Tiger 123
08-13

1. CPI delivered the outcome we wanted

July US CPI rose just 0.1% month-on-month and 3.4% year-on-year, down from 3.5% in June. Core CPI rose 0.2% monthly and eased to 2.5% year-on-year.

This is not enough to declare inflation defeated, but it materially reduces the urgency for another Fed hike.

Markets now place roughly a 60% probability on no September rate change, versus approximately 50-50 before CPI.

That is a meaningful positive change from yesterday.

My concern shifts away from immediate Fed tightening toward two longer-term issues:

energy inflation + US bond supply.

#1 opportunity — AI infrastructure just received another validation

Cisco’s results are important.

Fiscal Q4 revenue rose to US$17.25 billion from US$14.67 billion, while net income jumped to US$3.86 billion. More importantly, Cisco received US$4 billion of AI infrastructure orders in Q4 alone, bringing full-year AI orders to about US$9.3 billion.

That is significant because Cisco sits further down the AI infrastructure chain than Nvidia:

GPU → network → data centre → cooling → electricity.

AI demand is therefore clearly spreading into networking rather than remaining concentrated only in accelerators.

This strengthens the hierarchy I have been advocating:

Power → grid → cooling → networking → memory → compute

⚡ Our AI-power basket: strong divergence continues

Yesterday again produced a clear split.

GE Vernova: +2.8% → US$1,039.90

Vertiv: +2.3% → US$288.36

Vistra: +1.2% → US$146.68

Constellation: roughly flat → US$278.68

Eaton: roughly flat → US$459.96.

This reinforces a trend visible over several sessions:

The market is increasingly rewarding the companies that solve AI’s physical constraints.

However, valuation discipline is becoming even more important.

Morgan Stanley, JPMorgan Both Target S&P 8000 — But Index Falls?
Morgan Stanley and JPMorgan both lifted their S&P 500 targets to 8,000, on earnings upgrades rather than multiple expansion. Monday disagreed: S&P 500 −0.52% to 7,745.06, Dow −0.51%, Nasdaq −0.32%. August consumer confidence weakened, and a sell-side note titled "Three Bubbles, One Liquidity Problem" flagged narrowing upside and extreme investor leverage. Worth noting: 8,000 is 3.3% from here. The week's variable is July FOMC minutes, Thursday 2 a.m. Beijing, from the meeting that held at 3.50–3.75% with three hike votes. Long AI and semis, rotate to financials and consumer, or wait?
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