1. What if the Fed does hike?

"A September Fed hike could put further upside pressure on bond yields, weighing on equity multiples," strategists said in a BofA Global Research report.

“The bulk of inflation pressure appears to be tied to short-term oil price movements. Even if oil prices hold around current levels, headline CPI in both the U.S. and the Eurozone should start to fall on a sequential basis as the oil-driven base effects fade.
We believe the Fed could ultimately be less hawkish than what is already being priced in. Last week’s optimism from NY Fed President Williams and Governor Waller on the inflation front is encouraging”, said JPMorgan.
“Historically, equities can cope surprisingly well with higher yields when those yields reflect resilient economic growth, strong corporate investment, rising productivity expectations, and improving earnings prospects."
“As corporate profits remain on an uptrend, any bout of weakness in equity prices would leave them cheaper. We believe one should continue using the dips to add.

Below: “Earnings revisions are picking up meaningfully in all regions, driving our call for further upside in equities into year-end.”

2. Nasdaq breadth is getting weaker.

A top-performing fund manager at PIMCO beating 97% of peers is underweight big US tech and betting on Asian equipment suppliers, Chinese financials, and healthcare stocks as the next winners of the AI boom. On the topic of US tech, there are signs of deteriorating breadth under the surface, with the fewest Nasdaq 100 members trading above their 20-DMA (20 day moving average) since July.

3. High yield corporate bonds are priced for perfection.

High-yield spreads have fallen to just 2.66% above US Treasuries—close to their tightest level in years and roughly half the historical average. That leaves almost no margin for error.
And credit markets often crack before equities notice. At a 2.66% spread, investors are receiving very little compensation for default and liquidity risk.
If spreads widen, financial conditions could tighten quickly—and stocks may feel the impact soon after.

4. Gold slips on rate-hike bets but this could be a buying opportunity.

Gold slipped as strong U.S. jobs data reinforced expectations for higher interest rates, while investors awaited key U.S. inflation reports due later this week for further clarity on the Federal Reserve's policy path.
However, central-bank buying has remained strong as fiscal sustainability concerns and geopolitical fragmentation are structurally expanding gold’s share of global reserves.
Over recent years, the step increase in buying from global monetary authorities has helped insulate the yellow metal from the increase in real yields, which have typically had a significant inverse correlation to the price of gold.
With structural demand drivers more firmly in place, the primary impediment to a sustained rally in precious metals would be any sharp appreciation in the dollar.
The combination of an already stretched dollar exposure, physical demand holding strong and yield sensitivity fading means even modest downside surprises in US data should turbocharge the new bull market for gold and silver.

5. EV’s are making China “Hormuz-proof”.

EVs displaced China’s oil consumption to the tune of 1.5 million barrels a day in the second quarter, according to the International Energy Agency—1.5% of global demand, roughly France’s share.
Sales of electric heavy trucks exceeded 230,000 last year, nearly 30% of overall sales, and their share reached 44% in June, ICCT says.

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