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@theMarket: Nvidia Earnings Beat Pushes Markets Higher
It was a lovefest, as strong quarterly results from Nvidia, the linchpin of all things AI, once again wowed investors. Not even Kevin Warsh's hawkish speech at Jackson Hole could make much of a dent in investors' enthusiasm.
But looks can be deceiving. Yes, all three indexes gained on the back of the semiconductor company's earnings, but 10 out of 11 equity sectors fell on Thursday. How can that be, you might ask? Simple, technology stocks are now the largest weighting in just about every index. As such, the results rippled through so many tech stocks that everything else was dragged up with it.
That said, investors' love/hate relationship with certain aspects of the world's rollout of the artificial intelligence ecosystem took a turn for the better this week. Why so much attention on Nvidia? Because the semiconductor giant is at the center and the hub of the world's build-out of the infrastructure of AI. It beat second-quarter earnings and revenue expectations handily. And, even more importantly, Jensen Huang, the chairman, also provided a better-than-expected outlook for the third quarter.
Unlike previous quarters, when the company's stock price fell despite strong results, NVIDIA jumped almost 10 percent this time. Its report also helped other AI chip stocks and the technology sector in general recover after several weeks of lackluster performance. The company still derives the lion's share of its revenues from hyperscalers like Google, Microsoft, and Amazon.
Investors have worried that these companies were already spending too much to build out their own infrastructure, as the trillions of dollars they are spending on and off their balance sheets have raised concerns. The revenues from this area more than doubled in Nvidia's second quarter.
Investors are also concerned that these hyperscalers are beginning to build their own chips to reduce their dependence on Nvidia's chips. But none of that seemed to matter this week as investors eyed the $20 billion stock buyback and the $6 billion in dividends ($ 0.25/share) the company returned to existing shareholders.
In the meantime, Oman and Iran are working on a deal to jointly "administer" the Strait of Hormuz. Tolls figure prominently in that discussion. On the U.S. side, the latest economic pressure is to convince those who are trading with Iran to stand down. If companies and countries ignore the American directive, they would then be excluded from the dollar-based global financial system.
Exactly when and how this could be accomplished is up for discussion. Given that China imports more than 90 percent of Iranian crude in non-U.S. dollar trade, their cooperation would be of paramount importance. So far, their response has not been encouraging. Oil traders are unimpressed and have held crude prices in the $80- to $83-barrel range all week.
As for last week's attempts to cap the climb in U.S. Treasury bond yields, Secretary Scott Bessent appears to have succeeded, at least over the last few days. Yields on the Ten-year bond have dropped about 10 basis points. Those waiting to see whether the Fed would jump in and back the Treasury secretary's play were disappointed.
Fed Chairman Kevin Warsch underscored his commitment to reducing inflation instead. His speech in Jackson Hole was taken seriously enough to put an interest-rate hike back on the table by the betting markets. On Friday mid-morning, the probability of a rate hike was back up to 50 percent for the September FOMC meeting. So, the Treasury and the Fed are somewhat at odds on where they think interest rates should be, at least on the long end.
The three major indexes notched a positive week. An almost 2 percent move in the Nasdaq, a 1.2 percent gain in the S&P 500 Index, with the Dow trailing with less than 1 percent, indicates buyers are still willing to chase markets.
Gold fell toward $4,500 an ounce, its lowest level in a week, as investors digested what was perceived as hawkish commentary from Warsh. Given its rise over the last few weeks, the Fed comments provided an excuse for some profit-taking in bullion and in most precious metals and mining stocks.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
The Retired Investor: Saver’s Match Offers Some Workers up to Half Their IRA Contribution
The Trump administration’s ongoing effort to help low- and moderate-income taxpayers save towards retirement took another step forward last week. The new program will impact millions of Americans who have struggled to save in an economy where they can barely make ends meet.
In a follow-up to my mid-May column on President Trump’s efforts to provide new retirement savings vehicles to low-income Americans, a new modification to his existing program was announced last week.
As I wrote previously, "Many workers say they cannot save for retirement, especially as inflation reduces their paychecks. Others find the application process too complicated or paperwork heavy. Some do not bother because they already have employer retirement plans. For many, retirement seems unreachable due to their background and income."
The Internal Revenue Service and the Department of the Treasury plan to propose a new federal program that will provide up to 50% of the first $2,000 in retirement savings contributions for eligible taxpayers. The amount caps at $1,000 annually and will be paid to individuals based on income beginning in 2028.
