Bulls & Bears
Markets spent the first half of this week celebrating CPI and PPI prints that came in softer than expected, completely ignoring the fact that the data was backward-looking and reflected a brief oil price retreat during the now-collapsed Iran ceasefire. By Thursday, reality was biting. Brent crude had ripped 13% higher for the week, the US was five nights into sustained strikes on Iranian military targets, and Dallas Fed President Lorie Logan was calling for "modestly higher" rates. The relief rally had a shelf life of about 48 hours.
The real story was the widening gap between what the data said happened and what is clearly about to happen next. June CPI dropped 0.4% monthly, the biggest decline since April 2020, pulling the annual rate to 3.5% from 4.2%. PPI fell 0.3%, the largest drop in 14 months. Gasoline prices collapsed 12% as the ceasefire briefly held. On paper, great. But those numbers are a photograph of a world that ceased to exist the moment Iran declared Hormuz closed.
Banking was a rare bright spot. Goldman Sachs posted record equities trading with prime brokerage revenue up 91% year-on-year. JPMorgan delivered record profit and revenue. Morgan Stanley's stock traders hit another quarterly record. The trading desks carried all of them, fuelled by a volatile, high-volume market where hedge funds were churning positions at a ferocious pace.
Then TSMC dropped a 77% profit beat on Thursday and the stock fell 2.3%. The SOX index tanked 4%. SanDisk lost 12.5%, Seagate 10%. Netflix missed after hours and shed 8.6%. The market is telling you something when it sells the best numbers in semiconductor history. It is telling you the trade is priced, the capex numbers are scaring people, and the next move is more likely down than up.
- Mon 13 Jul — SK Hynix ADR debuted on NASDAQ, jumping 13% after raising US$26.5bn in the largest-ever US listing by a foreign company.
- Mon 13 Jul — US renewed strikes on Iran for the fourth consecutive day. Tehran declared Strait of Hormuz closed "until further notice." Oil spiked 10%.
- Tue 14 Jul — Chip stocks slid as SK Hynix ADR reversed its debut gains. Oil added another 7%. KOSPI hit a circuit breaker. Congress acknowledged the Iran war was officially back on.
- Tue 14 Jul — CPI dropped 0.4% in June, the largest monthly decline since April 2020. Annual inflation fell to 3.5% from 4.2%. Markets rallied.
- Wed 15 Jul — PPI fell 0.3%, the biggest drop in 14 months. Goldman Sachs record equities trading (+91% y/y). JPMorgan record profit. Stock trading revenue up 86%.
- Wed 15 Jul — US launched fifth day of strikes on Iran. Trump pledged to continue until Tehran negotiates. Brent hit $85. SpaceX fell below IPO price.
- Wed 15 Jul — Fed Chair Warsh told Senate he hasn't been pressured by Trump but isn't meeting the price stability mandate. Beige Book flagged Middle East cost increases.
- Thu 16 Jul — TSMC posted 77% jump in Q2 net profit to $22bn. Raised full-year revenue growth guidance to 40%+. Capex guidance hiked to $60–64bn.
- Thu 16 Jul — TSMC shares fell 2.3% despite blowout. SOX index dropped 4%. Market sold the fact on massive capex.
- Thu 16 Jul — UnitedHealth smashed expectations. Abbott Labs surged 11% on double-digit CGM growth guidance.
- Thu 16 Jul — Dallas Fed's Logan called for "modestly higher" rates. Gold fell below $4,000 for third session.
- Thu 16 Jul — Netflix forecast Q3 below consensus, shares dropped 8.6% after hours. Cutting viewing-hours reports.
- Thu 16 Jul — Iran told Houthis to stand ready to close the Red Sea if US hits power infrastructure. Saudi Arabia taking threat seriously.
- Thu 16 Jul — US retail sales +0.2% in June, in line. Core +0.5%. Jobless claims 208k (lowest since May). Consumer spending resilient.
- Fri 17 Jul — Google delayed Gemini 3.5 Pro, months behind schedule. Anthropic and OpenAI outpacing Google in coding AI.
