning after that bounce, with yields ticking back up slightly as the market digests the buyback plan. Oil rose again on fresh Iran threats, with the president vowing economic warfare on Tehran and penalties for its supporters. Today brings Walmart earnings before the bell, the anchor of retail week, plus jobless claims and the Philadelphia Fed reading. Gold pulled back a little after a strong run, and Bitcoin pushed above $70,000 for the first time in months.

Washington Steps Into the Bond Market

With long yields climbing to levels not seen in two decades and the selloff spreading globally, the Treasury announced it would at least double its repurchases of 10, 20, and 30-year debt over the coming months. A buyback like this has the government going into the market to buy back its own bonds, which supports their price and pushes yields down. The market reacted exactly as intended, with yields tumbling and stocks catching a bid.

The administration acting tells you it was concerned enough about this week’s rout to intervene, which shows how much the bond market was weighing on everything. The relief was welcomed but it did not erase the months long climb in yields, and several of the forces driving that climb sit outside the executive branch’s control. The deficit is enormous with no sign of narrowing, defense spending is rising, the AI buildout keeps competing with the government for capital, and inflation has not gone away, with the Iran conflict keeping energy prices elevated. I would treat this as genuine relief rather than a resolution, and the question is whether the buybacks prove a lasting influence or a blip.

Warsh Gets Squeezed From a New Direction

The Treasury’s move creates an awkward tension with the Fed. Warsh has signaled that he views rising yields as a useful thing, since higher borrowing costs tighten financial conditions and do some of the Fed’s work without the Fed having to raise rates itself. The administration just went the other way and acted to push those same yields down. So you have the Treasury and the Fed pulling in opposite directions, one trying to lower long term rates while the chairman had been content to let them run.

The practical consequence is that if the Treasury succeeds in easing financial conditions through lower yields, and inflation stays where it is or worsens, the Fed may find itself under more pressure to raise the funds rate to offset that easing. The path for this Fed keeps getting more complicated, which makes Jackson Hole pretty intriguing to me.

Gold Keeps Earning Its Place

I have been constructive on gold through the summer since the large sell off and this environment is only confirming that view for me. Gold broke out of the technical downtrend and with yields elevated and the dollar weakening, it has continued to work. Even with a small pullback yesterday on profit taking after a 4% gain, the trend since the breakout has rewarded the patience I spoke about when the price action was weak and the metal was unloved earlier in the summer.

Central banks have been steady buyers, and gold does its best work as a diversifier in exactly this kind of backdrop, with fiscal worry mounting, the dollar softening, and real questions hanging over the bond market. When the safest government debt is being called into question by the market, an asset that answers to none of that has an obvious appeal.

The Consumer Read Closes With Walmart

Retail week finishes with its most important report this morning, with Walmart reporting before the bell. Expectations are for solid results, though Wall Street is looking for some slowdown in US same store sales. Walmart is the widest lens on the American consumer we get, spanning income levels and regions, and after Home Depot’s steady beat and Target’s stronger than expected turnaround this week, it will either confirm or complicate the picture of a consumer that is careful but holding.

The retailers have shown a shopper who responds when the price is right, with Target leaning on price cuts to pull customers back and posting broad based category strength. That fits the theme I spoke about recently where we have an economy leaning less on a stretched consumer and more on corporate investment and the buildout, while the consumer itself proves durable rather than either booming or breaking. Walmart today should tell us whether that holds at the top of the retail food chain.

Final Thought

The market showed real resilience this week, and I have been impressed by it. It absorbed long yields at multi-decade highs, a global bond selloff, an Iran escalation, and a reminder through OpenAI that the market wants proof the AI spending pays. That is the behavior of a market with strong fundamentals underneath and is showing the earnings and cash flows powering this market are strong enough to weather these scares.

I expect the chop to continue, and I would not mistake one day’s relief for the end of the bond market’s pressure, since the forces behind the yield climb remain largely in place. What this week reinforces my constructive view for the long term while treating pullbacks as likely and welcome rather than something to fear.

Walmart before the bell, jobless claims and the Philadelphia Fed this morning, and next week’s PCE already looming as the inflation read that matters most. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

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Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

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Good morning investors,

The bond pressure that has defined this week is still with us, but it did ease a touch overnight. Stocks fell again Tuesday, a third straight loss for the S&P, as high oil and the climb in long yields weighed on tech in particular. The 30-year Treasury held near a 19-year high, and the selling in bonds around the world dragged Asian markets down hard overnight, with Korea down nearly 6% and Japan down more than 3% on losses in the big chip names.

The S&P gave up 0.7% Tuesday, the Nasdaq 1.3%, and the Dow 0.2%. Futures are near flat this morning, with yields pulling back slightly from their multi-decade highs, and the 10-year easing to around 4.70%. Oil is up more than 1% again on fresh Iran threats. The day brings the Fed minutes this afternoon and more retail earnings, with Target, Lowe’s, and TJX reporting.

What the Fed Minutes Might Tell Us

The minutes from July’s meeting come out this afternoon, and it will be interesting reading with how divided the Fed currently is. The committee held rates in a 9-3 vote, with all three dissenters wanting a hike, the first time in years that three officials broke the same direction. What I want to see in the minutes is the reasoning on both sides, how the hawks justified pushing for a hike and how the majority defended holding. I also want to see what the committee thinks the AI buildout and the Iran conflict do to the path of inflation. Warsh has given the market so little to work with in his public comments that the minutes become one of the few windows into how this Fed actually reasons.

Warsh sits in a difficult spot at the moment. His Fed is holding rates steady, and the recent run of softer data has pushed the odds of a hike down, since a weaker economy needs less restraint to keep inflation in check. At the same time the bond market has done the opposite, driving the 30-year to 19-year highs and raising borrowing costs across the economy on its own. So even as the Fed holds, the market is tightening for it. That gap between the Fed and the bond market shows a disagreement about where inflation is headed. Next week’s PCE inflation reading takes on real weight because of it.

The Consumer Turns In a Better Read

The retail earnings this week are painting a more encouraging picture of the consumer than I expected. Target beat and raised its full year guidance, with comparable sales up 3.8% against expectations closer to 2.4% and strength the company described as broad based across its categories. It is two solid quarters in a row now for a retailer that had struggled for over a year, though management was careful to say the turnaround has further to go and that two good quarters is not the goal. Some of the bottom line boost came from a one-time tariff refund rather than operations, which is worth keeping in mind, but the sales strength was real.

This lands alongside Home Depot’s steady result yesterday, and together they suggest a consumer that is holding up rather than cracking. Target has leaned on lower prices to pull shoppers back, cutting prices on more than ten thousand items, which fits the price sensitivity I have flagged in other consumer names. When retailers compete on price and volume responds, it tells you the demand is there when the value is right. The read is a consumer that is careful but not broken, spending where the price makes sense, which is about what the data has been saying all along.

The Chip Selloff and a Word on OpenAI

The semiconductors took the brunt of the global selling overnight. The Wall Street Journal reported that OpenAI’s second quarter results disappointed, with revenue up 18% quarter over quarter while losses widened, and that weighed on Oracle and some of the AI names in the premarket. This is the monetization question I raised earlier this week showing up in a real number. The market is moving from cheering the spending to asking what it earns, and a report that one of the marquee AI companies is growing revenue but losing more money as it does is exactly the kind of scrutiny that phase brings. It does not change the structural story though, as the demand for compute remains real, but it is a reminder that the market will be selective and will punish spending that runs ahead of results.

On the other side, SK Hynix gave the memory group a reason to steady after a rough session, committing to return at least half its free cash flow to shareholders through 2027 and to buy back and cancel a large block of stock. That kind of capital return from a company at the center of the memory buildout speaks to real confidence in the cash it expects to generate, and it fits the constructive view I came back to on memory after last week’s break in the downtrend. The demand case there keeps confirming itself even as the shares swing violently with the broader chip tape.

The Shorts Pile Up

One technical point I am watching with interest. We recently hit the largest level of Nasdaq short positions on record. I would never say those traders are wrong, and plenty of them may have good reasons for the caution given the yields and the seasonal setup. A lot of it will also be hedging. What I would note though is that when a short position gets this crowded, the market often has a way of squeezing it out. A heavily shorted market that stops going down can turn sharply higher as those positions are forced to cover, and it is one reason I am wary of getting too bearish here even with all the near term worries. It also fits the positioning picture I keep pointing to, where the big money is far from all in on the upside, which leaves fuel for a move higher rather than signaling a top.

Final Thoughts

The market is working through a genuine test this week, and the driver remains the one I have pointed to all year. Long yields near multi-decade highs, a global bond selloff, oil pushing back up on the Iran escalation, and now a reminder through OpenAI that the market wants proof the AI spending pays. Three down days in the S&P reflect that, and the heavy selling in Asia overnight shows how the bond move ripples everywhere.

