Authored by Nohshad Shah, Citadel Securities EMEA Head of Fixed Income,

The Fed sounds hawkish… but markets are testing the reaction function

Chair Warsh was unequivocal that there is “no soft inflation target”, that five-plus years of above-target inflation cannot be cured by nine weeks of better data, and that this Fed “will not waver”. Yet despite that language…and three members preferring an immediate hike…the FOMC again declined to move.

Warsh instead repeatedly highlighted the large rise in nominal and real Treasury yields since June, arguing that reduced forward guidance had allowed markets to respond more directly to the data and, in effect, deliver some tightening on the Fed’s behalf. 

But all forms of FCI tightening are not equal…higher front-end yields because the Fed has acted to restrain demand are different from a higher long-end driven by investors demanding greater compensation for inflation, term risk, and uncertainty over the reaction function. 

Warsh also left markets with some uncertainty over how inflation will ultimately be judged. He confirmed that PCE remains the measure attached to the 2% target under the current framework, but left open whether that will remain the case after the strategy review concludes in January, while invoking Goodhart’s Law, the Lucas critique, and a broader (but unspecified) set of inflation measures. Those are legitimate cautions against relying mechanically on a single statistic. 

But investors will still want greater clarity over what the Fed will regard as evidence that inflation has returned to 2%. A fixed numerical target attached to a potentially changing measure risks making the reaction function harder to interpret, particularly while inflation remains materially above target. There may be a strong case for improving the framework, but markets will want reassurance that reform does not amount to changing the measuring stick before success has been achieved.

The initial market response suggests that reassurance has not yet been secured: 30y Treasuries have sold off, breakevens have widened, while equities and the dollar have weakened. Investors may interpret that combination less as a clean tightening in response to stronger growth and more as a challenge to the credibility or clarity of the policy framework. 

It is also an uncomfortable outcome in a market already unsettled by rising oil prices amidst the conflict with Iran and the accelerating unwind in AI momentum. The risk from here is a negative feedback loop: higher long-end yields pressure duration equities; equities fall while bonds fail to hedge; correlated losses force further deleveraging and the resulting tightening in financial conditions gives the Fed another reason to wait…which, in turn, encourages investors to demand still more inflation and term premium. 

This is the reflexivity at the heart of “market guidance”…the Fed holds because markets have tightened, while markets tighten because the Fed has held.

Markets may be able to deliver part of the required tightening, but they will still look to the Fed to anchor the inflation outlook.

In recent years, few forces in electoral politics have been as potent as an endorsement from Donald Trump. However, the first polls in the special South Carolina primary race for the Senate seat that was held by the late Lindsey Graham shows his sister Darline is in second place, with half of GOP voters saying her Trump endorsement is irrelevant to them. Graham’s campaign faces other headwinds, as many South Carolina Republicans aren’t enthusiastic about turning one of their Senate seats into an inheritance for someone with a thin political resume.

After Lindsey Graham suddenly died on July 11, South Carolina Gov. Henry McMaster appointed Darline Graham to be a placeholder for the remainder of her brother’s term that ends in January. It was seen as a sentimental and politically-safe gesture, with no expectation that she would enter the race for the six-year term that starts on July 11. Then Trump issued a Truth social post, encouraging her to run and saying she’d have his full endorsement. Three days later, Graham told Fox’s Sean Hannity “I’m in.”  

According to an Emerson College poll of the crowded race, Graham is starting in second place. She has the support of only 19% of likely GOP primary voters, while US Rep. Ralph Norman leads the way at 22%. A 73-year-old with a background as a real estate developer, Norman has represented South Carolina’s 5th District since 2017, and served in the state legislature for 11 years before that. Graham has never held an elected office. Until this summer, she was commissioner of the South Carolina Commission for the Blind, and earlier held a communications role in the South Carolina Vocational Rehabilitation Department. 

Two other candidates are in the double-digits: US Rep Russell Fry at 12% and former governor and former House representative Mark Sanford at 11%.  Fry, who was reportedly hand-picked by Trump to unseat Republican Tom Rice in 2022, as payback for Rice’s vote to impeach Trump over the Jan 6, 2021 Capitol Hill riot. A quarter of likely voters are still making up their minds. The primary is just a week away, on Tuesday, Aug 11, and the top five candidates debated on Monday evening. Unsurprisingly given her lack of experience discussing national issues, some observers said Graham seemed to lean heavily on her notes. Then, in a moment of spontaneity, Graham oddly suggested that constant noise from data centers is somehow a uniquely leftist and maybe imaginary concern: 

Darline Graham Nordone’s message to South Carolinians is clear: build more data centers, and if you’re concerned about the constant noise they bring, just get over it. pic.twitter.com/qmJOqBacas

— Kelly McCarty (@KellyLMcCarty) August 4, 2026

With no candidate likely to top 50%, expect a run-off of the top two vote-getters on Aug. 25. Assuming Graham makes it to the run-off, our intuition tells us most of those who’d voted for someone other than Graham in the Aug. 11 primary will migrate to the remaining non-Graham option.  

The race is a test of Trump’s endorsement power, and only 29% of those polled by Emerson say Trump’s endorsement makes them more likely to support a given candidate. 53% say a Trump endorsement doesn’t affect them one way or the other — but 18% say Trump’s endorsement makes them less likely to support the endorsee. Not surprisingly, Graham’s greatest strength comes from the oldest voters: 30% of voters over age 70 back her. 