- All week — KOSPI triggered multiple circuit breakers. 30-day realised vol highest since 1998 LTCM crisis. Foreign investors selling Korea fastest in 25 years.
| Index | Level | Week | Signal / Commentary |
|---|---|---|---|
| S&P 500 | 7,533.61 | -0.5% | Near record but breadth cracking. Half of tech members >20% off highs. |
| Nasdaq Composite | 25,882 | -1.5% | SOX down 20% in a month. Chip selloff dragging everything. |
| Dow Jones | 52,554 | -0.2% | Bank earnings supportive. UNH and Abbott carrying. |
| SOX (Semis) | — | −4% Thu | TSMC sold despite 77% profit beat. "Sell the fact" on $60–64bn capex. |
| ASX 200 | ~8,784 | -0.2% | Commodity support vs global tech drag. Copper miners outperforming. |
| KOSPI | — | −7.0% Wk | Multiple circuit breakers. SK Hynix, Samsung = 60–70% of index. Vol highest since 1998. |
| Hang Seng | — | -0.3% | Tracking global tech weakness. |
| Russell 2000 | — | -0.8% | Small caps feeling rate-hike uncertainty. |
| USD Index | 101.0 | +0.3% | Dollar firming on higher yields, hawkish Fed. |
June CPI dropped 0.4% monthly, the biggest decline since April 2020, pulling the annual rate to 3.5% from 4.2%. PPI fell 0.3%, the biggest drop in 14 months. Energy did the heavy lifting. Gasoline prices collapsed 12% as the ceasefire briefly held. Core goods prices softened as tariff effects faded. Housing costs moderated. On paper, exactly what the doves needed.
But those numbers are a photograph of a world that no longer exists. The ceasefire collapsed before the ink dried on the June data. Brent crude has ripped from $76 to $85 this week alone. Diesel prices are through the roof after Ukraine hit a Russian refinery. And if Tehran follows through on its threat to have the Houthis close the Red Sea, both major Middle Eastern oil routes get disrupted simultaneously. The backward-looking comfort is about to meet forward-looking fire.
Lorie Logan reminded everyone on Thursday that 3.5% is still nearly double the 2% target. "I currently believe modestly higher interest rates would better balance the outlook." She called the path back to target "more a hope than a likelihood." Kansas City's Schmid says inflation is his biggest worry. Warsh dodged rate guidance at the Senate but conceded the Fed isn't meeting its price stability mandate. July rate hike odds have dropped, but September is alive.
Retail sales rose 0.2% in June, in line. Core retail +0.5%. Jobless claims fell to 208k. The consumer is still spending and the labour market isn't cracking. GDP tracking ~2.4% for Q2. But the gasoline savings that powered June spending are now reversing as pump prices climb back. The Fed Beige Book flagged cost increases tied to the Middle East and tariffs, and "greater price sensitivity among customers."
✓ CPI -0.4% M/M, PPI -0.3% M/M — softer than expected. July rate hike expectations pared. But data is backward-looking.
Oil is the story. Brent ripped 13% in a week as the US conducted five consecutive nights of strikes on Iranian military targets, the ceasefire collapsed completely, and Tehran told the Houthis to prepare to close the Red Sea if American forces hit Iranian power infrastructure. Saudi Arabia has already diverted 70% of its energy exports through its Red Sea port of Yanbu, so any Houthi action would disrupt both major Middle Eastern oil routes simultaneously. Europe faces a 600,000 barrel per day jet fuel deficit in Q3 versus surpluses in the US and Asia. Diesel prices are spiking after Ukraine hit a Russian refinery, widening crack spreads.
Gold fell below $4,000 for a third session. Higher rate expectations and dollar strength are doing the damage. When bond yields rise, the opportunity cost of holding non-yielding assets increases and money flows back to treasuries. Precious metals will stay under pressure until rates peak. When they do, that will be a compelling entry.
Copper remains the standout. The price action is rock solid. It barely dips when everything else sells off, then grinds back up. Rio Tinto's copper earnings doubled group growth. BHP reports Thursday and should mirror the strength. Copper is up 78% since early 2024. It has become the safe haven that gold used to be. Coal is quietly outperforming too. Iron ore sits around $99, eerily quiet for weeks.
The positioning data is ugly. FINRA margin debt hit $1.42 trillion in May, up 66% from $850 billion thirteen months earlier. That is the highest it has ever been. Higher than the dot-com peak. Higher than the pre-GFC high. Fund manager cash is at 3.9% of AUM, which sits below BofA's own contrarian sell-signal threshold that triggers below 4%. The put-call skew collapsed to 0.71 against a historical average of 12.13. Almost no one is paying for downside protection.
