JPM JPM US Market Intell

IDEAS & INSIGHTS – IN BRIEF • MKT THOUGHTS – ISM, Oil, and yesterday’s price action • HYPERSCALER CAPEX AND ROIC – JPM Spec sales Mark Schilsky has a great note on hyperscaler CapEx and ROIC, which includes helpful earnings quotes. We included some excerpts below and his full note is here. • APAC AI IMPLEMENTATION SURVEY – JPM Research share their survey results • DELTA-ONE FLOWS & POSITIONING – Bram tells us that there was aggressive dip-buying in Semis and Korea ETFs; CTAs sell oil, cover JPY shorts post-intervention • US MKT INTEL VIEW – Tactically Bullish and we update the Monetization Menu • TRADING DESK CALL – Flows, Spreads, & CDS: Connecting the Dots on Recent Tech Vol. Speakers include John Schlegel (Global Head, Positioning Intel), Brian Heavey (Equity Trading), Josh Meyers / Mark Schilsky (TMT Spec Sales), Tarek Hamid, (Head, North America Credit Research), Erica Spear (US TMT Credit Research), Bram Kaplan (Head, Equity Derivatives Strategy), and Scott Reeder (TMT CDS Trading). Weds at 11am ET / 16h UK. Please register here.

JPM MARKET INTEL MORNING UPDATES • SPX +0.1%, NDX +0.6%, RTY +0.0%. WTI +187bps at $81.84, NatGas -119bps to $2.75, UK NatGas +469bps to £1.4764, Gold -16bps to $4,048, Silver +94bps to $58.72, 10Y @ 4.702%, and VIX @ 15.76. • US: Futures are higher led by Tech, as the global AI / Semis tape continues to stabilize / heal. Bond yields are +2-3bp and USD is stronger as is USD / JPY; intervention is not expected to have a lasting impact and the market is likely signaling the need for BOJ to hike. In cmdtys, energy prices are higher with WTI finding support ~$80/bbl. Base metals are higher with Precious mixed (silver up, gold down) and Ags bid. In Eqys, Semis are leading the Tech tape with Mag7 (DRAM, EWY, SMH, SOXX all higher by at least 1.6%) mixed but net lower putting to a pullback in Comm Srvcs. Cyclicals are leading Defensives with HC / Staples lower pre-mkt. Today’s macro data focus is on JOLTS and trade balance.

• EU/UK: Major markets are almost all higher led by Italy with Spain the laggard. Semis are the best D1 baskets with Luxury lagging and clients pressing shorts within MidEast Escalation and Stagflation baskets. Thematically, ResVol / Beta are leading, Value / ST Momentum are lagging; Cyclicals over Defensives. UKX +0.2%, SX5E +0.5%, SXXP +0.4%, DAX +0.5%. CSI +1.3%, HSI -0.6%, NKY +0.3%, ASX +1.4%, KOSPI +1.6%.

CATALYSTS TODAY (WEEK AHEAD) • US MACRO DATA: Trade Balance at 8.30am ET. Factory Orders, JOLTS Job Openings, Durable/Cap Goods Orders (Revision) at 10am ET. • US EARNINGS:

o BMO: ADM, AME, APO, BRBR, CAT, CIFR, CMI, DD, DOCN, DUK, ENTG, EOSE, ET, FIS, HUT, IDXX, IT, KMB, LDOS, MCD, MPC, MRK, NRG, NSA, PFE, PRAX, Q, ROK, SYY, TDG, TPG, W, WAT, XMTR, ZBRA

o AMC: ALAB, AMD, AMGN, ANET, ARWR, BKNG, BRKR, CC, CE, COMP, CPNG, CRNX, DVA, DVN, EMR, GILD, HNGE, IFF, J, KTOS, LCID, LIME, LSCC, MAT, MOS, MTCH, OPEN, PINS, PRIM, PRU, PSKY, SPCX, TOST, TREX, VSAT, ZETA

• GLOBAL MACRO DATA: (Japan) Labor Cash Earnings at 7.30pm ET. (Japan) PMIs (Revision) at 8.30pm ET. (China) RatingDog PMIs at 9.45pm ET.

JPM MARKET INTEL EQUITY & MACRO NARRATIVE Using DRAM, EWY, and SMH / SOXX as risk-on proxies, all experiences an intraday reversal to close at / near their highs. In our view we are in a risk-on market driven by Mag7 / Semis earnings, and SPX earnings more generally, pointing to the need to own stocks given a favorable macro and micro environment. JPM Tech Spec Sales Mark Schilsky tells us that management teams have been giving clearer messages “that the ROIC on their CapEx is more than sufficient to justify spending the annual GDP of a small country on building out compute capacity.” He is bullish on hyperscalers and thinks we have seen the floor on P/E multiples; his full note is linked here.

Bond yields and oil prices will remain as near-term headwind potentially creating a choppy market. Looking forward, Fedspeak may be what the Bond Market uses in place of Warsh / Fed forward guidance. ISM-Srvcs and NFP have the potential to change the macro story; but both are expected to reflect a resilient economy, so the next biggest catalysts are CPI (Aug 12), NVDA (Aug 26), and Jackson Hole (Aug…