Bulls & Bears
The S&P 500 punched to a fresh all-time high on Thursday. That sentence, on its own, sounds fantastic. Dig into the detail and the picture gets murkier: 4.7% producer inflation is apparently what passes for "cooling" now. Back when we started in the bond market, CPI and PPI would come in at 0.1, 0.1, month after month, for a decade straight. Those days are long gone.
Two data points drove this week's action. Wednesday's July CPI landed in-line at 3.4% year-on-year, with core at 2.5%. Not exciting, not alarming. Then Thursday's PPI came in flat month-on-month and at 4.7% year-on-year, both below expectations. September rate hike probability dropped from coin-flip territory to about 34%. Stocks loved it. Bonds loved it more.
Meanwhile, the Strait of Hormuz situation remains a mess. Both Trump and Iran claim "total control" of the waterway, which tells you nobody has control of the waterway. Traffic through the strait has dropped to its lowest since mid-May. The IEA bumped its demand-hit estimate to 1.6 million barrels per day. Iran has shifted to an "offensive doctrine" militarily. And the US fired Hellfire missiles at a Panama-flagged cargo ship trying to run the blockade. None of this screams "resolution imminent."
On the earnings front, the AI infrastructure trade just keeps printing money. CoreWeave rallied 19% after beating on revenue and lifting its capex outlook, backlog swelling to $104 billion. Nebius surged 34% on a 514% jump in cloud revenue. Super Micro popped 19% on guidance that made analysts look conservative. Even Cisco beat strongly, though the stock dropped 8% because expectations were already in the stratosphere after a 60% YTD run.
And then there was the 30-year Treasury auction. The US government paid 5.216% to borrow for thirty years. Highest rate since 2001. The fiscal year-to-date deficit has already hit $1.8 trillion, surpassing the entire FY25 total with two months to spare. The national debt is about to touch $40 trillion. Someone described the US dollar as a meme coin this week. Hard to argue.
- Mon 11 Aug — Wall Street drifted lower as oil surged 5% on fading Hormuz deal hopes. NVIDIA −2.9% on leaked $500B AI infra deal. Intel −4.1% on $15B stock offering.
- Mon 11 Aug — RBA held rates at 4.35% with hawkish statement. Ingham's expanded bird flu lockdown to all states.
- Tue 12 Aug — S&P 500 fell 0.4% as Iran declared Hormuz "will not reopen" until conditions met. Oil hit $89.20.
- Tue 12 Aug — CoreWeave beat on revenue after the bell, backlog surged to $104B. Super Micro guidance blew past estimates.
- Tue 12 Aug — US Navy fired Hellfire missiles at cargo ship attempting to run Iran blockade. Houthi attack killed six in Bab el-Mandeb.
- Wed 13 Aug — S&P 500 +0.3% as CPI matched expectations (3.4% Y/Y headline, 2.5% core). September hike odds fell to 38%.
- Wed 13 Aug — CoreWeave +19%, Nebius +34%, Super Micro +19%. Philadelphia Semiconductor Index +2.5%.
- Wed 13 Aug — US budget deficit hit $432B in July alone. 10-year auction at highest yield since 2007 (4.683%).
- Thu 14 Aug — S&P 500 hit all-time high at 7,799 after PPI came in flat M/M (4.7% Y/Y). September hike odds fell to 34%.
- Thu 14 Aug — Cisco −8.4% despite strong beat as sky-high expectations weren't enough. 30-year auction at 5.216%, highest since 2001.
- Thu 14 Aug — Applied Materials beat on Q3 earnings. Sandisk +13.7%, Netflix +5.4% on Ackman position. Workday +18% on Silver Lake bid rumour.
