Chips Break Before Nvidia | Bessent Targets Iran’s Lifelines | Bitcoin Tests $80,000 | Warsh Gets the Final Word

Tuesday opens with chips under pressure and the rest of the market waiting.

The S&P 500 slipped 0.28% Monday to 7,652 and the Nasdaq fell 0.76% to 25,980. The Dow gained 0.26% to 53,417 as financials held up. Nvidia (NVDA) fell 2.9%, Micron (MU) dropped 5.8%, and Broadcom (AVGO) lost 2.6%.

The chip weakness spread into Asia. Japan’s Nikkei fell 0.5% and South Korea’s Kospi dropped 2.4%. U.S. futures are near flat.

Part of the pressure came from reports that AI-server prices are rising more than 15%. That can be read two ways. Demand remains strong enough to lift prices, but the cost of building AI capacity keeps rising.

Case-Shiller home prices and consumer confidence land today. Nvidia and July PCE arrive Wednesday. Jackson Hole opens Thursday, before Fed Chair Kevin Warsh speaks Friday.

The Signal

The market sold chips before Nvidia gave it a number. Wednesday now has to prove that higher AI costs still come with higher returns.

Treasury Secretary Scott Bessent went after Iran’s financial system Monday. Oil sold the news.

Bessent unveiled “Operation Economic Outcast,” calling it an economic onslaught aimed at Iran’s revenue streams. He warned China would not be exempt and said at least one major financial institution could face sanctions by the end of the week.

Brent still fell 2.5% to $92.06. WTI dropped to $84.89. Both had rallied into the announcement, so some of Monday’s move looked like traders selling a risk already priced.

Iran stayed defiant. The Revolutionary Guard said Tehran has ways to offset the sanctions and rebuild trade links. The rial still fell to a record low near 2.02 million per dollar.

Hormuz remains the harder piece. Roughly 16 million barrels crossed the Strait during one recent night, showing that financial pressure and physical oil flows are still moving on different tracks.

Energy Signal

Bessent escalated and oil fell. The sanctions matter, but tanker traffic still decides whether financial pressure becomes an energy shock.

Treasury tried to push long yields down last week. The market gave most of the relief back.

The 10-year yield remains near 4.65%, while the 30-year is still above 5.1%. Treasury doubled long-bond buybacks to $4 billion per issue, but the first move lower in yields lasted only a day.

That leaves Warsh with an awkward mix. July payrolls fell by 23,000, one of the weakest readings since the pandemic, while inflation remains above target. September hike odds sit near one-in-three.

Wednesday brings July core PCE, the Fed’s preferred inflation gauge, alongside the second estimate of Q2 GDP. Consensus puts GDP growth near 3.3% year over year. Warsh then gives his first Jackson Hole keynote as chair Friday, 19 days before the September 16 Fed decision.

He has avoided strong forward guidance so far. The market is betting that continues.

Macro Signal

Jobs are weakening while inflation remains too high. Treasury could not force long yields down. Warsh now has to explain which problem the Fed fears more.

Nvidia’s earnings are already trading before the company reports.

Intel (INTC) fell 5% Monday, AMD (AMD) lost about 4%, Taiwan Semiconductor (TSM) dropped 3%, and Nvidia fell nearly 3%. The selloff came as reports of AI-server price increases above 15% added to concern about the cost of the buildout.

That does not mean AI demand is weak. It means the market wants more proof that demand can outrun the bill.

Nvidia reports Wednesday after beating EPS estimates in four straight quarters. Jefferies sees revenue near $95 billion, above Wall Street’s consensus. A normal beat may not be enough if investors have already raised the bar.

The company is also adding to the spending story. A reported $20 billion Groq investment and a new multi-gigawatt AI-factory partnership with Lancium point to even more capital going into the ecosystem.

Zoom (ZM) and Intuit (INTU) report today, giving investors an earlier look at software demand and margins.

Capital Signal

AI spending is still growing. The question has changed from whether companies will spend to whether the returns can keep growing faster than the cost.

Bitcoin is holding the move that bonds could not.

BTC briefly touched $79,954 overnight after gaining 22% last week, its strongest week in years. Spot bitcoin ETFs took in $1.92 billion, their best weekly inflow in ten months, while roughly $6.4 billion in leveraged shorts have been liquidated since Wednesday.

Ether is starting to broaden the trade. ETH ETFs added $697 million last week, while the ETH/BTC ratio formed a bullish “golden cross.” The same pattern preceded a 93% rally in 2021, but also produced false signals in 2022.

Risk has moved further down the curve. XRP gained 48% over the week on hopes for progress on the CLARITY Act, while Zcash surged 70% to $838 after Grayscale filed for a spot ZEC ETF. Both cooled Monday.

That matters. The first move was helped by forced covering. The next one needs buyers.

The Verdict

Bitcoin turned bond-market stress into a breakout. ETF flows now give that move real support, but Warsh will decide whether the liquidity story survives another week.

Three markets are waiting for two events.

Nvidia goes first Wednesday. Chips have already sold off, server costs are rising, and investors want proof that AI demand can still outrun the capital going into it.

Warsh gets the final word Friday. Payrolls are weak, inflation is still above target, and Treasury’s bond intervention failed to keep long yields down.

Bitcoin sits between them near $80,000, backed by $1.92 billion of ETF inflows but still carrying the fingerprints of a huge short squeeze. Iran sits outside that trade, where Bessent is testing whether financial isolation can hurt Tehran without sending oil sharply higher.

Wednesday tests AI. Friday tests liquidity.

The rest of the week trades the answers.