Kashkari Named a Series | Exxon/Chevron Refining Record | Yen Intervention

The Situational Awareness forced sale cleared today.

Markets took the signal and ran. Apple (AAPL) fell hard on a soft outlook. Amazon (AMZN) surged on cloud acceleration. The Nasdaq still finished the week higher.

Three Fed officials explained Wednesday's dissents this morning. One of them named a series of hikes. That is the word that moved bonds.

Oil companies posted their best quarters in years. Two central banks spent billions defending their currencies. And a Chinese AI startup trained its flagship model on chips rented from one of its own investors.

• Amazon added more market cap today than any US company in a single day ever.
• Tesla is reportedly weighing a sale of its China business ahead of a potential SpaceX merger.
• Hyperscaler bonds rallied after Amazon's results, compressing spreads across Meta and Oracle.
• SK Hynix surged 30% in Seoul. The Kospi rose 18%.

Three Dissenters Explained Wednesday. Kashkari Named a Series.

Three regional Fed presidents published statements today explaining why they voted to raise rates Wednesday.

Hammack: "Inflation has remained stubbornly above 2 percent for more than five years. I am not confident it will return to our objective on its own."

Logan: "Without any policy restraint, inflation will likely continue to trend above target until there's an unanticipated shock."

Kashkari's language was the sharpest. "A potential series of small policy moves would be better than waiting and eventually concluding that even bolder actions were necessary." That is a documented case for multiple hikes, not one. Kashkari was projecting cuts as recently as March.

The bond market responded immediately. The 10-year hit its highest level since January 2025. Bonds sold off across maturities. Wednesday's selloff was about the long end. Today’s was broader. The difference matters. Wednesday priced Warsh's credibility gap. Friday priced the odds of near-term rate increases.

A September hike requires support from Washington-based Fed governors, not just regional presidents. As of today, no governor has signaled support for the dissenting case. Waller voiced inflation concerns but voted to hold. Cook said patience is prudent. That gap between the three dissenters and the twelve voting members is what July payrolls will narrow or widen.

Christian Hoffmann of Thornburg Investment Management put the week plainly: Warsh "suggested policymakers should follow the bond market rather than lead it, and the bond market's response was to punch him in the face."

The Signal to Watch

Any Washington-based governor publicly supporting the dissenters before Jackson Hole on August 27 converts the dissent from a regional minority to a committee framework shift. July payrolls next is the first live data test.

SIGNAL 1: Exxon and Chevron Posted Record Refining Profits. The Margins Tell the Story.

ExxonMobil (XOM) more than doubled profits year-over-year to $14.5 billion. Chevron (CVX) reported record earnings of $12.1 billion, up nearly fivefold. US oil prices averaged $92.45 in Q2.

The headline numbers were large. The refining story is larger. Exxon's refining unit made $5.5 billion in the quarter versus $1.4 billion a year ago. Chevron's refining segment made $4.9 billion versus $737 million a year ago. Combined, six times more than the same quarter last year.

Exxon's CFO said global refining capacity is at its lowest level ever. Russia and China both restricted product exports during the quarter. Chevron's CEO said the situation is "under stress" and that "every day that goes by, the situation gets more difficult."

This is the same fuel-price pressure all three Fed dissenters named as their inflation concern. Record refining margins are a direct input to what the consumer pays at the pump.

The Signal to Watch

A second consecutive quarter of constrained refining capacity through Q3 confirms the margin structure holds through the September rate decision.

SIGNAL 2: Japan and South Korea Intervened to Prop Up Their Currencies. The US May Join.

Japan and South Korea both moved to buy their own currencies in a rare coordinated intervention. Bank of Japan data suggests Japan may have spent nearly $59 billion. The yen posted its biggest single-day gain in almost two years.

The US Treasury informed banks it may intervene and told them to stand ready. Japan's top currency official said the US support "goes beyond mere moral support." The last time the US Treasury intervened in the yen market was 2011 following the Japanese earthquake and tsunami.

The Bank of Japan held rates at 1% today. It warned for the first time that underlying inflation could exceed its 2% target from September. That signals a BOJ rate hike could land alongside whatever the Fed does in September.

The Signal to Watch

US Treasury formally intervening confirms the first joint US-Japan currency action since 2011. The BOJ September meeting becomes the parallel rate decision to the Fed's.

SIGNAL 3: Moonshot's Kimi K3 Was Trained on 20,000 Nvidia Chips Rented From Alibaba.

Chinese AI startup Moonshot trained its Kimi K3 model on roughly 20,000 Nvidia (NVDA) chips rented through a computing agreement with Alibaba (BABA). Alibaba is also one of Moonshot's largest investors and expects its backed companies to use its cloud.

White House Director Michael Kratsios accused Moonshot last week of illegally acquiring Nvidia's advanced Blackwell chips through an unnamed party in Thailand. A person familiar with Moonshot's strategy confirmed the company has a channel for accessing Blackwell processors via Southeast Asia. US rules currently allow Chinese firms to access the chips through compute rental agreements even when direct purchases are banned. That is the specific loophole Kratsios named.

Kimi K3 has already surpassed Alibaba's own competing models on key benchmarks. Moonshot is now seeking additional Blackwell processors for its next model.

The Signal to Watch

Any US administration action closing the compute-rental loophole before September AI talks converts the Kratsios accusation into an active export-control tightening. No action confirms the loophole as the operational mechanism behind Chinese frontier AI progress.

Kashkari was projecting cuts in March. He published the case for a series of hikes in July. That is a four-month framework reset. Hammack and Logan are on the same record. The twelve people who vote on the September meeting are split three ways on where inflation is going and what to do about it. The 30-year yield already picked one of the answers. The July payrolls print next Friday tells the other nine which one they have to argue.

Three dissenters explained the case. Kashkari extended it to a series. The bond market sold off across the curve. Exxon and Chevron made six times more from refining than a year ago.

Three tests land before Jackson Hole. July payrolls Friday. Any Washington governor signaling support for the dissenters. US Treasury yen intervention.

The open question is no longer whether the September meeting is a live hike. It is whether Kashkari's series framing has already been priced by the twist steepener.