None of it changes my longer term read, because the fundamentals underneath stay as strong as I have seen, and as one strategist put it well yesterday, the earnings and cash flows of the biggest companies are strong enough to power through this kind of scare. What it reinforces is the caution I have carried into the fall. The seasonal window is poor, sentiment leaves the market exposed, and the bond market has yet to show how it settles under Warsh. I stay constructive for the long term while treating a pullback as likely and welcome rather than something to fear, and the record short positioning is one reason I would be careful about betting heavily on more downside from here. I keep my closest watch on the 10-year as it sits near 4.70% and that 5% level, hold the energy exposure that this Iran escalation rewards, and would use weakness in quality names as the opportunity it usually turns out to be.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

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Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a financial advisor and wealth advisor based in Charlotte, North Carolina. I work with high income professionals, families and business owners on comprehensive financial planning, investment management and tax-efficient wealth strategies.

My clients are typically doing well financially but want a more coordinated approach to their investments, taxes and long-term planning. That can include retirement planning, equity compensation and RSUs, concentrated stock, business owner planning and building an investment portfolio around the life they actually want to fund.

This newsletter is where I share my thinking on the markets and what is impacting your portfolio.

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Good morning investors,

The thing I have flagged as my chief concern for a good while now is the story this morning. A global selloff in government bonds has pushed long term yields to levels most investors have never traded through, and it is happening all over the developed world, not just the US. This is the risk I keep saying matters more than anything happening in the stocks, and it deserves the top of the letter today.

Monday saw the S&P and Dow each down 0.5% and the Nasdaq down 0.3%, as the stalled Iran situation and rising yields weighed on the market. The 30-year Treasury closed at 5.31%, its highest since 2007, and pushed higher again overnight toward 5.33%, a level not seen since 2002. The 10-year sits near 4.74%, also the highest since 2007. Futures are lower this morning, led down by the semiconductors, with Western Digital and SanDisk both down around 6%, though the Dow is holding up on a Home Depot beat. Oil is moving to the upside with Brent back above $90.

The Bond Market Is the Story

Before I get into this section, I want to give a little education for my readers who may not fully track the bond market or its direct link to equities. This should help give some context on why I have written about this so much lately.

When a government wants to spend more than it takes in, it borrows by selling bonds, which are basically IOUs that pay the buyer interest over a set number of years. The interest rate it has to offer is the yield. When buyers get nervous about lending, whether because there is too much debt being issued, because inflation might eat into their return, or because they simply want more compensation to tie their money up for thirty years, they demand a higher yield. That is what has been climbing, and the long end of the market, the bonds that mature furthest out, is where the strain is showing most.

Why should a stock investor care about government bond yields? Here are two main reasons:

1. Opportunity Cost: Higher yields make risk-free government bonds an attractive alternative, pulling capital away from equities. Furthermore, future corporate earnings are worth less today when a guaranteed bond offers a higher return to wait.

2. Borrowing Costs: Sovereign yields set the benchmark rate across the broader economy, raising financing costs for everything from corporate debt to consumer mortgages.

That brings us back to the situations today. Long yields are climbing as investors are demanding more compensation to lend to governments for decades, and the pressure is showing up everywhere at once. German yields hit a 15 year high overnight, French yields reached levels of 2008, and Japanese long yields pushed past their spring peak to the highest in 40 years. When Japan’s long bonds move, it spills straight into ours, because global capital treats these markets as connected. A repricing of long term borrowing costs abroad pulls US yields up regardless of what our own data says.

Interest on the national debt has reached a record $1.4 trillion over the past year, nearly triple what it cost in 2020, and on the current path it will surpass Social Security as the government’s single largest expense within a few years. That is the box a heavily indebted government finds itself in when yields rise. This means they are paying more to service the debt they already own. You then add in the heavy Treasury issuance, with the latest 30-year auction clearing at the highest yield since 2001 and demand at the long end looking less than robust, and you have a market asking for a bigger premium to fund the deficit. The AI buildout compounds it, since the tech issuers financing all this infrastructure through the bond market are competing with the government for the same pool of capital.

Yields have refused to fall even as the data softened. July retail sales were weak and the labor market has cooled, which is normally the kind of backdrop that would bring yields down, but instead they continued to climb. This shows it is being driven by supply, fiscal worry, and a global repricing rather than by the growth outlook. The level I keep watching is 5% on the 10-year, because that is roughly where the pressure on the market’s multiple turns broad. We sit near 4.74%. This remains my single biggest concern.

Iran Escalates as the Truce Expires

The other factor in this morning’s move is the escalation in the Middle East. The ceasefire between Washington and Tehran expired Monday with no extension and no breakthrough, and both sides have walked away from further talks. Overnight a cargo vessel was struck by a projectile crossing the Strait of Hormuz, and President Trump threatened to strike Oman, a longtime US ally and mediator, for moving toward its own arrangement with Iran. Treasury Secretary Bessent promised aggressive sanctions on Oman if it gets involved and unprecedented new measures on Iran this week. The US blockade continues, and the strait stays effectively contested.

The escalation changes the near term picture, and it feeds the inflation worry driving bonds. Oil above $90 Brent pushes straight into the price data at the worst possible moment, right as the Fed was gaining room to hold on cooling inflation.

The Calendar Turns Less Friendly

Yesterday I wrote about September carrying its seasonal baggage. We are entering the stretch that has historically been the least kind in midterm election years. BTIG’s Jonathan Krinsky, CMT noted that the window from mid-August into mid-October has produced pullbacks of at least 7% in every midterm year going back through 1990, from 1998 and 2002 up through 2018 and 2022. That is a consistent enough pattern to respect, layered on top of the bullish sentiment I flagged, which leaves the market exposed when few are braced for a decline.

I would not build a portfolio around a seasonal marker, and history is a tendency rather than a promise. The counterweight is the earnings season just behind us, where 86% of companies beat expectations, one of the strongest showings in memory. A market carried by fundamentals that strong can shrug off seasonal odds. This is just a reminder that the stock market is never a straight line.

The Consumer Read Begins

The retail earnings that anchor this week started with Home Depot, which beat and held its full year guidance steady. Its CFO described operating in what he called frozen housing market conditions, which lines up with housing starts today expected to drop sharply. The read is a consumer and a housing market that are holding rather than accelerating, with the company leaning on taking share rather than a rising tide.

This connects to a comment I recently made where I said that the economy is leaning less on the consumer and more on corporate investment and the AI buildout. A steady but soft read from the home improvement names would fit that picture, and the bigger tells come later this week from Walmart and the broader box stores. For now the consumer looks durable rather than either booming or breaking, which is about what the earnings and the data have been saying all along.

Final Thought

Long yields at multi-decade highs, a global bond selloff with almost no margin for error in the pricing, a fiscal backdrop that grows harder as rates rise, and now an Iran escalation pushing oil and inflation the wrong way. Together they explain why stocks are heavy and why the long end deserves more of your attention than the daily moves in the chips.

None of it changes my longer term read, because the fundamentals underneath remain as strong as I have seen, with the cleanest earnings picture outside a recovery and a buildout that keeps confirming itself. What it does is reinforce the caution I have carried into the fall. The seasonal odds are poor, sentiment is bullish enough to leave the market exposed, the bond market has not shown how it will judge Warsh’s Fed, and the midterms add their own uncertainty. I stay constructive for the long term while treating a pullback as likely and welcome rather than something to fear. I keep my closest watch on the 10-year as it edges toward 5%, hold the energy exposure that days like this reward, and would use weakness in quality names as the opportunity it usually turns out to be.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

After a couple weeks of heavy data and geopolitical headlines, we are entering a quieter stretch. The S&P comes in at record highs after a third straight weekly gain.

Last week finished with the S&P up 0.4% and the Nasdaq up 0.6%, while the Dow slipped 0.6%. Futures are modestly lower this morning to start the week, giving back a little after the run. The week’s real interest sits in the retail earnings, with Walmart, Home Depot, Lowe’s, and others reporting for a read on the consumer, plus the Fed minutes on Wednesday and a batch of manufacturing and housing data.

The Rally Sits on Firmer Ground

The market is in a better spot than it was a couple of weeks ago, and the reason traces back to the leverage shakeout. The deleveraging that felt so violent at the time, the hedge fund blow up and the margin calls that rippled through the chips, cleared out a lot of the excess that had made the whole trade fragile. That reset expectations and flushed the froth before this move to records, which is why the advance since has stood on firmer footing than the one that preceded the summer selloff.

The honest caveat is that a rally rebuilds leverage as it runs, so the clean positioning we have now will not stay clean forever. For the moment, though, the setup is healthier. Hedge funds have been buying US equities aggressively, at the fastest pace in years, while retail has been a net seller, which is close to the opposite of the pattern you tend to see near a top. The soft jobs report and the tame inflation prints reset rate expectations in a way that finally let tech participate after a quiet July, where the strong earnings were there but the stocks did not move much. That shift in the rate outlook is a good part of what powered the recent leg higher.

