Making sense of this week’s volatility... And Nvidia earnings on the clock 8/21/26

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0:41Isn't that why we work so hard? To have some fun with our money? Like treating yourself to something special or spontaneously doing something extra for a loved one. So use Empower and get good at money so you can be a little bad. Join their 20 million customers today at Empower.com. Not an Empower client paid or sponsored. Live from the Nasdaq market site in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. Stocks ending a rough week on an up note, but still down notably since Monday. Can today's momentum carry into next week? We'll debate. And we're counting down to NVIDIA earnings, the world's biggest company, set to report next Wednesday what the charts say is next for the stock and what one top analyst is expecting.

1:26Plus, Broadcom eyes a massive debt deal. Retailer Ross Stores surges after earnings and a big week for Bitcoin. The crypto hitting three-month highs and clocking its best week of the year. What's driving the gains and how much more momentum is left in that trade? I'm Mike Santoli in for Melissa Lee. Coming to you live from Studio B at the NASDAQ on the desk tonight, Karen Feinerman, Steve Brasso, and Carter Worth. Welcome to you all. We start with that volatile run on Wall Street. The S &P higher today, still down more than a percent since Monday, breaking a streak of three straight weeks of gains.

2:00Other major indexes also in the red, with the Nasdaq leading the losses down over 2 percent. All the action coming as long-term interest rates trade near two-decade highs. Investors seemingly unimpressed by Treasury Secretary Scott Besson's plans to buy back billions of dollars in longer-term government debt. The 30-year yield fully recouping Wednesday's drop by today's close. So can today's stock momentum last into next week or will higher rates take another bite out of equity? Steve, read the back and forth here between stocks and bonds. Yeah, so bonds are always considered the smart guys in the room, I think.

2:36You know, I say this humbly as an equity trader. We sort of react to them. And Warsh wants the bond market to do all the heavy lifting. It's done that so far. And the market is, as you've said in your last show, it's already pricing in, basically. It's a coin toss right now. So is Worscht going to have these focus groups handle it? Or is he going to let the market sort of, is he going to intimate anything? He's not going to say anything. He doesn't want to say anything. And I think Powell said too much, right? So we went from your parge is too cold, your parge is too hot. We want it just right.

3:11I think we're going to swing to that ambiguity now and the market's going to run away with it a little bit. And I think that's what he wants. I think that's what the market wants. That's what I want. Why do I want that? Because I always like asking myself questions because I know the answers, I think. So the reason why I want that is I feel as if the Fed gets painted into a corner if he talks too much, gives him the ability to go back and forth. You had a guest on the previous show saying it's getting political. So last year it was or up until WASH came in, it was Trump being political with Powell.

3:43Now I feel like the Fed is being political with the market. I think we're going to see a little bit of this juggling back and forth, but I think it's a healthy healthy for the overall market. I mean, I guess, Karen, even setting aside the Fed piece of what's been going on with yields. First of all, it's a global move. It's not really about projected inflation expectations. It's kind of like everyone's borrowing. We're building, you know, a totally new industrial complex with A.I. You obviously have a little bit of uncertainty around around policy. But the question is, is this a level that changes the equation for stocks?

4:20No, I don't I don't really think so, though. I found to me it's I thought Besson's comments were really interesting, I guess. I don't know. A lot of words that you could use. that to me was the most significant event of the week, I think, in that, you know, he was trying to massage the bond market to where he wants it to be, which is sort of exactly counter to what Warsh had said that he didn't say a ton, but he did say he was happy to have longer, you know, higher rates for 30-year bonds to do some of the work to hopefully get inflation under control. So the I guess it was a two days of mild reaction to best and common and then completely reverse.

5:03And then it kind of reversed. Look, you did see reactions stick in some respects, which is since the Treasury buyback announcement, dollars down a bunch, gold's up a bunch, Bitcoin's up a bunch. So you had this idea out there of like, OK, we need somehow to hedge this bit of uncertainty, whatever it's going to mean. Yeah, I don't know that worse will address this. I mean, this head on at all. It seems unlikely. I don't think he's going to raise. I think, you know, the midterms, I know he's not political or doesn't claim to want to be in all of that. But here we are. Yeah. And I can't help that, you know, the Senate, I just felt was being a good soldier out there and trying to do what he could.

5:40I do think that oil moving this high is another really important factor. And I don't think Trump likes it this high and will try to do something to talk it down. Those, I think, are the most important things. Also, in video. Well, that's true, too, of course. Oil moving up again is part of that whole yield story as well. It's a very tight relationship. So, Carter, in terms of how the equity market behaved and metabolized all this, whether it was because of rates or not, what did you see this week? I mean, look, I think the real pressure, of course, as expected, is on financials. Big, large Canadian banks, super regionals here in the U.S., as well as so-called money center.

