The Morning Brief
Futures are backing off record highs as Iran rattles sabers over Hormuz and the AI-bubble debate gets louder before the bell.
Overnight: Iran tension and a mixed data picture abroad.
Tehran's security chief told Treasury Secretary Bessent that the Strait of Hormuz "will not be opened by threats or pressure," and separate reporting has Iran mocking the US economy while Vance insists Iran must cut enrichment to end the war. Crude stays volatile on the back of it, and Dow and Nasdaq 100 futures are pointing lower into the open as a result. That geopolitical overhang is landing on a tape that closed Tuesday at a fresh S&P 500 (SPY) record, with sentiment gauges having drifted into "neutral" territory. On data, Germany's industrial production jumped 2.0% in August, well ahead of the 0.5% estimate, a rare bright spot for the euro-zone. The UK's Lloyds house price index was flat month over month and improved year over year. India's central bank raised its policy rate to 5.50% from 5.25%, matching expectations. Crypto is soft, with bitcoin, ether, XRP and dogecoin all dipping as traders position for Fed minutes, though tokenized treasuries on Avalanche are up sharply over the past year.
The Fed and the AI-bubble argument are colliding.
The Fed is reportedly visiting JPMorgan, Wells Fargo and Barclays as part of a private-credit risk review, a signal regulators are getting more uneasy about leverage in that market. That dovetails with a louder chorus questioning the AI trade: Ray Dalio says the bubble is "close" to bursting given debt and rising rates, Michael Burry argues Big Tech is "spending wildly" because CEOs expect to be "granted an oligopoly," and Paul Krugman says the AI boom is crowding out other investment in a way the dot-com era never did. None of that stopped Nvidia (NVDA) from holding near $239, but the valuation debate is clearly intensifying into earnings season.
Mega-cap AI capex keeps expanding in unusual directions.
SpaceX (SPCX) stock fell after hours on a report it's seeking $40 billion, financing led by Apollo, to buy Nvidia chips. AMD's (AMD) CEO Lisa Su says the company is exploring memory and foundry tie-ups with Samsung and will invest "tens of billions" across the supply chain. Intel (INTC) says it will keep working on the Terafab chipmaking venture tied to Elon Musk, though TSMC may only sublease part of it rather than own it. Memory names Micron (MU), SanDisk (SNDK) and SK Hynix-linked shares are down on Toshiba storage fears, though at least one desk is calling the pullback a buying opportunity.
Single-stock movers.
Constellation Brands (STZ) beat on both lines and raised full-year EPS guidance, but shares fell on the print as Modelo Especial and Corona Extra depletions declined even as beer shipments rose. Penguin Solutions (PENG) is up sharply after a Q4 beat and FY27 guidance well above estimates, plus a new CFO. Caribou Biosciences (CRBU) is sliding again after announcing a strategic alternatives review and killing its two CAR-T programs. ZIM (ZIM) is near a 52-week high after hiking full-year EBITDA guidance on a freight-rate boom.
On the radar today.
Levi Strauss (LEVI) and Applied Digital (APLD) both report after the close, with Resources Connection (RGP) also due. Watch for any Fed minutes-related headlines and continued Hormuz rhetoric for oil direction.
Bottom line: the record-high tape from Tuesday meets a Wednesday dose of Iran risk and AI-valuation anxiety, and futures are telling you which one is winning for now.