WEDNESDAY MARKET UPDATE

Good morning. Index figures below are futures — I'm writing before the open. The Fed decides at two, and the quarter's two biggest reports land after the close.

— Nathan Reed

Gold & Macro

THE DECISION ISN'T THE EVENT. THE WORDS ARE.

Gold is $4,047, down a third of a percent and 3.2% over the month. Silver is $53.72, down 12.6% in the same stretch. The dollar sits at 102.35 and the 10-year near 4.99%, both barely moved — a market holding its breath.

Almost nobody expected a change today. Rates stay in the 3.75% to 4.00% range, and that has been in the price for weeks. What isn't in the price with any confidence is what Chair Warsh says half an hour after the statement about December.

That's the asymmetry worth carrying into any headline you read today. That pause is already sitting in your bond fund. The December language isn't, and that's the half that moves what you actually own.

The Trade

BROADCOM IS NOW GUARANTEEING THE CHIPS IT SELLS

Bank of America, Citi, Morgan Stanley and Blackstone have lined up $63 billion. A newly formed vehicle will purchase Broadcom's AI accelerators and networking gear and lease them to Anthropic, with deliveries from 2027. Roughly $43.5 billion of that is senior debt.

Yesterday I wrote that the money and the order book had become the same thing. Today it got twenty times bigger and changed shape. Broadcom isn't writing the cheque — the banks are. What Broadcom put in is residual value support, meaning it absorbs the loss if those chips end up worth less than the lenders assumed.

So the seller is guaranteeing the collateral behind the loan that buys its own product. Moody's called Broadcom one of the strongest large technology companies, then warned the risk climbs if several of these stack up quickly. One already has — an earlier $35 billion expansion carried a Broadcom backstop of up to $29 billion.

What to watch

Microsoft and Alphabet report after the close, and capital spending guidance is the number. Then whether a third structure like this appears before year-end, which is when that Moody's line stops being hypothetical.

Heat Check

Nathan's Take

"Banks are lending sixty-three billion against chips, and the maker of those chips has promised to cover the shortfall if they're worth less. That isn't a sale, it's a loan."

Names to Know

BOEING, VISA, ROBINHOOD

Boeing $BA (▼ 10%) — slid through Tuesday's session while its chief executive laid out a path to $10 billion of free cash flow by 2029.

Visa $V (▼ 1.4%) — a soft fiscal 2027 growth outlook overshadowed the quarter it had just reported.

Robinhood $HOOD (▼ 8.4%) — quarterly earnings of $0.51 a share missed the $0.55 expected, and revenue came in light as well.

Seagate $STX (▼ 3%) — slipped despite beating expectations and guiding above them.

SoFi $SOFI (▲) — record quarterly results, following its biggest one-day gain in eighteen months.

Figures are pre-market except Boeing's, which is Tuesday's session. For real-time data, I recommend monitoring Finviz.

The Macro Edge

⚡  Houthi forces struck Saudi Arabia's Ras Tanura refinery, sending Brent back above $116 and US crude over $102.

💾  SK Hynix posted record results and announced more than $23 billion of dividends and buybacks.

🤖  OpenAI is reportedly weighing a purchase of Google's own AI chips.

₿  Bitcoin climbed about 2% to $81,400, its firmest in a week.

Two o'clock, then two earnings reports. Today has more in it than most weeks.

Nathan Reed  |  Profits & Insights