So let's get to the big story breakdown.
We continue to trek along in this busy week, last full trading week of August.
Now this morning we received the Fed's preferred inflation gauge ahead of Kevin Warshch's Jackson Hole speech on Friday.
Now after the close, all eyes will be on Nvidia's Q2 earnings.
Amid the AI financing rush, underlying industry concerns over CapE.
So a lot to discuss.
So joining me to break all this down is Tim Anderson, managing director of TJM Investments.
Tim, thank you so much for being with us.
How are you today, Johnny?
It's great to be with you today.
It's kind of a little bit like the calm before the storm.
The market's just been in a churn really for the last 4 or 5 days, but I'm sure there's some.
Plenty of action to come in the next couple of days.
Well, like you said, the calm before the storm, that's the perfect way to say it.
So let's start off with this morning's breaking data.
Chair Warsh said that he is taking an expanded view of inflation behind PCE, and through all that, he's saying that the Fed's preferred inflation measure still stands out.
So when you hear all that.
What actually stands out to you about the data that we received today?
You know, it's pretty much from last month.
I realized that the headline number was up 1.10 and people were expecting it to be unchanged.
The core number was unchanged on a year to year basis.
The Dow futures did sell off a little bit on it.
Some of the headlines are that the number was.
But I think that's really stretching to look at some impact behind what was really a pretty benign report with oil still right around in the 90s, high 80s, low 90s to mid 90s and gasoline above $4 for inflation to be 1 from last month is almost a little bit encouraging and I think it'll be interesting to see what Chairman Warsh has to say about that and a number of other topics on Friday.
All right, so Tim, like you said, the calm before the storm, today is going to be a big day.
Tomorrow is going to be a big day.
Friday, a huge day because we're going to hear from the Jackson Hole.
Press conference on Friday.
We're going to hear more about what Warsh has to say on Friday.
So what do you expect the market reaction to be after this press conference?
You know, it's a great question because the best debate that I've heard this week has been who's going to have more of an impact on the market.
Going for the rest of the year, really, is it going to be Jensen Wang when he talks at the Nvidia earnings conference after their earnings report later this afternoon, or is it going to be Kevin Warsh on Friday morning?
So look, I think Kevin Warsh is not going to really Give a lot of information that people really want.
He's stated he's going to tail back giving forward guidance, but I think the theme of this conference is the impact of.
On the economy, blah blah blah blah blah.
OK, so I think he's going to talk about productivity because he's mentioned it in the past and he's been very clear that if this AI revolution produces a strong uptrend in productivity that that would be disinflationary and I think the last time you and I spoke I was pretty clear that I know I'm in an extreme minority, maybe a little bit less of a minority than the last time.
I don't think they're going to hike rates this year.
In fact, I think their next move is going to be a cut.
Because I think this ramp up that we're having in productivity is going to be disinflationary as uh Chairman Warsh has alluded it should be and that that's going to start to bear out in the data as we get closer to the end of the year.
All right, so definitely people are going to be watching his every word for that press conference on Friday, but I want to talk to you about the Treasury's plan now.
Let's pivot a little bit.
The Treasury's plan to buy long term debt, the buyback situation, we've seen yields come down, but some economists are questioning if the federal government should be making moves here.
Do you think that this could actually benefit the markets?
You know, I think that it's a preemptive move, and if you think back to the I believe it was the third quarter of 24 and a couple of other times in the last 6 to 8 years.
In late in the year, the market has had this little technical disruption where they get a little frozen, liquidity gets a little stuck.
On a couple of occasions there's been some issues in the repo market, and I think what Besson is trying to do is stay one step ahead of that and prevent that from happening this year.
And this is really very much just a technical move.
You're not as much as it sounds like a big number, it's not really a lot in terms of what they're buying, and they're buying things that have definitely lower liquidity because they are off the run issues that are not really actively traded right now.
All right, so you said it best calm before the storm.
Closing bell will happen.
The video will report.
So I want to talk a little bit about that because the stocks snapped a seven day losing streak yesterday.
Sure.
So specifically, you know, this comes amid AI financing, the concerns over the industry CE numbers.
