NFP drops this morning | Dimon warns on hidden leverage | Datadog loses 17% on a beat | SpaceX absorbed 911 million shares.

Good morning, Slaters!

There is a number arriving at 8:30 this morning that will do more work than any earnings report this week.

The Bureau of Labor Statistics releases the July nonfarm payrolls report in less than an hour. Economists polled expect 80,000 jobs added, up from June's dismal 57,000 print that missed expectations by nearly half. Unemployment is forecast at 4.2%. Average hourly earnings growth at 3.5% year-over-year.

That all sounds routine. It is not.

Fed Chair Kevin Warsh is privately open to raising rates in September if inflation stays hot. CME FedWatch now prices a September hike at 56.7%, up from 54.4% the day before. Three FOMC members dissented at the July meeting, voting to hike immediately. The runway between "hold" and "hike" has never been shorter under Warsh's tenure.

So this morning's jobs number is not just a labor market check. It is a referendum on whether the Fed's next move is up or sideways. A strong number with hot wages gives Warsh cover. A weak one buys the market more time.

The S&P 500 closed at 7,710 yesterday, just below Tuesday's record. Datadog (DDOG) reminded everyone that in 2026, beating expectations can still cost you 17%.

Let's get into it.

The Fed is one payroll away from pulling the trigger

Here is the uncomfortable math for this morning.

The June nonfarm payrolls report came in at 57,000 jobs, roughly half the 110,000 consensus. It was the weakest print since late 2024. Leisure and hospitality, which was expected to get a World Cup lift, actually declined by 61,000. The number was soft enough to restart recession whispers.

July's consensus sits at 80,000, an improvement but still well below the 150,000-plus pace the economy averaged through most of 2025. ADP's private payrolls report on Tuesday came in weaker than expected, adding to the uncertainty. But initial claims in the NFP survey week were unusually low, creating upside risk. The conflicting signals are the point.

The labor market is the last structural pillar propping up the consumer economy. GDP growth was revised to 1.5% in Q2. PCE inflation is running at 3.7% annually. Consumer savings are near historic lows. If jobs hold, the Fed can wait. If jobs crack, the calculus shifts entirely.

What makes this report uniquely consequential: Fed Chair Warsh admitted to people close to him that he made missteps in his first weeks by failing to reinforce the inflation-fighting message clearly enough. Bank of America's economists called it a "credibility shock." The read inside the Fed is that Warsh now needs to act hawkishly to rebuild credibility, regardless of whether his instincts lean dovish.

A strong NFP with wages above 3.5% makes a September 16 hike the base case. A weak print below 60,000 takes it off the table and sparks a relief rally. Anything in the middle lands in the zone where markets argue for five straight weeks.

The market signal?

Watch the 2-year Treasury yield at 8:31 AM. It moved four basis points higher yesterday on the Warsh headline alone. Today's first ten minutes will tell you more about September than any pundit will for the next month.

Datadog beat everything. The stock lost 19%.

If you needed a reminder that 2026's market punishes good-but-not-magical, Datadog (DDOG) just delivered it with a sledgehammer.

Q2 results: revenue of $1.12 billion, up 36% year-over-year, beating the $1.08 billion consensus. Adjusted EPS of $0.65 against estimates of $0.58. Full-year guidance raised across the board. Enterprise customers paying over $100,000 annually grew to 4,720 from 3,850 a year ago.

The stock fell 19% on Thursday, its largest single-day drop on record, closing around $235 after touching a 20% loss in premarket.

What killed it? One sentence from the earnings call. Management disclosed that Datadog's largest customer, a nine-figure AI account using 17 different Datadog products, told the company it plans to cut usage starting in Q3. That single customer disclosure turned a beat-and-raise quarter into a sell event.

The pattern is becoming a genre. Zscaler (ZS) missed Q4 guidance by $1 million in May and lost 26% in a day. Datadog beat everything and lost 17% because one customer signalled a pullback. The stock had nearly doubled in the prior twelve months. When the price is perfection, anything less than perfection is a confession.

The market signal?

Software stocks built on usage-based revenue models carry a specific vulnerability: one large customer changing behaviour can move the stock more than 4,720 other customers growing. Datadog's fundamentals remain strong. But the stock needs to rebuild trust around the guidance trajectory. Watch whether institutional positioning changes at these levels over the next two weeks.

Dimon just said the quiet part about leverage out loud

JPMorgan (JPM) CEO Jamie Dimon sat down with CNBC on Wednesday and made a statement that landed differently than his usual macro commentary.

"Margin debt is the highest it has ever been," he said. "There's a lot of margin debt you don't see because it's not called margin debt. It's called other things. It's that kind of leverage, some hidden, some public."

He named the channels: prime brokerages, hedge funds, leveraged ETFs, Treasury basis trades. All carrying borrowed money that doesn't show up in headline figures but moves markets when it unwinds.