Trump’s endorsement has ruffled feathers of Republicans in the Palmetto State, including Dorchester County GOP chair CJ Westfall. Speaking in the context of Trump’s endorsee for governor having been clobbered in the June primary, Westfall told CNN: 

“The president continues to get bad advice about South Carolina. We certainly empathize with Darline — and even the president, as Lindsey was a really good friend of his — but he’s certainly getting bad advice. We’ve got a lot more exciting options for this seat. It’s a once-in-a-generation opportunity.”

Other members of the GOP machine in South Carolina are likewise irked by Trump’s move, with one state legislator calling it a “backroom deal” and another saying “Trump threw us all a curveball with Darline. That wasn’t expected. It wasn’t exactly welcomed here, either.”  

Importantly, only 4% of Republican special election voters think their senator should focus on foreign policy. That’s not good news for Darline Graham, as her brother was only known for his foreign policy exploits that centered on collaborating with the State of Israel to support US interventions in the Middle East, and partnering with Ukraine in America’s proxy war with Russia. Reading the winds, Darline Graham has already made a point to say she wants to focus more on domestic issues like the cost of living.  

Darline Graham says she’ll be more invested in affordability issues than national security:

“Lindsey was more focused on national security. I know that’s important but I’ll probably be more focused on affordability, what matters to families, the struggling families.” pic.twitter.com/txDfpt6zoy

— The American Conservative (@amconmag) August 3, 2026

It’s not just Apple that is scrambling to find cheap memory alternatives to the DRAM offerings from the memory “cartel” of Samsung, SK Hynix and Micron: according to the Nikkei Asia, a trio of the world’s leading PC makers – HP, Asus and Acer – have started to use small amounts of chips from China’s ChangXin Memory Technologies (better known as the recently IPOed CXMT) amid an unprecedented memory shortage fueled by demand for artificial intelligence infrastructure.

Many major PC makers completed the qualification process for CXMT’s DRAM chips around the middle of this year and have started to use a limited amount in their notebook computers, according to multiple sources familiar with the matter.

The amount of CXMT chips used and the number of notebook models utilizing them are very limited as of now, as CXMT is prioritizing a large part of its production capacity for Chinese clients, such as Huawei. The notebook models that use CXMT chips are for sale in non-U.S. markets.

The PC companies are also taking a restrained approach over their use of CXMT chips due to concerns that doing otherwise would anger leading global memory chipmakers Micron, Samsung Electronics and SK Hynix, two sources said.

“The top three memory chipmakers accounted for more than 90% of global market share,” an executive with a PC company with direct knowledge of the matter told Nikkei Asia. “PC companies have to be very careful and stay low-key about [the use of CXMT chips] … After all, it is a seller’s market now. We dare not source too much from CXMT at this moment.”

CXMT, moreover, is included on a Pentagon list of companies alleged to have ties to the Chinese military, making sourcing from it potentially sensitive for U.S. companies. The Chinese company has denied the allegations and is not subject to an outright trade blacklist.

Still, the adoption marks a significant win for CXMT, which recently listed on Shanghai’s STAR Market and after soaring nearly 8-fold since its IPO last week, boasts a market valuation exceeding that of Intel, America’s top microprocessor maker.

“Although PC makers only use very small volumes [of CXMT’s DRAM] for budget models, they don’t want to neglect a potential important source, particularly when the market is so constrained,” one supply chain manager supplying to HP and Asus told Nikkei Asia.

Not everyone is terrified of retaliation by the memory cartel: another industry executive said some PC makers have secured additional supplies of central processing units (CPUs) and are now racing to lock in more memory to match, making them much more open to sourcing from any available supplier, including CXMT. “After all, PC makers still hope to work with all the available sources as the market is very constrained now,” the person said.

In response to request for comment, Acer said: “We do not disclose our suppliers, but that we keep in close contact with multiple global manufacturers and suppliers to dynamically adjust operations to manage component prices changes. We work with multiple manufacturers and suppliers to enhance our supply chain resilience.”

The PC and smartphone industries have been suffering from shortages of memory chips and CPUs since late last year. Earlier thi year, Nikkei Asia was the first to report that HP, Dell, Asus and Acer were considering using CXMT’s DRAM.

PC companies have prioritized chips for premium models and raised overall prices by several hundred dollars to reflect the rising component costs. Smartphone companies like Xiaomi, Oppo, and Vivo, on the other hand, cut their 2026 shipment forecasts several times due to the memory shortages.

The global PC industry is expected to decline more than 11% this year due to the unprecedented memory crunch, with supply conditions worsening toward the end of this year, market research company IDC estimates.

The shortfall in memory chips has turned out to be a golden opportunity for CXMT to tap the global PC supply chain. The Hefei, China-based memory chipmaker listed on the Shanghai Stock Exchange’s tech-focused STAR Market on July 27 and its share price soared almost 5x on the first day of trading. Its market capitalization reached more than 3.5 trillion yuan ($545 billion) as of Tuesday, topping Intel and starting to approach Micron and SK Hynix.

CXMT estimated in a filing to the Shanghai Stock Exchange that its net profit for the first half of 2026 would reach between 52 billion yuan and 58 billion yuan, up as much as 2,530% from a year earlier. The chipmaker attributed the surge to favorable market conditions and a better pricing environment. CXMT already supplies to almost all the top Chinese tech companies including Tencent, Alibaba Cloud and ByteDance.

