As the final four months of the year begin, markets are showing signs of what DH Unplugged hosts Andrew Horowitz and John C. Dvorak describe as "elephanty" behavior—a term they use to capture the heavy, lumbering uncertainty that has taken hold. In Episode 816, titled "Strikes, Spikes, Hikes," the pair dissect the forces shaping September's traditional volatility, from renewed U.S. military action in Iran to a sharp spike in crude oil and rising bond yields that are rattling investors.
Crude oil has surged roughly 13% in two weeks to around $91.80 per barrel, a move that Horowitz and Dvorak argue is sending inflation warnings through diesel crack spreads. The spike comes amid President Trump's threat on Fox News that Iran will be "totally wiped out as a country" if it retaliates again, escalating geopolitical tensions that are feeding directly into energy prices. For investors, the implication is clear: higher energy costs could reignite inflation and complicate the Federal Reserve's path forward, especially as it juggles political pressure and a softening labor market.
The bond market is also flashing caution. Dvorak connects rising yields to a broader erosion of trust in institutions, noting that "it's a series of very large trust factors." He warns that tariff escalation, reminiscent of the Smoot-Hawley Act, would signal that America no longer believes it can compete globally. This sentiment echoes Horowitz's criticism of Treasury Secretary Scott Bessent and Fed nominee Kevin Warsh, with Horowitz stating, "The administration is the boy who cried wolf right now," and adding that "Bessent has really gotten a little bit crazed trying to manipulate the markets." Such comments underscore the hosts' view that policy missteps are undermining confidence in the dollar and U.S. assets.
Corporate earnings are providing a mixed picture. Dell delivered blowout guidance, projecting fiscal 2027 EPS near $25.50 versus $18.99 prior, driven by a 40% data center share gain. However, retail is struggling: Dick's Sporting Goods plunged roughly 30% as Foot Locker's comparable sales fell 3.6%. Target is facing a backlash over its Halloween clown costume, highlighting the brand-management landmines that can trip up even the largest retailers.
In the tech sector, Nvidia is reportedly pursuing a $12.9 billion acquisition of Hugging Face, a move that has sparked a reported fallout between Jensen Huang and Sam Altman. Meanwhile, Chinese lab Z.ai claims to have trained its GLM 5.3 Flash model without a single Nvidia chip, raising questions about the future of AI hardware dependence.
The hosts also delve into government equity stakes in companies like Intel, MP Materials, and Trilogy Metals. Horowitz, who discloses a personal short position in Intel, questions why Washington gets discounted shares that retail investors never see. Dvorak contrasts this with China's state-owned enterprise model, suggesting that such interventions could distort markets.
Other notable mentions include LEGO's 21% first-half revenue jump and the baseball-card casino economy that is drawing scrutiny from Japanese regulators. With Friday's August payrolls, ADP, JOLTS, and ISM data on the horizon, the hosts preview key economic indicators that could set the tone for the weeks ahead.
As always, DH Unplugged delivers a skeptical, unfiltered take on the markets, blending Fed watching, earnings, commodities, and offbeat cultural observations. The episode is available now at DHUnplugged.com and via Apple Podcasts, Spotify, and Amazon Music/Podcasts.