In plain English: everyone is loaded up on margin, nobody has cash to buy a dip, and nobody has insurance. We have seen this combination before. It does not end with a gentle pullback. It ends with forced selling that feeds on itself because every margin call creates the next one. Add a near-certain government shutdown in September, Trump losing his own party ahead of midterms, and Lindsay Graham's passing leaving the Republican caucus leaderless. The political backdrop is getting worse, not better.
BHP Group (BHP) Copper Play
Quarterly production Thursday. Copper earnings expected to mirror Rio's strong result. Copper up 78% since early 2024, but BHP only up 32%. The gap between the commodity and the stock is where the opportunity sits.
Rio Tinto (RIO) Copper Earnings
Copper doubled group earnings growth. Stock only up 28% vs copper's 78%. Still catching up to the commodity. The re-rating story has legs if copper holds above $4/lb through the back half.
Macquarie Group (MQG) Trading Read
Goldman Sachs-type model. Prime brokerage and trading volumes at records globally. Positive read-through for Macquarie's markets-facing businesses as hedge funds churn positions at pace.
Woodside Energy (WDS) Oil Beneficiary
Direct LNG and oil exposure at a discount to global peers. If Hormuz stays disrupted, Woodside benefits from higher prices. Pays you to wait with a solid yield while geopolitics does the work.
Zip Co (ZIP) NZ Exit
Exiting New Zealand. BNPL model under pressure as consumer stress builds and rates stay elevated. The shrinking footprint tells you where the economics are heading.
Gold Miners Below $4K
Gold below $4k for three sessions. Rising yields and dollar strength crushing precious metals. Miners follow spot lower. The opportunity cost of holding non-yielding assets is back in focus.
ASX Growth / Tech Duration Pain
Higher-for-longer rate outlook punishes long-duration growth. Logan's hawkish turn hits anything priced on distant earnings. Cash flows five years out are worth less when discount rates climb.
Lithium / Uranium Macro Drag
Cyclicals suffering from higher inflation, higher rates outlook. Very sensitive to macro headwinds. The thematic stories are intact but the price action says "not yet."
Goldman Sachs (GS) +9%
Record equities trading. Prime brokerage revenue up 91% y/y. Record prime balances. Asia growth strategy firing on all cylinders. The trading desks are printing money in this volatility.
JPMorgan (JPM) +2.5%
Record profit and revenue. Equity markets unit raked in $6bn (+86%). Jamie Dimon cautious on Mythos AI model risks but the core business is humming.
UnitedHealth (UNH) +1.2%
Beat on every metric. Medical cost ratio improvement. Boosted full-year outlook. Blue-chip defensive that works in exactly this kind of environment.
Abbott Labs (ABT) +11%
Raised guidance. Return to double-digit CGM growth. Top S&P 500 percentage gainer Thursday. Healthcare names are quietly becoming the place to hide.
Chevron (CVX) ~+5%
Oil stocks climbing on Hormuz disruption. Scale and dividend yield. Chart looks constructive with crude supply risks skewing to the upside for weeks to come.
Netflix (NFLX) −8.6%
Q3 forecast missed on revenue and EPS. Cutting viewing-hours reports to once yearly. Stock down ~20% YTD. The transparency reduction never inspires confidence.
SpaceX (SPCX) Below IPO
Fell below IPO price. Shed $860bn from peak. Lock-up expiry looming. Limited free float currently but the direction is the wrong one.
SOX / Chip Names −4% Thu
SanDisk −12.5%, Seagate −10%. TSMC sold despite blowout. "Sell the fact" repeating the same ASML pattern from earlier this month.
SK Hynix ADR Debut Reversed
IPO gains reversed. Korea circuit breakers. 30-day vol highest since 1998 LTCM crisis. Foreign investors fleeing Korean equities at the fastest pace in 25 years.
Citigroup (C) −5%
Beat on EPS and revenue but market didn't care. Non-trading banks underperformed. Wells Fargo also down. The spread between trading banks and lending banks keeps widening.
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Mark Gardner — Livewire Markets"A dangerous trinity of market forces is combining" — Record margin debt ($1.42T), record low fund manager cash (3.9%), and collapsed put-call skew. The three forces that precede sharp drawdowns are present simultaneously.
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Mark Gardner — Ausbiz"Why Mark's bullish on these copper players" — Making the case for copper as the new safe haven. BHP, Rio, Sandfire, Freeport McMoRan.