“You would think CXMT’s price is cheaper than the top three players, which is a wrong assumption. … Their DRAM is definitely no cheaper than the likes of Samsung,” one of the people said. “We also couldn’t book supplies from CXMT beyond the current quarter, as so many companies are racing to secure DRAM from it,” the person added.

CXMT and domestic peer Yangtze Memory Technologies (YMTC) are undertaking their most aggressive capacity expansion plans at home. CXMT is expanding plants in Shanghai with the aim of having a capacity two to three times larger than its homebase in Hefei, including capacity for building high-bandwidth memory (HBM), a crucial AI component, Nikkei Asia reported earlier.

Joseph McCarthy was right about everything.  Communist movements have been playing the long game from inside western nations, exploiting the liberal freedoms westerners enjoy as a backdoor to sabotage free market choice and constitutional checks and balances from within.  The players might have changed over the decades, but the ideological goals remain the same.  

Forget about the “false left/right paradigm”; that concept is now dead.  Whatever logical clarity or loyalty to the American way that average progressives might have had is long gone.  They have detached completely from morality and ideals of merit and responsibility.  They are financially backed by some of the most evil NGOs and globalist corporations on the planet.  They have ties to some of the most despicable and oppressive governments in the world.  

The political left is the monster they claim to be fighting against.  They are the foot soldiers of the globalist order.  They are the greatest existing threat to western civilization.  To be “right wing” today simply means your principles sit to the right of Stalin and Mao.  It doesn’t take much deviation to find yourself a mortal enemy of the leftist fold. 

Furthermore, these groups are intricately organized and operating using classic communist subversion tactics commonly used throughout Europe from the 1920s to the 1990s.  This includes front organizations, labor infiltration, agitation, influence operations, paramilitary training and mass propaganda.  

Remember when Democrats used to argue that the woke movement was not communist and to label it as such was a misinterpretation of what communism actually is?  Remember when they argued that Cultural Marxism is not a real thing?  Well, now they’re coming out and openly admitting the agenda.

DSA candidates are infesting the Democrat Party, and if you thought the typical blue state liberals were extreme, get ready because the next generation is full-bore collectivist in their rhetoric and resolve.  In recent interviews with DSA politicians and campaigners, they list a series of goals (or demands) then intend to enact once they gain enough governmental power.  For example…

Erasure Of The Electoral College:   In other words, the destruction of the republic and the institution of a traditional “democracy” in which the 51% rule over the 49%.  Leftists have long believed that they are the majority of the US population, which is why they constantly call for the end of the electoral college.  Donald Trump’s latest presidential win showed that leftists can’t always count on a popular majority to maintain power, but they have an answer for that.

End Of The Two Party System:  This might sound like a rational policy, especially for libertarians.  However, America already has an open party system; there is no law preventing third, fourth or fifth party candidates from participation in elections.  What the DSA wants, at bottom, is a parliamentary system of government similar to governments across Europe.

Why?  Because parliamentary systems are designed to suppress conservative and nationalist movements.  In a parliament, multiple leftist parties will often vie for greater control but whenever conservative movements arise these parties join forces to stonewall the right-wing from any real power.  We have only to look to Europe today to see these suppression tactics in action, from France to Germany to the UK. 

End Of The Senate:  Again, this is something conservatives might agree with out of anger over Senate inaction, but leftists have a far different motive.  They want a massive and expansive congress which would create even more bureaucracy, have the power to choose the president or leader of the executive branch instead of the public, and remove all checks and balances through the three branch framework.  

Expand Or Replace The Supreme Court:  Socialists want a court that is completely subservient to congress and is loaded with leftist judges.  They rage over the idea that judges might interpret constitutional law against the favor of leftist policies.  Want to keep your gun rights or free speech?  Forget it if the DSA ever gets into power.

32-Hour Work Week And Extreme Increases To Minimum Wage:  DSA activists are economically retarded and have no concept of budgets and profit margins.  They think more like pillagers – They see companies with wealth and they want to take it by any means necessary.  The problem is, drastic cuts to productivity and huge wage increases will only lead to the destruction of businesses.

They will have to close up shop or fire a substantial number of workers to survive.  Leftists will then try to force companies stop layoffs.  This level of control is a fantasy and companies will fire people anyway.  The end game will, of course, be socialist calls for the government to nationalize the economy, which will also end in financial collapse as demand greatly outweighs production.

Paid Leave And Free College:  Who is going to pay for a bunch of low IQ dissidents to get degrees in gender fluid studies or underwater basket weaving?  Only the taxpayer.  Who is going to pay for European-style paid leave programs?  Only larger companies will be able to afford it, meaning small businesses will die out. 

Defund The Police And Eliminate The Prison System:  We’ve already seen how this goes.  When woke activists tried these programs in blue cities across the US, crime skyrocketed.  Social service workers and “community outreach” personnel are utterly incapable of handling the typical criminal.  So, they will do nothing instead and let repeat offenders run rampant. 

Democrat Socialist Co-chair Ashik Siddique: “Our police and prison system is stacked toward persecuting poor people… the language that we have in there is abolishing the police and prison system that protects capital over people.” pic.twitter.com/dg7XzyC828

— America (@america) August 2, 2026

Leftists use the claim that they want more equality of policing against “wealthy criminals” in order to appeal to the American distaste of elitism and corporate crime.  However, this is always pursued in tandem with less policing of “lower class” criminals (usually minorities).  The real reason leftist are so opposed to the criminal justice system is because most of them believe that lower class criminality is justified as an act of social justice against the rich (anyone with more money or success than they have).

