Crazy pirate

Nothing to see here

How a week that started in chaos turned into a big ol’ nothingburger

I think we can all agree that everyone remained completely calm and was their best selves this week.

8/9/24 4:12PM

Market historians poring over daily charts will (rightly) believe this week was one for the ages. Those who pore over weekly charts will confine this to the dustbin of history.

The week started with widespread panic about the unwind of leveraged trades, as US stocks tumbled on Monday morning, the US dollar plummeted versus the Japanese yen, and the US stock market’s volatility index hit its highest level outside of COVID or the financial crisis.

It ends with most of those “great unwinds” being almost – or completely – re-wound.

The S&P 500 opened down more than 4% on Monday; the tech-heavy Nasdaq 100 opened down more than 5%. And wouldn’t you know it, the tech-heavy gauge ended the week with a small gain while the S&P 500 was virtually unchanged. Amidst the huge intraday and day-to-day volatility, the benchmark US stock gauge has largely carved out a near-term trading range of 5200 to 5340 this week.

We were only halfway through the unwind of the so-called “yen carry trade” that was wreaking havoc on markets this Monday, according to JPMorgan. Since then the US dollar has ripped higher versus the yen to end the week just barely positive. So much for volatility: the cross moved 0.1% this week when all was said and done.

And, perhaps most astoundingly, the VIX Index – Wall Street’s “fear gauge” – spiked to nearly 66 on Monday morning in the pre-market. It ends this Friday lower than it was one week ago.

An environment where volatility can go haywire, then vanish almost as quickly as it appears, is not necessarily a very healthy market.

Just to be clear, the short-vol trade still has not capitulated. That flow is still active and very aggressive, as large footprints continue to show up as of yesterday and today.

To our knowledge, only two smaller desks have been carted off. The Vega rotated on the street over…
— Kris Sidial🇺🇸 (@Ksidiii) August 7, 2024

And implied correlations continue to creep higher despite the fall in volatility. It might not sound like much, but correlations rising by 2.5 percentage points while the VIX falls by 2.5 points is an odd outcome.

In totality, we’re left with another mixed message from a market that’s chock full of them: things are nowhere near as stressed as the daily charts would lead you to believe, but much more fragile than the weekly charts would imply.

Luke Kawa55m

Micron soars after reporting huge Q1 beat, with Q2 sales guidance ahead of every Wall Street analyst’s estimates

Micron completely erased Wednesday’s big losses in after-hours trading after the memory chip specialist posted stellar results for its fiscal Q1 2026 and a much better outlook for the current quarter than Wall Street had anticipated.

For Q1, the company reported:

Revenues: $13.64 billion (estimate: $12.95 billion)
Adjusted earnings per share: $4.78 (estimate: $3.95)

And the Street’s consensus was well ahead of even the upper ranges of the guidance provided by management for the quarter for sales of $12.5 billion (plus or minus $300 million) and $3.75 (plus or minus $0.15).

For Q2, management provided an outlook for adjusted revenues of $18.3 billion to $19.1 billion, and adjusted EPS of $8.22 to $8.62. Wall Street had penciled in revenues of $14.38 billion with adjusted EPS of $4.71.

Even the bottom end of the ranges management provided is well above the top analyst’s estimate for the quarter.

These results may help spark a revival in semi stocks, which have gotten trounced in recent sessions. Hard disk drive sellers Seagate Technology Holdings and Western Digital are also rising in after-hours trading, as is flash memory seller Sandisk.

Micron has been one of the worst performers in the S&P 500 since last Thursday’s record close, down double digits from then until Wednesday close as investors broadly dumped AI names. Prior to that, shares had been on fire amid a bevy of Wall Street price target hikes and surging memory chip prices as demand runs ahead of supply. The AI boom has fueled a spike of immense appetite not only for GPUs and custom chips but also memory chips as well, as data centers also need a boatload of these to store information and feed it to those processors. Micron and its major competitors, SK Hynix and Samsung, have already sold out production for their most advanced high-bandwidth memory offerings for calendar year 2026.

Micron recently announced that it would be exiting its consumer chip business to focus on serving its AI customers.

Toby Bochan

Market wrap

Markets slump as AI trade tumbles

Tech dragged US stocks lower, especially the Nasdaq 100.

The East Side of the US Capitol Building in the early morning, Washington DC, USA.

Group of House Republicans defy leadership and join Democrats to force ACA vote

The subsidies are still likely to end before the deadline.

J. Edward Moreno6h

Luke Kawa

Bitcoin is behaving like a no-fundamentals tech stock

The three-month correlation between the daily changes in the iShares Bitcoin ETF and a Goldman Sachs basket of nonprofitable tech stocks is at a record high.

Matt Phillips7h

Oracle slides on report that data center partner Blue Owl won’t fund $10 billion Michigan facility; company says project is on track without Blue Owl

Oracle shares declined early Wednesday after the Financial Times reported that Blue Owl Capital, the largest funder of Oracle’s data center investment push, will not finance a 1-gigawatt Oracle data center planned for Saline Township, Michigan. The pink-paged periodical reports:

“Blue Owl had been in discussions with lenders and Oracle about investing in the planned 1 gigawatt data centre being built to serve OpenAI in Saline Township, Michigan.

But the agreement will not go forward after negotiations stalled, according to three people familiar with the matter.

The private capital group has been the primary backer for Oracle’s largest data centre projects in the US, investing its own money and raising billions more in debt to build the facilities. Blue Owl typically sets up a special purpose vehicle, which owns the data centre and leases it to Oracle.”

For its part, Oracle told Bloomberg on Wednesday morning that negotiations for a data center project in Michigan are “on schedule” and don’t include Blue Owl.

While not horrible, Wednesday’s drop puts Oracle down 15% so far this week, as the shares continue to be clobbered by rapidly shifting investor sentiment toward lofty AI investment plans.

Oracle is down roughly 45% from the all-time high it hit on September 10, in a plunge that has destroyed more than $400 billion in value. Yowza.

“Blue Owl had been in discussions with lenders and Oracle about investing in the planned 1 gigawatt data centre being built to serve OpenAI in Saline Township, Michigan.

But the agreement will not go forward after negotiations stalled, according to three people familiar with the matter.

The private capital group has been the primary backer for Oracle’s largest data centre projects in the US, investing its own money and raising billions more in debt to build the facilities. Blue Owl typically sets up a special purpose vehicle, which owns the data centre and leases it to Oracle.”