Watching September After a Good August

I expect August to remain a good month for stocks, but I am keeping September firmly in my sights. It is historically the worst month of the year for the market and the only month that averages a negative return. This is often referred to as the September Effect. I would not build a portfolio around a calendar quirk, and I am not predicting a decline. It is just the kind of seasonal data to know.

The risks I would point to are the familiar ones to my regular readers. When everyone is positioned for more upside, fewer people are braced for a pullback, and near highs is exactly where those tend to arrive. The market also does not yet know how the bond market will respond to Warsh and the different way he is running the Fed, with less communication and less guidance than investors are used to. Margin debt has climbed to a level that catches my eye and the midterms, my recurring talking point, will bring their own uncertainty as the political season heats up into the fall. None of that changes my longer term read, and the fundamentals underneath this market are as strong as I have seen. It is a reminder that the path higher runs through more volatility than a string of record closes would suggest.

The AI Story Enters a New Phase

The AI investment cycle still looks early to me, with the buildout of compute, data centers, and the infrastructure around them having a long way to run. Demand for compute keeps outstripping the available supply, which supports the whole infrastructure story, and the forecasts for how much the hyperscalers will spend keep climbing, with estimates now pointing toward $1 trillion globally this year and a path toward $1.2 trillion by 2027 (Per JP Morgan).

What has changed is the nature of the question the market is asking. We are moving from an investment story to a monetization story. Investors want to see the enormous capital spending translate into real revenue, productivity gains, and customer adoption, and this earnings season started to provide that evidence, particularly as enterprise use cases broadened beyond the hyperscalers themselves. The opportunity extends well past semiconductors, flowing into data centers, networking, power, cooling, memory, cloud, and software, which is the physical layer thesis I keep coming back to. The scale of available capital is a real support here, as the largest tech companies carry exceptional balance sheets and cash generation while banks and institutions grow more comfortable financing the infrastructure, and compute itself increasingly treated as an investable asset class that broadens the sources of funding.

The biggest risk is no longer whether AI is real but whether returns ultimately justify the extraordinary capital being deployed. Higher rates are a secondary risk, unlikely to constrain the largest players today but more important as the buildout leans further on debt and pulls in less well capitalized participants. I expect the market to stay highly selective, rewarding the companies where earnings catch up to expectations and scrutinizing hard those where spending runs ahead of monetization. The structural bull case is intact, but we are entering a more mature phase where simply having AI exposure is not enough. The winners will be the ones that turn the investment into durable earnings and cash flow.

Memory Looks Interesting Again

One area I have warmed to again is memory. The DRAM names broke the downtrend that had capped them since June last week, and that technical break is the signal I had been waiting for before leaning back in. I flagged for weeks that I wanted to see the chips clear their downtrends before calling the reversal complete, and the memory group did exactly that.

The demand case never broke through the summer selloff. What broke was the leverage and the froth, and with those cleared and the price action now confirming, the group looks more attractive than it has in a while. The structural shortage that SanDisk, SK Hynix, and the others keep describing, with contracted demand running years out and supply rationed well into 2027 and beyond, is the kind of setup that makes this memory cycle different from the boom and bust pattern that has humbled confident investors before. I hold that view with the humility the sector’s history demands, but the combination of a confirmed technical break and a demand story that keeps proving itself is what drew me back.

The Long End Still Deserves the Closest Watch

The one place I continue to watch closely is the bond market, and last week gave another reminder why. The government sold 30-year bonds at the highest auction yield since 2001 and 10-year notes at the highest since 2007, a worsening trend in what it costs to finance the deficit. The July budget shortfall was the largest for that month on record. Yields eased a little this morning ahead of the Fed minutes, but the 30-year still sits above 5.2%.

This is the risk that outranks the day to day moves in the stocks. The same AI buildout that excites me on the equity side is increasingly financed through the bond market, which means tech issuers are competing with the government for the same pool of capital and pushing long term borrowing costs higher. The level I watch is 5% on the 10-year, where the pressure on the market’s multiple turns broad. We are not there, but the direction in the long bond and the auctions behind it is the wrong one, and it is why I treat bonds, not stocks, as my chief concern for the back half.

Final Thought

The market comes into a quiet week at records, and it earned its way there on the strongest earnings season in memory. The July reset cleared the leverage that made the summer so rough, positioning came back cleaner, and the AI story keeps confirming itself even as the market rightly starts demanding proof that the spending pays. I remain bullish on the long term because the fundamentals underneath are as good as I have seen.

Near term I would hold some caution alongside the optimism. August looks constructive, but September carries its seasonal baggage, sentiment has turned bullish enough to leave the market exposed to a pullback near highs, and the questions around Warsh’s Fed, margin debt, and the coming midterms all sit unresolved. I would treat any pullback as opportunity rather than threat, keep my closest watch on the long end of the curve, and stay selective in the AI names. The path higher into year end holds, carried by earnings, with more chop likely than the calm of a record close suggests.

A light day today, the Fed minutes Wednesday, and the big retailers through the back half of the week. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

Its been great having more of you reaching out and I encourage more of this. Happy to sit down for a free portfolio / financial planning intro call.

The week’s inflation data did its job, and the S&P pushed to a fresh record on Thursday, closing within reach of the 7,800s after touching an intraday high near 7,817. Wholesale prices came in tame, and the market read the pair of inflation reports this week as clearing the path for the Fed to stay on hold. The S&P gained 0.7%, the Nasdaq 0.8%, and the Dow finished flat, even as a couple of AI names sold off after earnings.

Futures are choppy this morning after that run, with the major indexes on track for a third straight weekly advance. Today brings the last data of the week, with July retail sales and the University of Michigan sentiment reading giving a read on the consumer. Applied Materials is lower premarket after its results, and Reddit jumped on news it joins the S&P next week. Oil and yields ticked up after the US signaled its naval blockade of Iranian ports could run indefinitely.

Two Inflation Reports, One Message

Wholesale prices followed Wednesday’s tame consumer read, with PPI slowing to 4.7% annually from June’s 5.1%, though the monthly figure came in flat against expectations of a small rise. Put the two reports together and the message is that inflation is contained enough to keep the Fed’s wait and see approach intact, and the market has moved to price a September hold as the likely outcome.

The debate inside the Fed has not been settled by this, as the hawks who want a hike will argue that moderately good reports still do not prove inflation returns to 2%, and that more work is needed. The doves, who outnumber them, will read this week as confirmation that patience is the right call. My own view sits with the latter, and it has all year. The inflation we have is largely a supply driven energy story that rate hikes address poorly, the labor market is cooling rather than overheating, and a Fed on hold that eventually cuts remains the path I expect. What this week does is raise the stakes on the next round of data, since these prints now have the power to confirm a genuine downtrend or extend the mixed signals that keep the committee divided.

One note from the bond market is that yields eased on the inflation relief but did not collapse, and the 30-year still sits above 5.2%, near levels not seen in a quarter century. As one strategist put it, the data eases the pressure for higher rates without removing it, since real yields are elevated and likely to stay that way. That is the piece I keep watching most closely, because the long end is where any strain from inflation or the fiscal picture shows up first.

The Earnings Season Closes Strong

With more than 90% of the S&P having reported, this has been one of the strongest earnings seasons in memory, and it is the foundation under the record highs. The strength has been broad, the margins have expanded, and the beats have come with raised guidance rather than just cleared bars. This is a market being carried by profits rather than by multiple expansion, which is the healthy version of a rising tape and the reason I have stayed constructive through all the summer volatility.

Software has been the standout turnaround. After tumbling more than 24% early in the year, the software group has rallied around 28% over the past six months and jumped again Thursday. The market appears to have decided it overpriced the risks to enterprise software back when the AI replaces software fears were loudest, and Palantir and the cloud names have since proven those fears overdone. That reappraisal fits the broadening I keep pointing to, where leadership widens out rather than resting on a handful of chipmakers.

8,000 Comes Into View

I want to be plain about where I think this goes near term. Barring a shock, the S&P looks locked onto 8,000, and I would expect it to get there before we find out what happens next. The momentum, the earnings, and the positioning all point that direction, and a record close within striking distance of it tends to act like a magnet once the path is clear. What matters more than hitting the number is how the market behaves once it arrives, whether it powers through or pauses to digest, and that is what I will be watching for as we approach it.

One thing I am keeping an eye on is the Nasdaq, which did not make a new high alongside the other indexes on this latest push. I would expect it to push for one with the strength in tech and tech breadth reading that just saw 75% of S&P technology stocks reclaim their 200-day average for the first time in more than a year supports that. When that many names in the sector turn up together after a long stretch below trend, it has historically been followed by further gains rather than a fade. The Nasdaq catching up to the other indexes would be the confirmation I am looking for that this leg has real legs.

I am also watching the chips for a technical signal I have flagged for weeks. The semiconductor index and the DRAM names are still working to break the downtrends that have been in place since June, and a clean break there would put real momentum back into a group I have grown constructive on again. The demand keeps confirming itself through the buildout, but the price action needs to clear those levels before I would call the reversal complete.