Slavery Reparations:  No white American with any sense of dignity is going to pay reparations to black people who have never been slaves.  It’s not going to happen.  But, socialists want minorities on their side as a righteous shield and so they will continue to promise reparations for decades to come. 

Feminism For All:  This is perhaps the most destructive goal of all, because it would enshrine feminism as a national ideological pillar.  The remnant of the old “patriarchy” is the only thing keeping the US from total collapse.  Feminists are a cancer on society and the source of most of America’s ills. 

It’s not just the abortion issue; feminists want women’s supremacy, not equality, which means men (mostly white men) acting as the work engine the feeds women’s coffers through taxation and government subsidies.  They are also the main source for the rise of the LGBT movement and gender-relativism.  The DSA would joyfully burn western civilization to the ground to achieve a system in which relativism is the standard. 

Open Borders And Path To Citizenship For All Illegals:  Nationalism is the barrier that prevents globalism from reaching its final form.  Borders, national identities and cultural separation are sins in the eyes of the woke cult.  They believe that if they eliminate all of these ideals then they will have no more enemies and they will therefore control the future of the human race forever. 

At this stage it’s difficult to say if the DSA platfrom is going to resonate with enough Americans to gain significant momentum.  But, recent polls show 66% of all Democrats support the basic idea of socialism.  By extension, leftists are fuming over the reversal of public opinion on liberalism – They came so close to total control under Obama and under Biden and twice they have been thwarted.  

When leftists lose the first thing they always do is double down.  They do not take accountability and question their own thinking; they assert that they are right, everyone else is wrong or stupid, and they become even more insane.  The Democratic Socialists are a reflection of this mentality.  The more Democrats continue to lose ground, the more the DSA is going to grow because leftists don’t care about being right, they only want to win.

Don’t be surprised if the socialists rise from the woke grave to wreak havoc in 2028 and beyond.

Summary: 

• Musk Warns Bears (Again) 
• Earnings at 1600 ET; Earnings Call at 1630 ET 
• SPCX Short Position Soars 
• SpaceX Earnings Preview: The Five Questions That Matter Most 

Musk Comments On ZH X Post 

SPCX Short Hits 34% Of Float Ahead Of Earnings 

SpaceX’s first earnings report since its record-setting early June IPO is just hours away and will test whether investors can justify the company’s lofty valuation after a vicious post-IPO bear market.

Shares hit a low of $104.83 on Monday, 22.4% below the $135 offering price and 53.5% beneath their June peak of $225, erasing more than $1 trillion in market value. However, the stock rebounded to $119 on Tuesday morning.

Wall Street expects a second-quarter loss of 24 cents per share on $6.8 billion in revenue, though limited financial disclosures have left analysts with little confidence in these estimates.

RBC analyst Ken Herbert outlined the five most important questions investors want answered before the earnings report, which will be released after the bell around 16:00 ET – 16:30 ET will be the earnings call (see report below).

Earlier this morning, we cited S3 Partners’ proprietary short data, which shows that 95% of SpaceX stock available to borrow is out on loan, amounting to 34% short interest as a percentage of the float.

Massive SPCX shorting ahead of earnings: 95% of SpaceX stock available to borrow is out on loan, amounting to 34% short interest as percentage of the float: S3 pic.twitter.com/rELoXcyOJu

— zerohedge (@zerohedge) August 4, 2026

Musk stated last month: “The survival probability of firms who maintain a significant short position in SpaceX over time is very low.”

The survival probability of firms who maintain a significant short position in SpaceX over time is very low

— Elon Musk (@elonmusk) July 17, 2026

Important: Mapping SpaceX’s Lockup Expirations: HSBC Calculates When The Shares Could Hit The Market

SpaceX Earnings Preview: The Five Questions That Matter Most 

SpaceX has lost roughly $1.2 trillion in market capitalization since briefly peaking near $2.6 trillion in the first few trading days following its June 12 IPO. After an initial retail-driven buying frenzy, sentiment has sharply reversed, with the stock posting four consecutive weekly declines and now trading nearly 20% below its IPO price.

The steep pullback, driven largely by post-IPO technical selling, comes just ahead of the company’s first earnings release as a public company, scheduled for after the market closes Tuesday. The report follows Tesla’s quarterly results just weeks earlier.

RBC analyst Ken Herbert offered clients a preview of SpaceX’s earnings, claiming that stock selling was driven more by technical factors than by deteriorating fundamentals.

Herbert expects second-quarter revenue to rise 66%, with adjusted EBITDA margins of approximately 30%, citing continued execution across Starship, Starlink, and the company’s AI infrastructure. He warned that upcoming insider share lockup expirations are likely to put pressure on the stock.

Ahead of Tuesday’s earnings, here’s Herbert’s view:

SpaceX (SPCX) will report its much-anticipated first public results on August 4. While the stock has significantly lagged since its initial post- IPO surge (down ~52% since its ~$225 peak), we expect lingering technical factors (share unlocks) and macro sentiment to remain headwinds. We believe the current valuation is attractive (under 17x consensus 2028 EBITDA), but we believe investors are focused on long term challenges, looking past near-term strength and strong fundamentals. With this preview we highlight what we believe will be five of the most important questions investors are focused on with the 2Q26 results.

