I'm Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.
Good morning investors,
Stocks broke their three day slide Wednesday with the S&P and Nasdaq each rising about 0.5% and the Dow nearly 300 points, helped by oil steadying and a Fed official casting some doubt on a September hike. After a run to multi-decade highs, yields came off their peaks too, the 10-year having touched 4.82% intraday before easing back.
Futures are mixed this morning and yields are lower again, the 10-year near 4.77%. Broadcom and Snowflake both reported strong quarters after the close. Weekly jobless claims and ISM services come this morning, but the week still builds to Friday's payrolls.
A Different Read on the Yield Surge
The most interesting thing said yesterday came from New York Fed President John Williams who's argument is that yields are climbing because the economy is strong, not because something is breaking. Record corporate profits in the second quarter, heavy investment in AI and data centers, a solid growth outlook. In his view, it's the economy driving financial conditions rather than financial conditions threatening the economy.
A good part of what's pushing yields up is real growth and the enormous capital being put to work in the buildout, not just deficit panic. It doesn't cancel the concerns I keep raising about the debt and the global nature of the selloff, and both things can be true at once, that strong growth and heavy issuance are lifting yields together. Williams also nudged against the September hike case, which helped the tone. His comments are a reminder that the committee isn't uniformly hawkish, even after Warsh set the tone at Jackson Hole.
I still watch the 10-year and that 5% level above everything else. We touched 4.82% before pulling back, and whether Williams is right that this is a growth story or the bears are right that it's a debt story, the level is what matters for the multiple the market will pay. We're closer to it than we've been.
Broadcom Beats, and the Call Changed the Story
Broadcom is a good lesson in why the earnings call can matter as much as the print. The headline numbers beat, revenue up 86% to $29.59 billion and earnings at $3.32 against $3.24 expected, but fourth quarter guidance came in slightly light at $34.8 billion, and the initial reaction was to sell it. After the run this stock has had, up more than sixfold since ChatGPT arrived, investors want upside surprises, and merely-good guidance wasn't enough. That was the story right at the print.
Then Hock Tan got on the call and he guided AI revenue to double to $115 billion next fiscal year and double again to $230 billion the year after, with earnings power above $30 a share. He detailed the custom chip pipeline, tens of billions in TPUs to Google annually for years, Anthropic deploying 5 gigawatts of chips in 2027 with line of sight to 10 more, OpenAI taping out its second generation Jalapeno chip and planning a third. The stock turned higher. My read at the print was that the fundamentals looked strong and Broadcom was simply being judged against an exceptionally high bar, and the call bore that out. Revenue growing 86% at this scale is exceptional. The bar is just as high.
Broadcom's finance chief said the company may provide residual value guarantees to the AI labs, essentially helping bridge the gap between their current cash flow and the huge upfront investment their businesses require. Tan said it makes economic sense to enable these customers. It's the same theme we've seen with Nvidia, the chip supplier using its balance sheet to help fund the customers buying its products. It works while demand is real and growing. It's the kind of arrangement worth keeping an eye on if the cycle ever turns.
Snowflake and the Software Broadening
Snowflake jumped 24% after hours on a clean beat, revenue up 35% to $1.55 billion, earnings of 62 cents against 45 expected, and raised guidance across the board, with the full year product revenue forecast lifted to $6.07 billion and margins guided higher. Its CoCo AI coding agent now sits in 9,100 accounts, up more than 2,000 in the quarter.
For me this is another sign the AI opportunity is broadening beyond the chips and infrastructure into the software companies that help businesses actually use their data. Snowflake already holds enormous amounts of enterprise data, which puts it in a natural spot to benefit as companies build AI applications on top of it. The combination of faster growth, higher guidance, and improving margins is exactly what the market wanted. Together with Salesforce, CrowdStrike, Okta, and Palo Alto over the past week, it shows that the AI money that started in the physical layer is now reaching the software names with the data and the customer relationships to monetize it.
Planning Around a Bigger 401k
Fidelity reported that 769,000 savers now have $1 million or more in their 401k. More people are reaching retirement with balances that large, and what you do with that money once you stop contributing to it matters as much as how you built it.
A few conversations become worth having as you approach that stage. Roth conversions are one, and timing them well can make a real difference, moving money from a traditional account to a Roth in a year when the market is down or your income is lower means you convert at a lower tax cost and let the recovery happen inside the tax free account. A volatile September, if it delivers one, is exactly the kind of window where that can be worth looking at. Beyond conversions, there's the question of how you'll draw the money down in a tax aware order across accounts, how required minimum distributions will land once they start, and how to think about the balance between leaving money to grow and taking it while you're in a lower bracket. None of these have a single right answer. They depend on your situation, which is why they're worth talking through rather than defaulting into.
A Thought on How the War Ends
Market positioning remains heavily braced for prolonged geopolitical escalation, but my macro analysis suggests we may be closer to a resolution than current consensus reflects. The recent series of strikes and intensifying economic measures could mark a final push toward resolution rather than the start of an extended new phase.
If this non-consensus thesis plays out, several headwinds currently weighing on markets could unwind. A resolution could pave the way for equities to move higher while placing downside pressure on crude oil prices. Lower energy costs would, in turn, take pressure off near-term inflation metrics, potentially providing the Federal Reserve with justification to hold interest rates steady at its upcoming mid-month meeting.
Geopolitical forecasting, however, carries inherent unpredictability. Should conflict escalate further rather than resolve, crude oil could face sustained upward price pressure, keeping inflation elevated and maintaining upward pressure on interest rates. Investors should evaluate how portfolios are positioned across both potential outcomes rather than anchoring strictly to a single forecast.
Final Thought
The bounce is welcome, but I wouldn't read too much into one green day inside a stretch I expect to stay choppy. The run into the Fed meeting still has Iran headlines, a jobs report tomorrow, and a rate decision near a coin toss all packed together, and sentiment turned cautious enough this week that it won't take much to move things either way.
My read on the Fed hasn't wavered. I still think the eventual move is a hold that leads to cuts in 2027, even as the odds of a September hike climb and the case for one builds. Williams pushing back yesterday is a reminder the committee isn't all hawks, whatever tone Warsh set. Plenty of intelligent people would take the other side of my call this month, but ill stand with it because a lot of tightening has already happened through the bond market without the Fed lifting a finger.
Best regards,
Dan Sheehan [email protected]
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Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader's objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.