Regardless of your geopolitical opinion about the war in Iran, there is zero question that it has been the most acute contributor to higher real rates this year. The Fed hasn't hiked, and yet the 2-Year yield is nearly a full percentage point higher, and yields are up materially across the curve. Rather calling on Bessent and the Treasury to intervene at the long-end with buybacks (which would only be a short-term solution, and would set a dangerous precedent for bond market interference), the White House needs to recognize that ending the war in Iran is the only easily accessible kill-switch for bond vigilante enthusiasm, and is of paramount importance to sustainably reverse the direction of yields/rates.

BREAKING: OPENAI, ANTHROPIC, GOOGLE, MICROSOFT, AND GROUP OF 100+ TECH COMPANIES WRITE OPEN LETTER TO U.S. GOVERNMENT & AMERICAN BUSINESSES URGING CYBER DEFENSE ACTION - BLOOMBERG AI companies OpenAI & Anthropic along with Microsoft, Google, and 100+ other tech companies are calling for governments, tech companies & organizations to focus on making cyber defense "an immediate leadership priority" and to fix existing vulnerabilities in their software to prepare for AI-enabled hacks. The letter says that in the coming months, AI models will be used to carry out increasingly complicated cyber attacks at a higher volume. "Today’s AI advances are already giving defenders new ways to fix weaknesses that have accumulated for years... If we act decisively, we can use the defenders’ window to make our digital world much more secure."

One more clearing event left for the week — Warsh’s Jackson Hole speech on Friday. If he can assuage the bond vigilantes & bring yields down prior to Bessent’s proposed September 9 intervention, this market might have a shot of reviving the necessary conditions for speculation.

DYNATRACE $DT upgraded to 'Overweight' (from 'Equalweight') at Morgan Stanley, with a $65 price-target (from $58): "The observability market is currently experiencing the healthiest demand since 2022, fueled by the strongest public cloud growth in several years, an explosion in software development initiatives that is culminating in a new round of digital innovation, and early benefits from enterprise AI investments as the broader market enters a multiyear enterprise build-cycle. Together, these forces have led to a recent acceleration in growth among leading players with consumption pricing models such as Datadog. While Dynatrace's ARR growth (in cc) has slowed consistently after peaking at +32% in FY21 (and coming in at +16% in FY26), we think the company is next in line to see a durable acceleration, with cc net-new ARR growth poised to recapture the 20%+ level in FY27, leading to 20%+ ARR growth (cc) in FY28/FY29. The key factor driving our confidence in reaccelerating growth is a large upcoming renewal cohort of Dynatrace Platform Subscription (DPS) customers, which is 50% larger than the FY26 renewal (also includes non- DPS) and 70% weighted towards the 2H of FY27. With underlying usage growth of this cohort tracking above 20%, we expect to see significant expansion in ARR as these contracts renew mainly starting in 2H of FY27 and beyond. Another factor driving our reacceleration thesis is Dynatrace's platform breadth, which positions the company to be one of the few platform consolidators in a generally crowded market. Furthermore, the company's recent acquisition of Arize improves the company's relevance for AI workloads and accelerates Dynatrace's vision to deliver autonomous operations. Finally, the go-to-market organization changes implemented over two years ago are resulting in sharper execution and translating first to a stabilization in cc net-new ARR growth, followed by an acceleration in netnew ARR growth more recently."

- Prior to last Fed meeting, Citadel shared bearish takes, namely "Fed to raise rates" - The same week, Citadel acquired 'Situational Awareness' AI stocks at discount - 10 days ago: Citadel says "Funds re-leveraging AI stocks" - This week, Citadel sells 80% of their AI stocks