Key points:

SPCX will report its 2Q26 results after the close on August 4. Beyond the actual results (we model 66% 2Q26 revenue growth and ~30% adj. EBITDA margins), the company has achieved several import milestones. The recent V13 Starship test flight was successful (and FAA regulations on re-use and launch cadence are set to ease), and the company continues to win significant government contracts (critical for space access and infrastructure funding). The initial 2026 guide will be a focus, but we believe investors remain overly focused on the mid-term operational and financial challenges, overly discounting the near-term outlook, in our view.

We see five key questions for SPCX heading into the 2Q26 results. First, we believe the upcoming share lockup expirations will remain a headwind (technical challenges). The best remedy is strong execution. Second, we are looking for a more detailed Starship update after the recent successful test flight. Third, investors are focused on SPCX’s interest in becoming a full- scale consumer wireless operation (organically or through acquisitions)? Fourth, how is capacity expansion tracking and how will margin compute capacity be allocated? And fifth how would investors think about the software toolkit and SPCX’s ability to succeed with higher margin products?

Where have the buyers gone? After the over-subscribed IPO–and the stock trading at under $110–we are often asked about the lack of demand. We believe the lock-up expiration is a material overhang (20% of insider shares are unlocked on August 6, with the incremental ~10% trigger unlikely), followed then by rolling 7% unlocks. The comparisons to Meta (significant under-performance in first year post-IPO) is likely appropriate, but we believe the current price overly discounts the maturity of the Connectivity and Space businesses.

We are maintaining our OP rating and $225 price target. Our PT continues to be based on a SOTP valuation. We believe the upcoming share lockups have been a headwind for stock sentiment, but see them as attractive entry points for investors. Our analysis of META’s similar lockups is supportive of LT value in our view. Increasingly, we believe investors are also focused on a potential merger with Tesla, which we detailed in a recent note.

SpaceX 2Q26 Preview: Five of the most important questions investors will focus on in earnings:

Question #1: How has buying demand changed post-the heavily over-subscribed IPO and what impact could the lock-up period have on investor perception?

Answer: We believe the expected timeline for share un-lock is weighing on stock sentiment. The first lock-up period for SpaceX is scheduled for August 6, 2026, two days after the company reports 2Q26 earnings. Then, insiders will be able to sell up to ~20% of their locked-up shares, which equates to roughly ~911M shares. Comparing the company’s lock-up expiry schedule to that of META’s when it came public in 2012, we would highlight a similar stock performance to that of SPCX. META IPO’ed at $38/share and was down almost (50%) into its first 90-day lock-up expiry. SPCX is currently trading down (19.7%) from its $135 IPO price but is down (52%) from its high of $225.64.

Below, we have detailed the subsequent dates for additional lock-up expiration dates. As laid out in the prospectus, these dates are 70, 90, 105, 120, 135, and 180 days post pricing (June 12th). There is an additional lock-up expiry of 10% of shares on August 6th if SPCX closing price is greater than or equal to 30% above the IPO price of $135 ($175.50) for at least 5 of the 10 consecutive trading days ending on the first earnings release (Aug 4th), however this will not be achieved.

Question #2: What did we learn from the successful V13 Starship launch?

Answer: Last week, SpaceX launched Starship flight 13 (note here) achieving incremental steps with the launch. The launch marked a successful end-to-end mission, hitting all key milestones: the rocket lifted off from Starbase, the Super Heavy booster separated from the upper-stage and flipped for a Gulf of Mexico splashdown (though the landing was rougher than anticipated due to engine restart issues), completed its boostback burn, and the upper-stage climbed to orbit where it deployed 20 Starlink V3 satellites. Starship also successfully relit a Raptor engine in space — confirming the in-orbit restart capability that will be essential for future lunar missions — before re-entering the atmosphere to test its heat shield and splashing down in the Indian Ocean.

We believe SpaceX is likely to attempt to catch the next Starship with the tower on the next launch. After the success of flight 13, Elon Musk suggested that the company would attempt to catch the ship with the mechanical arms on the launch tower as it slows to a hover. The company has already successfully caught the Super Heavy booster but has not yet caught the upper-stage Starship with the launch tower arms. Performing a catch would entail sending Starship on a longer-range trajectory, potentially even into low-Earth orbit, in order to bring the vehicle back to the launch site. We believe formally scheduling the attempt, and successfully catching Starship could represent a positive catalyst for the stock. Given SPCX’s plans for reusability of Starship, demonstrating a catch with the launch tower, could help sentiment behind the company’s LT aspirations with Starship.

Question #3: What is the level of the company’s interest in full-scale consumer wireless operation in the US, and is an acquisition a preferred path?

Answer: As the company is looking to increase its spectrum holdings, investors are weighing the company’s opportunities to potentially acquire a carrier, build its own network, or pursue an MVNO route. As carriers are publicly shutting the door to MVNO talks with SpaceX, we view the company’s spectrum pursuit as a leverage in the MVNO negotiations. We continue to view that operating a full-scale mobile operations in the highly-competitive US market entails a range of operational challenges, investments, and executive resources. We believe that a potential market share gain from the mobility market will not suffice to justify network and spectrum investments. However, the expansion of IoT, V2X and applications for Unmanned Aerial Vehicles could provide growth opportunities in periods beyond 2028.