This new Saver’s Match would replace the existing Saver’s Credit program, which will still be in place beginning next year. The match would apply to four types of retirement vehicles. Elective deferrals, like those made to a section 401(k) plan. Contributions to traditional IRAs and Roth IRAs. Those made to a section 501(c)plan and certain voluntary, after-tax employee contributions of a qualified retirement plan.
To qualify, an individual must be 18 years old during the taxable year with a modified adjusted gross income of less than $35,500 per year. A similar limit applies to married couples who file separately. For couples who file jointly, the threshold is $71,000, and for head of household, the maximum limit is $53,250.
You do not qualify if you enrolled as a full-time student at a school or took a full-time, on-farm training course given by a school or government agency. How much of the match you receive depends on your adjusted gross income.
This effort is aimed at the roughly 41 million American workers aged 18-65 who lack access to employer-provided retirement plans, according to the TrumpIRA.gov website. That’s a lower number than the 56 million the Pew Charitable Trust came up with in a recent research paper. The government site claims that "A 25-year-old worker who saves $165 per month and qualifies for a $1,000 annual Saver’s Match could retire with roughly $465,000 at age 65."
The math assumes a 6% annual return, and almost $155,000 of that total would come directly from the government’s contributions. For taxable years after 2027, income thresholds will be adjusted for inflation. Applicants can apply for the Saver’s Match through a separate government form (Form 8880-A).
This differs from the existing Saver’s Credit program because the government amount is paid directly into a person’s retirement account. In contrast, the existing credit program offers a tax credit as an incentive. The credit is nonrefundable, meaning it can reduce your federal tax liability to zero but cannot generate a refund by itself.
In my last article, I predicted that Trump would up the income level for those qualifying for the match to $35,500. That is exactly what the proposed regulations now do. Now it is up to Congress to pass the legislation.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
@theMarket: Bonds, Stocks Moving Together
Investors turned their attention to the bond market this week as yields on long-dated U.S. Treasury bonds hit multi-year highs. The government needed to step in to curb what looked like a rout in both stocks and bonds.
Mid-week, the 30-year Treasury bond, as well as the benchmark 10-year, fell in price as yields hit 5.24 percent and 4.74 percent. To stem the fall in bond prices, U.S. Secretary Scott Bessent announced Wednesday morning before the open that he would double Treasury bond purchases beginning in September.
Both bonds and stocks rallied on the news, but by Thursday, bond yields rose again, and stocks fell as traders doubted the impact of Bessent's new measures. Aside from reducing the pace of higher yields (which it did), they figured that buying back some bonds would not do much to stem the fundamental reasons for the climb in interest rate yields.
Higher oil prices, higher inflation, higher deficits, higher debt (now $40 trillion), and no end to government spending made the move's impact no more than a pimple on an elephant's derriere. But the announcement did force the dollar lower (as intended). So far this quarter, the dollar has declined 2.5 percent; that's a large move in the currency world.
What it did do was convince investors that with this attempt to force interest rates down, inflation could be here to stay at least for the foreseeable future. That caused a spike in the prices of inflation hedges like gold, bitcoin, and most other commodities. Right now, the negative correlation (one goes up, the other goes down) between the U.S. greenback and gold is above 90 percent, while bitcoin's correlation is roughly 83 percent.
Gold gained more than 4 percent on the dollar move, while gold mining stocks posted high single- and double-digit gains. Bitcoin climbed much more than that, although some of the gains were attributed to the president's attempt to jawbone Congress to pass the much-delayed crypto Clarity Act legislation. What Trump didn't say was that the delay is largely due to concern that passing the legislation (as is) would allow politicians to benefit from their existing crypto investments. Read the president and his family and friends.
In another TACO moment, the president's tariff tantrums against Canada have come to naught (surprise, surprise). As for the Middle East, markets have tuned out the meaningless stream of assurances on Truth Social just like they have on the tariff diatribes. Oil moved higher this week as investors realized that there will be no grand Hormuz openings. That adds to the inflation story, which fuels the rise in long-term bond yields and is a large reason why we are seeing gold, other precious metals, and commodities in general come back to life.
