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Futures Slide After Another Korea Rout, TSMA Results Revive AI Fears

Futures are lower, erasing much of yesterday's gain with both Nasdaq and Rusell lagging SPX, following a continued rollercoaster in Korea where stocks tumbled after the BOK hired rates for the first time in 3 years. As of 8:15am ET, S&P futures dropped 0.3%, while Nasdaq 100 contracts dropped 0.8%. In premarket trading, semis are weaker again while Mag7 is stronger (AMZN, GOOG, META, and MSFT all up are least 1.2%) with the market having "a defensive tilt as the AI theme is poised to move lower" per JPM. A strong earnings beat and raised sales outlook from TSMC failed to trigger fresh gains for the sector that has fueled most of this year’s stock market gains. Europe’s Stoxx 600 was down 0.6%. WTI trading in a tighter range into Trump’s speech, AI / Semis are driving mkts with TSM ADRs indicated -3.5% their print may not be enough to buoy the group. Korea moves to tighten rules around levered ETFs, so more near-term downside may ensue. US to set 25% tariff for Brazil on July 22, ex-beef / coffee / ethanol products. Pre-mkt, bond yields are +2bp with USD flat. Commodities are lower across all 3 complexes though base metals are bid. Today’s macro data focus is on Retail Sales where a stronger print may pull some inflows into consumer-related segments, which still have light positioning. 

In premarket trading, Mag 7 stocks are mixed (Alphabet +1.3%, Microsoft +1.3%, Amazon +0.7%, Meta +0.3%, Apple +0.4%, Tesla -0.2%, Nvidia -1.5%)

• AtaiBeckley (ATAI) leaps 34% as Eli Lilly is in talks to acquire the psychedelic drugmaker, according people familiar with the matter. Analysts are positive about the psychedelic sector; RBC singles out GH Research (GHRS +18%) for a direct read-across.
• GE Aerospace (GE) declines 4% after the world’s largest jet-engine manufacturer posted second quarter results and provided an updated forecast.
• United Airlines (UAL) falls 3% after the airline’s updated full-year adjusted EPS forecast trailed the average analyst estimate.
• UnitedHealth Group (UNH) is up 7% after the health conglomerate raised its outlook for the year and reported quarterly profit well ahead of Wall Street’s views, helping to solidify the company’s earnings recovery after a historic collapse. Shares of peer insurers are up on the news: Humana (HUM) +5%, Centene (CNC) +3%.

In other corporate news Hyundai Motor is moving to acquire SoftBank’s remaining stake in Boston Dynamics, securing full ownership of the robotics pioneer at a steep discount. ABB agreed to buy British industrial components company Rotork for an enterprise value of around $5.5 billion to expand its electrification and automation businesses. Japan is planning to buy 27,500 next-generation Rubin chips from Nvidia to build a homegrown foundational AI model for robots. Jensen Huang said Nvidia’s next-generation AI accelerator systems were in production and on track for delivery. The AI frenzy is showing up in Asia airlines’ cargo bays helping to mitigate the surge in jet fuel costs. 

TSMC hiked sales and spending projections for the year, signaling its confidence in the demand for chips and data centers holding up through 2027 and beyond. However, American depositary receipts for the firm are down 4.6% during premarket trading, while peers like Micron, Marvell and Nvidia also declined.  With TSMC’s results, concern around AI — and the capital spending behind it — has been brought back to the forefront. Traders have become more critical over AI this year, rotating out of stocks linked to the technology on the basis that the spending has failed to produce meaningful returns.

Chipmakers’ leading role in this year’s equity advances is increasingly coming under strain as traders grapple with lofty stock valuations and whether AI hyperscalers are building more capacity than they will need. Investors are also looking for opportunities to rotate to other sectors within the AI trade that will benefit from the global buildout at more attractive prices.

The latest rout in Korean stocks (full discussion in a subsequent post), sparked selling in tech names, even after Taiwan chip giant TSMC raised its spending and revenue projections for the year, reflecting its confidence that torrid growth in demand for chips and data centers will extend into 2027. TSMC also plans to spend an additional $100 billion to expand US chipmaking capacity. Still, such strong earnings alone aren’t sustaining the momentum trade, signaling that investors are reducing risk. Indeed, as Goldman noted yesterday, we have now seen the worst monthly plunge in high beta momentum since the Global Financial Crisis.