Question #4: How is capacity expansion tracking and how will margin compute capacity be allocated?

Answer: We are modeling the company to exit the year at ~2GW of nameplate capacity and would view as the key bottleneck if we could see potentially bigger upside in ’27. GOOGL and Anthropic are SPCX’s two flagship customers contributing $26B of ARR starting in Q3, however, with those 2 only occupying an estimated 35% of estimated year-end capacity, the company tracking ahead on its deployment schedules would be very bullish. Further, META’s commentary from Wednesday spoke to the depth of latent demand for added compute commenting that it had many offers from companies willing to pay a price that was multiples of its cost of compute (META’s). This squares with SPCX’s partnerships with the GOOGL and Anthropic deals priced at an estimated $50B annually/GW and $30B/GW, respectively.

Worth noting, on GOOGL’s earnings call last week, in laying out the strategic rationale for leasing 3p compute to supplement its own, CEO Sundar Pichai gave a theoretical example where he arbitrarily cited renting compute from a partner for 6 months (as an example) at dilutive levels as being an acceptable tradeoff given it could quickly & accretively shift those workloads to its own compute once ready to deploy. We recognize the 6-month comment was only illustrative, but it wouldn’t surprise us to hear questions probing at the durability of SPCX’s partners. In some ways, we could assert this rhymes a bit with META’s current capacity allocation conundrum where at some point, SPCX would need to show strong/accelerating traction with its own intelligence products to support the expected LT accretive mix shift of capacity allocation.

Question #5: How should we think about the software toolkit (Grok, Cursor, Build, Work,etc.c) being able to guide users tohigher-marginn products over time?

Answer: Most recent signs point to SPCX driving strong model training improvements as well as being on track for building out its expanding software & intelligence portfolio. We’d also expect some visibility around Cursor’s growth which last reported ARR above $4B on June 8th up from $2B reached back in February. We believe the consensus view is now that owning & controlling the cost of compute is the surest way to achieving a durable moat in AI, though lately, we believe sentiment regarding moat formation at the harness & application layer is also warming as jobs are not being destroyed as was previously anticipated and many high quality companies are emerging at various checkpoints in the industry previously thought destined to be controlled by the verticalized frontier labs, etc. And with the open- weight/model affordability debate appearing more and more of a one-sided in favor of intelligence software being LLM agnostic, the path to creating a sticky user experience with land and expand capabilities remains somewhat less clear (for the industry by the way, not just SPCX). As such, we expect investors to be seeking visibility on technical, financial or any other mile markers for adoption where Cursor should remain at the forefront as it expands from a coding tool to a fuller multi-agent orchestration platform while the Grok platform of products will be coming from behind relative to the other frontier coding & work automation tools.

Herbert maintained an “Outperform” rating and a 12-month price target of $225.

Where the rest of Wall Street sits: 

Important: Mapping SpaceX’s Lockup Expirations: HSBC Calculates When The Shares Could Hit The Market

Professional subscribers can read more on SpaceX here at our new Marketdesk.ai portal​​​​​​. 

Authored by Jesse Hamilton via CoinDesk.com,

A supervising U.S. FBI agent who worked in intelligence at the national headquarters has been arrested and accused in a federal court filing of stealing more than $1 million in cryptocurrency.

The high-level special agent, identified as Patrick Steven Yarmoch, allegedly turned himself in to agency colleagues, reporting that he dug crypto keys from FBI systems to make as many as a dozen transfers to himself from accounts tied to foreign individuals he’d investigated, according to an August 1 account filed with the U.S. District Court for the Eastern District of Virginia.

“During the afternoon of July 28, 2026, Yaroch contacted DOJ Employee 1 via Signal and requested to meet to discuss personal matters,” prosecutors said in the complaint.

“Upon meeting DOJ Employee 1 at FBI headquarters, Yaroch immediately started to break down as he told his story.”

Yarmoch — who held a “top secret” security clearance — had worked in counterintelligence, specifically with an investigative unit that focused on an unnamed “adversary nation,” according to the court filing, which noted he was suspended for a couple of days before being fired and arrested on July 31.

The resident of Ashburn, Virginia, had worked as a supervisory special agent at FBI headquarters in Washington, specifically in its counterintelligence and espionage division. He’d previously worked for years out of Boston, where he’d been in a national-security unit investigating the adversary nation referenced in the court filing.

In handling the digital assets, Yarmoch was said to use accounts with Kraken and also Suilend, the decentralized finance (DeFi) ecosystem for the Sui blockchain, via a Slush wallet.

The FBI searches of his computer and phone records revealed some of his recent questions to AI apps, including, “If you had a bucket of money (around $1 million) and you wanted to leave the USA and become a resident or citizen of an EU country, what would you do?”

To which the app allegedly recommended Portugal as a favored destination.

Investigators also located travel plans for Yarmoch and his family to go to Portugal next month, and located the power of attorney forms for Portugal.

“Yaroch stated he was not planning to funnel money into Portugal,” the complaint said.

“Yaroch told FBI WF Agents that his family had a trip planned to Portugal in September 2026 to meet friends. Yaroch realized he might not be able to attend the trip but stated he hoped his wife and child would still go on the trip.”

Later searches included whether Americans need a visa when connecting through Turkey and help drafting a follow-up email about a job opportunity and life in Greece.

He was also said to take recent trips to Germany, and Grenada that he hadn’t reported internally, in violation of FBI rules.

