JPM US Market Intell | Morning Briefing

IDEAS & INSIGHTS – IN BRIEF • AI & CREDIT MKTS – We share views on AI credit spreads and financing capacity from Nate Rosenbaum and Erica Spear; plus, we have add’l color from Equity Sector Specs Scott Silver and Josh Meyers. • EARNINGS: DAILY MACRO READ-THROUGH – Ellen looks at Consumer Health • DELTA-ONE FLOWS & POSITIONING – Bram tells us that flows turn cautious as AI concerns resurface: Semis/Momentum/HY weaken, while Memory/Commodities/Option-based ETFs attract inflows; UST futures sold • US MKT INTEL VIEW – Tactically Bullish and we update the Monetization Menu

JPM MARKET INTEL MORNING UPDATES • SPX -0.1%, NDX -0.8%, RTY +0.0%. WTI -240bps at $80.63, NatGas -126bps to $2.73, UK NatGas - 308bps to £1.3770, Gold -97bps to $4,037, Silver -167bps to $57.39, 10Y @ 4.616%, and VIX @ 18.86. • US: Futures are lower as the Tech tape continues to unravel; global Semis were hit yesterday / overnight with APAC bearing the brunt with fears of Chinese competition accelerating the sell-off. The market is adopting a risk-off tone that is continuing both the broadening in the US and a rotation ex- US where EU may continue to outperform as investors tilt towards Value; the question remains when do Semis / AI find a bottom. US / Iran negotiations are reducing cmdty prices. Pre-mkt, yields are down 3bp, USD is flat, cmdtys are weaker led by Energy and Precious with Base and Softs the outperformers. Semis are lower pre-mkt but are off their overnight lows. Mag7 names are mostly bid and are outperforming futs. While Defensives are leading Cyclicals, there are bids to Discretionary and Financials as both sectors look to outperform. Today’s macro data focus is on the weekly ADP print, Housing price indices, Consumer Confidence, Import / Export data, Inventories, and regional Fed activity indicators. • EU/UK: Major markets are all higher with broad leadership from Spain, Germany, UK, and France with Italy the laggard. Regional yields are lower as curve bull flatten. Aero/Def, LT Laggards, and

Short Baskets (being covered) are among the best D1 performers with Semis / AI themes declining. Thematically, Recession / Value are leading, Beta / Momentum are lagging; Cyclicals flat to Defensives. UKX +0.6%, SX5E +0.4%, SXXP +0.4%, DAX +0.6%. CSI -2.8%, HSI +0.4%, NKY - 4.0%, ASX +0.6%, KOSPI -10.8%.

CATALYSTS TODAY (WEEK AHEAD) • US MACRO DATA: ADP Weekly Employment at 8.15am ET. Trade Balance / Imports / Exports, Retail / Wholesale Inventories at 8.30am ET. Home Price Indices at 9am ET. Dallas Fed, Richmond Fed, Consumer Confidence at 10am ET..

• US EARNINGS: ACHC, AMT, BA, BE, CAKE, CAR, CARR, CDNS, CMS, CNC, CNP, CSGP, CZR, DINO, DYN, ECL, ENPH, EXE, F, GLW, HLT, HUBB, INCY, IQV, ITW, IVZ, JBLU, KLAC, KO, MDLZ, MIR, OI, OMC, PCAR, RCL, RGEN, RITM, SHW, SPGI, STX, SWKS, TER, TRU, TXT, UPS, V, VLTO, VRNS, XPRO, XYL

• GLOBAL MACRO DATA: Denmark / Ireland / Spain – Retail Sales. France – Consumer Confidence

JPM MARKET INTEL EQUITY & MACRO NARRATIVE Yesterday, the market failed to hold its opening move higher. SPX futures rose as much as 1% and traded in a roughly 1.5% intraday range before closing +1bp. The choppy price action was driven by Tech/Semis, with SOXX fading from a 1% gain to as much as a 5% decline before closing -2.2%, after China unveiled new competition for ASML. The market-broadening theme continued, though the move may reflect de-risking more than a new fundamental view on earnings or the outlook. Lower oil prices, bond yields, and breakevens did not shift Fed pricing: July still implies about a 38% chance of a 25bp hike, while September continues to price more than 100% probability. Still, the late-day rally was encouraging.

Summarizing the tape, Equity Trader Taylor Barry tells us that yesterday’s price action was, “… very much machines / quants / multi's de-grossing as evidenced by our low-touch volumes +25-30% while HT is pretty quiet (-10% vs 20d avg) … amid another Momentum unwind, the largest two-day draw since July 1/2. We have sellers of ‘typically shorted’ names like TOST, EFX, GPN, FISV etc but no real demand on the desk. Getting through the Fed Wednesday will help risk (while mkt pricing ~33% chance of hike I think it is FAR…