Positioning Still Has Room

The flows this week reinforce why I am comfortable staying constructive even with the market at records. Hedge funds bought US equities last week at the largest weekly pace in eighteen years, and the two week total was the biggest on record. That is real money coming back in, and it followed the heavy deleveraging of July, which means positioning came into this rally cleaner than it went into the summer. The froth got flushed and the institutional money is rebuilding exposure from a lower base.

While hedge funds bought aggressively, retail investors were net sellers, which is the reverse of the pattern you often see near a top, where the professionals distribute to an eager crowd. When the big, sophisticated money is adding while retail steps back, and when institutional positioning still sits well short of stretched, there is a pool of capital available to keep buying or to step in on any dip. That is the kind of backdrop that tends to support a market rather than leave it fragile, and it is part of why I would treat any pullback from here as opportunity rather than a reason for concern.

Where I Land

The week ends with the S&P at a record, inflation cooling, and the Fed in a position to hold, which is close to the ideal setup for a market carried by strong earnings. The season now closing has been exceptional, the strength has broadened well beyond the mega-caps, and the money flowing back in is doing so from cleaner positioning than we had before the summer reset. That combination keeps me constructive looking into the back half of the year.

The near term risks are still inflation and the Fed, and I would not treat two good months as a settled trend with another CPI and Jackson Hole ahead of the September decision. I stay optimistic without confusing a record close for a straight line higher, and I keep my closest watch on the long end of the curve, on the Nasdaq confirming the highs, and on the chips breaking their downtrends. The S&P looks set on 8,000, and the more interesting question is what the market does once it arrives.

Retail sales and consumer sentiment at 8:30 close out the week. Enjoy your weekend. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

The number the whole market was waiting for came in about as expect, and stocks took it well. July CPI matched expectations at 3.4% annually, easing from June’s 3.5% and marking a second straight month of cooling. That was enough to push the market’s bets toward the Fed holding rather than hiking in September, and the S&P closed higher for the first time in three sessions, up 0.3%, with the Nasdaq gaining 0.5% and the Dow finishing flat.

Attention now turns to the wholesale side of inflation, with July PPI out at 8:30 this morning. Economists look for a 0.2% monthly rise. Futures are modestly higher, though a few tech names are lower after their reports, with Cerebras down sharply premarket and Cisco off after earnings. Retail sales close the week tomorrow.

The Inflation Read the Fed Wanted

Two months of cooling inflation is a real relief, and it lands at a useful moment. The energy shock from the Iran conflict that had threatened to push prices higher appears to be working itself through the system rather than embedding, which is the outcome I have expected given that supply driven inflation tends to fade as the supply disruption eases. Coming right after a soft jobs report, the CPI keeps intact the narrative that took hold last week, that the Fed has no pressing need to hike.

I would not treat two data points as the end of the story however. Inflation at 3.4% still sits above the 2% target, and with another CPI reading due before the Fed’s next decision and Jackson Hole in between, I wouldn’t take this as hold for sure in September. The report does keep the committee in a position to leave rates unchanged next month, which is where I have thought they would land all along. The market read it the same way, trimming September hike odds, though a move in October or December stays on the table as officials take time to weigh both sides of their mandate. The inflation we have does not respond well to rate hikes, the labor market is cooling rather than running hot, and the path of least resistance for this Fed is to hold and eventually cut rather than tighten into a slowing economy.

The bond market agreed, with yields easing after the print, the 10-year slipping to around 4.67% and the two-year down more. That relief at the long end is the part I watch most closely, since a benign inflation trajectory is what keeps the pressure off the 30-year and off the multiple the whole market is willing to pay.

Small Caps Keep Proving the Call

One theme I flagged at the start of the year keeps playing out. I titled my January piece around this being the year of the small cap, and the group is up better than 22% on the year, continuing to outrun the large cap indexes. After trailing for years, small caps have taken genuine leadership, and a benign inflation read that firms up the case for a Fed on hold is exactly the backdrop they respond to best, since these are the companies most sensitive to borrowing costs.

Leadership broadening into small caps is a sign of a healthy market rather than a narrow one. Having the index at highs is normally a good gauge that no recession is close at hand, since small caps are usually the first place to sell off when trouble is coming. And the AI riches concentrated at the top of the market will eventually make their way down into the small cap sector too.

The Earnings Engine Keeps Widening

The more I look at this earnings season, the more it reinforces why I stay constructive. Profit margins for the S&P are pushing toward 17%, up from roughly 10% five or six years ago. That is around seven points of margin expansion, a 70% increase in the level of profitability itself, and it is the clearest evidence that this rally is being driven by earnings rather than by investors simply paying higher multiples. When margins expand like this, the earnings power underneath the market grows in a way that valuation-driven rallies never deliver.

Technology led the beats, with better than 85% of tech companies topping expectations, the highest beat rate the sector has posted. That strength drew money back in, with technology seeing its second largest weekly institutional inflow ever, hedge funds a major contributor. The timing is worth noting, because it followed the heavy deleveraging of July, which means positioning came into this rally cleaner than it was before the summer selloff. The froth got flushed and the money came back on firmer footing.

Even setting technology aside, the rest of the market has grown earnings strongly, which challenges the idea that this is only an AI and mega cap story. Ten of eleven sectors are growing profits, and that breadth is the healthiest feature of the whole picture.

How the AI Buildout Is Getting Funded

Companies are increasingly funding their AI investment through investment grade corporate debt, private equity, private credit, and large financing consortiums rather than out of operating cash flow alone. Oracle and Microsoft have both tapped debt and private capital to fund their spending, and Monday’s Nvidia financing effort with the big asset managers fits the same pattern.

I read the rising investment grade issuance as a signal that the funding base for this buildout is widening, and that lenders and institutions expect the AI demand to be there to service it. That is constructive for the physical layer thesis I keep coming back to, since the money flowing in confirms the conviction that the infrastructure will be used. The flip side I keep in view is that a buildout financed increasingly through debt is one where the bond market becomes the place any strain shows up first. As long as the credit is being extended on the expectation of real, contracted demand, this is a healthy broadening of how the buildout gets paid for. It is worth watching how much leverage accumulates, because that is the mechanism that turns an ordinary slowdown into something sharper. Anthropic reportedly heading toward a public debut at a valuation above $2 trillion, which would be the largest IPO in history, is a measure of just how much capital continues to chase this space.

An Economy Leaning Less on the Consumer

The economy is becoming less dependent on the consumer and more driven by corporate investment, technology spending, credit creation, and the earnings growth that follows. That is a meaningful change from the traditional consumer led cycle.

If corporate investment and the AI buildout are carrying more of the economic weight, then earnings can stay strong even through pockets of consumer softness. The worries that dominate the headlines, a cooling labor market, sticky inflation, an uncertain Fed, may hold less sway over the earnings outlook than they would in a cycle that ran on the consumer alone. That does not make those risks irrelevant, and a genuinely weak consumer would still matte, but it does suggest the earnings engine has a broader base under it than a purely consumer-driven expansion, which is part of why the profit growth has held up through everything companies have absorbed this year.

Final Thought

The inflation read this week was the relief the market wanted, keeping the Fed in a position to hold and easing the pressure at the long end of the curve that I care about most. The earnings underneath remain the strongest I have seen outside a recovery, with margins expanding, the strength broadening well beyond technology, and small caps leading in a way that confirms the breadth I keep pointing to.

The immediate risks are still inflation and the Fed, with PPI this morning and another CPI before the September meeting, and I would not mistake two good months for a resolved picture. The bull market has already absorbed higher yields, higher oil, and the July deleveraging without breaking, which tells you something about its footing. Institutional positioning that turned outright negative on Nasdaq futures in early August, near a record weekly sale, actually leaves room for money to come back in rather than signaling a top.

I stay constructive, would treat any pullback as opportunity rather than threat.

PPI and jobless claims at 8:30, Applied Materials and JD.com tonight, and retail sales tomorrow to close the week. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

There will be one thing talked about in financial media until 8.30am and thats the CPI report. July CPI lands after a jobs report that muddied the Fed’s path and with oil turning back up, it is the print that could decide whether September brings a hike or another hold. I don’t believe its quite that black and white, but it is a big read for sure.

Stocks drifted lower Tuesday in what felt like a market unwilling to commit ahead of the data. The S&P and Dow each fell 0.3% and the Nasdaq 0.6%, with the stalled Iran situation adding to the caution. The 10-year sits at 4.68% this morning, worth watching closely once the number hits. Futures are firmer, helped by strong results after the close from the AI infrastructure names, with CoreWeave up 18% premarket and Super Micro up 9%. Cisco and Nebius report today.

Everything Hinges on the Number

Economists look for a modest July, headline CPI up 0.1% and core up 0.2%, which would nudge the annual rates down to around 3.4% and 2.5%. Both still sit above the Fed’s 2% target, but two soft monthly readings in a row would buy Warsh and the committee time to stay on hold rather than move.

