Market Overview & Fed Policy - Markets are cautiously awaiting Nvidia earnings and PCE inflation data [2][3] - Equities are showing a neutral response to Fed actions, with focus on inflation, earnings, and employment [3][4] - The dollar is slightly weaker, while the yield curve is expected to steepen [4] - A 25 basis points rate cut by the Fed is expected in September, contingent on August payrolls [10] - Disappointing August payrolls could put a 50 basis points rate cut back on the table [10] Nvidia & Tech Sector - Nvidia is considered underowned by investors [6] - Nvidia's potential earnings could reach $8 per share by 2027, trading at 25-30 times 2026 earnings [6] - Continued bullishness around AI demand is crucial for Nvidia's stock performance [6][7] - Tech stocks comprise over 30% of the S&P 500's market cap and have driven two-thirds of recent earnings growth [8] - Strong Nvidia earnings are expected to continue leading the US market [8] Fixed Income & Economic Outlook - The Treasury yield curve is expected to steepen, with longer rates potentially rising [9] - If the yield curve steepens due to a strong economy, it's considered positive for equities [10] - Structurally higher inflation could also contribute to the steepening yield curve [10] - If the Fed waits to cut rates until employment markets crack, the risk of recession increases [10]

Market Overview & Economic Factors - Late August is expected to have low liquidity, and September is traditionally the worst month for the S&P 500 [2] - Earnings are expected to grow over 10% year-over-year, about double the consensus [2] - Weak payrolls data (around 73,000) and ISM data raise concerns about the economy [3] - Uncertainty surrounding the next Fed chair is making markets nervous [3] NASDAQ & Tech Sector - The NASDAQ is considered a favorable investment area due to the AI trend, moderating 10-year Treasury yields, and its appeal during economic slowdowns [5] - The AI boom is still active, with companies continuing to invest tens or even hundreds of billions in AI [6] Interest Rates & Fed Policy - A weak August payrolls report could lead to a 25 basis point rate cut, and a 50 basis point cut should be considered [7] - A 4% to 4.5% range is expected for the 10-year Treasury yield for the rest of the year, assuming the economy shows signs of slowing [8] - The Fed is closely watching employment markets, balancing this with the impact of tariffs on inflation [10] - The base case is a 25 basis point rate cut in September, unless August payrolls are significantly weaker [11] - A one-time bump in inflation is expected due to tariffs, but core inflation is trending towards the Fed's target [12] Investment Opportunities - Infrastructure is favored, driven by increased investment in the US on both public and private sides [13][14] - AI data centers and upgrading electrical grids are key areas within infrastructure [14] - Utilities are a strong play for infrastructure, needed to fund electricity for AI and upgrade grids for renewable energy [16]

Labor Market Trends - Employment markets are showing a clear signal of slowing down significantly, despite previously solid levels [1] - Revisions in the previous two months indicate a notable downward trend in employment [1] - Unemployment rate stood at 41%, with solid wage and employment growth previously [3] Inflation and Economic Risks - Core PCE inflation rate was at 28% and not moving towards the 2% target [2] - Prior to this week, the risk to inflation was considered greater than the risk to employment [2] - Recent data suggests the economy and labor market may be weakening more broadly [4] - Risks to the employment side of the mandate are becoming more balanced with those of inflation [4] Policy Implications - The appropriate path for policy needs to be re-evaluated in light of the new data and revisions [4] - The extent to which the labor market slowdown is a temporary move or a persistent trend remains uncertain [2]