Good Morning Investors,
Markets open the week on the cusp of all-time highs after a 28% rally off April’s lows, with the story still one of consolidation rather than reversal. Gains are being digested, not dumped, and that’s often the prelude to another leg higher. My base case remains intact: if August produces a pullback, it will most likely be around Tuesday’s CPI report. Consensus expects a hotter read driven by tariff pass-through, but the real opportunity lies in an upside surprise. A cooler number that undercuts that narrative would clear the way into Jackson Hole, and would set the stage for a September rate cut. Any CPI-driven weakness is likely to be short-lived.
Opening Bell: Futures Edge Higher Ahead of CPI
U.S. stock futures were modestly higher early Monday. Dow ($DIA ( ▲ 1.94% )) futures gained 100 points (+0.2%), S&P 500 ($SPY ( ▲ 1.54% )) futures rose 0.1%, and Nasdaq-100 ($QQQ ( ▲ 1.54% )) futures hovered just above flat. Gains were kept in check after reports that Nvidia ($NVDA ( ▲ 1.72% )) and AMD ($AMD ( ▲ 2.47% )) agreed to hand over 15% of revenue from certain chip sales to China in exchange for export licenses. Nvidia slipped about 1% premarket, AMD fell 2%.
Last week saw the Nasdaq Composite finish at a fresh record close, the S&P 500 end just shy of another milestone, and the Dow notch a weekly gain. Apple ($AAPL ( ▲ 1.27% )) was up 12% last week for its best performance in five years, helped drive the advance after striking a $600 billion U.S. investment deal with the White House.
Global markets are also trading with a cautious upward bias. Japan’s Topix crossed the 3,000 mark for the first time, while China and Hong Kong gained on signs of a U.S.-China trade truce. Oil prices eased ahead of U.S.-Russia talks on Ukraine, and gold pulled back as investors await clarity on potential bullion tariffs.
Market Framework: Earnings Strength, Structural Tailwinds
This market is not running on sentiment alone. Roughly 82% of S&P 500 companies have beaten earnings estimates this season, well above historical averages. Multiples may be elevated, but they’re underpinned by genuine earnings growth across sectors that have navigated multiple macro stress tests since 2020.
Leadership remains concentrated with the top 10% of stocks now making up 76% of market cap, but these are proven earnings engines with deep moats. Nvidia’s chips, in short supply and commanding premium margins, anchor the AI buildout alongside Microsoft, Meta, and Alphabet.
Liquidity remains a dormant catalyst. With $7 trillion parked in money markets, even a modest redeployment post-Fed cuts could materially lift equity demand. Pullbacks since 2020 have been shallow and quickly bought, a sign of persistent underlying appetite for risk.
Technology & Infrastructure: AI Buildout to Monetization
The Nvidia–AMD revenue-sharing deal with Washington is unprecedented, highlighting the administration’s willingness to blend tariffs with selective carve-outs for strategic tech exports. While headlines may rattle sentiment short term, the arrangement ensures continued access to China’s AI demand, a long-term positive for both.
SoundHound’s Q2 results reinforced that AI isn’t just infrastructure, it’s becoming embedded in everyday transactions. Revenue surged over 200%, full-year guidance was lifted toward 100% growth, and the launch of Vision AI, giving the platform both “eyes” and “ears”, opens applications from drive-thrus to factory floors. If adoption keeps scaling, this is a recurring revenue story in the making.
Corporate Highlights: Execution Still Wins
Palantir delivered a blowout quarter, sending shares up 18% to fresh records. MP Materials posted a 120% surge in NdPr production, aligning with U.S. critical mineral policy. Western Union’s $500 million acquisition of Intermex expands its Latin America footprint.
Activist Engine Capital has built a stake in Avantor, pushing for a sale at $17–$19 per share. Nexstar is in advanced talks to acquire Tegna, signaling further consolidation in U.S. broadcasting.
Crypto Framework: Bitcoin Leads, Ethereum Builds
Bitcoin’s ($BTC.X ( ▲ 3.75% )) July breakout has historically been a one-to-two month lead indicator for equities, suggesting potential for an S&P 500 breakout by early autumn. Ethereum ($ETH.X ( ▲ 13.4% )) is holding near $4,000, with its central role in stablecoin settlement providing a steady transactional base. I remain constructive on Ethereum treasury plays like Sharplink Gaming ($SBET ( ▲ 15.69% )) and Bitmine ($BMNR ( ▲ 12.07% )).
Macro Outlook: CPI as the August Inflection Point
Tuesday’s CPI is the main event. Headline inflation is expected at 2.8% y/y, core at 3.0% y/y with a 0.3% monthly gain - the largest since January. A softer print could ignite a breakout, while a hotter number would likely trigger only a brief pullback before positioning turns toward Jackson Hole.
The Fed’s September meeting remains pivotal. With the nomination of Stephen Miran, the balance inside the FOMC could tilt dovish, especially with the labor market cooling but not collapsing. Retail sales Friday will add another data point on consumer resilience, which remains stronger than headlines suggest.
Final Thought
The market’s resilience is no accident. Earnings strength, ample liquidity, and structural growth in AI, infrastructure, and critical materials are providing a foundation that can absorb both policy noise and seasonal headwinds. With inflation data and Jackson Hole in sight, the opportunity lies in owning the businesses already aligning with the next phase of capital deployment, those building capacity, securing market share, and locking in pricing power now. In this environment, leadership is not about chasing the next headline, it’s about backing the companies turning structural change into durable, compounding returns.
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.