Week ahead: Powell opens the door, Nvidia decides who walks through

The silicon crown jewel

Markets have swung their gaze from the Wyoming Tetons to Silicon Valley’s silicon crown jewel. Powell walked off stage at Jackson Hole having managed a tightrope act—just dovish enough to out-flank a market leaning cautious, but not reckless enough to lose credibility. His nod to a weakening labor market cracked the door for an “insurance cut,” and traders rewarded him with a round-trip rally. Yet, no fresh highs were taken. The baton has now passed: Nvidia steps into the arena this week, carrying the weight of an entire AI-stretched market on its back.

With Jackson Hole fading into the rear-view, all eyes turn to Nvidia. In a market where concentration risk already gnaws at the edges, Nvidia is no longer just a stock—it’s the proxy for AI, the heartbeat of the Magnificent Seven, and the gravitational center of the S&P 500. Its numbers are a referendum on the AI trade itself. I’ve watched investors ride its 1,400% surge since 2022, pushing valuation past $4 trillion, and the stock now sits with an 8% weight in the index. One way or another, this print decides if the benchmarks fly or fall.

Tech cracked last week—1.6% down on the group, the first wobble in months. That could just be pre-earnings nerves, or it could be the first tremor of an AI hangover. Even Altman has started to warn about over-excitement, and the academics are questioning whether the payoff curve matches the hype. Add in the ongoing tariff squeeze and the macro backdrop isn’t exactly velvet.

Still, S&P earnings have been running hotter than forecast, closing out a season closer to +13% growth versus a +6% expectation just last month. Strip out the Magnificent Seven and the other 493 are grinding along at +7%. But the imbalance is glaring—the giants are carrying the tape, and Nvidia is the load-bearing wall. If it buckles, the index buckles. No way around it.

Rotations into healthcare and staples might offer ballast, but they won’t carry the load if tech breaks stride. Investors may well get their September cut, but that’s not the same as getting growth. Powell loosened the knot, but Nvidia now holds the rope—and this week decides if it’s a lifeline or a hangman’s noose for the AI-drunk bulls.

And for the macro FX mavens in the crowd, already sketching out what comes after September’s Fed move, let’s not sugar-coat it. Lower rates don’t conjure jobs out of thin air. They don’t refill shrinking margins under tariff pressure, nor do they rescue businesses already bleeding into cost absorption. Rate cuts aren’t miracle serum; they’re morphine. They dull the pain, but the patient still limps. Historically, when the Fed reaches for the scissors, it’s because the rope is already fraying. Joblessness rises before it falls, and recovery only comes after a lag that can stretch six to eighteen months.

There’s one rare exception: the elusive “insurance cut” cycle — 2019’s mid-expansion easing, where the Fed cut preemptively and the economy skated past a downturn. Traders are praying Powell can pull that trick again, but history says that’s the exception, not the rule. So yes, Powell handed the market a rope. The question is whether it ends up as a lifeline — or a noose.

Markets don’t need a reason, but they’ll take a silly one

Call it a sell-off if you must, but what we really witnessed was a market that caught its breath and then blamed the hiccup on a headline out of MIT. The so-called “Nanda” report claimed that 95% of companies are getting zero return from their generative AI spend. Cue the headlines, cue the nervous whispers across trading floors, cue the AI darlings taking a knock.

But here’s the thing: the paper itself reads more like a consultancy freebie than the Rosetta Stone of market insight. Surveys, interviews, second-hand reports — the stuff you stuff into PowerPoint decks when you need to fill a slide. And the findings? Hardly revolutionary. People like plug-and-play tools like ChatGPT for grunt work even when IT says no. Nobody likes bloated, industry-specific systems that require duct-taping to legacy pipes. Point solutions that nail one job tend to scale, while Swiss-army-knife mediocrity ends up in the bin. A system that learns is useful, a system that doesn’t is shelf-ware. And when companies try to roll their own, they usually trip over themselves.

This isn’t the death knell for AI. It’s the same old story of new tech: the tools that solve real problems survive, the rest get buried in procurement purgatory. The “95% failure” stat sounds dramatic, but let’s be real — is that even unusual at this stage in the cycle? Most frontier tech starts with a graveyard of failures before the winners become obvious.