Gold has broken out of its range and is now above $4,500. Energy has quietly become the strongest performing sector so far this year, substantially beating technology with far less attention. Keep your eye on those soft commodities as well. The combination of less fertilizer flowing out of the Middle East, climate change, and my prediction of a Super El Niño beginning next month ( see my column "El Niño Is Flashing Red Light for the World") is boosting prices in wheat, corn, sugar, etc.
As for equity markets overall, August is off to a positive start, but stocks are beginning to wobble. This week the S&P 500 lost 1.5 percent while Nasdaq fell almost 2.35 percent. In the coming week, we have Nvidia's earnings, and the Jackson Hole boondoggle — the Economic Policy Symposium of central bankers on Aug. 28. Investors are hoping the keynote speaker, Fed Chairman Kevin Warsch, will share his view on long-term bond yields and the move by his fellow former hedge fund manager, Scott Bessent.
A big reason I have been cautious on the markets in August and September is the upcoming midterm elections. Consider this: in the last three midterm election years, the stock market has declined by at least 10 percent beginning on Sept. 19, 2014, Sept. 20, 2018, and Aug. 16, 2022. Coincidence? Possibly, but three in a row does make a trend. History is only a guide, but in this case, I'm listening to how it rhymes with the past.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
The Retired Investor: Cost of Healthcare Cuts
The U.S. and Mexico are the only countries out of 19 other OECD countries where a substantial portion of the population lacks any form of health insurance. In the U.S., about 8 percent of the population, or 27 million people, are uninsured. That number is about to grow larger.
That data is part of an independent research study conducted by The Commonwealth Fund, a private foundation. And that is despite the U.S. has spent more on health care than any other nation. In 2024, we spent 18 percent of gross domestic product on health care. That is nearly two times as much as the average OECD country.
Over a year ago, the Republican led U.S. Congress cut healthcare spending by cutting public subsidies for private health care insurance which caused millions to lose healthcare coverage. While on paper the savings seemed justifiable, in reality the cuts have just shifted the burden of paying for the uninsured patient to the hospitals, and ultimately, the taxpayer.
Before you ask, the Emergency Medical Treatment and Labor Act mandates that hospitals provide treatment to patients with emergency medical conditions, regardless of their insurance status or ability to pay. This federal law was enacted in 1986 to prevent patient dumping, where hospitals would refuse treatment to individuals based on their inability to pay or lack of insurance. This places hospitals and other health care clinics in harm's way.
This is not some dire predicament that may happen in the years to come. Some for-profit hospitals are already reporting a 20 percent increase in uninsured visits, and one company is expecting as much as $1 billion less in profits for this year. And the administration is only getting started.
As part of the "Big Beautiful Bill," the administration and Congress are cutting an additional $625 billion in Medicaid over 10 years. The CBO estimates another 7.8 million people will become uninsured as a direct result of these changes. That would bring the total number of newly uninsured Americans to almost 17 million.
And the trend is not your friend. Baby Boomers of all income levels are retiring and will need increasing healthcare regardless of their ability to pay. If you look at the demographics, those most impacted by these changes are low-income adults in Medicaid expansion states. Young adults (ages 19-34) will be hurt as well. To put that in perspective, that's 3 in 10 Gen Zers who are vulnerable, according to the Urban Institute. People with disabilities who do not qualify for federal disability benefits (2.6 million), and rural residents, where it is estimated that $155 billion in reductions of Medicaid spending will occur.
In 2025, the federal, state, and local governments collectively spent $30.6 billion to cover the medical costs of uninsured patients, according to recent government studies. The total cost to taxpayers is higher when you consider uncompensated care costs. Each newly uninsured person can generate as much as $900 in lost revenues for hospitals, two-thirds of which translates into loss profits. Uninsured patients frequently pay 2 to 5 times more for care than insured patients. And that was before the ACA reductions and the expected cuts in Medicaid coverage.
In this era of populism, where the GOP majority is already razor-thin, some might think that this kind of legislation is tantamount to political suicide. It would be, but politicians are a crafty lot. Most of the cuts in Medicaid will only become law after the midterm elections this year. In which case some of the base that Republicans depend upon the most to deliver a majority in Congress in November won't realize the devastation to their well-being until it is too late. I won't mention the potential loss of life involved since some might accuse me of valuing human life more than money.
Hospitals and emergency rooms will continue to absorb rising uncompensated care from a combination of state-directed payment cuts, much higher charity care, reduced Medicaid/ACA funding, and limited stopgap state programs. Some will attempt to pass on those higher costs to you via increased premiums on your own health care. Others will need to apply to the government to bail them out. In which case, you, the taxpayer, will pay for those bailouts as well.
