JPM US Market Intelligence Afternoon Briefing Aug 19

IDEAS & INSIGHTS – IN BRIEF • MKT UPDATES – Broadening trade amid bull flattening of the curve; US/Iran; Desk Comments on Healthcare and Retail Earnings today. • DESK COMMENTARY – Desk commentary on Tech. • US MKT INTEL VIEW – We are Tactically Bullish and we update the Monetization Menu.

AFTERNOON UPDATES (NEWS LINKS) • SPX +0.2%, NDX -0.2%, RTY +0.5%. WTI +89bps at $85.70, NatGas 0bps to $2.78, UK NatGas +18bps to £1.5727, Gold +408bps to $4,511, Silver +481bps to $66.41, 10Y @ 4.637%, and VIX @ 14.89. • US: Stocks closed mixed with tech lagging. The biggest macro focus was the Treasury announcement that triggered a bull flattening of the curve. 2-, 5-, 10- and 30y yields were 1bp, 3bp, 7bp and 10bp lower, respectively. The dollar softened while gold and bitcoin rallied. Rate- sensitive baskets (Housing, Staples) and Healthcare (pharma/biotech strength on positive melanoma vaccine trial data) were among the sector leaders, while Semis/AI baskets declined. Target earnings pointed to a positive sales outlook, with the stock up 4.3% today. • EU/UK: Major markets closed lower; Italy and Spain lagged. Momentum continued to underperform in Europe today: Semis lagged, while Software, Luxury and Most Short were all higher. UKX +0.1%, SX5E -0.4%, SXXP -0.1%, DAX -0.1%.

CATALYSTS TOMORROW (FULL WEEK CALENDAR) • US MACRO DATA TOMORROW: Philly Fed Business Outlook, Initial/Continuing Jobless Claims at 8:30am ET. Leading Index at 10am ET. • US EARNINGS TOMORROW: DE, ROST, WMT

• GLOBAL MACRO DATA TOMORROW: (Germany) PPI at 2:00am ET. (Canada) IP at 8:30am ET. (UK) GfK Consumer Confidence at 7:01pm ET. (Japan) CPI at 7:30pm ET. (Japan) PMIs at 8:30pm ET.

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

TODAY • PRICE ACTIONS POST TREASURY ANNOUNCEMENT – We saw a knee-jerk reaction to the Treasury buyback announcement, with SPX up 50bp immediately after, but index-level gains faded through the session and NDX closed in the red. While the market may be debating whether today’s bond-market reaction can really move equities, we think it can support the broader broadening trade and drive some moves in rate-sensitive baskets, but it is not the definitive driver of equities right now. Tech remains the key focus, and with low volumes ahead of NVDA earnings, stocks tend to be more headline-sensitive. • US/IRAN – Oil remained elevated despite a quiet day for news flow: (i) An Axio article reported that US military has quietly established a shipping corridor in and out of the Strait of Hormuz to ship about 10 million barrels of oil a day. (ii) Iran signaled no frozen funds had been released yet under the MoU; separately, Iran-linked media also flagged steps to reroute flows via rail transit of Iraqi oil products to Turkey. • HEALTHCARE FLOW (JACKIE BUKZIN) – Busy morning to start and desk is leaning better for sale in biotech/therapeutics on the broad based strength. We are better for sale in BMY, ACAD, CLYM, and CLDX seeing some generalist trimming. Moves in some of the lesser quality names in tools/dx certainly feel cover bid driven, TWST obviously called out by name, but not seeing any real buying in names like TEM, ILMN and TXG (here). Flows in pharma are a bit more even split, seeing LO supply in BMY but we are better to buy in JNJ, MRK, and RPRX. We have not seen anything real in MRNA, as most focused on whether there is generalist engagement up here. Most seemed to expect success heading into the data but can't say this type of move was in the cards and there were still certainly some shorts out there (still screening as a top 5 in our prime data). • RETAIL EARNINGS (COMMENTS FROM BRIGGS BARTON) – A buoyant Consumer tape is providing an assist to some EPS reversals which once again is not exactly a vote of confidence in the consumer sector and rather a move against what is happening elsewhere ---> the 10yr + semis/AI themes and momo factor are all rolling over, and consumer is the markets source of funds for that trade [the airsickness bag to the semis puke]...