With signs of memory capacity expansion, and Chinese competition ramping - investors might begin to look through perceived low P/E multiples and focus on a more cyclical measure of price/book, which paints a contrasting picture.  

Korea’s Kospi was hit particularly hard, down 6.4%, as its two main heavyweights, Samsung and SK Hynix both fell more than 10%. Korean authorities moved to curb volatility, announcing a temporary halt on new listings of single-stock leveraged exchange-traded products tied to the chipmakers.

“There’s been a lot of concentration in the market and that means there’s little room for error,” said Richard Flynn, managing director at Charles Schwab UK. “Global geopolitical risk is elevated and so there’s a relative tone of caution fundamentally looking at the macro outlook.”

“There’s been a lot of rotation within the AI trade, and a small rotation more broadly,” said Toni Meadows, head of investments at BRI Wealth Management. “It’s probably a healthy thing to have consolidation. The further things go, the more stretched they get and then the reaction is bigger.”

After two days in which softer-than-expected inflation data saw traders dial back their expectations for Federal Reserve interest rate hikes this year, June retail sales numbers will put the spotlight on the strength of American consumers.

In geopolitics, the IEA boss warned the global economy is in peril if the Hormuz crisis persists. US Trade Representative Jamieson Greer offered praise for Switzerland’s stance in trade negotiations and its investments in the US, a positive sign for the European nation as it looks to secure a 15% tariff and avoid further confrontation with Trump. The US will begin charging a 25% tariff on imports of certain goods from Brazil following an investigation alleging that the country engaged in unfair trade practices.

In hedge fund news, King Street Capital Management told clients it’s significantly restricting withdrawals from its main hedge fund, moving investors who want to exit to a separate vehicle that will sell off the assets over time. 

European equities edged lower on Thursday with the Stoxx 600 down 0.4%, as utilities and telecommunications shares led declines, while the biggest outperformers are media and banking stocks. Here are the biggest movers Thursday

• Indutrade shares surge as much as 14% after the Swedish flow control equipment firm’s second-quarter results beat estimates. Analysts at SB1 Markets said the company is poised to win consensus upgrades
• Diploma shares rise as much as 5.4%, the most in nearly two months, as the equipment supplier upgrades full-year guidance again
• Publicis shares rise as much as 4% after the advertising agency raised the low-end of its organic revenue growth guidance, saying new business wins are contributing about 2 percentage points of extra growth on FY basis
• De’Longhi rises as much as 4.9% in Milan, the most since May, after Goldman Sachs initiated coverage with a buy rating, citing the household appliance maker’s exposure to the growing espresso coffee market
• Dunelm shares rise as much as 5.6%, hitting a four-month high, after the homeware retailer reported better sales growth in the fourth quarter compared to the exit rate coming out of the third
• Telenor shares fall as much as 13%, the steepest drop since October 2008, after the Nordic telecom operator reported second-quarter results that missed estimates and lowered its full-year guidance
• ABB falls as much as 4.1%, erasing an initial gain of 1%, after the industrial group reported second-quarter results with focus on the company’s announcement that it would buy Rotork for $5.5 billion
• Partners Group shares fall as much as 8.2%, the most in six weeks, after the Swiss alternative asset manager’s first-half net inflows disappointed analysts
• Experian shares fell as much as 7.1%, as the credit checking company’s first-quarter organic revenue growth moderates. Analysts say the results were largely expected
• Frasers shares drop as much as 5.9%, underperforming the FTSE 250 Index on Thursday morning, after the UK retailer reported weaker-than-expected adjusted pretax profit for the year
• Ocado shares slide as much as 17%, to the lowest price since 2013, after the online grocery firm confirmed further delays to multiple customer fulfillment centers

Asian stocks slumped as investors accelerated semiconductor selling, dragging down sector‑heavy markets and souring broader sentiment. The MSCI Asia Pacific Index slid as much as 2% before paring some losses, as the stock markets in South Korea, Japan and mainland China registered losses. Korea’s Kospi was hit particularly hard, down 6.4%, as its two main heavyweights, Samsung and SK Hynix both fell more than 10%. Korean authorities moved to curb volatility, announcing a temporary halt on new listings of single-stock leveraged exchange-traded products tied to the chipmakers. Hong Kong’s Hang Seng Index bucked the trend to gain 1.3%, as investors rotated into the Chinese internet giants such as Alibaba and Tencent. Most Southeast Asian markets, such as Thailand, Malaysia and Indonesia, also traded higher. 

