Wall Street Breakfast Podcast: Futures Flat Awaiting Nvidia Earnings

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Futures flat as traders await Nvidia earnings (0:30), Cook’s lawyer says she’ll sue (2:00), Musk’s lawyers try to stop OpenAI (3:50).

The following is an abridged transcript:

Stock index futures were largely flat on Wednesday, as traders awaited Nvidia’s (NVDA) quarterly results.

S&P 500 futures (SPX) were flat, Nasdaq 100 futures (US100:IND) +0.1%, and Dow futures (INDU) were largely unchanged.

The 10-year Treasury yield (US10Y) rose 1 basis point to 4.28%. The 2-year yield (US2Y) fell 1 basis point to 3.72%.

Nvidia (NVDA) is set to be the centerpiece of this week’s earnings calendar, with its Q2 report scheduled for release after the market closes. Analysts are forecasting ~50% Y/Y growth in both sales and profits, fueled by relentless demand for AI chips and accelerating data center momentum.

Other big earnings for the day include CrowdStrike (CRWD), Snowflake (SNOW), and HP (HPQ), among others.

Wall Street closed out Tuesday higher after being mostly muted throughout the day, even as President Donald Trump said he would dismiss Federal Reserve Governor Lisa Cook on Monday, following a mortgage fraud allegation.

Interestingly, equities advanced despite the news, with the S&P 500 closing just -0.04% beneath its record high. In part, that was because investors were still unsure if there’d actually be a radical policy shift at the Fed. But several data points also helped to support risk appetite, as they leant against the idea that the US economy was slowing down, particularly after the recent jobs report, Deutsche Bank’s Henry Allen added.

Cook said she will sue Trump’s administration to block her removal after Trump announced his intention to dismiss her.

“President Trump has no authority to remove Federal Reserve Governor Lisa Cook,” said Cook’s lawyer, Abbe Lowell, a prominent Washington attorney. “He has no legal or factual justification for trying to terminate her based only on a recommendation letter. We’ll be bringing legal action to stop this unlawful behavior,” he added.

Trump justified his decision by alleging “deceitful and potential criminal conduct” in mortgage applications Cook filed in 2021. Trump’s attempt to remove the first Black woman to serve on the central bank’s governing body follows his previous efforts to bring other U.S. government bodies under his direct control.

Trump has suggested he may replace Cook with Stephen Miran or David Malpass, both of whom would likely support his agenda on lowering interest rates.

The Federal Reserve indicated that Cook’s status remains unchanged until the courts rule, reinforcing the principle that board members have strong protections to shield monetary policy from presidential interference. The episode has stirred concerns on Wall Street about U.S. central bank independence.

Replacing Cook with someone more aligned with the Trump Administration’s agenda could signal a power shift that could be huge for the markets, deregulation, and small-cap stocks. The Federal Reserve’s political independence has long been considered essential for its effectiveness. Should Trump succeed in removing Cook, the potential shift and balance of power could favor an uptick for small-cap stocks and opportunities for risk-on investors.

Steve Cress featured his top Quant-based small-cap stocks under $10 in an article today, which are up a whopping collective average of 78% YTD.

In tariffs news, Trump’s punitive 25% tariffs on Indian goods took effect on Wednesday, taking the total levy to 50%, among the highest rates imposed by the U.S.

Elon Musk’s lawyers asked a U.S. judge to block OpenAI from getting documents from Meta Platforms (NASDAQ:META) related to a previous $97.4B bid for OpenAI’s assets, Reuters reported, citing a court filing.

Last week, it was reported that Elon Musk, the billionaire CEO of Tesla (NASDAQ:TSLA) and xAI, had approached Meta’s CEO Mark Zuckerberg to join a $97.4B takeover bid of OpenAI earlier this year. Musk had discussed a letter of intent with Zuckerberg, including “potential financing arrangements or investments,” OpenAI disclosed in a filing. However, neither Zuckerberg nor Meta signed the LOI.

The ChatGPT creator then requested the judge to order Meta to disclose documents and communications related to any bid for the company. Meta asked the judge to deny the request, noting that it should seek relevant documents directly from Musk and his AI startup xAI, the report noted.

In a filing on Tuesday, Musk’s lawyers said OpenAI had already received documents related to the bid from him and xAI. They noted that OpenAI’s “expansive discovery” was irrelevant to the current phase of the trial, the report added.

However, attorneys for OpenAI and CEO Sam Altman requested the judge to reject Musk’s assertions and said they were not seeking “expansive” and “sprawling” discovery and that the relevant requests for documents were targeted and “span weeks, not years,” according to the report.

Meta, OpenAI and xAI did not immediately respond to a request for comment from Seeking Alpha.

“Plaintiffs have sought to explain the absence of bid-related documents by representing that their communications were primarily oral. If that is true, then the need for depositions – of Musk, an xAI representative, and other co-bidders – is even more acute,” they said in the filing.

Earlier this month, it was reported that a federal judge ruled that Musk must face claims by OpenAI alleging that his public and legal attacks on the company amount to a “years-long harassment campaign.”

Musk sued Microsoft-backed (NASDAQ:MSFT) OpenAI and Altman last year for straying from its founding mission, after which OpenAI counter-sued Musk this year.

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