JPM US Market Intelligence Afternoon Briefing Aug 12

IDEAS & INSIGHTS – IN BRIEF • MKT UPDATES – Thoughts on CPI and US/Iran; Preview for PPI tomorrow. • DESK COMMENTARY – Trading desk views on TMT and Consumer. • US MKT INTEL VIEW – We update the Bull / Bear debate and are Tactically Bullish and we update the Monetization Menu

AFTERNOON UPDATES (NEWS LINKS) • SPX +0.3%, NDX +0.7%, RTY +0.6%. WTI -71bps at $82.61, NatGas +101bps to $2.80, UK NatGas +279bps to £1.4825, Gold +86bps to $4,408, Silver +97bps to $65.31, 10Y @ 4.690%, and VIX @ 14.55. • US: Stocks closed higher, led by tech. Thematically, Semis, China Exposure, Momentum Winners, and Cyclicals were among the top performing baskets. Momentum L/S pair added 3.6%, a 1.1z move. The Mag 7 were all lower except for a 3% rally in NVDA; META fell 3.4%. Positive narrative around AI outlooks from tech earnings drove AI-related baskets higher; the in- line CPI was also supportive, easing concerns of a near-term inflation spike. Headlines in the Middle East remain mixed, but market reactions are now largely muted. Tomorrow, we will receive PPI. • EU/UK: Major markets closed mostly lower. Thematically, Semis and Electrification were among the best performing baskets. Momentum Short fell 1.2%, a 1.2z move. Luxury and Software were among the worst performing baskets. UKX -0.1%, SX5E -0.3%, SXXP -0.2%, DAX -0.2%.

CATALYSTS TOMORROW (FULL WEEK CALENDAR) • US MACRO DATA TOMORROW: Initial/Continuing Jobless Claims and PPI at 8.30am ET. • US EARNINGS TOMORROW: ADIG, AMAT, AMIX, CAPR, FIGR, FPS, FRMI, LGN, LUNR, MWH, OBX, ONDS, SOC, TPR, XE, YSS

• GLOBAL MACRO DATA TOMORROW: (UK) GDP, Private Consumption, Industrial Production at 2am ET. (Eurozone) IP at 5am ET. (Japan) Japan Buying Foreign Bonds at 7:50pm ET.

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

TODAY • US/IRAN – Headlines remain mixed in Iran, but market reactions today were largely muted: (i) Trump said that US will keep "total control" over the Strait of Hormuz. (ii) On a positive note, Pakistan said the US-Iran 60-day MOU deadline can be extended. • THOUGHTS ON CPI – [We sent below in some IB chats immediately following the release] This print is in line with expectations with shelter costs making up the majority of the gain. Supercore is higher MoM. This type of print is unlikely to change the minds of anyone on the FOMC and think that points to a hold in Sept. Unless the bond market has a material change of view, then this print is supportive of stocks. With bond yields pointed lower, this should keep Tech atop the leaderboard. Earnings are supportive of the broader tape and recent earnings supportive of the AI theme. Our colleagues in APAC point to the potential for a renewed bid (surge?) in Korea given (i) local brokers hiking credit limits for margin trading; (ii) improving swap line capacity for foreign investors; and (ii) the decline in KOSPI vol aiding systematic funds re-gross. We remain BULLISH and like the barbell of Tech and Cyclicals. If we see PPI print inline and positive growth in Retail Sales, that supports a broader rally in the near-term. Bond yields / vol remain a risk but for now, think we see the market run higher into NVDA / Jackson Hole which are Aug 26 – 29 (Warsh on the 28th, I think).

TMRW • PPI PREVIEW (FEROLI; here) – On MoM basis, Feroli expects Headline PPI to print 0.2% vs. - 0.3% prior and Core PPI to print 0.2% vs. 0.2% prior. On YoY basis, Feroli expects Headline PPI to print 4.9% vs. 5.5% prior and Core PPI to print 4.1% vs. 4.7% prior. Some excerpts from his preview below: o Energy PPI had grown by 31% cumulatively since the beginning of the year through May before falling 6.4% m/m in June. For July, both propane and gasoline prices rose modestly in the data collection window, following renewed escalation in the Middle East conflict.