Investing for Survival

Thursday morning setup: Futures are higher again, although trading in a narrow range for the past week just below all-time highs, with Tech flat following disappointing earnings from CSCO. As of 8:00am ET, S&P 500 futures add 0.2% while Nasdaq futures are unchanged as Cisco shares dropped 6.4% in premarket trading after earnings failed to impress. Elsewhere, Semis are flat, Memory is lower, with Mag7 / Software trading up. Cyclicals and Defensives are trading higher with weakness in Energy / Materials; AI theme remains bid. Price action in Asia was upbeat and again characterized by bubbly tech enthusiasm just days after the last Korean bubble popped, with benchmarks in South Korea, Japan and Taiwan all advancing, and the Kospi re-entering a bull market, up 20% from its late July lows. European stocks are grinding higher with the Stoxx 600 up 0.2%. Brent crude is down 1.7%, pausing its recent rally. News flow remains light and the impasse over the Strait of Hormuz is dragging on. Weaker energy prices are dragging US yields lower across the curve with more price data due today via PPI metrics. The Bloomberg Dollar Spot Index is flat as the low vol environment in FX markets continues. USD/JPY is steady following a report that the government is supportive of a faster BOJ hike. Spot gold is down 0.6% and back on a $4300/oz handle. JPM says to keep an eye on the Retail investor as the bank's flows data show an uptick from 4%-ile to 64%-ile but with a shift away from Tech to macro themes, e.g., gold. Today's US economic data calendar includes weekly jobless claims and July PPI (8:30am). Fed speakers scheduled include Cleveland Fed’s Hammack (8:15am) and Richmond Fed’s Barkin (8:40am).

As Bloomberg notes, investors are increasingly discerning between companies already turning the data-center boom into revenue and those where they are still being asked to look further out. The reaction to Cisco and Cerebras suggests the next batch of AI earnings may face a higher bar. Headline orders and exposure to the capex boom may no longer be enough on their own, with investors likely to focus more closely on how quickly demand converts into revenue, what it does to margins and whether earnings can keep pace.

Fundamental

Headlines

The Economy

Weekly initial jobless claims totaled 209,000 versus forecasts of 202,000.

July PPI was flat versus expectations of up 0.2%; core PPI was up 0.2% versus +0.3%.

https://www.zerohedge.com/markets/rate-hike-odds-remain-low-us-producer-prices-print-cooler-expected-july

International

Q2 QoQ UK GDP grew 0.4%, in line; Q2 construction orders declined 18.1% versus +11.8%; June GDP was up 0.3% versus 0.0%; June industrial production fell 0.2% versus +0.1%; the June trade balance was -L5.5 billion versus -L3.6 billion.

June EU industrial production was flat versus estimates of -0.1%.

July Japanese PPI came in at +0.1% versus +0.6%.

Other

Trade between US and China increased in June.

https://politicalcalculations.blogspot.com/2026/08/trade-between-us-and-china-increases.html

Global oil deficit continues to rise.

https://www.zerohedge.com/markets/global-oil-deficit-hit-18-million-bpd-quarter-iea-forecasts

Hormuz shock manifesting itself in cracks not crude.

https://www.zerohedge.com/energy/hormuz-shock-manifesting-itself-cracks-not-crude-jefferies-says

Monetary Policy

I recently linked to an article outlining a major shift in the outlook from one of the premier bond market experts in which he made a 180 degree turn from forecasting lower interest rates/inflation to higher interest rates/inflation. Here is an analysis of his analysis.

https://talkmarkets.com/article/lacy-hunt-turns-bearish-bonds-studying-his-reversal-1786532279

Fiscal Policy

Unchecked fiscal irresponsibility.

https://townhall.com/columnists/terryjeffrey/2026/08/12/federal-debt-per-working-couple-tops-median-home-price-n2681071

Inflation

An in depth look at yesterday's CPI number.

https://bonddad.blogspot.com/2026/08/july-consumer-inflation-second-gift.html

Credit market signaling rising doubts about AI buildout.