The reaction is set up to be asymmetric. Bank of America made the point that rates and the dollar should respond more to a soft print than to an equally hot one. A cooler number would come close to ruling out a September hike and would challenge the roughly one hike the market still has priced through December. A hot number puts September firmly back in play, provided August confirms it. The market has already pulled September odds to roughly a toss of a coin. So the setup favors the doves on a soft print more than it rewards the hawks on a hot one, which shapes how I would expect the tape to trade around 8:30.

The complication is that the Fed does not meet in August, so officials get both this reading and next month’s before they decide, with Jackson Hole in between as another chance for Warsh to signal. The hawks are not backing down with Cleveland’s Beth Hammack, one of the July dissenters, saying on Monday she expects more than one hike will be needed if the labor market stays stable enough to let the Fed focus on inflation.

My own view has not moved. I still do not think the Fed hikes, because the inflation pressure we have is largely a supply driven energy story that rate increases address poorly, and the labor market is softening rather than overheating. Today’s number will tell us how much room that view has.

Why I Stay Bullish Regardless of the Print

Whichever way CPI lands, I remain constructive on this market. A hot number could bring a pullback, and I would not be surprised by one, but I would expect dip buyers to step in once the market reaches obvious levels of support. The reason for that confidence is earnings. This is as strong an earnings picture as I have seen outside a recovery from recession.

With about 80% of the S&P reported, earnings are growing around 32% including technology. Strip technology out entirely and the rest of the market is still growing near 28%, which shows this is not purely an AI and mega cap story. Ten of eleven sectors are posting profit growth. Revenue is up around 15%, the strongest since 2021 and more than 300 basis points ahead of what analysts expected just two months ago. The beat rate is near a record 88% and margins actually expanded through the season, moving from an expected 15.0% to 15.6%, which is remarkable given everything companies have absorbed: the pandemic aftermath, supply chains, tariffs, higher rates, and higher energy. This is the steepest upward revision path for estimates since at least 2000, and both this year’s and next year’s numbers keep climbing, which almost never happens as a year wears on. None of it is being manufactured through leverage, with debt to equity actually falling across most sectors.

My only real hesitation is that everyone now sees this. Bullishness has become the consensus, and I am generally wary of standing with the crowd. It is hard to argue against numbers like these though, and there is a difference between crowded sentiment and crowded positioning.

Sentiment Is Bullish, Positioning Is Not

The reason I am comfortable staying constructive even as everyone turns bullish is that the actual money has not fully committed. Institutional positioning sits around the 37th percentile, nowhere near stretched, which means there is a real pool of capital still available to come into equities or to buy a correction if one comes. Retail is more extended than institutional, so the loud bullishness you hear is not fully reflected in how the big money is actually placed.

This is what separates a durable advance from a fragile one. When sentiment runs hot but positioning stays measured, the market still has room to climb rather than being fully loaded and vulnerable to the first shock. It is also why I keep pointing to the equal-weight S&P, which recently made a new high and has held up even with oil higher and yields elevated. That index is one of the cleanest early warnings for breadth starting to deteriorate, and right now it is confirming the advance rather than flashing caution. The dollar is the other gauge I watch for stress, and neither is signaling trouble yet.

The Valuation Question, Honestly

The market trades around 20 times earnings, which is not cheap, and I would not pretend otherwise. The number that matters more is the direction, and the multiple has actually been falling even as prices rise, because earnings are growing faster than the index. That is the healthy version of a rising market, profits doing the work rather than the multiple stretching.

A comparison that gets raised is 1994, when the market traded closer to 16 times. The valuation was lower then, but the quality of corporate America today is materially different, with stronger returns on equity and capital and better margins than that era carried. So while 20 times is not a bargain, it does not look excessive against earnings growing this quickly with estimates still climbing. When the E in the multiple keeps growing, a full-looking P/E is far less of a concern than it appears.

Final Thought

The bull market has already passed a serious stress test. Higher yields did not break it, higher oil did not break it, and the July deleveraging that looked so threatening at the time turned out to be the reset that put it on firmer footing. That resilience is worth remembering on a morning when everyone is nervous about a single data point. The earnings underneath are the cleanest I have seen in a non-recessionary environment, the economy is running around trend despite restrictive policy, and fund flows stay supportive.

The immediate risk is inflation and the Fed, and I will not wave that away. A hot CPI could reopen the September hike, and a few officials have suggested one increase might not be enough, so the genuine bear case is a renewed tightening cycle rather than a single move. Even in that scenario, the downside being discussed is only around 5 to 10%, which frames the problem with getting bearish here. To profit from it you have to time both the decline and the moment the dip buyers return, and with institutional money sitting at the 37th percentile, there is a large pool waiting to buy exactly that kind of dip. The market still climbs a wall of worry over bubbles, concentration, yields, and the Fed rather than showing outright euphoria, and that skepticism is usually a healthier backdrop than universal conviction.

So I stay constructive. I would treat any CPI-driven pullback as opportunity rather than threat, keep watching the equal-weight index and the dollar for the first real signs of breadth cracking, and keep my closest eye on the long end of the curve, which is where the inflation and fiscal risks would show first. Jackson Hole and next month’s data still sit between here and the September decision, so today answers a lot without settling everything.

CPI at 8:30 is the whole morning, with Cisco and Nebius tonight and PPI tomorrow. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

Firstly just wanted to say thank you. I asked yesterday whether you prefer this newsletter daily or weekly, and the amount of responses I got was truly incredible. The majority said daily, with a fair number of you asking for a slightly shorter read. I hear both, and I will work on tightening things without losing the substance over the next couple weeks. Keep the feedback coming, on cadence, length, or any subject you feel is missing. This is written for you, and I would rather adjust than guess.

Stocks were quiet Monday, with the S&P barely moved, the Dow off 0.1%, and the Nasdaq down 0.3% as the market waited on this week’s inflation data. Futures are flat this morning. Oil is the mover, up more than 2% with WTI back above $84 and Brent near $90, as hopes for a quick Hormuz deal fade and Iran resists direct talks with the US. Yields pushed higher alongside, the 10-year back to 4.73% and the 30-year above 5.27%. CPI lands tomorrow and PPI Thursday, and a batch of earnings comes this afternoon led by CoreWeave, Super Micro, and Cava.

Wall Street Turns Chips Into an Asset Class

The most consequential news of the day is how the AI buildout is going to be paid for. Nvidia has lined up six of the largest asset managers, Apollo, Blackstone, BlackRock, Brookfield, Goldman Sachs, and KKR, behind an effort to mobilize more than $500 billion in outside capital to finance its customers’ purchases of chips and data centers. The idea is to let hyperscalers and AI labs build without loading it all onto their own balance sheets, by treating compute the way lenders treat real estate or toll roads, as a long lived asset you can borrow against.

Jensen Huang framed it as the first time chips have become an investable asset class, arguing that because Nvidia’s hardware is widely used and transferable, lenders can underwrite it as revenue generating infrastructure rather than fast depreciating equipment. Larry Fink went further, likening the project to the birth of mortgage-backed securities in the 1970s and calling it the next chapter of financial engineering. On one hand, this is a serious answer to the question that rattled markets in July, whether Big Tech could fund this buildout without cratering free cash flow. Bringing institutional and insurance money in to share the load relieves that pressure and, if the demand is as durable as I believe, unlocks the next leg of the buildout. On the other hand, the mortgage securitization analogy is not entirely comforting given how that particular innovation ended, and the honest risk is whether AI chips hold their value as newer generations arrive, and whether financing the buildout with this much debt introduces the kind of leverage that turns an ordinary downturn into a disorderly one.

This is the physical layer thesis I have been coming back to, that the value flows to whoever supplies and now finances the scarce infrastructure, and it fits a string of deals landing this week.

Anthropic signed a twenty year agreement worth up to $16 billion with Riot Platforms for computing power, one of several such contracts it has struck to keep up with demand. These are long dated, contracted commitments, which is exactly what gives the buildout its staying power. I will continue to watch the credit side as when this much debt gets issued to fund one theme, the bond market is where the first real strain would show, and that ties straight to the concern I keep raising about the long end of the curve.

The Earnings Season That Justified Itself

With most of the quarter reported, corporate profits are on pace for their fastest growth since 2021, and S&P earnings are now expected to climb 32% this year, more than double the 15% growth penciled in when the year began. As Charlie Bilello said, we have not seen earnings growth this strong outside of a rebound from recession, and this time there was no recession to rebound from. It came from an AI driven boom instead.

This is the cleanest earnings picture I can remember, and it is the foundation of why I stay constructive for the long term. Prices have followed profits higher rather than running ahead of them, which is the healthy version of a rising market. It is worth remembering the backdrop this was delivered against, a live conflict in the Middle East and inflation that refused to fall as fast as anyone wanted, and companies still put up numbers like these. JPMorgan lifted its year end target to 8,000 on the strength of it, stating that the big AI capital bets are starting to pay off. I would not chase a target, but the logic underneath is sound. When earnings are doing the work, the market is standing on something real.

