To The Moon

Pre-market trading activity shows all three major US stock index futures in positive territory. As of writing, Dow Jones futures are up 0.06%, S&P 500 futures have gained 0.17%, and Nasdaq 100 futures are leading with a 0.33% increase.

European markets are showing mixed but modest moves. The German DAX has edged up 0.05%, the UK's FTSE 100 is 0.03% higher, the French CAC 40 has added 0.06%, and the broader Euro Stoxx 50 index is up 0.31%.

In the commodities space, WTI crude oil is trading 0.12% higher at $82.23 per barrel, while Brent crude has dipped 0.05% to $87.68 per barrel. Reports indicate that Pakistan has suggested signals from the US and Iran point towards a "near agreement," with developments moving in a peaceful direction. Additionally, according to Iran's Mehr News Agency, Pakistan's interior minister has arrived in Tehran for talks.

Japan's central bank might consider a rate hike in September to combat rising inflation risks, according to sources. Following a June rate increase, the Bank of Japan could revisit the idea at its September 17-18 policy meeting, driven by escalating price pressures. These pressures are fueled by surging demand related to artificial intelligence, a sharply weaker yen, and higher oil prices. While many market participants had previously anticipated rate hikes roughly every six months, a summary of opinions from the July 30-31 meeting shows some board members advocated for a faster pace of tightening. One member stated the "pace of policy rate increases may be faster than market expectations," while another stressed the need to "accelerate the pace of adjustment in monetary easing."

The yen has erased half of the gains from a recent intervention, approaching the 160 level against the US dollar, raising questions about the effectiveness of support. US Treasury Secretary Scott Bessent suggested a "whatever it takes" approach to help Japan save the yen, but market participants question the limited firepower available. The yen fell as much as 1% on Monday, wiping out half the gains from the first joint US-Japan intervention since 1998. After the July 31 intervention, which saw the yen briefly approach 155 per dollar, it has now slipped past the 159 mark. As of writing, the dollar-yen rate is hovering near 159. Following the unusual action, Bessent stated, "We will do whatever it takes to support them... to help the US economy, US taxpayers, and stabilize the global economy." The challenge lies in the limited scale of the Exchange Stabilization Fund, his primary tool, which is less than $220 billion. In contrast, Japan is estimated to have used $53 billion for yen operations on July 30 alone. "The US can influence the narrative by coordinating interventions with Japan, but it cannot change the fundamental reality," said Nathan Thooft, senior portfolio manager at Manulife Investment Management, adding that while US authorities have deep pockets, they are not unlimited.

President Trump delivered a series of statements covering control of the Strait of Hormuz, Iran strategy, and Federal Reserve communications, intertwining Middle East tensions with domestic politics. On the Strait of Hormuz, he reiterated US control, claiming mines laid by Iran have been cleared. He outlined three options for dealing with Iran: monitoring its deteriorating situation, launching a heavy strike, and continuing economic pressure, emphasising US control over Iranian funds and assets. Addressing prospects for US-Iran talks, he also made compensation demands from Iran, covering casualties from past conflicts and families of protesters suppressed over the last 50 years, instructing US representatives to pursue these claims in all future negotiations. Domestically, Trump clarified he has only had one brief conversation with Fed Chair Powell since the latter took office, denying frequent communication, a statement aimed at easing market sensitivity over Fed independence. On security and immigration, he disclosed that after receiving a credible assassination threat following the early July NATO summit, he secretly left Turkey using a C-32A aircraft rather than Air Force One. The government has also revoked over 175,000 foreign citizen visas for reasons including criminal activity, violations, and violent speech against Americans. Furthermore, Trump extended the Jones Act shipping waiver for 90 days but narrowed its scope to energy commodities and fertilizers, and publicly backed current FIFA President Infantino, calling his replacement a huge mistake.