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Kai Chen — Ausbiz "Global Stocks | The Call"Covered ASML, NVIDIA, SAP, Palantir, SpaceX, Apple, Arista Networks, SK Hynix, PepsiCo, Chevron. With Mark Moreland (value3).
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Kai Chen — Ausbiz "The COB""Strait Stress" — Coverage of the Hormuz situation and implications for energy and Australian equities.
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Kai Chen — Ausbiz "Stock of the Day"Netflix deep-dive ahead of Thursday night earnings.
"It appears that the 2026 inflation resumption crested last month and headed back to its pre-conflict trend lower. This really helps the Fed avoid the mistake of hiking rates into a supply shock."
"There's no near-term pressure on the Fed, but oil is in the driver's seat over the longer term. Energy saved the day in June, but that might become ancient history if the Strait of Hormuz doesn't open soon."
"I currently believe modestly higher interest rates would better balance the outlook and risks for the FOMC's dual mandate goals. The path back to target is tenuous. For now, it is more a hope than a likelihood."
"The action in the chip stocks going forward is still the most-important issue for the stock market. They are definitely showing some meaningful cracks."
"Our conviction in the AI megatrend is very strong. The capex in the next three years will be significantly higher than in the past three years."
| Date | Company | Ticker | Focus |
|---|---|---|---|
| Tue 22 Jul | Alphabet | GOOGL | Gemini delays, AI coding, Search resilience, Cloud growth |
| Tue 22 Jul | Tesla | TSLA | Margins, delivery records, energy storage, robotaxi timeline |
| Wed 23 Jul | IBM | IBM | watsonx AI platform, Red Hat, consulting growth |
| Wed 23 Jul | Texas Instruments | TXN | Analog chip demand, industrial recovery, inventory levels |
| Wed 23 Jul | Intel | INTC | Foundry progress, AI PC traction, cost restructuring |
| Fri 25 Jul | PCE Price Index | — | The Fed's preferred inflation gauge. The number that actually matters. |
| Mon 28 Jul | FOMC Day 1 | — | Rate decision expected on Day 2 |
| Tue 29 Jul | FOMC Decision | — | Statement, press conference. September hike guidance |
| w/c 28 Jul | Meta Platforms | META | Meta Compute revenue, AI capex, Reels monetisation |
| w/c 28 Jul | Microsoft | MSFT | Azure AI growth rate, Copilot adoption, margins |
| w/c 28 Jul | Apple | AAPL | iPhone cycle, China Intelligence rollout, services |
| w/c 28 Jul | Amazon | AMZN | AWS pricing power, retail margins, AI infrastructure |
We have been saying it for a few weeks and the data keeps stacking in the same direction. Markets are pricing in a world that doesn't match the one we're living in. The inflation prints were terrific for June. But June was a different planet. The ceasefire was holding, oil was retreating, and everyone got a free pass. That free pass expired about 72 hours after the CPI release when Brent ripped past $85.
The positioning data should concern anyone with money in this market. FINRA margin debt at $1.42 trillion is not a statistic that ages well. Fund managers at 3.9% cash is not dry powder. It is an empty magazine. A put-call skew of 0.71 against a 12.13 average means nobody bothered buying insurance. We have seen this combination before. It does not end with a gentle correction. It ends with forced selling that feeds on itself.
TSMC confirmed the AI demand story is real. A 77% profit beat is staggering. But the market sold it 2.3%. It is telling you the trade is crowded, the valuations are stretched, and $60–64 billion in annual capex is making even the believers wince. That is $725 billion across the top four hyperscalers this year. At some point, free cash flow matters again. We are getting close to that point.
We are taking profit on semiconductor momentum, rotating into healthcare defensives like CSL and ResMed that don't care about tariffs or oil, picking up quality oil majors like Chevron and Woodside that get paid if Hormuz stays shut, and sitting on high cash. Our Buy the Dip strategy around the S&P 500 uses a lookback observation period through November. It is built for exactly this kind of setup. You get index exposure, amplified upside via calls, and the discipline of a structured entry instead of trying to catch a falling knife with your bare hands.
Short-term bearish. Long-term bullish. The AI story is real, the Trump put is real, and plenty of quality stocks are out there at reasonable prices once we get through this. But buying at these levels, with this positioning, at this level of geopolitical uncertainty? That is portfolio suicide when all you needed was patience.