The Rush of AI Capital Keeps Building

OpenAI completed a roughly $7 billion secondary sale letting employees cash out at an $852 billion valuation, part of its march toward an eventual IPO, Intel upsized a stock offering to $20 billion to fund its own AI compute buildout, taking a dilution hit for it, and the capex numbers across the five biggest spenders are on track to reach a record share of the economy, more than double the telecom investment peak of 2000 as a percentage of GDP.

That last comparison is the one worth thinking about because the dot-com parallel gets raised constantly. The spending as a share of GDP now dwarfs the telecom buildout that ended badly in 2000. The difference, and it is the crucial one, is that this spending is being made by wildly profitable companies funding it out of real cash flow and now, increasingly, through structured financing backed by contracted demand, rather than by speculative ventures with no earnings. The buildout is enormous, and enormous buildouts carry risk, but the financial footing underneath this one bears little resemblance to the telecom bust. That is the distinction and this week’s financing news actually strengthens it rather than weakening it.

Oil Turns Back Up

The one clear headwind this morning is energy. Oil jumped more than 2% as optimism over a quick Strait of Hormuz reopening faded, with Iran signaling it will not restart direct talks with the US until several conditions are met. That pushed crude to its highest this month and dragged Treasury yields up with it.

This matters most for what it does to inflation right as the Fed is trying to read a softening labor market. Higher oil feeds straight into the price data at the worst possible moment, and you can see the knock-on effects already, with the 30-year mortgage rate climbing for a fifth straight week to its highest in a year as long yields grind higher. My medium term read is unchanged, that the political incentive to resolve this before the midterms eventually wins, but the path there keeps delivering these bumps, and this one lands right before an inflation print that already carried more weight than usual.

Everything Still Runs Through CPI

Tomorrow’s inflation report is the event of the week, and the setup got trickier overnight. Economists look for CPI to rise 0.2% on headline and core, but the fresh move up in oil raises the odds of an upside surprise at a moment the Fed can least afford one. The labor market weakened enough in Friday’s jobs report to pull September hike odds down toward the mid 40s, which argues for patience, while rising energy costs pull inflation the other way and hand the hawks their argument.

The bond market is the audience that matters, and it is already leaning nervous, with the 10-year back up near 4.73%. A benign CPI would take real pressure off. A hot one, layered on top of climbing oil, would put the squeeze on the long end that I have flagged as the chief risk all year. I continue to watch 5% on the 10-year, as the point where the pressure turns broad across the market, and this week’s data feeds directly into whether we drift toward it or away from it.

Final Thought

The market sits at records for good reason. The earnings behind it are the strongest I have seen outside a recovery, and this week brought a serious answer to the funding question that spooked everyone in July, with Wall Street stepping in to finance the buildout at scale. That is a constructive backdrop, and it is why I remain optimistic looking out over the longer term.

The near term picture remains volatile. Oil turned back up, yields are climbing with it, and tomorrow’s inflation print could go either way into a Fed that is already split. I stay constructive without mistaking a strong run for a smooth one. I keep watching the long end of the curve above all else, because the same debt fueled buildout that excites me on the equity side is exactly what competes with the government for capital and pressures long yields. The earnings are clean, the demand is real, and the path higher into year end holds, with the usual caveat that the road runs through more volatility than the calm of a record close suggests.

CPI tomorrow, PPI Thursday, and CoreWeave, Super Micro, and Cava this afternoon for reads on AI infrastructure and the choosier consumer. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

Before we get into the markets, I want to ask something of you directly. This newsletter goes out daily, and I have had mixed feedback on whether that cadence is right. Some of you value the daily read, and others might prefer a weekly version that gives a deeper dive each time. I would like to hear from you. Reply and tell me whether you like Market Pulse as a daily note or would rather receive it weekly. You are the reason I write it, and I want the format to fit how you actually use it.

On a personal note, I bought a money tree for my office this weekend. The plant is meant to symbolize good luck and financial prosperity, and I liked the idea of having something on my desk that reminds me daily that prosperity takes time to grow. It suits the way I think about building wealth for the people I work with, patiently and over years rather than days.

Stocks come into the week at record highs. The S&P rose 3.58% last week to an all time closing high, its best week since April, while the Nasdaq jumped 5.19% as the chips came roaring back. Futures are steady this morning with no major data due, though the week ahead is heavy, with CPI on Wednesday and PPI on Thursday the main events. Oil is up over 1% as the Iran picture clouds again, and Asian markets closed broadly higher overnight.

The Reset Turned Into a Breakout

The two months of grinding, going nowhere price action finally gave way last week. Technology is too large a share of the market to drag, and while it worked off its excesses the whole index stalled with it, the market was stuck. Once the forced selling from the margin calls ran its course, tech found its feet again and pulled the averages up sharply, the S&P gaining 3.58% to a record close and the Nasdaq better than 5%. Underneath, more stocks joined the advance, with the broad market’s advance-decline measure turning up alongside the price.

This is the outcome I had hoped for through the ugly stretch in July. I wrote repeatedly that the selling in the chips was a leverage story rather than a break in demand, and that I would let it exhaust itself and wait for quality to go on sale rather than chase a falling group. The excess that made the whole trade fragile has now been wrung out, and what is left is a broader, sturdier market. When the number of participating stocks widens as the index sets records, the advance tends to last, because it no longer depends on a handful of names holding up the roof. The path higher I expected into year end sits on firmer ground than it did a month ago. I have continually called for a choppy summer and then a push into mid terms and so far, that has been the case.

The Jobs Surprise Reset the Fed Picture

Friday changed the rate outlook as the July payrolls report showed an unexpected contraction, weak enough that the market pulled September hike odds down to around 44% from 67% a week earlier. A softer labor market reduces the urgency for the Fed to tighten, and stocks took it as good news, closing the week on a high.

This fits the view I have held for a while, that the next move is more likely a hold that eventually becomes a cut than a hike, because the inflation we have is largely supply driven and a cooling economy does not need tightening on top of it. The picture is not clean, since the unemployment rate actually ticked down even as the economy shed jobs, a quirk driven by falling participation rather than strength. The Fed is divided, and this week’s inflation data will tip the balance.

Everything Rides on CPI

Wednesday’s inflation print carries more weight than usual due to the Fed expectations. Economists expect CPI to rise 0.2% on both the headline and core, with producer prices Thursday also expected to firm. After a jobs report that made the picture less clear, this is the number that cand determine whether the Fed holds or feels pushed to hike.

A soft labor market pulls the Fed toward patience, but its renewed focus on inflation means an in-line or hot CPI could revive the case for a September hike. Bank of America flagged that last month’s cooler reading may have been a one-off, and that a print in line with their expectations would strengthen the argument for tightening. I keep saying the long end of the curve matters more than anything happening in the stocks, and this week tests it directly.

Yields eased Friday on the weak jobs data, and a benign CPI would extend that relief. A surprise to the upside would put the pressure I have watched all summer right back on. There are also two developments on Fed independence worth noting, the White House reviving its push to remove Governor Cook and a comment from a White House official that the president and Warsh speak about the economy often, which is not the usual arm’s length arrangement. Markets have not reacted much yet, but anything that makes the bond market question the Fed’s independence feeds straight into the long yields I care about.

TSMC Confirms the Demand Again

TSMC gave another read on AI demand when they announced the July sales rose almost 45% from a year ago, a pace that runs comfortably ahead of the roughly 40% full year growth the company has guided to, which suggests the back half of its year has room to breathe rather than needing every month to stretch. As the manufacturer behind Nvidia’s chips, Google’s custom silicon, and much of the industry, its monthly sales are one of the cleanest gauges of whether the buildout is still accelerating, and the read is that it is. Chairman C.C. Wei has described the AI related demand as extremely robust, high performance computing now accounts for two-thirds of the company’s revenue, and it has lifted its own capital spending plans toward $64 billion this year. A single month can bounce around and should not be leaned on too heavily, but the signal lines up with everything else this season, from the cloud giants through the memory names.

The most constrained corners of the memory and chip market are earning extraordinary profits right now, and margins that high are exactly what draws in new competition, fresh supply, and the innovation that eventually erodes them. The companies making a fortune on today’s shortage are, in effect, funding the capacity and the next generation technology that will compete their own current products away. That is how shortages have always resolved, through the price mechanism and through innovation, and it is why I hold the memory names with a structural conviction paired with real humility about the cycle. The bottleneck moves over time. The chip index is still down around 15% from its June high and working to break a multi-month downtrend, and a clean break above it is one of the things I am watching most closely right now.

Buffett’s Successor Starts Spending

Berkshire Hathaway showed Profit from its operating businesses rose 16%, but the line that caught my eye was what Greg Abel did with the balance sheet now that he is a couple of quarters into the job. Berkshire repurchased roughly $4.5 billion of its own shares, a sharp change from the token amount it spent the prior quarter, and became a net buyer of stocks for the first time in fourteen quarters, with close to $20 billion in net purchases. The cash pile came down from a record $397 billion to $365 billion.