| Index | Level | Week | Signal / Commentary |
|---|---|---|---|
| S&P 500 | 7,799 | +0.54% | New ATH Thursday. Strong Buy on daily & weekly technicals. |
| Nasdaq Composite | 26,803 | +0.42% | Strong Buy. AI infra names carrying, chip-to-SaaS rotation underway. |
| Dow Jones | 53,840 | −0.28% | Strong Buy on weekly. Slight drag from Cisco sell-off. |
| Russell 2000 | — | +0.67% | Strong Buy. Small caps catching a bid on lower hike odds. |
| ASX 200 | ~9,150 | −0.81% | Neutral (1H). Banks & insurance dragging. Gold miners outperforming. |
| Nikkei 225 | — | +4.12% | Strong Buy. Yen weakness back toward 160 fuelling rally. |
| Hang Seng | — | −1.06% | Strong Sell (1H). CXMT overtook Tencent as China's most valuable co. |
| Euro Stoxx 50 | — | +0.31% | Strong Buy. Grinding higher despite Hormuz overhang. |
Most global indices were "Strong Buy" on daily and weekly technicals by Thursday's close. The outliers: ASX 200 dipped to Neutral on the hourly, dragged down by weak bank earnings and insurance sector softness. Hang Seng flashed Strong Sell on the 1-hour as Tencent got overtaken as China's most valuable company by memory chip maker CXMT. Nikkei was the standout performer for the week at +4.12%, rallying hard as the yen continued to weaken back toward the 160 level.
Wednesday's CPI and Thursday's PPI painted a picture the market desperately wanted to see: inflation trending down, not reaccelerating. Core CPI at 2.5% is within spitting distance of the Fed's 2% target, even if headline numbers remain elevated thanks to the Iran-driven energy shock.
The CME FedWatch tool now prices a 63% chance the Fed holds in September. That shifted meaningfully this week. Before the CPI print, it was 50-50. Before the PPI, it was 62-38. Now December is where the first hike is fully priced. But Richmond Fed President Barkin is talking hold, while Cleveland's Hammack still wants to hike. The battle lines are drawn and Jackson Hole at month's end could tip the balance.
The elephant in the room remains fiscal. The US deficit is running at 6%+ of GDP. The government spent $766 billion in July alone, against $334 billion in receipts. Net interest on federal debt has hit $931 billion fiscal year-to-date. That is more than the defence budget.
✓ CPI in-line at 3.4% Y/Y, core at 2.5%. PPI flat M/M (4.7% Y/Y). September hike odds fell from ~50% to ~34%. December now fully priced for first hike.
Gold cracked $4,400 mid-week before pulling back to $4,348 by Thursday's close. UBS has maintained a $5,000/oz target, citing falling real yields as the Fed eventually eases, dollar weakness tied to fiscal deficits, and steady central bank buying. The People's Bank of China added 20 tonnes of reserves in its largest monthly addition since October 2023. Heavy buying from Tether has also supported bullion. Silver had an even better week, up over 10%.
Oil was all over the shop. Brent touched $90 on Wednesday as Hormuz tensions peaked, then snapped a six-day winning streak on Thursday after EIA data showed a surprise US crude inventory build of 17.4 million barrels. The IEA now sees global demand declining by 1.6 million bpd in 2026 before bouncing back 2.4 million bpd in 2027. Strait traffic averaged around 13 ships per day over a five-day period, the lowest since mid-May. The US expects supply disruptions of around 600,000 bpd through the end of next year.
Copper, lithium, uranium, coal all had a breather after strong runs. Bitcoin sat practically unchanged for most of the week, which is unusual enough to mention.
The VIX dropped to 14.45, its lowest level since January. That is a lot of complacency considering: a shooting war in the Middle East, Hormuz at a trickle, 30-year yields above 5%, and the yen sliding back toward intervention territory. The joint US-Japan yen intervention from late July has been almost entirely erased. If USD/JPY breaks 160 decisively, expect intervention chatter to intensify. Mizuho's Masayuki Nakajima flagged that level as psychologically critical.
Leveraged ETFs continue to concentrate risk in a handful of AI names. Global AUM sits around $250 billion, but 30-day trading value tripled from January lows to a June peak near $70 billion. Just ten companies account for two-thirds of the AI slice. Nomura estimates the complex needs to buy or sell roughly $10 billion of securities for every 1% move in the underlyings. South Korea's experience with domestic leveraged ETFs on Samsung and SK Hynix serves as a warning: the Kospi's volatility index surged to an all-time high of 96.9, higher than Bitcoin.
