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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,
The market is waiting around for Nvidia to report tomorrow after the close. We will also get the PCE inflation number on the same day, and Warsh speaks at Jackson Hole Friday. Three events that each matter on their own, packed into a 3 day period, and I expect to see a little bit of a wait and see market until Nvidia minimally.
You could see the caution in the markets yesterday, with the S&P falling 0.3% and the Nasdaq 0.8%, with the selling concentrated in the names most exposed to Nvidia's print, semiconductors and memory. The Dow went the other way, up 0.3%. That split tells you this was positioning ahead of Wednesday rather than a broad move. Futures have turned higher this morning, the Nasdaq up around 1%, after CNBC reported the Treasury could tap its $1 trillion cash account to fund the bond buybacks. Yields eased on that, the 10-year back to 4.67% and the 30-year to 5.20%. Bitcoin ran to $81,000 overnight before settling back near $79,300 as I write.
The Setup Into Nvidia
I'm treating this as a wait and see market into Nvidia, and the pullbacks yesterday in semis and memory were the names most in the crosshairs getting marked down ahead of the number. That's normal before a print this size. The question isn't really the result, which should be strong, but how the stock trades on it after a run into the report.
I wrote yesterday about the earnings call having the potential to move half the S&P directly, and what I'd add is that Nvidia tends to climb into these prints and then face a high bar on the day, so a good quarter can still bring a sell-off if it doesn't clear expectations that have already built up. I'm watching the reaction more than the headline figures.
A Higher Yield World
My bigger picture view is that we're in a high-yield environment for a while, and I agree with Edward Yardeni that something like 4% to 5% is becoming the new normal. This isn't a spike that reverses in a quarter. It's a change in the level that rates settle around, and it has real consequences for how portfolios get built and how much bonds compete with stocks for a place in them.
Mike Wilson at Morgan Stanley put out a piece on this that I thought was worth reading. His argument is that the economy has shifted out of the disinflationary run that held from roughly 1982 to 2020, the long stretch that gave us falling yields and a multi-decade bond bull market with rates eventually down near half a percent. He sees us in something closer to the post-war period from 1945 to 1982, with higher nominal growth, inflation that runs above 2% and ebbs and flows, more economic volatility, and a Fed that has to react to it rather than sit still. If that framing is right, the trend in long yields stays higher over time, with cyclical rallies along the way rather than a return to the old regime. It lines up with what I've been saying about the long end being the thing I watch most, and it's part of why I don't treat the current yield levels as an anomaly waiting to correct.
Wilson also said equities have shrugged off yields pushing well past 4.5%, which he'd flagged as a warning line, and haven't blinked. His caution is that borrowing costs this high eventually bite if they stay here, and that another leg up in oil could force the issue, potentially leaving a dovish Fed with no choice but to hike. I don't think we're there, and the resilience has been real, but it's a risk worth holding in view rather than dismissing because the market has been strong.
The Treasury Keeps Pulling Levers
Scott Bessent unveiled a plan to isolate Iran by pressuring the countries that still buy its oil, notably China, which took a little heat out of crude, and the reporting that the Treasury might use its cash reserves to fund the buybacks helped yields lower this morning. The consistent thread is a government signaling it will step in to hold borrowing costs down.
Wall Street doesn't think it works, and I lean that way too. Goldman said plainly that the buybacks don't address the main sources of the volatility at the long end and are unlikely to reset rate levels even if scaled up. Wells Fargo argued you'd need an actual macro change to bring long yields down, a slowdown in growth or inflation, less uncertainty around the Fed, real fiscal discipline, or a slowdown in the investment grade issuance funding all the AI build out. Several desks expect the curve to keep steepening, which is the opposite of what Bessent is after. The tools can move yields for a day. They don't touch the deficit, the inflation, or the wave of corporate borrowing underneath the move.
That credibility gap is feeding what people are calling the debasement trade, money moving into assets that hold value when faith in the currency and in policy softens. Gold is at a three-month high, Bitcoin had a huge week, and the dollar is at its weakest since May, down almost 3% over two months with hedge funds now positioned against it. When investors start questioning whether Washington can fund itself at a price it likes, they look for things that sit outside that system. I continue to like gold for exactly this reason, and the move this month has rewarded it.
Final Thought
The setup into the back half of the week is the whole story. PCE and Nvidia Wednesday, Warsh Friday, any of which could set the tone into September. I'd stay patient rather than position hard ahead of events that could break either way. The pullbacks in semis and memory yesterday were the market bracing for Nvidia, not a verdict on it.
Earnings have carried this market, the multiple has come down even as prices rose, and a high-yield world doesn't sink stocks on its own when growth and earnings hold up. The near term stays choppy, we're in the historically rough mid-August to October window, and I continue to expect moves both ways into the midterms. I'd treat weakness as opportunity, keep the closest watch on the long end, and hold gold while the dollar softens and the debt questions build.
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.