I read this as mildly constructive for how the smart, patient money views value right now. Buffett spent the last few years struggling to find things worth buying and let cash build to an unprecedented level, so seeing Abel deploy it, including adding to an Alphabet stake that now sits among Berkshire’s five largest holdings, suggests they are finding opportunities again. It is not a market call, and Berkshire moves on its own clock. It is a data point that the most disciplined value investor in the business is leaning in rather than pulling back.

The Earnings Are Carrying This Market

The strategist community keeps raising its market expectations. JPMorgan lifted its S&P target to 8,000 for the second time in two months, joining a bullish chorus, and the reasoning matches my own. This earnings season produced real evidence that the hyperscaler spending is being monetized, with stronger cloud growth and rising backlogs at Alphabet, Amazon, and Microsoft easing the worry over whether all that capex earns a return.

I would not chase a price target, and I take them with some salt, since strategists tend to raise them after the market has already run. What matters underneath however is the earnings picture. Corporate earnings grew around 32% this quarter, one of the strongest increases on record, and forward estimates keep pointing upward for the great majority of the index. This is what I mean when I say this is a market of the E rather than the PE. The S&P has climbed while its forward multiple has actually compressed, which tells you profits are carrying this market rather than sentiment. That is the opposite of what happened into 2000, when prices and valuations ran far ahead of earnings that never arrived. Here the earnings came first, and the leaders generate real revenue and real cash flow rather than a story. A market rising on profit growth stands on far firmer ground than one rising on multiple expansion and hope, and that distinction is the heart of why I stay constructive through the volatility.

Final Thought

The market comes into this week at records, and it earned its way there. The reset flushed out the leverage that made summer so rocky, tech broke back to life, breadth improved, and the jobs surprise eased the rate pressure into the bargain. The earnings underneath remain strong, forward estimates keep pointing higher, and the buildout keeps confirming itself from TSMC down through the memory names.

I try to stay honest about what would actually change this view, because it is easy to be swept along by records or spooked by a bad headline, and neither is a good guide. What I watch is the data that leads rather than follows, forward earnings estimates rolling over, credit spreads widening while profit expectations fall, the bond market balking at funding all this AI spending at reasonable rates. Those would tell me something real had shifted. A rough month or a scary headline would not. For now those signals point the right way, so I stay constructive while watching them closely. I am also watching gold, which broke out and continues to look well placed, rewarding the dip buying I flagged earlier in the summer, and the semiconductors, also looking to breakout again. The summer stays choppy, this week’s inflation data is a genuine test, and volatility likely builds as the political season heats up into the midterms. The path higher into year end looks intact, carried by earnings rather than hope.

CPI Wednesday, PPI Thursday, retail sales and consumer sentiment Friday, and a lighter earnings slate led by the AI infrastructure names. And do tell me your thoughts on daily versus weekly. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

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Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors.

Jobs day is here, with the July payrolls report out at 8:30 this morning to cap a week that has swung on the labor data and the news out of the Middle East. Expectations are for around 83,000 to 88,000 jobs added and unemployment holding at 4.2%, coming off a soft June. The number under the number is what matters this time and I will explain why later in the newsletter.

Stocks eased Thursday ahead the data, with the Dow falling more than 460 points to break a five day winning run as oil and yields ticked back up. The S&P slipped 0.2% and the Nasdaq was roughly flat. Futures are mixed this morning, with the Nasdaq leading on strong earnings from Airbnb and Cloudflare. Despite Thursday’s pullback, the market is set for a second straight weekly gain, and the Nasdaq is on track for its best week since May thanks to the chip rebound, with the semiconductor ETF up better than 5% on the week. Oil has settled lower, WTI back around $77, as hopes for a Hormuz deal hold.

What to Watch in the Jobs Number

The headline payrolls figure will get the attention, but the Labor force participation is the one I am watching most closely after June’s reading fell to its lowest since 1976 outside the pandemic, with the prime age cohort dropping sharply. Economists are split on whether that was a seasonal distortion or the start of something more troubling, so today should give us a little more insight there. Wage growth is expected at 3.5% year over year, which is a pace the Fed considers consistent with its inflation goal.

The backdrop is a labor market that keeps getting described as low-hire, low-fire, and the description fits. ADP came in soft on Thursday, hiring has slowed, but layoffs remain low too, which keeps the unemployment rate steady even as fewer people get hired. The catch, as Governor Cook noted, is that this equilibrium falls hardest on new entrants, the young workers trying to establish themselves who cannot find a first rung. The unemployment rate has stayed low in large part because participation has fallen, and the actual employment level this year is down by more than 800,000.

That sets up a genuine divide on where the Fed goes next. Cook said this week she is prepared to support a hike if inflation does not improve, joining a hawkish chorus. Pulling the other way, Citi has an out of consensus call for three cuts by early next year, arguing the unemployment rate climbs above 4.5% within months as sidelined workers return faster than they find jobs, and Vanguard’s data points to a July gain as low as 18,000. My own lean has been toward the next move being a hold that gives way to a cut rather than a hike, because the inflation we have is largely supply driven and cooling oil takes pressure off it. A soft number today strengthens that case, but a hot one revives the hawks who won’t need much encouragement. The market has already pulled September hike odds down to around 47%, so a surprise in either direction will move things.

The AI Question Inside the Labor Data

Challenger’s layoff report showed the tech sector accounting for roughly a third of this year’s job cut plans, with AI frequently cited as a reason. Some of that is real, and some is optics, since naming AI in a layoff memo makes a company look modern to investors.

Hiring is actually up 25% from last year, and the growth is concentrated in aerospace, energy, and manufacturing, work that happens on a floor rather than a screen. The fields economists expect to grow fastest, personal care, home health, and nursing, are hands on and largely beyond AI’s reach. The pattern taking shape is that AI is compressing wages and hiring in exposed white-collar corners, particularly for younger workers and in software, while barely touching the physical, in-person work that a modern economy still runs on. AI is reshaping the labor market at the margins rather than dismantling it, and that distinction is worth holding onto through all the noise about job destruction.

SpaceX Passes Its First Real Test

SpaceX got through its lockup expiration without drama, which counts as a win for a stock that has taken a beating since its debut. More than 900 million shares came unlocked, roughly doubling the float, and the feared flood of selling did not materialize.

Individual investors have not had a single day of net selling since the IPO, and they bought nearly $23 million in the first hour of Wednesday’s session even as the stock got knocked around. Wall Street is largely on the same side as retail, with bullish price targets running as high as $300 for much the same reasons the retail crowd is drawn to the company, a belief in a future facing vision rather than present day earnings. My position has been consistent through all of it. I like where this company is headed over the long term and I am bullish on what Musk builds, and my caution was always about paying up during the IPO euphoria rather than the business itself. Clearing the first lockup without a collapse removes one of the overhangs I wanted to see resolved.

The Memory Buildout Keeps Growing

SK Hynix committed another $38 billion to build two new memory plants, one for DRAM and one for NAND, as the shortage driving this whole cycle shows no sign of easing. The detail that matters for the longer view came from an analyst tied to the announcement. Even with multi vendor expansions from SK Hynix, Samsung, Micron, and China’s CXMT set to lift global supply significantly through 2028, demand is growing even faster than the planned capacity, so memory prices are unlikely to soften before the end of 2028.

That fits the picture SanDisk painted yesterday with its multi-year contracts and its expectation of rationing supply beyond 2027. The memory shortage is the clearest bottleneck in the AI buildout right now, and the value is flowing to the companies that supply the scarce physical inputs. New capacity like this takes years to come online, with these SK Hynix fabs built for 2029 and beyond, so it does nothing to relieve the near term squeeze. This is the physical layer thesis playing out, the suppliers of the chips, memory, and power capturing the value while the pricing power stays with whoever controls the scarce input. I stay drawn to that layer above the model builders and the hyperscalers spending to rent it.

Gold Confirms the Case

Gold is heading for its best week since January, with silver up 5% Friday to a six week high, both lifted by cooling oil and soft hiring data. I flagged gold potential during its dip earlier in the summer when the price action was weak and the thesis unloved, and that patience is starting to look well placed.

The case for precious metals was never about a single week. It rests on persistent central bank buying, on gold as a hedge against the fiscal and inflation risks I keep pointing to at the long end of the bond market, and on its role as ballast when equities wobble. This week’s move is a reminder of why the position earns its place. When oil falls and the labor data softens, the Fed picture shifts toward eventual easing, and that backdrop favors metals. It is one more piece of the diversification argument I have made all summer, that owning assets which do not all move together is what carries a portfolio through the choppy stretches.

A Thought on Uber

One name I have started paying attention to is Uber, and while nothing here is a recommendation, the reasoning is a good example of how I weigh a business the market has soured on. The stock trades near 15 times 2027 earnings even though analysts see double digit growth for years, and that discount comes down to a single worry, that robotaxis eventually make Uber’s model obsolete.

