1. Chips continue selloff.

Nvidia and SK Hynix Group unveiled a $500B-plus AI infrastructure and memory partnership that links SK Hynix’s high-bandwidth memory supply with Nvidia-powered data centers. Both stocks sank as investors focused on how much of the AI boom now depends on suppliers financing customers who buy their products.
Also, China’s chip advances added another reason to question how comfortably U.S. AI leaders can defend their margins.
An unconfirmed article reports that an unnamed state-backed Chinese manufacturer has started producing domestically developed immersion deep ultraviolet (DUV) lithography machines. Initial output is set to be limited, with roughly five machines this year and about 20 in 2027.

2. The big picture: Global double digit EPS growth for 2026.

Current 2026 consensus EPS growth forecasts for the S&P 500, STOXX 600, MSCI Japan and MSCI EM stand at 25.6%, 14.5%, 15.1% and 64.8%.

3. Eurozone economic surprise index has risen sharply over the past two months.

4. Focus on the FED this week.

The market still has a one-in-three chance of the Federal Reserve hiking this week. The vast majority of analysts assume Chair Kevin Warsh is not for tightening, but there could easily be one or two dissents in favour of an immediate hike.
"The Fed is not going to move this week. It would be difficult to justify a hike based on a short-term spike in oil prices," said Thomas Hayes, chairman at Great Hill Capital.
The Personal Consumption Expenditures Price Index for June is due a day after the central bank's decision. The Fed's preferred inflation gauge will likely be key in shaping market expectations for interest rates later this year.
“At this point, I am concerned about the elevated pace of core inflation this year,” Christopher Waller, Fed governor, said July 13.

5. US household allocations to equities at record high.

Americans have been piling into the stock market in recent years.
However, many younger U.S. retail investors have never experienced a deep, multi-year bear market. They have been conditioned to rely on the Fed and the government to bail them out before stock prices fall too far – and that has likely only encouraged more risk-taking.

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