6:21We don't call them anymore, but all under pressure. I think the bigger takeaway is still that the cost of 10-year money is very benign. I mean, we know we're coming up on the three-year anniversary of the peak. The peak was October 23rd, 2023. Here we are about to be September of 2026. We briefly, intraday on that day, got above 5%. 5.02 was the high. And here we are three years later, and the cost of 10-year money is 4.73. generally speaking the equity market has loved that the equity market S &P was at 4200 then and here we are at 74, 75 so it's really about the rate of change it always has been were we to creep up to over the next between now and November up to 5 % I don't think the market cares at all were we to have an accelerated move there quickly between now and a little bit after Labor Day equities will not like that this is I think elemental But for now, I don't see this as being a problem for the market.

7:23And in fact, the market is saying it isn't a problem. Yeah. S &P 76, 75. Don't want to have anybody panic that we just lost 200 points through the couch. Carter. But real quick, you mentioned the banks. They obviously did. They were they were kind of helping to support things on the way up a couple of weeks ago, actually for a while. They faltered a little bit. Obviously, semis down again today. Industrials look tired as well. I just wonder whether, in fact, the market's losing some of those thrusters. Yes. And so if you think about the mid-May to mid-July, we traded within a 5 % range for a two-month period.

8:01That's only happened five, six times in the post-war period. I mean, a very benign. And yet, despite that sideways quiescent action at the index level, huge moves under the surface. Think about semis in that period, or software, or energy stocks, and so forth. And then this minor breakout to new highs and now this pullback. I think we're very much maybe, as you phrase it, sort of losing a little steam and that the market has really asymmetrical downside here than upside potential on an intermediate basis. All right. Well, we are building toward getting a few answers next week. Markets will get another read on the Fed at the end of next week at the Jackson Hole Symposium.

8:43Kevin Warsh is first as Fed chair. It kicks off on Thursday. CNBC senior economics writer Matt Peterson joins us now. Matt, sometimes we have to, you know, maybe kind of hype this event as being consequential. Probably don't need to do that this time just because the market craves clarity or at least whatever messaging we're going to get from Warsh. Where do you expect we ought to set our expectations? Yeah, we are going to get something from Kevin Warsh, but whether it's going to satisfy the market's desire for clarity from the new Fed chairman, I will believe it when I see it. So far, the pattern has been that he has liked to talk about his big picture plans about changing the Fed and relatively little about what exactly is going on in the markets and the economy.

9:33Other than that, you know, as everybody noticed, he did seem to be happy with or OK with at least the rise in long end yields when he was talking in July. And so, you know, I think this is a big moment for him. Is he going to talk about what's going on in the bond market, how he sees the Fed, you know, thinking about the bond market? Or is he going to just kind of take his hands off of this entirely and say, you know, this is a Treasury thing. I'm not going to engage in it. I think if he does that, you know, I suspect we'll keep seeing yields creep up here, right, because we have markets looking at a Fed chairman that they think is happy with this situation and will just continue selling up.

10:15You know, inflation expectations are rising over the past couple of days here. I think there's something for Warsh to address, but I'm just not convinced that he's interested in getting into this fight. Yeah, it certainly may be the case. He wouldn't be interested in certainly getting into a fight. A lot of the sort of potential frictions have been noted, right, where it's if Warsh wants a smaller Fed balance sheet, kind of less of a finger on the scale of trying to sway rates where they're going. And obviously, Treasury is doing the doing the opposite. He also wants the Fed to lower the duration of its balance sheet.

10:49Here you have the Fed as a buyer of longer duration assets. But maybe if what Warsh wants is the Fed shouldn't be the main character anymore, then somebody else is willing to be the main character. Look, I think you've got two things that Warsh has said that are a direct tension in what we're seeing from Scott Peasant. On the one hand, you know, he has said he said last year, pretty recently, that he thinks that, you know, when the Fed buys bonds, you know, through quantitative easing, it has encouraged reckless fiscal spending. He has broadly criticized the idea of the government holding down yields because this encourages the debt to rise.

11:29So he doesn't like this. The Treasury is acting here and not the Fed, but it's a very similar kind of effect. And on the other hand, you have Warsh saying again and again that he thinks the Treasury ought to have a lot of say over how the Fed intervenes in the bond market. This is the thing that he talks about when he talks about rewriting the Treasury Fed Accord, is that he thinks the Treasury ought to have a lot more say of what the Fed does with its balance sheet. And so if you are Scott Besson and you think, well, if I really want to bring down long-term yields, I need to get the Fed involved, it seems like a pretty easy call to get Kevin Warsh on your side here, even though he's going to do something that he doesn't want, that Kevin Warsh said he doesn't want to do.

