Looking for Kevin Warsh to Spill the Policy Beans: 8 Key Items Shaping the Stock Market Friday
These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a weak start to the final trading day of the week.
1. The U.S. military said Thursday that it has cleared all Iranian sea mines along internationally recognized transit routes in the Strait of Hormuz… If Iranian sea mines have been cleared as Cooper said, vessel movement through the strait will most likely be less restricted. (The Hill)
The flow of crude through the Strait of Hormuz is creeping higher as producers across the Middle East boost exports in the face of Iran’s lingering threat to shipping. The increase is keeping global crude oil prices in check. (Bloomberg)
Mediators in the Iran war are stepping up efforts to get the Strait of Hormuz reopened, with Tehran agreeing to draw up a list of conditions to restore normal traffic after a Qatari emissary pressed the Iranians to respect freedom of navigation. (Reuters)
Iran’s top diplomat said resuming diplomacy with the US “isn’t impossible,” after what he described as “creative discussions” with Qatar, a mediator in the war between Washington and Tehran. (Bloomberg)
We don’t want to get ahead of things, but while the above is encouraging, the real test will be traffic data through the Strait in the coming days. If we see volumes improve, that should translate into lower oil prices, bringing some relief at the pump and on the inflation front.
2. While much of Wall Street is standing by to hear what Federal Reserve Chairman Kevin Warsh has to say today at his first speech to the Jackson Hole economic symposium, history suggests the stock market is likely to react with a whimper rather than a roar. Despite a few exceptions, a Fed chair’s speech at the symposium normally isn’t a big catalyst for stocks — unless it comes before a crucial shift in monetary policy… Warsh, scheduled to speak Friday at 10 a.m. New York Time, could remain especially tight-lipped about the timing of hikes since the next jobs report on Sept. 4 and consumer price figures on Sept. 11 are both likely to be important data points for the Fed when they meet later in the month to set rates. (Bloomberg)
We’ve shared with you our view that we are not expecting Fed Chair Kevin Warsh to tip his or the Fed’s hands when it comes to monetary policy, precisely because of the data coming before the Fed’s September policy meeting. Would we like to see more specifics from the Fed chair rather than the quasi politician-like ones he gave at the last post-policy press conference? Sure we would. And we can see why folks are looking for Warsh to course correct on how he communicates with the financial markets. Perhaps we’ll get more of a framework for policy out of Warsh, but our expectations heading into his comments on Friday morning are low. More after he delivers them.
3. Marvell Technology stock was falling sharply in the Friday premarket after the chip designer narrowly beat the market’s expectations for its fiscal second quarter… Marvell reported adjusted earnings of 94 cents a share for its fiscal second quarter, up from 67 cents a year ago and roughly in line with analysts’ consensus estimate of 93 cents, per FactSet. Revenue surged 37% from last year to $2.74 billion, above Wall Street’s call for $2.72 billion… Marvell’s guidance came in slightly higher than expected for the fiscal third quarter. The company forecast adjusted earnings per share of $1.05 to $1.15 on revenue of $3.15 billion at the midpoint of a range. Analysts had anticipated earnings of $1.08 a share and $3.04 billion in revenue. (Barron’s)
We ascribe the pre-market fall in Marvell’s ($MRVL) shares to two key factors. First, leading up to Thursday night’s earnings report, MRVL shares soared from a low near $163 in late July to more than $241. That’s a big move and we benefitted by picking up more shares for the Portfolio just below $177 on July 30. However, that 48% move in the shares also set very high expectations. Helping fuel those high expectations was the second factor, Marvell’s recent deal that would allow Google ($GOOGL) to buy up to $12.2 billion in shares as part of an expanded relationship on custom chips that has the potential to equate to $120 billion in revenue for Marvell through 2033. As we pointed out in our alert discussing the expanded relationship, it would be presumptuous to automatically award $120 billion in revenue to Marvell.
But it seems others expected more from the Marvell, especially when it came to forward guidance, even though Marvell now sees its fiscal 2028 (calendar 2027) top line growing near 50% to $18 billion, compared to $16.5 billion three months ago and the $12 billion expected for this year. The company also shared it will hold an Investor Day on October 6, and in our view that is where we will hear much more about its expanded relationship with Google and demand from its other custom AI silicon customers. Following that event, we’re likely to look back on Friday’s slump in the shares as a bump in the road.
That’s quite a bit, but we’ll have more to say in a standalone note later on Friday morning.
4. OpenAI, Anthropic, Google, and more than 100 other companies and organizations are calling for a major push to defend against cyber threats powered by the most advanced AI models that, somewhat ironically, the industry itself is racing to put out in the world. The companies, which also include Microsoft, Amazon, and Oracle, signed a joint letter published Thursday calling on industry leaders and governments to carry out a “global surge in cyber defense.”
“In the coming months, AI-enabled cyber attacks will become far more widespread and sophisticated as models around the world become increasingly capable,” the letter reads. “The companies and public services our communities depend on — from hospitals to water treatment plants to the infrastructure that powers the internet — are at risk.” (Gizmodo)
Following the comments about AI and cybersecurity demand from CrowdStrike ($CRWD) earlier this week, the above reinforces the pain point driven tailwind powering cybersecurity stocks. We’ve been open that we will need to revisit the Portfolio’s price target for its position in the First Trust Nasdaq Cybersecurity ETF ($CIBR) and this gives us an ample reason to do so in the coming days.
5. US corporate profits have hit a record high while workers’ slice of the pie has sunk to historic lows, fuelling discontent among many Americans and a growing political backlash. Pre-tax earnings hit an annualised $4.8tn in the second quarter, or 18 per cent of national income, according to Bureau of Economic Analysis data, the highest share since the aftermath of the second world war. Employees’ share from wages and benefits fell to 60 per cent, the lowest level since the 1950s…“What we’re seeing today is that there are really two separate economies: one for people who make their primary income through investment and passive income . . . and then typical workers who clock in day in and day out.” (FT)
On Thursday, we shared with you an analysis of retailer comp sales figures reported so far for the July 2026 quarter. One of the findings pointed to off-price retailers and warehouse clubs winning consumer wallet share. The above puts another face on why that is happening, and it brings more support for the select retail positions we have in the Portfolio.
6. PayPal shares slumped 13% in premarket trading on Friday, after Bloomberg News reported that a consortium of buyout firm Advent International and payment processor Stripe had abandoned its pursuit of the fintech pioneer. (Reuters)
A fresh reminder that we should not count a deal as being done until the ink on the documents is dry. Following the pop in PayPal ($PYPL) shares in July, the prudent move would have been to sell some of one’s position rather than risk, and lock in some of that gain. Had we been involved with PYPL shares, that’s what we here at the Portfolio would have done, especially after Stripe agreed to acquire OpenRouter on August 19. Juggling one acquisition can be challenging but two at the same time, including a public company like PayPal that has multiple business lines and faces growing competition in the payments space…
7. Economic data today per TipRanks: Chicago PMI (August), University of Michigan Consumer Sentiment Index (August, Final).
8. Companies reporting today per TipRanks: AM – Frontline ($FRO)
More Pro Portfolio
- Selling Palantir at a Big Profit to Increase Our Cash on Hand
- We’re Tracking 23 New Signals Across Our Investing Themes
- Weekly Roundup: Geopolitics Wins Out, But Portfolio Continues to Outperform
At the time of publication, TheStreet Pro Portfolio was long CIBR, GOOGL and MRVL.