Earnings season dominated the ASX this week, and the banks set the tone early: badly. Westpac flagged mortgage applications down 20%. CBA delivered a clean 7% cash profit beat and lifted the dividend, but the stock slipped as investors fixated on post-budget mortgage application weakness. ANZ announced a rare $1 billion buyback, but mortgage applications slumped 12%. The insurance sector continued to soften, with IAG taking a 3% hit and QBE on deck Friday.
The ASX exchange itself was the stock of the day on the Morning Call after reporting earnings up 9%. There are green shoots in the turnaround story: Sharon AI (genuinely the most Australian name for an AI company in history), Glencore, and Firmness are in the IPO pipeline. After years of nothing but junior mining floats, that is worth paying attention to.
Helia Group (HLI) +10.2%
Special dividend and buyback announced. Mortgage insurance benefiting from tightening lending standards. Clean result that the market rewarded immediately.
ASX Ltd (ASX) +9.0%
Earnings up 9%. IPO pipeline finally has some names worth talking about. The post-CHESS disaster turnaround story is getting traction with institutional investors.
Treasury Wine (TWE) +12.8%
Bounced from $5 to $5.64 as a major French vineyard owner has been quietly accumulating shares. China tariff removal still working through the supply chain.
Gold & Silver Miners +7–10%
Riding the bullion wave. Gold +7.57%, silver +10.22% for the week. Newcrest, Evolution, Northern Star all tracking spot higher. UBS $5,000/oz target getting attention.
Life360 (360) −19.4%
Hit 100M MAUs but US growth is slowing and Q3 margin guidance came in well below consensus. All six covering brokers kept Buy ratings. Conviction vs short-term disappointment.
Amotiv (AOV) −13.5%
Soft FY27 guidance despite reasonable operational result. Market punishing anything with a whiff of earnings deceleration during reporting season.
Seek (SEK) Crushed
Hammered after soft FY27 guidance and VC write-downs, despite solid operational numbers (revenue +10%, EBITDA +15%). Jobs market cooling read-through spooked holders.
Insurance Sector −3%+
IAG −3%, QBE weak on 5-day chart. OIAG also hit. Insurance companies copying each other lower. QBE earnings Friday could set the tone for next week.
One thing worth watching: Ingham's bird flu lockdown has expanded to all states. No commercial cases yet, but free-range operations are at risk. If H5N1 gets into the poultry sector, chicken and egg prices are going up materially. In the US, the dairy variant cut cattle output significantly.
Nebius Group (NBIS) +34%
514% quarterly jump in cloud revenue. Won four contracts averaging over $1 billion each. NVIDIA is a 9% shareholder. Netherlands-based, full-stack AI cloud. The numbers are staggering.
CoreWeave (CRWV) +19%
Backlog surged to $104 billion. Near-term capacity effectively sold out. Margins on new deals 5–10 points higher than recent quarters. CEO called it "strongest bookings quarter" in history.
Super Micro (SMCI) +19%
Guidance blew past estimates. AI server demand still accelerating. The company that everyone wrote off after the accounting mess keeps delivering.
Workday (WDAY) +18%
Silver Lake bid rumour. The chip-to-SaaS rotation is real and this was the poster child for the week. SaaS names broadly outperforming semis.
Applied Materials (AMAT) Beat
Beat after the bell Thursday. Q4 guidance well above consensus on AI chip demand. Dell +285% YTD. Palo Alto +110%. Dispersion in the sector is remarkable.
On Holding (ONON) −20.3%
Consumer discretionary getting hit as the tariff reality sets in. Running shoe hype can't outrun margin compression forever.
Tapestry (TPR) −16%
Luxury spending softening. Coach and Kate Spade parent hit hard. China consumer weakness spreading to Western luxury brands.
Cisco (CSCO) −8.4%
Revenue +18% YoY, product orders +35%, AI infra orders $9.3B for FY26. CEO said demand was the best in 30 years. Stock dropped 8% because it was up 60% YTD. The bar gets higher when the stock price gets higher.
Cerebras (CBRS) −9%
AI chip challenger slumped despite broader sector strength. Concentration of demand at the top of the stack is leaving smaller players behind.
Intel (INTC) −4.1%
$15 billion stock offering, the first public offering since 1971. Desperate capital raise to fund the foundry pivot. The stock tells you what the market thinks of the plan.
