JPM US Market Intelligence Afternoon Briefing Oct 12

IDEAS & INSIGHTS – IN BRIEF • MKT UPDATES – Oil Updates, Semis Weakness, D1 comments. • DESK COMMENTARY – JPM Trading desk comments on Meta/Muse and Semis. • US MKT INTEL VIEW – We return to our Tactically Bullish view and update the Monetization Menu.

AFTERNOON UPDATES (NEWS LINKS) • SPX -0.1%, NDX -0.7%, RTY -0.4%. WTI +151bps at $93.24, NatGas -155bps to $3.17, UK NatGas +317bps to £2.0899, Gold -57bps to $4,170, Silver -96bps to $60.24, 10Y @ 5.238%, and VIX @ 15.21. • US: Stocks closed lower; Tech lagged. All three indices were lower today, but the underlying market breath was quite supportive: over 60% of SPX stocks finished higher on the day. Notable decliners were concentrated in the AI baskets, particularly semis (SOXX -2.6%) and memory (DRAM -4.3%). Desk color pointed to a mix of (i) renewed investor focus on AI capex/financing constraints after Broadcom CEO Hock Tan warned that financing could become a bigger bottleneck than component shortages, (ii) power / “powered shell” availability concerns from a weekend sell-side research, (iii) thin holiday liquidity amplifying moves as investors largely stayed sidelined into an expected private frontier-lab investor meeting on Wednesday and (iv) CXMT “4F2” news, while rotation favored parts of Mag 7 / Internet. META (+3.4%) outperformed again on fresh Muse updates. Oil rallied further (~up 1.5% for both WTI and Brent) amid Houthi’s attack on Saudi airports; Ukraine said that Russia hit energy targets despite Trump’s ceasefire announcement (RTRS). Bond markets were closed today. • EU/UK: Major markets closed higher led by Spain and UK. Despite the move higher in energy prices today, we saw a broadening/squeezing trade across multiple sectors in Europe today; Semis were among the few decliners. Thematically, Defense, Software, UK Homebuilders and Momentum Short were among the top performing baskets. UKX +1.0%, SX5E +0.5%, SXXP +0.6%, DAX +0.8%.

CATALYSTS TOMORROW (FULL WEEK CALENDAR) • US MACRO DATA TOMORROW: NFIB Small Business Optimism at 6am ET. ADP Weekly Employment Change at 8.15am ET. Existing Home Sales at 10am ET. Federal Budget Balance at 2pm ET. (Oct 13-15) SEMICON West. • US EARNINGS TOMORROW: ACI, C, DPZ, GND, GS, JNH, JNJ, JPM, WFC • GLOBAL MACRO DATA TOMORROW: (Japan) Money Stock M2 and Money Stock M3 at 7.50pm ET. (China) CPI/PPI at 9.30pm ET.

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

TODAY • MACRO UPDATES – Oil extended gains as escalation on two fronts added to the supply-risk premium. In Saudi Arabia, a deadly Houthi attack on Riyadh's airport led to further escalation in the region. In Ukraine, Kyiv said Russia kept hitting energy sites after the announced "energy ceasefire." Fresh strikes in both Saudi Arabia and Ukraine weakened the de-escalation story behind Trump's Russia diesel deal and added upside risk to crude. • COMMENTS ON SEMIS/HW WEAKNESS (JOSHUA MEYERS) – o The most proximate reason seems to be Hock Tan's participation in a panel at a DBS conference in Singapore, where he warned financing could become a bigger bottleneck than component shortages (in addition to questioning frontier lab business models, and comparing "many investors" to casino gamblers). o Additionally, a sell-side research not over the weekend re-ignited power concerns that have worried investors for weeks (suggesting shortages of powered shell of as much as 19GW next year and more in '28). These worries are hitting on a low-liquidity holiday day, and news out of the middle east isn't helping... o As investors sit on their hands ahead of an expected private frontier lab investor meeting on Wednesday. o While the SOX struggles at its 100MA, we're seeing the sort of rotation into Mag 7 and Internet names that we might expect if an open bond market were sending rates higher... o Key questions this morning have centered around why optical is particularly weak LITE COHR CIEN, what's driving memory lower (especially SNDK), why SMCI is down so much *again*, and why TTMI is being so punished for its capex announcement. Outside