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.
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