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Jonathan Tacadena — Ausbiz "The Call"Co-hosted with David Novak (Wealth Wise Education). Full hour covering the tension between technical setups and fundamental valuations in the current market.
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Kai Chen — Ausbiz "The COB""Seek-ing Trouble" — Kai on Seek's earnings disappointment and what the soft guidance means for the jobs market.
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Jonathan Tacadena — Ausbiz "The Trade"Three gold stocks with further room to run as bullion keeps climbing past $4,300.
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Mark Gardner — Ausbiz "The Call"Co-hosted with Henry Jennings (Marcus Today). Covered AGI, SLC, TCL, LLC, HDN, IAG, MPL, RMD, EVN, DYL. ASX as Stock of the Day. Insurance pressure, gold names.
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Morning Call — YouTube & SpotifyDaily pre-market wrap covering Hormuz tensions, CPI/PPI data, ASX earnings season, AI infrastructure earnings, and the chip-to-SaaS rotation.
"The AI earnings-driven tech boom continues. It's an earnings boom, not a bubble."
"The Achilles' heel of this whole story is if something bad happens to Anthropic and OpenAI. The Chinese open-weight models are much cheaper. If they start really taking market share, you could have a big price war. And then we have a problem."
"I think the reality is for the foreseeable future, if not forever, Iran will control the Strait of Hormuz."
"The US stock market has all the ingredients to rally another 10% in the coming months, as profit projections are rising faster than share prices can keep up."
Key events: Australian jobs data Thursday, FOMC Minutes Wednesday night, BHP + CSL results Tuesday, Walmart Thursday evening AEST. Heavy week for ASX earnings with NAB, BHP, CSL, Fortescue, Goodman, JB Hi-Fi, James Hardie and Santos all reporting.
| Date | Company | Ticker | Focus |
|---|---|---|---|
| Mon 17 | NAB | NAB.ASX | Q3 update; mortgage trends post Westpac/CBA weakness |
| Mon 17 | JB Hi-Fi | JBH.ASX | FY26 results; consumer spending pulse |
| Tue 18 | BHP Group | BHP.ASX | FY26 results; iron ore outlook, copper strategy |
| Tue 18 | CSL Ltd | CSL.ASX | FY26 results; Vifor integration, plasma volumes |
| Wed 19 | Santos | STO.ASX | H1 results; Barossa, LNG pricing in Hormuz era |
| Thu 20 | Fortescue | FMG.ASX | FY26 results; iron ore shipments, green energy capex |
| Thu 20 | Goodman Group | GMG.ASX | FY26 results; data centre development pipeline |
| Thu 20 | Walmart | WMT | Thu 9pm AEST; US consumer health check |
| Fri 21 | James Hardie | JHX.ASX | Q1 FY27; US housing construction demand |
Here is the thing about calling 4.7% PPI "cooling." It is cooling. From 5.5%. Which was up from 3% a year before that. We have spent so long with elevated inflation that 4.7% genuinely feels like progress. That should worry you.
The US government paid 5.2% to borrow money for thirty years this week. They printed a $432 billion deficit in a single month. The national debt is about to hit $40 trillion. And the response? More tax relief talk. More spending. Someone on the Morning Call described the USD's purchasing power as half what it was in 2013. Every government is doing the same thing, so the dollar just looks strong relative to other currencies. It's the least worst option, mainly because America owns the most aircraft carriers.
The AI trade is real. We said it during the "SASPocalypse" when software names were getting destroyed, and we're saying it now that those same positions are up 50–60% on average. CoreWeave's backlog at $104 billion is staggering. The neocloud buildout is printing money. But Steve Eisman's point about Chinese open-weight models eating into the revenue of OpenAI and Anthropic (who account for 70% of AI revenue at the big cloud providers) deserves serious thought. A price war in inference would reshuffle the entire stack.
For next week, BHP and CSL on Tuesday will set the tone for the ASX. Australian jobs data on Thursday is the domestic macro event. The FOMC minutes might give some colour on how close those three dissenters came to carrying the day in July. And the Hormuz situation continues to be the background risk that nobody can price properly because nobody knows how it ends.
In the meantime, gold above $4,300 still looks like the right place to be if you think governments are going to keep inflating their way out of trouble. And there is absolutely nothing in the data suggesting they won't.