The era of "chip inflation" has begun, with AI-driven demand for memory chips causing prices to skyrocket, making computers and phones even more expensive. The explosive growth in AI demand is pushing memory chip prices up sharply, a phenomenon analysts call "chip inflation," which is forming a structural trend with no signs of easing in the short term. Data shows the producer price index for electronic components and accessories rose nearly 30% year-on-year in June, the largest annual increase since records began in 1966, easily surpassing peaks from the 1980s PC era and the pandemic supply crisis. Big tech companies, eager to secure computing power, are signing multi-year supply agreements with vendors, locking in memory capacity ahead of time. This leaves traditional PC and phone makers scrambling for supply in a shrinking residual pool, passing cost pressures downstream. One major phone maker is reportedly considering bringing in new memory chip suppliers to manage soaring costs, but this requires regulatory approval, highlighting the constraints of the current supply chain. The historical pattern of memory prices falling by about 90% every five years over the past six decades is now broken in the AI economy. Memory prices have surged more than fivefold in the past year, marking a complete reversal of a decades-long downtrend and putting pressure on costs for cloud services, end-user devices, and enterprise hardware. Market expectations are shifting from initial fears that companies would cut tech spending due to rising costs to a current scenario where they are increasing investment to avoid future supply gaps, a mindset analysts describe as "fear of missing out on procurement." Wednesday's US CPI data is highly anticipated, and while the overall impact of chip price increases on headline CPI may be limited, specific categories like personal computers could face year-on-year price increases of around 10%, meaning the shock for end consumers will be more direct.

OpenAI has completed a deal to repurchase $7 billion in employee shares, potentially paving the way for an initial public offering (IPO) at a valuation of $852 billion. The tender offer involved buying shares from current and former employees, rather than seeking external investors as in the past when firms like Thrive Capital and SoftBank participated. The transaction values the startup at $852 billion, consistent with its valuation from the most recent funding round.

Anthropic is meeting with investors ahead of a potential IPO, addressing multiple challenges while downplaying competition. The AI giant, valued at $965 billion, is aiming for what could be one of the largest IPOs in history, targeting a listing in September or early October, though pricing and timing are not yet finalised. The company faces headwinds including the rise of low-cost AI systems, tensions with the Trump administration, and growing opposition to data centre construction across the US. In pre-IPO meetings, investors have been questioning the impact of these factors on growth, highlighting the massive uncertainty surrounding the AI race and financial stability. Company executives have downplayed the threat from cheaper AI systems, emphasising a focus on delivering the most advanced AI models. They also revealed plans to expand into healthcare and biology AI applications.

Global gas turbine orders surged 71% in Q2 to a record high, leading major investment banks to declare a "supercycle" for the industry, with leading manufacturers' production schedules booked through 2030. According to JPMorgan, global gas turbine orders hit a record in the April-June quarter, reaching approximately 38 gigawatts (GW), up 29% from the first quarter and 71% year-on-year, driven by a surge in power demand. The US remains the largest market, accounting for nearly half of the orders. JPMorgan data shows Siemens Energy AG secured the largest order volume in Q2 at about 12.5 GW, followed by General Electric Co. at 11.3 GW, and Mitsubishi Power Ltd. at 5.3 GW. The analysts added that rising demand is pushing up costs, with a combined-cycle gas turbine scheduled for delivery in 2031 expected to cost three times as much as a unit delivered last year.

NVIDIA has partnered with six major Wall Street firms to target mobilising over $500 billion in third-party capital for building data centres and purchasing its hardware. The company signed memoranda of understanding with Apollo Global Management, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs, and KKR. The plan aims to transform AI chips and computing infrastructure into an asset class similar to commercial real estate or toll roads, using institutional credit, insurance funds, and private capital to finance customers without burdening their own balance sheets. CEO Jensen Huang stated, "This is truly the first time technology chips are becoming an investable asset class," noting their revenue-generating potential, long lifespan, interchangeability, and flexibility. Wall Street leaders view computing power as a key asset class driving global economic growth. Blackstone President Gray called AI computing power a "financeable asset" with demand far exceeding supply, while BlackRock CEO Fink likened the project to the birth of mortgage-backed securities in the 1970s, calling it "the next future of financial engineering." The initiative comes after global market volatility in July, when investors questioned whether tech giants' AI investments would pay off, and rating agencies like Moody's warned that unprecedented capital expenditure was squeezing free cash flow and increasing debt burdens. NVIDIA's move challenges the traditional view of GPUs as rapidly depreciating hardware, attempting to make them long-term, bankable infrastructure. However, sceptics may question whether AI chips can retain their value with the introduction of newer generations. Fink emphasised that some funds have already been raised and need to be deployed quickly to ensure the US maintains its global lead in AI.