What are you watching for and how will it impact the semiconductor trade specifically?
Look, I think The other headline that's been thrown out a lot the last couple of weeks is, and there was an article in The Wall Street Journal yesterday about Nvidia has now become a banker to the AI world and that there's a big risk with that, that if the AI trade were to come to and the AI investment cycle were to come to a screeching halt.
That that would be a major risk for Nvidia.
So I think he's going to get a lot of questions on that.
I think the probability of that happening is like, you know, it's almost like what if the sun doesn't come up tomorrow?
But I think that he's going to get questions on that in the conference call, and I think that will be one of the more interesting exchanges he has with the investment and analyst community.
All right, so Nvidia, obviously that's a big topic, but we're also looking at other earnings such as Salesforce and Marvel Tech that's going to be coming out today and tomorrow.
Exactly.
So let's talk about the software sector specifically.
Is it trying to move past earlier AI disruption fears at this point, or how do you think the two sectors match up?
Look, the software names are up about 25% this month.
OK, so they've had a pretty good bounce off of that very depressed level that they were stuck in from.
February, early March when we when the big fears came out that AI might really make major disruptions and displacements in the software industry.
I think the software stocks that are very high quality that have a large installed base and that have smart people running them are going to be able to recover from that.
Maybe they're not going to go back to the very high levels that they were at over the last couple of years.
But I don't think these companies are going away.
I think the best comment I heard months ago when everybody was concerned about the software companies going out of business was that if Anthropic really thought that they were going to put Salesforce out of business, they wouldn't be advertising on their LinkedIn page for Salesforce administrators at Anthropic.
So look, Had a violent reaction.
It was a little bit of an emotional trade, and plenty of people had big profits in the sector.
So now they've had 6 months or so to reflect and repair and plan for where we go from here, and you're starting to see with ServiceNow and Snowflake and Salesforce which ones are really Going to get through this and you know put themselves in a position for a strong 27.
It's definitely interesting to see what's going to be happening in 2027.
I want to talk about the US dollar because we've seen that it's weakened this month.
The debasement trade is back on.
So what are your thoughts on the rally that we've seen in Precious Metals, and is it just getting started?
I think the precious metal rally is just getting started.
We had a very, very strong move early in the year.
Gold was probably a little stretched out at 5500, but it held the 4000 level very nicely on a number of occasions, maybe 2 to 4 months ago.
So and silver, of course, had this parabolic move up above 110 that was just unsustainable.
But now if you look at uranium, you look at copper, you look at gold, and, and, and some other precious metals.
These stocks look like they're in the beginning of a multi-year rally.
I know that a lot of commodity analysts have used the term super cycle.
I'll let them go there.
I'm not going to go there yet.
And obviously gold specifically is going to trade contra to the dollar.
So if the dollar were to weaken gradually, which it has recently, that's going to help the gold trade.
One last question.
We have less than a minute.
Let's talk about oil specifically.
US and Iran still this war impacting markets.
Oil prices trending in the right direction at this point.
What's your thoughts?
Well, I think they're kind of at equilibrium right now.
The Groundhog Day in a way, it's the same thing over and over, week after week.
So up and down, a lot going on.
If the US wasn't producing as much oil as they are, oil prices would probably be 120 to 130, not.
80 to 90.
So I, I think that when you really consider everything that's going on with the oil production disruption from Iran and the and the transport of oil through the Gulf being disrupted so significantly, the fact that oil is hovering.
In the mid 80s, maybe low 90s is, is actually remarkable.
So the, if you were to get a breakthrough finally in some resolution over there, you know, you could go back, you could be in the mid, you could be in the low to mid 70s, uh, pretty quickly.
And we've seen that on a couple of occasions, you know, over the last two months when we thought we were. on the verge of a resolution, resolution.
Well, you know what, it's definitely going to be interesting to see what happens in the next couple of weeks, but Tim, thank you so much for joining us.
Never a dull moment again, the mayhem.
I don't know if we're about to start.
We're in it, so we'll see.
People used to always talk about the summer doldrums and the dog days of August.
I think that's happening nowadays, and that was Tim, thanks so much for joining us.
