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.

Two Rounds of Treasury Buybacks, and Long-End Yields Still Hit a New High?
The Treasury bought 20- to 30-year debt again Wednesday, capped at $6B — second round in two weeks; the first filled only $5.2B. The bid came, yields didn't fall: the 10-year closed at 5.11%, up 15bp and the highest since 2007, as was the 30-year. October Fed hike odds hit 69.7%. Stocks fell: Nasdaq -1.13% to 26,936.04, erasing Tuesday's record; QQQ -0.84% to $741.21; S&P 500 -0.75% to 7,706.03; Dow -0.68% to 51,511.59. Bulls say firm data, not weak demand, is lifting yields; bears say two buybacks and a new high prove the bid can't absorb supply. At what yield do you redo the math on stocks?
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