This morning, we teed up the week with a cautious but bullish tone… inflation has cooled, but traders are still dancing between rate-cut hopes, tariff risks, and a possible government shutdown. That balance held as markets pushed higher through the day. The S&P 500, Nasdaq, and the Dow all rose, extending Friday’s move. Tech and semiconductors carried the move, with Nvidia and Western Digital leading gains, while defensive sectors lagged.

Gold, the week’s quiet star, notched another record high above $3,800 as investors kept one foot in the safety trade. Oil, meanwhile, reversed sharply … sliding more than 3% after Russian export headlines fizzled and traders booked profits from last week’s run. Bond yields softened, with the 10-year falling to 4.14%, underscoring that the long end of the yield curve isn’t focusing on the “rate cuts are coming soon” narrative.

Under the surface, traders are walking a tightrope between optimism and overconfidence. The looming shutdown still threatens to freeze data releases, and Trump’s tariffs (set to hit in full tomorrow) are already rippling through autos, pharma, and consumer goods. Yet the market’s tone stayed upbeat, reflecting belief in a soft landing and resilient earnings (misguided as that may be, according to one read of the data… as you’ll see below).

The next test comes midweek with job data and more Fed talk; until then, enjoy the rally, but keep your hedge on.

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Wolf Richter sounds the alarm on a number that Wall Street barely noticed: nonfinancial corporate profits just plunged by a record $331 billion in one quarter, then barely rebounded in Q2. Manufacturing, retail, and transport all got hammered, with some sectors booking outright losses once tariffs and costs were factored in. Meanwhile, financial firms quietly posted record profits, widening the gap between Wall Street’s paper gains and Main Street’s profit pain.

The takeaway is clear: the “soft landing” story doesn’t line up with the hard data. If nonfinancial profits are collapsing while financials and megacap tech keep the indexes aloft, this rally rests on a shaky foundation. For traders, it’s a flashing yellow light… the real economy is groaning under the surface, and revision season might just rewrite the earnings narrative.

In this live Chicago edition of Odd Lots, DRW founder Don Wilson lays out his bold vision: a future where GPUs (graphics processing units) rival oil as a global commodity. He argues that as AI scales, demand for compute will balloon… and the industry needs a liquid, tradable market to price that demand. To make this work, Wilson and his teams are working on standardization, index construction, and even futures contracts for GPU clusters.

He walks through DRW’s “Compute Exchange” and “Silicon Data” initiatives, where auctions are already happening among cloud providers. His idea is that you should be able to hedge compute risk just like oil or electricity, letting GPU buyers and operators lock in pricing years ahead. He also floats that within five years, many financial instruments will be tokenized (or “on-chain”) and speculates that prediction markets and compute trading may merge paths. 

For traders, Wilson’s thesis is electric. If GPU compute becomes fungible and hedgable, it opens up a brand-new asset class tied directly to AI infrastructure. That means opportunities to trade compute futures, volatility tied to AI demand, and carve-outs in how cloud vendors and data centers manage capital.