https://www.zerohedge.com/markets/credit-markets-signal-rising-doubts-over-ai-buildout?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxMjQ2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjU2NzI5NSwiZXhwIjoxNzg5MTU5Mjk1LCJhdWQiOiJ6aC1naWZ0In0.zW67BsGPQq8H4BV523rUZrqBaEluw9FebIDIevEGqJY

Investing

The Market is broadening.

https://trendlabs.com/more-than-half-the-stocks-are-winning/

Back to your regularly scheduled bull market.

https://www.carsongroup.com/insights/blog/back-to-your-regularly-scheduled-bull-market/

But a word of caution….

https://www.pimco.com/us/en/insights/the-credit-market-lens-the-return-of-financial-engineering-not-2008-but-not-nothing

Financial markets, oil prices and supply side risks.

https://www.frbsf.org/research-and-insights/publications/economic-letter/2026/08/financial-markets-oil-prices-and-supply-side-risks/

Equity diversification in an era of concentration.

https://www.advisorperspectives.com/commentaries/2026/08/12/equity-diversification-era-concentration

How levered ETFs benefit from volatility.

https://www.wealthmanagement.com/etfs/leveraged-etf-boom-creates-new-ways-to-profit-from-sudden-bursts-of-volatility

The best way to sell a concentrated position.

https://ofdollarsanddata.com/the-best-way-to-sell-a-concentrated-position/

News on Stocks in Our Portfolios

What I am reading today

When power, policy and capital go wrong.

https://www.realclearmarkets.com/articles/2026/08/12/when_power_policy_and_capital_go_wrong_1199775.html

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Wednesday, August 12, 2026

The Morning Call---What Wall Stree isn't teling investors about AI credit risk

The Morning Call

8/12/26

The Market

Technical

Tuesday in the charts.

https://www.zerohedge.com/markets/mideast-malaise-ai-angst-batter-big-tech-bitcoin-bonds-shrug-oils-gains?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxMTUxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjQ3OTk3MiwiZXhwIjoxNzg5MDcxOTcyLCJhdWQiOiJ6aC1naWZ0In0.jvRNVXGkDpNcm0nwJ4kzDs_OY0E2Sd-laPMiDkm7AeI

Tuesday in the technical stats.

https://www.barchart.com/stocks/momentum

https://www.barchart.com/stocks/market-performance

https://www.barchart.com/stocks/sectors/rankings

https://www.barchart.com/stocks/signals/new-recommendations

Wednesday morning setup: US: Futures are higher, led by Tech as AI infra earnings boost the theme while the Semis trade was bid overnight led by a surge in Korea's Kospi. As of 7:45am ET, S&P futures are up 0.2% ahead of today's CPI report, while Nasdaq futures gain 0.7% as investors react positively to updates from US technology firms. Semis / Memory are outpacing broader markets with Mag7 trading higher, too. Software is lower, so watch to see if the +Semi / -Software dynamic returns after a significant reversal. CoreWeave shares are up ~17% in premarket on stronger-than-expected sales growth. Super Micro Computer shares have climbed 9% after their revenue forecast topped estimates. Tech stocks also outperformed in Asia where the Kospi climbed 3.7%. European stocks are inching higher. The market has seen muted volumes this week into today’s CPI print, with PPI and Retail Sales tomorrow, providing more details on the growth / inflation dynamic. Consensus sees Headline CPI MoM of +0.1% and Core MoM of +0.2%, which is 3.4% YoY for Headline and 2.5% YoY for Core (our preview is here). A dovish print today may remove Sept hike expectations, boosting stocks.Broader risk sentiment has improved as Brent crude futures turned negative and fell back below $89 a barrel after another well-time headline by Pakistan which said the 60-day deadline for a US-Iran MoU may be extended, but the larger peace process has stalled. Earlier, Donald Trump said the US “totally” controls the Strait of Hormuz. Treasuries extend gains ahead of the US CPI report, with US 10-year yields down 2 bps at 4.66%. European government bonds followed suit. The Bloomberg Dollar Spot Index is little changed. Precious metals are advancing, with spot silver up almost 3%. Looking at today's economic data calendar we get July CPI data at 8:30am and July federal budget balance at 2pm. Fed speaker slate is blank; Cleveland Fed’s Hammack and Richmond Fed’s Barkin have appearances slated Thursday

Fundamental

Headlines

The Economy

Month to date retail chain store sales were up 8.3% versus up 8.7% in the prior week.