SK Hynix's NAND subsidiary, Solidigm, has restarted construction of a second phase factory at its NAND flash memory production base in Dalian, China, in the first half of this year. Once operational, the company's local production capacity is expected to expand by about 50%. The factory, construction of which began four years ago, was long halted due to a downturn in the memory market. SK Hynix plans to begin moving in semiconductor production equipment as early as November, with mass production slated for the first half of next year. The new line is expected to have a wafer input capacity of around 50,000 units per month. NAND prices have surged nearly tenfold in a year, driven by soaring demand for enterprise-grade solid-state drives due to the proliferation of AI data centres.

Intel is reportedly planning to expand its stock offering, increasing the target from $15 billion announced on Monday to around $20 billion, a rise of one-third. Sources indicate the offering is expected to be priced around $95 per share or higher, roughly a 6.5% discount to last Friday's close. If the over-allotment option is exercised, the total amount could exceed $20 billion. The share sale has reportedly attracted over $100 billion in orders, indicating strong market interest. Discussions are ongoing, and details like size and price could still change. An Intel spokesperson declined to comment.

Fermi shares surged in pre-market trading after the company announced its first binding customer lease for an AI data centre. The company's Project Matador campus in Carson County, Texas, has signed a 15-year lease with AI cloud provider TensorWave. The initial phase covers a facility backed by 222 megawatts of total power capacity, generating an estimated $6.5 billion in total contract revenue over the initial term. The lease includes expansion rights for two additional data centres, potentially extending the partnership to over 650 megawatts across three phases. The facility is expected to begin phased delivery in the second half of 2027 and could support tens of thousands of next-generation AMD Instinct GPUs for large-scale AI training and inference. The lease also includes two five-year renewal options, potentially extending the term to 25 years.

Anthropic has signed a $9.1 billion deal with Bitcoin miner Riot Platforms for AI data centre computing power. The agreement highlights Anthropic's efforts to secure sufficient computing capacity to meet growing customer demand for its Claude AI model. Riot, which recently began offering AI data centre services, also reported Q2 2026 earnings after the close on Monday, with revenue beating expectations but losses exceeding forecasts. The company earlier disclosed a 20-year power supply agreement from its Rockdale, Texas campus, providing 191 megawatts of power capacity to a "leading frontier AI company," which sources confirm is Anthropic. Riot shares surged 16% in pre-market trading on the news.

Amkor Technology is considering strategic options for its China business, including selling a stake, which could be valued at up to $1.5 billion. The OSAT giant has hired advisors to help prepare for a potential spin-off and gauge initial buyer interest. Amkor may retain a minority stake in the business, which is valued at between $1 billion and $1.5 billion.

Morgan Stanley has launched its "US Innovation Infrastructure Initiative," aiming to facilitate approximately $1.5 trillion in financing, capital raising, and related investments over the next decade. The initiative focuses on strategic sectors including artificial intelligence, semiconductors, cybersecurity, and energy infrastructure. The bank will assist companies with capital raising, financing, and advisory activities. The plan centres on three core areas: innovation platforms and strategic industries (AI, semiconductors, cybersecurity), infrastructure supporting the innovation economy, and capital supply for entrepreneurs and high-growth companies.

Key economic data and events for the upcoming session include: US ADP employment change for the week ended July 25 at 20:15 Beijing time; US July existing home sales at 22:00; EIA monthly short-term energy outlook at midnight; and US API crude oil inventory change for the week ended August 7 at 04:30. Earnings reports are expected from CoreWeave, Super Micro Computer, and Lumentum before market open on Wednesday, with Nebius Group reporting after the close.