The kerfuffle around this report is a perfect market parable. Expensive sectors wobble, and once they do, the hunt for a villain begins. Sometimes the villain is tariffs, sometimes it’s Powell’s scissors, sometimes it’s a lukewarm AI survey dressed up in MIT drag. Truth is, stretched valuations don’t need a reason to wobble — gravity alone will do. The explanations come after the fact, and often they’re as flimsy as the sell-off itself.

Nvidia: The too-big-to-fail of the silicon age

Nvidia isn’t just a stock anymore — it’s a pillar of the national arsenal. The market’s waking up to it, whispering that this isn’t another 2008 bank bailout script but something more strategic, more existential. Nvidia has become the silicon spine of America’s security complex, and that makes it untouchable in ways a busted balance sheet never was.

Chips are the new oil; GPUs the refined jet fuel. Every Pentagon simulation, every AI-driven surveillance dragnet, every neural net built to sniff out cyber threats runs straight through Nvidia’s pipeline. Strip away its chips and the military-industrial machine doesn’t just stall — it wheezes. This isn’t Wells with a mortgage book; this is Lockheed Martin with semiconductors, Raytheon with CUDA cores.

Washington gets it. The scaffolding around Nvidia isn’t ordinary industrial policy — it’s national defense doctrine dressed in corporate clothes. Export bans cut China’s supply lines. Subsidies keep fabs anchored on U.S. soil. Regulators, who love to swing at Big Tech elsewhere, step gingerly around the GPU throne. Nvidia’s ticker may flash across trading screens, but behind it sits an unspoken pact: this is a state asset flying a corporate flag.

For traders, that rewires the calculus. Markets are supposed to price risk, but Nvidia carries an embedded option — the national security put. Uncle Sam can’t let it fail because failure wouldn’t just torch shareholders, it would punch a hole in America’s strategic shield. Every headline about AI, every soundbite about U.S.–China tech rivalry, is a synthetic bid under the stock.

Sure, you can scalp exuberance at the edges, but shorting Nvidia outright is like shorting the carrier fleet. You’re not just trading earnings cycles, you’re stepping into the slipstream of defense policy. The tape knows it, the flows know it, and even the bears know it: Nvidia isn’t priced on TAM slides and product refreshes anymore, it’s priced on the geopolitics of keeping the crown in the AI arms race.

In 2008, it was banks the government couldn’t let topple. In 2025, it’s silicon. The too-big-to-fail moment has gone digital.

The “Sell America” trade was basically only in April

There’s a prevailing storyline analysts love to push into the Bloomberg–WSJ–FT echo chamber: foreign central banks are supposedly tiptoeing out of Treasuries, quietly shrinking their dollar footprint. And yes, if you stare at the Fed custody data, you’ll see holdings slipping to year-lows, down $100 billion from early April. That makes for good headlines. But let’s be honest — the Treasury market itself isn’t breaking stride. Structural demand is alive and well: tweaks to bank liquidity rules, stablecoin issuers backing tokens with T-bills, and domestic accounts happy to soak up supply.

The real trade isn’t foreign officials walking out the back door — it’s private capital flooding in through the front. The so-called “sell America” phase was a one-month fling, April’s post-Liberation Day wobble. Since then, May and June flows tell a different story: foreigners have been net buyers, not just in Treasuries but across the asset stack — equities, credit, private placements.

Watch the yield action: 10-year climb during New York hours and drift lower overseas. That’s U.S. real money trimming, while foreign demand provides the overnight bid. Simply put, global investors like the yield pickup America offers, and they’re voting with size.

So yes, custody books show central banks lightening up, perhaps diversifying reserves, perhaps hedging political risk. But the private sector has stepped in with both fists. From my perch, April’s “sell America” was a head fake, not a trend. The U.S. remains the world’s heavyweight growth engine, with credit spreads tight, the S&P grazing record highs, and foreign money chasing the juice.

The wrinkle, of course, is the dollar. Treasuries may be fine as domestic and foreign buyers absorb official sales, but if central banks are trimming exposure at the reserve level, the greenback feels the chill. That’s the paradox: the bond market holds steady, equities rip, and yet the dollar could still wear the bruise. It’s a reminder that in global macro, the cash register doesn’t always ring where the action takes place.