12:14That's why this is such a dilemma. Yeah, it is obviously pretty tricky. I would say that this is different from QE in the sense that it's kind of just a maturity swap, right? You're going to have to, Treasury's going to have to borrow on the shorter end to buy back at the long end, trying to twist the curve around. We'll see if that is a relevant distinction. Matt, thank you very much. We'll certainly talk to you a bunch next week. So, Karen, again, I mean, a lot of these questions are going to hover over this meeting. We never know if the market is really going to take its cue from it. I mean, this is a very different kind of information flow and, I guess, forward looking that we're not going to have anymore.

12:54Yeah. So I think we're going to be a little stuck. I really wonder, though, what was Warsh aware that this was going to happen? What was that conversation like when Besson said, hey, this is what I'm going to go out there and say? I think he's doing it because because this isn't QE. There aren't any new reserves. There isn't a printing machine. And Warsh wasn't going to do it. He wants to shrink that balance sheet. So it wasn't going to happen with Warsh. So I don't know. To your point, was there a meeting? Was there a lunch? Was there a dinner? Was there something smoke signals? I don't know.

13:25But I think this is the administration's way of answering QE without actually printing. What does it tell us, though, that bonds didn't ultimately didn't? Well, that's that is the question. I mean, you know, the bonds are going to fight. Four billion against the 40 trillion market per little operation. It's a little bigger than that in aggregate, potentially. But no, I do agree. Markets are going to test, policymakers resolve, almost whatever happens here. I do think, though, we have to keep in mind that Treasury, as a matter of relatively normal business, does occasional buybacks of orphaned, you know, off-the-run securities.

13:59This is just bigger. But the first thing that Treasury Secretary Besson said in the interview on CNBC was, well, it's a signal. It was intended as a signal. And I have asymmetric information. Yes. Whatever that means. But they always do. So everyone's always had a venture capital. Including the central bankers that Scott Besson bet against as a hedge fund manager. So we'll take that all and try to figure out what it could mean. For more on the week ahead and the markets, let's bring in Tiffany Wade, Senior Portfolio Manager at Columbia Threadneedle Investment. She co-manages the Columbia Cornerstone Growth Fund.

14:33Tiffany, good to see you. Welcome. Thank you for having me. So it seems like the bond market was kind of dominating a lot of the conversation this week. The absolute level of rates, whatever reasons for them getting there, does it make much of a difference in terms of how you're viewing prospects for stocks? I think it's going to matter for the short-term prospects for stocks. Certainly, equity investors are going to be looking to see what Warsh has to say next week. As you were talking about before, the lack of clarity, lack of forward guidance is something that equity markets don't like, right?

15:04We don't like uncertainty. And so that lack of information is going to create potentially some volatility next week around that meeting. So that's certainly one of the things that could create some noise in the near term. I still find it fascinating that that one element of this story is the voracious demand for capital by the private sector, the A.I. investment theme. And that seems to be a key driver of where global rates are going. And so if one of the bull cases for stocks and for earnings growth is we're just not even close to finishing this build out, but then you have the cost offset from higher rates, you know, the market has to sort that out, I suppose.

15:42Yeah, I think that's definitely something that people are concerned about, right? Like, is all of the bond issuance going to be able to find a home? And is that going to be crowding out some demand for treasuries, right? Does that have a longer term impact on 10-year or 30-year treasury rates? But for the most part, we do think that all of that corporate issuance is going to be able to find a home. It's just a matter of what the rate is going to be. But we do think that the AI CapEx trend is going to be a multi-year trend. I think that this is not stopping anytime soon. Does that mean kind of sticking with the recipients of all that money?

16:16Or are there other kind of bank shot ways of playing that? Yeah, we definitely prefer the names that are benefiting from the capital spending right now as opposed to the spenders. So that's names within the tech sector for sure. Semiconductors are clearly a beneficiary, but also a number of names in other sectors like industrials. So electrical equipment names are clearly beneficiaries. Some of the construction engineering names are also beneficiaries. So do you see those as having as much growth potential as some of the more direct ones? I think so. Over the next couple of years, there's definitely going to be a lot of growth potential and a lot of visibility for these names if we think that the CapEx cycle is going to continue for multiple years.

16:54Certainly there's some names within the tech sector. You think about the memory stocks that have tremendous pricing power over the short term. You probably don't see that from some of the electrical equipment names or construction names to the same extent. But they are getting pricing power and they have great visibility into backlog for multiple years. When you look at inflation, do you try to distinguish between supply pull or demand push or or vice versa? So do you look at inflation through the prism of geopolitical cause? Not all inflation is created equally. So how do you look at this as being temporary, longer in duration?