Korea, Taiwan and Japan have been among the global leaders this year, but face mounting scrutiny as investors question whether the AI rally can last. A gauge of Asian chipmakers fell as much as 4.6%. Still, Taiwan Semiconductor Manufacturing Co. provided more signs of sustained AI demand, when it raised its spending and revenue projections for the year. With leading Korean chip names down, investors are rotating out of the country, said Yi Ping Liao, portfolio manager at Franklin Templeton. “But interestingly it doesn’t look like a broad based rotation out of tech as Taiwan tech and China tech remain well supported.”

“Now that selling momentum builds in the Korean semis, investors are returning to China where valuations are depressed,” Vey-Sern Ling, managing director at Union Bancaire Privee, said, adding China’s tech performance has been inversely correlated with high-flying Korean memory names recently.

 

In FX, the Bloomberg Dollar Spot Index is near flat with muted moves across the G-10 complex.

In rates, treasuries fall despite a pullback in oil prices that correlations suggest should be accompanied by gains for bonds. That’s not been the case however with US 10-year yields rising 2 bps to 4.57%. UK and German government bonds are nursing similar sized declines. Long-end yields cheaper by around 3bp and the curve slightly steeper, amid similar moves in European bonds. The price action unwinds a portion of the sharp rally over the past two days spurred by soft CPI and PPI prints. Treasury yields are 2bp-3bp cheaper across the curve with 5s30s spread steeper by around 1bp, adding to its sharp widening since Tuesday. 10-year is around 4.57% with bunds and gilts similarly cheaper. IG dollar issuance slate includes a couple of deals. JPMorgan and Morgan Stanley headlined a $23.6 billion slate Wednesday with $9 billion offerings. Issuers paid an average of about two basis points in new issue concessions on deals that were 4.1 times covered. Focal points of US session include June retail sales data and several Fed speakers. 

In commodities, Brent crude futures fall 0.8% to around $84.30 a barrel even after the US struck Iran for a fifth straight day. European natural gas futures are down 1%. Bitcoin falls over 1% while precious metals are also in the red.

US economic data calendar includes July New York Fed services activity, weekly jobless claims, July Philadelphia Fed business outlook index, and June retail sales (8:30am), July NAHB housing market index, May business inventories and June pending home sales (10am). Fed calendar includes Dallas Fed’s Logan (12:30pm), Kansas City Fed’s Schmid (1:25pm) and Vice Chair Jefferson (7pm)

Market Snapshot

Top Overnight News

• The US struck Iran for a fifth straight day overnight and hit a sanctioned oil tanker near the country’s main export terminal. Iran fired at US bases in Kuwait and Jordan. BBG
• Iran allowed an American citizen to go free after preventing her from leaving the country for a year and a half, a move President Trump called a “gesture of good will” amid a deepening standoff between the two foes. WSJ
• The Trump administration said on Wednesday that it would impose a new 25 percent tariff on Brazil next week, arguing that the country had adopted a range of unfair trade practices against the United States. The tariff will apply to thousands of Brazilian products, but will exempt several major categories of exports, including oil and gas, beef, coffee, oranges, and aircraft parts. The tariff will apply to Brazilian ethanol, and take effect next Wednesday. NYT
• South Korea’s central bank raised interest rates for the first time in over three years, joining its global peers to tighten policy in the face of inflation fueled by the U.S.-Iran conflict. Bank of Korea Gov. Shin Hyun-song said that the bank would tighten policy further in coming months, citing stronger-than-expected economic growth and inflation. WSJ
• South Korea’s top financial regulator unveiled measures to curb risks from single-stock leveraged exchange-traded funds, seeking to stabilize a local stock market that has seen wild swings, as individual investors use debt to chase profits amid artificial-intelligence-related jitters. The Financial Services Commission said Thursday that it would suspend new listings of single-stock leveraged ETFs, ban securities firms and asset managers from advertising or marketing such products. WSJ
• Baidu plans to pursue a dual primary listing in the US and Hong Kong, a move that will allow it to tap mainland Chinese investors. BBG
• UK economic data for May was mixed, with modestly better GDP and manufacturing production while industrial production fell slightly short . BBG
• Smoke blanketed parts of the Northeast, Midwest and Great Lakes as hundreds of wildfires burned across Canada. New Yorkers face unhealthy air again today and are advised to stay indoors, according to state data. BBG
• The dip in SpaceX's shares below its blockbuster IPO price of $135 a share is an ominous sign ‌for Elon Musk's internet and rocket company as it faces more potential volatility in early August, when the number of shares available for trading on the Nasdaq stands to increase significantly from the lockup expiration. Reuters
• The market has priced a large US growth upgrade and more hawkish policy views versus before the war. Goldman
• BofA week-to-July 11th total card spending +4.5% (prev. 4.8%); spending growth slowed but remains solid.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were ultimately mixed, albeit with a mostly negative bias in the major indices, as risk sentiment was dampened by a sell-off in semiconductor stocks. ASX 200 was subdued with the index pressured by losses in miners after BHP reported lower output. Nikkei 225 slid below 67,000 with chip-related stocks over-represented in the list of worst performers. KOSPI triggered sidecars as Samsung Electronics and SK Hynix slumped alongside the semiconductor sell-off, while the BoK also raised its key rate by 25bps to 2.75%, as expected, and signalled further action. Hang Seng and Shanghai Comp were mixed with the mainland in the red following disappointing loans and financing data, while the Hong Kong benchmark rallied amid strength in hyperscalers following reports that US companies were increasingly adopting open-weight Chinese AI models and that Alibaba's Qwen AI would be integrated into Apple Intelligence in China.