Weekly mortgage applications rose 3.6% while purchase applications were up 3.0%.

July existing home sales were down 1.7% versus consensus of -0.7%.

July CPI was up 0.1%, in line; core CPI was up 0.2%, also in line.

International

July YoY Japanese machine tool orders increased 50.4% versus estimates of +42.0%.

July German CPI came in at +0.9%, in line.

Other

US household debt dropped in Q2.

https://www.zerohedge.com/economics/despite-record-surge-subprime-car-loan-originations-us-household-debt-dropped-q2-first

Nothing has changed.

https://alhambrapartners.com/monthly-macro-monitor-status-quo/?src=news

The housing recession is over.

https://conorsen.substack.com/p/the-housing-recession-is-over-8b6?r=1y6w9

Overnight News

The oil market faces a severe supply deficit of 1.8 million b/d this quarter due to renewed Middle East conflict, despite high prices cutting demand by half to 1.6 million b/d.

Monetary Policy

Warsh faces a host of problems.

https://www.bloomberg.com/opinion/articles/2026-08-11/fed-chair-kevin-warsh-s-problems-go-deeper-than-his-rocky-start?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc4NjQ2NTIwNiwiZXhwIjoxNzg3MDcwMDA2LCJhcnRpY2xlSWQiOiJUSkxMMEdLR1pBSzAwMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9.wfVBwrHLfWhqcih6nfjGPA5vVMnhNFwkpBRDzLF2t24

Fiscal Policy

The mistaken notion that a balanced budget is a worthy goal.

https://www.realclearmarkets.com/articles/2026/08/11/balanced_budget_hagiography_plays_into_the_hands_of_big_government_1199113.html

What Wall Street isn’t telling investors about AI credit risk.

https://www.zerohedge.com/markets/rebalancing-odds-heres-what-wall-street-wont-tell-you-about-ai-credit?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxMTQ2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjU0MDAxOSwiZXhwIjoxNzg5MTMyMDE5LCJhdWQiOiJ6aC1naWZ0In0.WJVvQNPCKNrHImFm7y3ccxzAurWlamZKlnA7WQGXCa8

AI buyers still waiting for the payoff.

https://www.apollo.com/wealth/insights-news/insights/daily-spark/the-buyers-of-ai-are-still-waiting-for-the-payoff

AI follows other boom and bust cycles.

https://mrzepczynski.blogspot.com/2026/08/ai-investment-follows-other-boom-and.html

Counterpoint.

https://www.riskhedge.com/outplacement/the-750-billion-ai-question

The Financial System

Private credit’s ‘redemption crisis’.

https://talkmarkets.com/article/private-credits-redemption-crisis-never-actually-ended-it-just-stopped-making-headlines-1786454963

Investing

Earnings drive both bull and bear markets.

https://www.advisorperspectives.com/commentaries/2026/08/11/earnings-drive-both-bull-bear-markets

The risks associated with a concentrated market.

https://www.advisorperspectives.com/commentaries/2026/08/11/why-dont-own-it

Your portfolio’s biggest threat.

https://www.realclearmarkets.com/articles/2026/08/11/your_portfolios_biggest_threat_isnt_the_market_its_you_1199465.html

Why the bond market is so important.

https://www.nytimes.com/2026/08/07/business/bonds-stocks-federal-reserve-interest-rates.html?unlocked_article_code=1.4lA.h_Bn.ZAtQIChjKFe2&smid=url-share

Corporate earnings growth is broadening out.

https://www.marketwatch.com/story/good-news-for-stock-market-bulls-corporate-earnings-growth-is-no-longer-being-driven-just-by-tech-ddac973b?st=Ai3WTi