Yarmoch was placed in detention in Alexandria, Virginia.

The scenes from the Ceuta invasion were deeply alarming, as 60,000 predominantly military-aged men, many carrying no supplies, crossed from Morocco into the Spanish enclave. The invasion set off alarm bells across the West, reinforcing concerns that uncontrolled mass migration poses a major national security risk.

According to The Sun, there are new concerns that a second invasion of Ceuta could be “just days” away, as the outlet cites online posts warning it may be their [migrants] “last chance” to enter Europe.

Just kidding, this is the actual footage … pic.twitter.com/jYRpSWM24e

— Elon Musk (@elonmusk) July 31, 2026

The outlet continued:

Fears are also mounting convicted terrorists were among the tens of thousands of people who stormed the Spanish enclave last week, reports say.

. . .

But reports say the peninsula could see scenes of mayhem play out on the streets yet again, as plans are being made for another mass border crossing on August 15.

On social media, posts appear to be plotting another storming of the shores of Ceuta, with one message reading: “Everything will be seen that day.”

Another appears to call for the creation of a WhatsApp group, saying: “Our appointment is on 15/08/2026.”

The invasion prompted Italy to suspend Schengen arrangements with Spain and to secure its borders, while 22 EU leaders demanded “immediate action” to address the national security threat. Denmark’s Mette Frederiksen, Italy’s Giorgia Meloni, Germany’s Friedrich Merz, and other European leaders warned:

“We cannot allow uncontrolled mass crossings, the instrumentalization of migration or other hybrid threats to create the perception that illegal entry into the European Union is possible.”

Reports that emerged in recent days show that Spanish Prime Minister Pedro Sánchez’s (unhinged socialist) claim that the migrants had been expelled from Ceuta may not have reflected the situation on the ground. Read the full report.

Years of open-border policies under Spain’s socialist government may now be approaching a political breaking point. The invasion of military-aged men was so visible to the world in real time on X, making it increasingly difficult for lefty corporate media to reconstruct the narrative and gaslight the public into believing this was merely a humanitarian migration event. The images instead reinforced views of a coordinated border invasion and undercut the left-wing narrative framing such arrivals solely as poor migrants searching for milk and bread.

Related:

• Spain’s Immigration Crisis: Ceuta & The Collapse Of Sánchez’s Pro-Migration Experiment

We noted last week:

• Spain’s Border Invasion Is An Optics Disaster For Open-Border Democrats

Hopefully, common sense can return to the West: secure borders. And, really, hold those accountable for nation-killing open border policies.

Summary

• Rubio: The “ultimate deal” is the denuclearization of Iran, while Omani talks focus on reopening Hormuz.
• Stalemate persists: Iran refuses nuclear negotiations until the conflict ends, leaving both sides far apart.
• Deal optimism sees oil slide: Brent fell below $80 on reports of progress in Oman-mediated Hormuz talks.
• Bessent claims a Hormuz agreement could come “today or tomorrow”.
• Major doubts remain given Iran denies formal talks, security risks persist and the reported Oman plan could leave Tehran with broad control over Hormuz traffic.

*  *  *

Rubio: “Denuclearization of Iran” is the “Ultimate Deal”

Secretary of State Marco Rubio spoke at the White House Tuesday, just after headlines out of Qatar touting that a new draft deal initiative is gaining momentum.

Rubio insisted again that Strait of Hormuz remains open and that vessels are continuing to pass through it, but said the US is working to open it up to bigger vessel transit flows.

“I think there is a conversation and a negotiation that we are involved in between Iran and Oman on how more ships can be able to go through there safely in the short term, as we move towards… longer-term talks about denuclearization,” said Rubio. He then emphasized that that the “denuclearization of Iran” is the “ultimate deal”.

But from Tehran’s point of view, this will constitute Washington shifting the goalposts back to square one once again. Iran has insisted it will not negotiate the end of its nuclear program, especially while the conflict is still in an active phrase. It has consistently said that nuclear talks can happen later, only once an agreement to end the war has been accomplished. The two sides continue to be far apart, despite the Tuesday morning onslaught of ‘Hormuz deal imminent’ headlines. 

PressTV, however, has said that Iran-Oman talks on opening Hormuz are in a “new phase” – and despite what it calls “US obstruction” – but so far it appears this management scheme will be favorable to Iran’s demands. And yet there’s still some signs of compromise on the horizon:

IRAN WEIGHS ALLOWING EUROPE TO CLEAR MINES IN STRAIT OF HORMUZ

“Over the next two and a half years” pic.twitter.com/x6e8GychXb

— Justin Logan (@JustinTLogan) May 30, 2026

Oil Slides amid return to Another Round of ‘Deal Imminent’ Headlines

Another fake ceasefire in progress? Or are we to believe it’s for real this time? There’s nothing on the ground-level at all that currently suggests the warring sides are imminently about to agree to a new ceasefire, or are so much as back at the negotiating table.

And yet Tuesday morning headlines are now being driven by a Qatari Foreign Ministry statement saying that “language” for a possible US-Iran resolution “has been drafted” and “is being circulated between the parties.”

Ministry spokesman Majed Al-Ansari didn’t offer any time line for a potential deal in relaying the statement before a press briefing but said that current diplomatic efforts are focused on preventing further escalation, reopening the Strait of Hormuz and creating conditions to resume talks.