Top Asian News

• South Korea Financial Regulator said they are to revise rules on single-stock leveraged ETFs to temporarily halt new single leveraged products from listing. The minimum required investor deposit is to be raised to KRW 30mln from KRW 10mln.
• Japanese Finance Minister Katayama reiterated they will take appropriate action on FX anytime as needed, although she won't comment on specific FX levels, and stated they will monitor market developments and economic indicators to achieve fiscal sustainability.

European bourses (STOXX 600 -0.3%) begin Thursday’s trade entirely in the red, with underperformance in the SMI (-0.9%) after earnings from Partners Group and ABB. On the data front, UK GDP M/M printed 0.1% M/M, in line with expectations, while the 3M ticked down to 0.7%, from 0.8%, but beat the 0.5% consensus; no reaction seen in the FTSE 100. Sectors highlight the negative bias, with Media (+0.6%) the only sector printing modest gains after earnings from Publicis (+2.1%), raising its FY revenue guidance. Underperformance is seen in Utilities (-1.1%), followed by Industrial Goods & Services (-1.0%) and Financial Services (-1.1%). US equity futures follow their European peers, trading entirely in the red, despite strong TSMC earnings and an Nvidia announcement. For TSMC, the Co. reported Q2 metrics that beat estimates and raised its Q3 revenue guidance. Additionally, the Co. is to add another USD 100bln of US investment. For Nvidia, the Co. announced that Japan, through Noetra, will buy 27,500 Rubin chips to build AI models for robots.

Top European News

• Italy PM Meloni’s electoral reform has been approved by Italy’s lower house in a vote.

FX

• G10s lack direction against the Buck in light newsflow. GBP, CHF and NOK all lower after recent gains.
• DXY is marginally firmer, but USD gains are mixed against other G10 peers. Today’s calendar sees a few Fed speakers, Logan, Schmid and Jefferson, and the data slate features Retail Sales and weekly jobless claims.
• NOK and CHF are the worst performers against the Greenback, which attempts to retrace lost ground with energy prices weighing on NOK, and USD/CHF garnering support around 0.8050.
• Not too much was learned from the UK GDP reading for May, which rose but fell short of expectations. On Wednesday, GBP rallied after a number of outlets reported that Mahmood was set for the Chancellor role. Currently, GBP/USD is holding onto gains just above the 1.35 mark.
• EUR is flat against the USD and slightly firmer against GBP, with bloc-specific newsflow light. For now, EUR trades within a narrow 1.1460-74 range. EZ calendar light with ECB on its quiet period ahead of its policy meeting next week.

