Nvidia reports earnings on August 26, Fed Chair Kevin Warsh gives his first Jackson Hole keynote on August 28, and July PCE inflation data lands in between — a sequence that arrives just as economists question whether Warsh's stripped-down communication style is undermining the Fed's credibility. The combination is testing the AI-driven rally that has carried tech stocks through the summer.
Nvidia's results and Warsh's speech collide in the same week as US public debt hits a record $40tn and long-dated Treasury yields touch a 19-year high.
Nvidia's growth meets a skeptical market
Wall Street expects Nvidia to post roughly 100% year-over-year growth in both revenue and earnings per share when it reports after the bell on August 26. But the Philadelphia Semiconductor Index dropped 5.5% the prior week, dragged down by rising long-term yields and a rotation out of momentum and tech names. CrowdStrike and Salesforce also report this week, giving investors two more reads on enterprise tech spending before Nvidia's numbers land.
Warsh's communications style draws criticism
Warsh has stripped back the Fed's guidance on future interest rates since taking over as chair in May, and that shift has unsettled some of the economists the Financial Times polled through the University of Chicago's Booth School of Business. Nearly 60% of respondents said it would take the central bank longer to return to its 2% target than they expected when Warsh was confirmed in mid-May. Eric Rosengren, a former head of the Boston Fed, put it bluntly: According to the Financial Times: "The communication strategy is driving a loss of Fed credibility". More than 60% of respondents also said concerns over the Fed's credibility had a substantial impact on the rise in long-term yields since Warsh's nomination.
A crowded, high-stakes week
Warsh delivers his first keynote as Fed chair at Jackson Hole on August 28, sandwiched between Nvidia's report and the July inflation print. That print is expected near 3.6% year-over-year, well above the Fed's 2% goal. That leaves little room for Warsh to sound dovish on inflation. Markets now have three separate catalysts landing within days of each other, and any disappointment from Nvidia or a hawkish tone from Warsh could accelerate the rotation already under way in tech.
Sources: Financial Times, Crypto Briefing
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