Dimon was referencing the implosion of Situational Awareness, the AI-focused hedge fund that collapsed from $45 billion to roughly $10 billion last week after leveraged semiconductor bets soured. The fund reportedly used 400% leverage. When margin calls hit, it sold the bulk of its public equity to Citadel at a discount. JPMorgan was one of its prime brokers.

Dimon argued the market absorbed that event. But his warning was aimed forward: "When you have that, you do have a higher chance that somebody will disrupt the market in a quick way." Bank of America CEO Brian Moynihan echoed the same concern Tuesday, calling the collapse a "warning shot" and suggesting prime brokers are quietly tightening standards.

The market signal?

When both JPMorgan and Bank of America's CEOs publicly flag the same risk within 48 hours, that is not a coincidence. It is a coordinated message to the market: we absorbed this one, but the next one might be bigger. Any investor holding positions through prime broker leverage should be watching their exposure ratios right now.

SpaceX survived lockup day. That tells you something.

The most anticipated lockup expiration in IPO history landed on Thursday. 911.5 million shares of SpaceX (SPCX) became eligible for trading, more than tripling the company's existing public float of roughly 280 million shares. At recent prices, that is approximately $99 billion worth of potential selling pressure.

The stock closed at $110.66 on Thursday. Up 3% on the session.

That defied nearly every prediction. Retail sentiment had been bearish for days. Morgan Stanley had flagged a potential drop to $100. The stock had already fallen over 30% from its post-IPO peak of $225 and was trading below its $135 IPO price heading into the week.

Why didn't the flood arrive? SpaceX's Q2 earnings, reported Tuesday, showed revenue of $7.8 billion, up 92% year-over-year. Starlink continues to print cash. The Starmind partnership with Nvidia (NVDA) gave long-term holders a reason to stay. Many early employees and investors appear to be holding through rather than taking the first exit. The float expanded by a factor of four, and the stock absorbed it.

The market signal?

The next lockup tranches arrive in staggered waves: roughly 7% chunks every two to four weeks through October, then a larger Q3 earnings-triggered release. Musk's 6.4 billion shares remain locked until June 2027. The August 6 test suggests that near-term supply fears were overpriced. But SPCX at 90 times trailing revenue still needs to grow into one of the most ambitious valuations in market history.

The cloud is going orbital

This one is not about a stock price or an earnings beat. It is about what happens when two companies decide the ground is no longer big enough.

On Monday, SpaceX and Nvidia announced they are jointly developing the computing payload for Starmind AI1, a satellite designed to run AI workloads in low Earth orbit. Not relay data. Not take pictures. Run inference. Process queries. Execute models. From space.

Each Starmind satellite will carry Nvidia's Rubin GPUs and Vera CPUs, harvest solar power, and radiate heat into the vacuum of space rather than through terrestrial cooling towers. Laser links connect the satellites to Starlink, beaming processed data back to Earth. SpaceX has asked the FCC for permission to deploy up to one million of these units.

One million orbital data centers. Science fiction eighteen months ago.

The logic is not insane. AI's biggest bottleneck on Earth is no longer chips. It is power. Alphabet raised $80 billion partly because it cannot build data centers fast enough. Meta is spending $145 billion a year on compute. The demand curve is outrunning every grid on the planet. Space offers unlimited solar energy, free cooling, and no NIMBYism. What it lacks is proven economics and a replacement plan for failed equipment 500 kilometres above your head.

SpaceX is targeting prototype testing in early 2027. Whether orbital compute ever competes on cost remains uncertain. But Nvidia committing its best silicon to the project suggests this is more than a press release.

• The CPI report for July drops Tuesday, August 12 and will be the single most important inflation read before the September FOMC meeting. June CPI cooled to 3.5% annually, but oil prices climbed through July as the Strait of Hormuz situation dragged on. A hot CPI print combined with a strong NFP today would make a September rate hike virtually certain. A cool one gives the hold camp ammunition. Every portfolio decision made this week is really a bet on that number.
• The Iran-Oman Hormuz deal is taking shape but remains unsigned. Iran said it reached an agreement in principle with Oman on proposed shipping routes, but Tehran wants to ban US and Israeli ships entirely and demand compensation before granting passage. That is not a reopening. It is a managed chokepoint. Brent crude rose to $80 on Thursday as traders remained cautious.
• Earnings from Rocket Lab (RKLB) and Hims & Hers Health (HIMS) arrive Monday, August 10. Rocket Lab is the purest post-SpaceX trade in the market right now: a smaller launch company whose valuation moves in sympathy with SPCX's narrative. If SpaceX's lockup survival holds through the weekend, expect the space-adjacent names to stabilize with it.
• The market signal across all three?
• Today's NFP sets the table. Tuesday's CPI clears the plates. By September 16, the Fed will have exactly two inflation reads and one jobs report to decide whether to hike for the first time in over a year. Everything between now and then is positioning.

That's it for today's Slate. The jobs number hits in minutes. Stay close to the signals.

Today's reply prompt: Strong jobs or weak jobs: which outcome actually scares you more, and why?