Our healthcare system is a wreck. The U.S. has one of the lowest rates of physician graduates and the lowest rate of primary-care physicians per 1,000 people. Americans also have one of the highest rates of dying prematurely where men are more likely to die from avoidable causes than women.
The U.S., on average, has the poorest health outcomes of any high-income country, according to The Commonwealth Fund. The May 28, 2026, paper "U.S. Health Care from a Global Perspective, 2026" argued that a "Lack of universal coverage, weak primary care infrastructure, high out-of-pocket costs, and a complex insurance system contribute to and exacerbate the nation's uniquely poor performance relative to its peers." I couldn't have said it better.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
@theMarket: Inflation Data Supports Markets Short Term
It wasn't difficult to predict that this week's July inflation data would be cooler. Last month, oil declined on the unfounded hopes of peace in the Middle East. That showed up in the numbers, but what about next month and beyond?
Oil is trading at $80-$82 a barrel. That is up more than $4 from July 1, 2026, or almost 5.5 percent. As such, I expect the August Consumer Price Index and the Producer Price Index to be higher than the results reported for July. And what happens if the Straits remain closed? Could we see $85, $90, or higher for a barrel of West Texas crude?
Nothing the Trump administration has tried has succeeded in unlocking the stalemate over the Straits of Hormuz. Intelligence assessments over the last few weeks indicate that without boots on the ground, the Navy could not open the Straits on its own. A land invasion would be difficult, if not impossible, and the severe loss of life unacceptable.
So, both sides are now playing a waiting game. The U.S. is applying continued economic pressure to Iran, hoping to force the hardline leadership to cave. The Iranians, long accustomed to economic pressure from the West, seem undeterred and have developed ways to grow their economy despite sanctions.
The regime has also become more entrenched thanks to the invasion. Rather than accede, they are content to use delaying tactics at the negotiating table while demonstrating their ability to strike militarily whenever they want. They know that the longer oil prices remain where they are or higher, the more likely it is that winning the mid-term elections will be difficult for Trump and the Republican Party. That could lead Congress to force an end to the war.
Given this background, why haven't we seen even higher oil prices? One reason is that oil demand is declining according to both OPEC and the International Energy Agency. The other reason could be that more oil is making its way out of the region than is reported. By some estimates, as much as 16 million barrels per day is making its way either through the Straits or through regional pipelines. That compares with approximately 20 million bbl. per day before the conflict.
Understandably, the U.S. financial markets have lost faith with constant U.S. assurances that a deal is right around the corner. We are in the ‘show me or shut up' stage of the war. Until there is a definitive opening of the Straits with tankers traveling through the passage at a pace like before the U.S. attack, the oil price will remain higher. How high that risk premium will go is at this point up to the Iranians.
The new CPI reading of 2.5 percent, higher than the inflation rate last year at this time but only a monthly gain of 0.2 percent from June's number, was in line with my forecasts. It seems clear to me that Wednesday's numbers were leaked. All the asset classes that would benefit from a weaker CPI number were up substantially well before the 8:30 a.m. data release.
The Producer Price Index was unchanged from June. From here, inflation moves higher in my opinion. As for the string of good inflation numbers we have had lately, I suspect the data will not sway the Fed members from their watch-and-wait stance.
Kevin Warsh, the new chairman of the central bank, has already said, "I do not find the current Fed policy of ‘data dependence' of much real value. We should care little about two numbers to the right of the decimal point in the latest government release." However, the June data should put to rest any fears that we will see a rate hike at the next meeting in September.
On a side note, readers who agree with my misgivings about the accuracy and leaking of government data should note that U.S. jobs numbers have been revised lower in 21 of the last 30 months by a total of minus-1.05 million jobs. This means an average of minus-35,067 jobs have been revised out of previously reported data each month over this period. June and May jobs numbers alone were revised down by a total of minus-103,000, the largest two-month downward revision since July 2025. It makes me doubt the trustworthiness of government data.
Stocks continued to climb higher on the back of the inflation data. As bets on an interest rate hike fall well below 50 percent, animal spirits are revving up, and many Wall Street strategists are talking about 8.000 as the next stop on the S&P 500 Index. Next week we could see some further consolidation before another run higher. I would buy the dip if we had a more substantial sell-off.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