The economics of the prediction market.

https://trendlabs.com/they-dont-want-you-to-invest/

News on Stocks in Our Portfolios

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Tuesday, August 11, 2026

The Morning Call---US debt servicing costs up 500% in five years

The Morning Call

8/11/26

The Market

Technical

Monday in the charts.

https://www.zerohedge.com/markets/big-tech-bonds-bitcoin-dump-black-gold-jumps-us-iran-brinksmanship-builds?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxMDI2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjM5NDkwOSwiZXhwIjoxNzg4OTg2OTA5LCJhdWQiOiJ6aC1naWZ0In0.Jy5CxQA166zhwphbsbBDhkXCYTCjCGCoXiluW0mnh_o

Monday in the technical stats.

https://www.barchart.com/stocks/momentum

https://www.barchart.com/stocks/market-performance

https://www.barchart.com/stocks/sectors/rankings

https://www.barchart.com/stocks/signals/new-recommendations

Tech got washed out.

https://www.zerohedge.com/the-market-ear/tech-got-washed-out-now-comes-pain-trade?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxMDM5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjM5MTYzMSwiZXhwIjoxNzg4OTgzNjMxLCJhdWQiOiJ6aC1naWZ0In0.uxj2uxnlCAA_cfEfA7oeV6No5MTTyqlW-RtDGk2viYY

But…

https://www.zerohedge.com/markets/weve-seen-after-divergent-breakout-btig-asks-how-much-juice-left-squeeze?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxMDI0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NjM5MTkyNywiZXhwIjoxNzg4OTgzOTI3LCJhdWQiOiJ6aC1naWZ0In0.gICexF0-PtmAj5wFuCUjtHRbwykS1LdzkIJnvxI7MGk

Tuesday morning setup: US equity futures were trading near session lows with bond yields at August highs of 4.74% and Brent rising above $90 for the first time in two weeks when - with just hours until the market open - we had the now standard double-whammy of well-timed "imminent deal optimism" thanks first to the Qatar foreign ministry, followed less than an hour later by comments from the Pakistan defense minister - a man repeatedly used by the Trump admin to spread market-moving propaganda - which sparked instant algo buying on hopes of, what else, an agreement to reopen the Strait of Hormuz. According to the Pakistani, the US and Iran "are close to some agreement" and "the situation is moving towards peace" which was sufficient to not only push futures immediately to session highs, and just shy of all-time highs... ... but also dump oil more than $3 and send bond yields to session lows on what is the same song and dance the market has heard countless times before, even as strategic and commercial oil stocks and reserves are being rapidly depleted below operational minimum levels. As of 8:00am, S&P futures climbed 0.2% and contracts on the Nasdaq advanced 0.4%. Ten-year Treasury yields were little changed at 4.71%, erasing an earlier move as high as 4.76%, as Brent crude erased gains to trade 0.4% lower at around $87 per barrel, rising above $90 earlier. Earlier in the morning, Intel announced a $20BN capital raise in an upsized share sale (originally $15BN) that drew more than $100 billion in demand. That deal followed hot on the heels of Nvidia’s plan to tap a group of Wall Street firms for $500 billion in funding commitments, which CEO Huang said will underwrite AI infrastructure costs for customers. Today's US economic data calendar includes ADP weekly employment change (8:15am) and July existing home sales (10am). Fed speaker slate includes Chicago Fed’s Goolsbee, unscripted on WIRED Tech Support on YouTube; Cleveland Fed’s Hammack and Richmond Fed’s Barkin have appearances slated Thursday.

Fundamental

Headlines

The Economy

The July small business optimism index came in at 99.8 versus forecasts of 97.5.

International

Other

Update on big four recession indicators.

https://www.advisorperspectives.com/dshort/updates/2026/08/07/the-big-four-recession-indicators

US Strategic Petroleum Reserve falls below operational limit.

https://www.zerohedge.com/energy/us-spr-falls-below-300-million-operational-limit-oil-drain-unexpectedly-surges-61mm-barrels

Iran

Overnight news.