A world of autonomous fleets is more likely to fragment across Waymo, Tesla, Zoox, and others than to consolidate under one winner, and consumers will only juggle so many mobility apps. Building and running fleets is brutally capital intensive, so those companies are better off focused on manufacturing and deployment than on also maintaining a global marketplace. That leaves Uber positioned to aggregate demand across all of them, still holding the brand, the customer base, the payments rails, and the network effects that do not disappear when the driver becomes a machine. At this price I think the market is paying for a disruption it has misjudged, and that is the kind of setup I find worth watching.

Final Thought

The week closes in far better shape than the middle of July, with the chips recovering, earnings coming in strong, and the war moving toward resolution. Tom Lee was out Thursday calling for a chase toward 7,900 or 8,000 this month, and while I would not put a number and a date on it, the setup that makes people talk that way is real, since the reset flushed out the leverage that made the market fragile and left it on firmer footing. I stay constructive on that basis.

I would keep yesterday’s caution in view alongside the optimism. A rebound this sharp can sometimes precede a top rather than a clean launch higher, which is not my base case but is worth holding in mind when sentiment turns this quickly. I expect the summer to stay choppy and volatility to build as the political season heats up into the midterms. The path higher into year end looks intact, supported by strong earnings and a healthy economy, and I like the quality growth names that got oversold, the physical layer of the AI buildout, and precious metals as ballast. Today’s jobs number is the next real input, and the long end of the curve remains what I watch most closely.

Payrolls at 8:30, a lighter earnings slate to close the week, and the NY Fed inflation expectations reading. Enjoy your weekend. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards and have a great weekend all

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.

I’m Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.

Learn More

Good morning investors,

The market took a breather Wednesday after its record run. The Dow rose 263 points to another record, its fifth straight up day, while the S&P slipped 0.2% to snap a four day streak and the Nasdaq fell 0.8% as tech cooled. Disappointing reactions to SpaceX and AMD weighed on the growth names, while investors kept one eye on Iran, where Trump says a deal to reopen the strait could come at any moment.

Futures are mixed this morning, the Dow higher again while the Nasdaq drifts lower. Today brings Challenger layoff data and jobless claims ahead of tomorrow’s payrolls report, which is the number that matters most this week. A heavy earnings slate continues, and SpaceX faces a real test as its first lockup expires.

The SpaceX Lockup Arrives

Today is the day I flagged as the bigger event than the earnings themselves. SpaceX’s first lockup expires, freeing more than 900 million shares into the market and roughly doubling the tradable float. Early investors and employees get their first chance to sell, and after a stock that has fallen well off its debut and dropped 13% Wednesday on the capex numbers, the supply overhang is real.

Nobody knows how this plays out, and the honesty on that from people close to it is telling. One large SpaceX investor said this may be the biggest single day increase in share supply for any one company ever, and that he simply does not know what happens. Many holders will sell to take profits and diversify, which is natural and healthy after building that much wealth in a single position. Others will hold to see how far the rocket climbs. The stock is up slightly premarket, which suggests the market is not panicking ahead of it, but the next few sessions will show how much of that new supply comes loose.

My view has not shifted from what I laid out this week. I like where this company is pointed over the long term, with a generational leader, an unmatched position in space, and genuine sovereign AI ambitions that require exactly this level of spending. My caution has always been about the price rather than the business, and the lockup is the clearest example yet of why patience made sense. Let the supply find its level and the valuation settle. A company with this much promise will give patient buyers a better entry than chasing it through a period when the float is doubling and the price is still finding its footing.

The Memory Story Keeps Confirming Itself

SanDisk reported and gave one of the cleaner reads yet on why the memory shortage is structural rather than a passing spike. The stock fell premarket on guidance that came in light, which fits the pattern of a name up nearly 490% this year facing an impossibly high bar. But look past the guidance to what management actually said.

Demand is outpacing supply to the point that the company expects to keep rationing its memory among customers beyond the end of 2027. Revenue growth last quarter came two-thirds from higher pricing and one-third from higher volume, which tells you the pricing power is real. Most importantly, SanDisk has signed long term agreements, some running up to five years, with a minimum expected value near $94 billion even at floor pricing, and management believes actual revenue will come in above that. That is the contract structure I keep pointing to as the thing that makes this cycle different from the memory busts of the past. When customers commit years ahead at set prices, the boom and bust rhythm that always defined this industry gives way to something steadier. The stock reaction is about expectations. The business underneath keeps confirming the shortage is deep and lasting.

AMD and the Moving Bar

AMD sold off despite beating, which by now is a familiar story this season. The company topped revenue and earnings, guided the current quarter above estimates, and saw data center revenue more than double. The stock still fell, because after nearly tripling this year on hopes it becomes the main alternative to Nvidia in AI chips, a solid beat was not the blowout investors demanded.

The underlying story stays strong however. Lisa Su expects data center revenue to more than double by 2027, the company keeps taking share, and management sees the chip market reaching $2 trillion a year by 2028 with AI accelerators making up the bulk of it. This was not a weak quarter. It is another case of a stock priced for perfection meeting merely excellent results, the same dynamic that hit TSMC and others through earnings season.

The Labor Market Comes Into Focus

The jobs data is filling in ahead of tomorrow’s payrolls report, and the picture looks like the labor market is cooling gently rather than cracking. Challenger reported layoffs fell to their lowest monthly total in two years, down to around 33,000, while hiring plans hit their best July since 2022. Job openings eased to 7.36 million, the lowest since March, but there are still more open positions than unemployed workers.

Challenger noted that hiring is actually up 25% from last year, and the demand is showing up in aerospace, energy, and manufacturing, work that happens on a floor rather than a screen. A survey of economists echoed it, pointing to personal care, home health, and nursing as the fastest growing fields, all hands on work well beyond AI’s reach. AI is reshaping the labor market at the edges, weighing on wages in exposed white collar fields and featuring in tech layoffs, but it is not dismantling employment. That fits the low-hire, low-fire description that has held all year.

The Fed angle matters here also. The market no longer fully expects a September hike, with odds down to around 47% after the softer data, and cheaper oil easing the inflation worry. Governor Cook pushed back Wednesday, saying she is prepared to act on a hike unless disinflation continues, warning that five years of above-target inflation risks becoming entrenched. So the debate is live, and tomorrow’s payrolls print feeds directly into it. A soft number strengthens the case for patience, a hot one revives the hawks.

A Note of Caution on the Rebound

I have felt better about the market these past few days, and the reasons are real, with the war cooling, the AI trade steadying, and the leverage flushed out. I want to raise a note of caution alongside that, because the nature of this rebound deserves respect. Violent recoveries like the one we have just seen can sometimes be associated with a market forming a top rather than launching cleanly higher. That is not my expected outcome for the year, and I do not want to overstate it, but it is the kind of thing worth keeping in the back of your mind when a bounce comes this fast and this sharp.

What I do expect is a choppy summer, with volatility picking up as we move deeper into the political season and the two parties start going at each other ahead of the midterms. The path higher into year end stays intact in my view, supported by strong earnings and a healthy economy, with ISM manufacturing just hitting its highest since 2022. The road there runs through more volatility than the calm of the past few days would suggest, and I would rather flag that honestly than let a good week convince anyone the all-clear has sounded.

A Read on the Consumer

Restaurant Brands beat, powered by a genuine Burger King turnaround, with US same-store sales up 8.5% against McDonald’s managing just 0.8%. The contrast is instructive. Burger King is taking share through renovations, sharper marketing, and a focus on core menu items, while the broader read shows a value conscious diner. Popeyes saw sales fall as more chains compete for a smaller pool of budget minded customers. The consumer is still spending, but choosing carefully, which fits the K-shaped picture we have seen across other reports this season.

Final Thought

The market paused after its record run, which is healthy after a move this sharp. The Dow keeps making records on the broadening strength beneath the surface, while tech takes a breather and digests results that were good but not good enough for stocks priced this richly. The bigger tests are still ahead, with the SpaceX lockup today and the payrolls report tomorrow.

The AI trade has steadied and the memory names keep confirming a structural shortage, and I like the quality growth names that got oversold in July. I would respect that a rebound this violent carries some risk of a top, not as my base case but as a genuine possibility worth holding in mind. The summer stays choppy, volatility likely builds into the political season, and the path higher into year end runs through it rather than around it.

A heavy earnings slate, the SpaceX lockup, and payrolls tomorrow. If any of this has you wondering whether your portfolio fits your goals rather than the day’s headlines, that is a conversation I am always glad to have.

Best regards,

Dan Sheehan dan.sheehan@telosfamilyoffice.com

Subscribe to Market Pulse: https://substack.com/@dansheehan3

Work With Me

Want more hands on support with your financial planning / wealth management. Feel Free to reach out to me: dan.sheehan@telosfamilyoffice.com

Learn More

Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader’s objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.