He described that the focus is on short term resolution that would restart US-Iran talks and return the sides to mediation, but also admitted that there’s “nothing the the books when it comes to direct talks.” This comes as President Trump has told Iran that he wants to see a deal done on the Hormuz Strait immediately, per Bloomberg.

This was enough for regional media, including Israel’s i24 to report ‘progress’ in the Omani mediated Hormuz talks, with the American side – as yet only participating indirectly – said to be “much more” flexible in their demands than even the Omani side, amid Iranian recalcitrance.

“Iran has conveyed a message: any solution that we agree to and sign must also be approved by Washington,” i24 has written. This somewhat forced and perhaps manufactured return yet again to peace optimism has sent oil sliding…

BRENT CRUDE OIL FALLS BELOW $80 FOR FIRST TIME SINCE MID JULY

The day prior, President Trump continued to address Tehran in threatening language, however. He said before reporters in the Oval Office: “I want to give them every last chance before decapitation. Very tough to do what what we have planned, still planned. We’ll see what happens, but it’s very very tough thing to do. I think I’m very proud of the fact that I will give people a chance.”

Bessent Floats Maybe ‘Iran Deal Tomorrow’ To Open Hormuz

Just on the heels of the above ‘draft deal’ headlines, and in a carefully timed CNBC appearance, Washington brought out its heavy hitter to re-anchor the administration’s narrative, seeking to assure markets that a diplomatic deal with Tehran is not only real, but imminent – potentially coming together even as soon as Tuesday through Wednesday.

“We may have an Iran deal tomorrow to open Hormuz,” Treasury Secretary Scott Bessent declared, signaling that a major diplomatic resolution is within reach. He pointed out that physical maritime traffic is already quietly resuming, regardless of headline volatility.

Bessent gets dragged in to justify “imminent Iran deal” as algos no longer reacting to $100,000 Truth Social API

— zerohedge (@zerohedge) August 4, 2026

Bessent claimed the administration is seeing “quite a few ships coming out of Hormuz, even now,” suggesting the chokehold is loosening ahead of an actual deal and formal signature. With physical crude flows expected to resume, Bessent predicted that elevated energy prices will soon settle down, paving the way for a massive “relief trade” across broader markets:

“We are in talks with the Iranians, and I think there is a chance we may have a deal today or tomorrow to open the Strait and move towards a more normalized position in this conflict,” Bessent said in an interview with CNBC.

Asked if Tehran would be allowed to charge a toll, Bessent said the deal would allow freedom of movement in the strait.

“It would be freedom of movement,” he said. “Even though things are still a little dicey there over the past few days, we saw quite a few ships coming out even now.”

Of course, we’ve heard all of this before, and notably Bessent’s commentary came just after Iranian President Masoud Pezeshkian insisted that while Tehran would defend its borders, it does not seek to expand the war, according to state media. An advisor to the Supreme Leader also reiterated that if the blockade continues, US vessels and forces will face serious risks and casualties. And there’s this not so small hiccup in the strait emerging Tuesday:

• A vessel has been struck in the Strait of Hormuz near Oman, the UK maritime security firm Vanguard says. One crew member is missing.

🔺 Senior Iranian figure warns US forces will “face serious risks and casualties” if the Hormuz blockade continues

Mohsen Rezaei, senior military advisor to the Supreme Leader and former longtime commander of the Islamic Revolutionary Guard Corps (IRGC), warned that US vessels… https://t.co/Oozl8C5sLw

— Drop Site (@DropSiteNews) August 4, 2026

Oman Hormuz Blueprint Would Leave Iran Largely With Control

Looming large over all of this is the fact that the Iranians have still denied that they are in formal talks with Washington, which Trump the day prior described as a ruse, venting his frustration while insisting that the Iranians have been engaging. The Hormuz blueprint as it basically stands:

Reuters: Iran would gain full control over vessels entering the Strait of Hormuz under a temporary plan being discussed with Oman, an Iranian official says.

Outbound vessels would use the route between Iran and Oman, with Oman approving their exit only after notifying Tehran. The plan would give Iran full visibility over outbound traffic and the ability to intervene if needed and Iran is unlikely to accept any other proposal to open the strait

The Bessent clip:

Bessent on Iran:

We’ve seen Trump, last week, threaten what would have been the largest military campaign since World War II against the Iranians, and now, because of that, we are in talks with the Iranians.

I think there’s a chance we may have a deal today or tomorrow to open… pic.twitter.com/mnel0A16O0

— Clash Report (@clashreport) August 4, 2026

*  *  *

Amid the sudden and dubious return to ‘optimism’, let’s recount how we got here…

Trump’s Iran Strike Threats: A Timeline

March 21: Trump threatened to “hit and obliterate” Iranian power plants unless Hormuz reopened within 48 hours.

March 23: Delayed strikes for five days, citing “productive conversations” with Iran.

April 7: Warned “a whole civilization will die tonight.”
Hours later: A two-week ceasefire was announced.

April 21: Said he expected “to be bombing” if talks failed.
Later that day: Extended the ceasefire.

May 17: Warned, “the Clock is Ticking.”

May 18: Paused planned strikes after requests from Qatar, Saudi Arabia, and the UAE.

June 11: Said the U.S. would hit Iran “VERY HARD TONIGHT.”
Hours later: Canceled the operation, saying a deal was near.

August 1: Said the U.S. was “locked and loaded.”
Later: Called off the attack to pursue a deal with Tehran.