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.

QQQ Falls 1%: Warsh and Bessent Clash at Jackson Hole — Who Sets the Tone?
QQQ −1.00% Monday against the S&P 500's −0.28% — the drop was tech and semis weighting, not broad risk-off. Two macro weights: Jackson Hole, where the story is Warsh against Bessent, monetary stance versus debt issuance; and the fiscal-dominance question, with long-end rates and liquidity now doing the valuation work. Iran signalled a new round of U.S. pressure, adding oil risk. The nearer trigger: Nvidia after Wednesday's close, guidance amplified sector-wide. Trim ahead of both and hold only relative-strength platforms like Meta and Alphabet, or use the pullback to add QQQ?
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