JPM International Market Intelligence | Morning Briefing

20 SECONDS: Status quo in US vs Iran. Buybacks don’t address fundamentals but reinforce debasement. Good news on the central question in Tech. >4.5 quadrillions of tokens. Next Week

• A slow finish to a volatile week. JPM Econ sees early signs of solid manufacturing.

• Status quo on US vs Iran means that odds that SoH normalizes before year- end drop further (30%). US has a preference for an "unprecedented" economic pressure campaign …but Iran’s near-term incentives could be different. Watch crack spreads.

• China new fiscal and financial policies to support growth do not look like a bazooka.

• US 30Y Bonds reversed gains from Treasury’s buyback surprise. The Street is sceptical because buybacks do not address the underlying fundamental issues.

• This setup reinforces the debasement trades which we continue to express via Gold and Miners. Meanwhile, aggregate Bond Positioning shows an increased

steepening bias while on a on a net basis it remains very low (vs last 12m and also on a multi-year basis).

• The key question for Tech: can the AI ecosystem — model providers, AI cloud platforms, hyperscalers and neoclouds — generate enough revenue and profit to justify the accelerating capital deployed into AI infrastructure? Early signs are encouraging:

• JPM Nikos says that the recent acceleration in AI companies’ revenues makes the AI capex cycle look more economically viable than it did six months ago.

• Demand is there. Token volume doubles c. every 11 weeks and OpenRouter data shows >4.5 quadrillion run rate. Meanwhile, J.P. Morgan APAC AI implementation survey tells us that AI spend is set to accelerate 29% over the next 12 months, to ~US$250bn.

• Record capex and FCF outflows make the cloud asset difficult to underwrite until returns are proven but more clarity is emerging. BABA flagged Cloud growth and margin acceleration; reiterated three-year capex projection and estimated payback period of roughly three years based on current margins. Meanwhile, JPM Alex Yao is forecasting cloud revenue growth above 50% with expanding margins and estimate ~22% after-tax project IRR on incremental AI capex versus a ~10% cost of capital.

• NEXT WEEK. Policy = Fed’s Jackson Hole; ECB Minutes; BOK & BOJ Himino. Macro = US PCE & 2Q S GDP; EA Cons Confidence, IFO, M3 & Aug P CPI; Tokyo Aug CPI; Earnings = NVDA, CRWD, CRM, MRLV, Meituan, Weichai Power; Other = UST Auctions (2y, 5y & 7y),