JPM US Market Intelligence Afternoon Briefing Aug 17

IDEAS & INSIGHTS – IN BRIEF • MKT UPDATES – Thoughts on US/Iran, Tech Flow, Momentum Rally. Preview for HD tmrw • DESK COMMENTARY – Briggs shared his preview for retailer earnings this week. • US MKT INTEL VIEW – We are Tactically Bullish and we update the Monetization Menu.

AFTERNOON UPDATES (NEWS LINKS) • SPX -0.5%, NDX -0.2%, RTY -0.4%. WTI +280bps at $84.71, NatGas -110bps to $2.70, UK NatGas +196bps to £1.5420, Gold +95bps to $4,418, Silver +175bps to $65.81, 10Y @ 4.728%, and VIX @ 15.19. • US: Stocks closed lower as the market digested a renewed US/Iran risk premium alongside another leg higher in long-end yields amid seasonally lower volume. WTI added 2.8% to $84.71 (now close to the MTD high), with a broad selloff in UST; 2-, 5-, 10- and 30y were 1bp, 2bp, 4bp and 6bp higher, respectively. The probability of a Sep hike jumped marginally from 31% to 35%. Underlying price action was more negative than the headline level: AI baskets (memory, photonics and semis) were among the outperformers, while 71% of the SPX stocks actually declined today, including software, Mag 7, retail and rate-sensitive baskets. The broader tape stayed relatively quiet, with geopolitics and rates being the main focus ahead of Jackson Hole and NVDA earnings. • EU/UK: Major markets closed lower; Spain lagged. The move higher in oil and momentum outperformance were the main drivers of today’s market as investors moved back to the playbook prior to the global semi selloff. Thematically, Most Short, Luxury and Software are among the worst-performing baskets. UKX -0.3%, SX5E -0.1%, SXXP -0.2%, DAX -0.4%.

CATALYSTS TOMORROW (FULL WEEK CALENDAR) • US MACRO DATA TOMORROW: ADP Weekly Employment Change at 8:15am ET. NY Fed Services Business Activity, Import Price, Export Price, Housing Starts, Building Permits at

8:30am ET. Industrial Production, Mfg Production, Capacity Utilization at 9:15am ET. Pending Home Sales at 10am ET. • US EARNINGS TOMORROW: HD, KEYS • GLOBAL MACRO DATA TOMORROW: (UK) Average Weekly Earnings, ILO Unemployment at 2:00am ET. (Germany) ZEW Survey Expectations at 5:00am ET. (Eurozone) ZEW Survey Expectations at 5:00am ET. (Canada) Housing Starts at 8:15am ET. (Japan) Core Machine Orders at 7:50pm ET.

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

TODAY • US/IRAN – Markets continued to price a higher probability of escalation rather than a near-term diplomatic off-ramp. Trump told Fox News that he is in “no hurry” to end the war with Iran and escalated rhetoric on Oman. WTI crude added 2.7% to $84.59; 2-, 5-, 10- and 30y yields were 1bp, 2bp, 4bp and 6bp higher, respectively. • MOMENTUM RALLY – The JPM Momentum L/S pair was up 2.8%, a 1.4z move today, led by both the long and short legs of the pair. On the one hand, AI and semis sentiment improved with outperformance across memory, photonics, semis and infra. Meanwhile, AI vulnerable trades (software, financials) and rate-sensitive baskets (airlines, retail, housing) were pressured by the rotation into semis and a renewed move higher in oil. • TECH FLOWS (BRIAN HEAVEY) – o SEMIS > SOFTWARE (and Mag7) as we're back to a world where both sectors can't co- exist together. I think the fact that 1) No definitive Silver Lake for WDAY deal driving a reversal in the SW squeeze and 2) Anthropic valuation + ARR forecasts (targeting $200B in '28) bolstering the ROIC argument for DC buildouts (supportive of more prolonged cycle). MEMORY certainly being helped by Lutnick discouraging AAPL from using CXMT DRAM (which in turn is hurting the memory buyers - i.e. DELL, HPQ, SMCI). o META getting hit - lot of Qs as to why. I think it's a combination of 1) It rallied the most on the WDAY takeout spec showing it's still shorted by broader tech books and 2) Social Addiction trials coming to the forefront (the SNAP news this morning around France not being allowed to ban 15 and younger from using social media platforms is positive but served as a reminder of upcoming legal overhang). We continue to think the outcome will take years and META likely remedies the platform in the meantime. Investors are still hoping to see the Watermelon model release imminently.