17:31How does it affect your calculus? Yeah, I think that is a great question, right? So we think about inflation related to chip stocks and the pricing increases we've seen. Is this a temporary inflation? is, you know, more capacity comes online later this year and even more at the end of 27 into 28 versus something like energy or food prices that may be, you know, a longer term inflation impact. So that is something that we try to distinguish when we're thinking about, you know, what inflation looks like, what that means for rates. Right now, it does seem like the impetus for inflation is probably a little bit lower over the near term.

18:06But there's a few things, you know, that are wild cards, certainly what happens with energy prices around Iran and geopolitical events. And then that could trickle into other things like other commodity prices or food prices as well. And then it always amazes me how these days we're able to talk about the overall market, the earnings drivers without really hitting the on the ground U.S. economy very much because it's not that big a part of the index. But we heard from a lot of consumer retail companies this week. You have a little wear and tear from inflation and maybe a little bit of wobbling of demand in some areas.

18:39How are you viewing that as it feeds into those stocks? Yeah, we heard from a number of retail companies hearing a little bit of softness, and that continues to be mostly at the lower end consumer. But this is a trend that we've been hearing from companies for the better part of a year and a half. Certainly, gas prices might be exacerbating that over the near term. So Walmart in particular said that they saw quite a bit of softness in June, but things recovered in July and August. So I don't think the consumer is dead, but there's a little bit of weakness here and there. Tiffany, great to catch up.

19:08Thank you. Thank you. Tiffany Wade. Carter, weigh in on any of that. Well, it all makes a lot of sense. I mean, the first thing is one has to know what your time frame is. Tiffany's speaking about long cycle things that I myself don't think anyone can know. But the question really is semiconductors having had one of the most epic runs of all time, a three-year push of an area, and then an epic collapse in certain stocks, 30 % to 50%, and then an epic bounce, right, in some cases 50%, do they recoup the highs or not between now and year end? And I'm in the not camp. Yeah, I mean, in some respects, the bounce kind of stopped at a pretty logical spot, right?

19:53That's right. That's right. And also what happens is you get vol crush right after that kind of movement, that sequence of money being pushed in two, three years, and then a collapse and then a ricochet. Both sides get emboldened. The bulls say, see, this ricochet shows it's all OK. We're off to the races again. And the bears say that sell off was just the beginning. Wait till you see what's coming next. And so what happens actually is neither. And you bet against volatility. I think semis are quite pinned here and are likely to be going nowhere fast. Get those offsetting currents. All right. Well, coming up, the AI financing boom gets even bigger.

20:30What we know about Broadcom's plans for a debt deal worth tens of billions of dollars and the growing cost of the AI build-out. Plus, perps going mainstream, a look at surging interest in the 24-7 trading product, and how one major exchange could shake up the trading landscape. Don't go anywhere. Fast Money is back in tune. You're watching Fast Money here on CNBC. We'll be right back.

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22:27Welcome back to Fast Money. Broadcom once again looking to tap debt markets to help finance its AI build out. The company looking to raise$70 to$80 billion, according to our David Faber, through a special purpose vehicle with Broadcom guaranteeing part of the debt. The financing is expected to include roughly$45 billion of senior debt, which gets paid back first, and about$35 billion of junior debt. Those figures are still fluid, according to sources. You can see a massive run up in Broadcom. Credit default swap spreads, though, I guess, as the market kind of braces for the potential extra leverage that's at least secondarily on its balance sheet.

23:04So I don't know, Steve. You know, you've got to expect these companies are going to make sure there's a market for what they're making. The companies that are buying this stuff say, hey, we're just responding to end demand. Where does it leave us? Yeah. So what it leaves me with looking at Broadcom has definitely been a laggard. It's only up, you know, 6%, 7 % year to date. And when you look at circular financing, they want to crack at it, too. So if they could buy their handful of clients, they're going to buy them as well. It's never appeared to me that they get a sexy story. Broadcom always seems to be sort of a nuts and bolts story.

23:40And I think they should. I'm actually curious to see how they're going to perform into next week. I like the stock. I still do. Yeah, I mean, almost by design, it was a little bit of a kind of a lower beta sort of, you know, kind of plotting story until they got levered to the AI theme. But, I mean, just, I guess, across the landscape of the markets, Karen, I mean, we do still have this buildup in credit that are kind of transforming once asset-like businesses. Right. That is, I think, one of the most material changes in the market we've seen in a really long time. I mean, I used to, you know, look at the meta balance sheet and say just a hoard of cash and tremendous cash flow.

24:23And that hoard is gone. It's now net negative. Right. And the CapEx spend is obviously enormous. But I'm curious. So they have several tranches of debt here. That SPV structure, which we know is a little bit wonky in terms of not. It's a contingent liability, which is not the same as a liability. Feels similar. Yeah. And then how much is the junior going to go for? I mean, at some point, the market, I think, is really going to just, you know, puke on one of these. Not yet. Hasn't happened. Right. Because we're not really that close to the moment when you know if all of the build makes sense. Right.