1. Spotlight on inflation.

U.S. inflation data on Wednesday could leave the Federal Reserve with a dilemma if a hot print comes on top of last week's data showing unexpected job losses in July.

Producer price data due a day later will provide a fuller picture of inflation. CPI and PPI figures in the previous month were softer than expected, but inflation remains above the Fed's 2% target.
The Fed held rates steady last month, but three policymakers dissented in favour of a hike. Markets see around a 40% chance of an increase at the Fed's next meeting in September, though the data could shift those bets.

2. Analyst raise European earnings estimates.

Citigroup strategists said “Europe remains one of the clearest positioning recovery stories globally.”
Goldman Sachs strategists debunked a number of negative myths about European equities in a note to clients; including that Europe has no growth, has low ROE, always underperforms, that China competition is a huge negative, higher energy prices hit EPS and the region is cheap because of low growth.
GS also highlights European equities are seeing the best inflows in 10-years excluding 2021.

3. Major brokerage forecasts for S&P 500 index in 2026.

4. Japanese stocks offer the best option for the next leg of the artificial-intelligence trade.

The AI trade is evolving into a phase defined by new competitive threats and value chain dispersion. Japan’s benchmark gauge offers a healthy exposure to the “picks and shovels” companies that are monetizing hardware bottlenecks across the AI supply chain. It also gives broader exposure to stocks that stand to benefit from productivity gains and Japan’s macro tailwinds.
Yet, Japan’s positive story extends far beyond technology. The Topix delivered an aggregate upside surprise of more than 24%, rivaling even the stellar performance of the S&P 500 Index. Japan’s earnings growth is supported by broad exposure across industrials, financials, information technology and consumer sectors — with tech exposure itself well-diversified across equipment suppliers, semiconductor manufacturers, and materials producers.

Below: The FactSet Japan Semiconductor Index tumbled over 20% during the month, driving a sharp repricing from ~35x forward earnings down to under 19x.

5. Barclays flag higher budgets and solid forecasts for European defence.

Barclays says European rearmament is set to drive defence spending growth of 16%/year to 2030, with the military equipment sector down 13% from its March peak creating an attractive entry point.
They see a catch-up related outgrowth in land and munitions as driving 20%+/year mid-term growth, flagging Rheinmetall (83% of sales) and CSG (97% of sales) as most exposed.
Barclays says earnings weakness remains concentrated in 2026, higher defence budgets and procurement activity should support stocks in the mid-term.
JPMorgan is particularly bullish on CSG, which is still 30% below the IPO price and has an upside of 60%.
“CSG is still trading on the lowest valuation in the sector all this while it has become more diversified.

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