Fixed Income

• Global fixed income benchmarks are modestly softer across the board, with a lack of clear drivers, and as US-Iran strikes continue to stoke fears of prolonged inflation.
• Gilts (-15 ticks) trade at the lower end of its 87.15-87.60 range, giving back some of Wednesday’s gains. This morning, UK GDP printed 0.1% M/M, in line with expectations, while the three-month gauge ticked down to 0.7% (from 0.8%), but still beat the 0.5% consensus. Politics remain front and centre: reports on Wednesday suggest that incoming PM Andy Burnham is likely to appoint Home Secretary Mahmood as the next Chancellor. Markets have taken this as a positive as she is seen as fiscally conservative, though many still seek clarity on her broader positions. Polymarket gives Mahmood a 63% chance vs Miliband's 9% to become the next Chancellor. The UK had a decent auction, however demand did fall from the prior auction
• OATs (-22 ticks) follow their European peers lower. Politics remains in focus; recently, RN's Le Pen was found guilty of embezzlement by the Paris court, but given the timing of the first round of the Presidential Election, she is eligible to run for President. Since then, she announced she would appeal the court's decision and has launched her Presidential campaign. Polls show that Le Pen has extended her lead, with support rising to above 35% from 33% before she announced her bid. Today’s auctions came broadly in line with priors, with demand holding near 3x.
• USTs (-7 ticks) look ahead for more Fedspeak, with Logan, Schmid and Jefferson all set to speak on the economy and economic outlook today (note: Jefferson is after hours). On the data front, initial jobless claims and retail sales are the highlights.
• The UK sells GBP 4.25bln 4.875% 2036 Treasury Gilt: b/c 3.13x (prev. 3.46x), average yield 5.040% (prev. 4.858%), tail 0.1bps (prev. 0.1bps).
• France sells EUR 13.999bln vs exp. EUR 12-14bln 2.40% 2029, 1.50% 2031, 3.25% 2032 and 3.50% 2033 OAT.
• Spain sells EUR 5.974bln vs exp. EUR 5-6bln 2.35% 2029, 3.55% 2033 and 3.95% 2056 Bono.

Commodities

• The situation between the US and Iran remains volatile. Overnight, the US completed another round of strikes on various parts of Iran, targeting military capabilities. Tehran responded with its own attacks on Kuwait and Jordan.
• The path to peace currently remains uncertain. President Trump said that strikes would expand next week; a recent report via the WSJ suggested that Trump is leaning toward expanding US military operations in Iran after days of briefings from top aides. If this proves to be the case, then the risk is that Iran responds with a harsher response against its regional peers. Thus far, Iran has generally avoided energy infrastructure across Gulf nations, but a US expansion could see Iran begin to target Gulf energy facilities, posing risks for oil supply. In the immediate term, the Strait remains shut and near-term flows have been slowed; longer-term, severe facility damage could see halts to production for several months/years, analysts say.
• Despite these risks, crude benchmarks are trading lower this morning; Brent Sep’26 (-0.5%) trades within a USD 84.30-85.55/bbl range. Price action was lacklustre overnight and into the European morning. However, some modest upticks (c. USD 0.30/bbl) were seen after an Iranian Top Military Commander stated that the Strait of Hormuz is a red line and added that all infrastructure in the region will be "crushed" if the US continues its interference.
• Spot gold (-0.6%) moved lower throughout the APAC session. The subdued action filtered through into London hours; currently holding at session lows of USD 4,024/oz (vs peak of USD 4,064/oz). Action, which is a bit of a paring back from the gains seen in the past couple of sessions. Elsewhere, base metals hold a modest positive bias. 3M LME Copper (+0.3%) holds within a USD 13,541-13,648/t range.
• Crude oil flows were suspended at all Iraqi oil loading terminals following a drone crash into an oil tanker at Iraq’s Basra terminal; no damage or fires were reported, security sources said.

Trade/Tariffs

• The US is to set a 25% tariff on some Brazil goods from July 22nd, with coffee and beef exempted.
• USTR Greer said that Canada offers no concessions and that Mexico is pragmatic in USMCA talks.

Central Banks

• BoK raised its 7-day Repo Rate by 25bps to 2.75%, as expected. BoK said the rate decision was unanimous and growth rate this year is expected to considerably surpass the May forecast of 2.6%. Will assess timing of further increase in inflation pressure, improvement trend in the economy and financial stability.
• BoE's Breeden said it is important firms are stress testing AI valuations. The Iran war shock is less likely to become embedded and lead to inflationary dynamics that members might need to lean against.
• NBP's Zarzecki said the base case is for rates to remain unchanged until the turn of 2026/27, with rates likely to rise in 2027.
• SNB Minutes (Jun): Although inflation risks have increased in recent months and stronger second-round effects are possible, there is no immediate need for action.

Geopolitics

• US President Trump posted that Iran allowed a US citizen who was wrongly detained in December 2024 to leave the country. Trump added that the citizen is now safely outside of Iran and in good condition, while he stated that the US appreciates the gesture of goodwill by Iran.
• US VP Vance said Israel is more effective than most at influencing the US, and that some people in the Israeli government want war indefinitely. Furthermore, Vance said they are not going to send ground troops for regime change and that the US will not simply engage in endless bombing of Iran.
• US CENTCOM said forces conducted operations for a second wave of strikes on Wednesday against Iran and that US forces disabled a non-compliant vessel in the Arabian Gulf, while it denied Iranian claims that US forces struck a civilian wheat storage facility in Hoveyzeh on July 14th and described the reports as false.
• Explosions were heard in Iran's Khorramabad, and US air strikes targeted areas in Tehran. Explosions were also heard in Iran's Qeshm and Bandar Abbas, while US projectiles hit near Sirik.
• Iran attacked economic interests and US facilities in Kuwait, while at least 10 explosions were heard at the US Navy's Fifth Fleet Headquarters in Bahrain, and Iran also targeted Jordan.
• Kuwait said its armed forces intercepted four cruise missiles and 21 drones from Iran on Wednesday, while Iranian aggression targeted a number of vital facilities, resulting in material damage, although no injuries were reported.
• Iran's Top Joint Military Command said the Strait of Hormuz is a red line and added that all infrastructure in the region will be "crushed" if the US continues its interference.
• Houthis were reportedly laying the groundwork and quietly extending their reach to the Horn of Africa, according to the Telegraph citing sources in Yemen, with Houthi rebels reportedly preparing to shut the Bab el-Mandeb Strait on behalf of Iran. Furthermore, sources said the effort was a deliberate Iranian attempt to control "the other side of the Red Sea" and create a situation similar to its grip on the Strait of Hormuz.
• Israeli Defence Minister said US operations against Iran was discussed in the phone call with the US Secretary of State Rubio, and said Israel will remain in security zones in Syria, Gaza and Lebanon. 
• Ukraine's security service said it struck two Russian shadow fleet tankers in the Black sea and hit six more tankers and two tug boats in the Sea of Azov and Black sea. 
• US and Iraq to announce USD 60bln in commercial deals as Trump pivots US-Iraq ties towards commerce over military, according to Semafor.

US Event Calendar

• 8:30 am: Jul Philadelphia Fed Business Outlook, est. 12.5, prior 10.3
• 8:30 am: Jun Retail Sales Advance MoM, est. 0.2%, prior 0.9%
• 8:30 am: Jul 11 Initial Jobless Claims, est. 217k, prior 215k
• 8:30 am: Jun Retail Sales Ex Auto MoM, est. -0.1%, prior 0.8%
• 8:30 am: Jul 4 Continuing Claims, est. 1817.5k, prior 1814k
• 10:00 am: Jun Pending Home Sales MoM, est. -0.5%, prior 3.8%

Central Bank speakers

• 12:30 pm: Fed’s Logan Speaks on the Economy and Monetary Policy
• 1:25 pm: Fed’s Schmid Speaks at Kansas City Fed Economic Forum
• 7:00 pm: Fed’s Jefferson Speaks on Economy and Monetary Policy

DB's Jim Reid concludes the overnight wrap

As hearts were broken in England, markets continued to shrug off the recent escalations in the Middle East and have mostly had a positive last 24 hours. Admittedly, there’s been some weakness among chip stocks in Asia this morning, but otherwise, markets benefited from a soft US PPI print which continued to drive a dovish repricing. Indeed, the probability of a Fed rate hike in a couple of weeks’ time now stands at just 10% this morning, the lowest it’s been since the Fed’s last meeting that led to the imminent hike speculation in the first place. Moreover, oil prices finally stabilised after their jump earlier this week, with Brent crude (+0.26%) up only marginally yesterday, and they’ve since fallen back -0.22% overnight to $84.76/bbl. Meanwhile, risk appetite also remained resilient, with the S&P 500 (+0.38%) closing just half a percent from its record high last month, and futures for the index are up another +0.13% this morning.  

As on Tuesday, that US inflation print really cemented investor confidence in the dovish narrative this week. Notably, headline PPI was down -0.3% in June (vs. unch expected), but we also had a big downward revision to the May reading, which fell half a point to +0.6%. So the recent inflation picture was softer than originally thought, with the year-on-year PPI reading down to +5.5% (vs. +6.2% expected). And significantly for investors, there wasn’t any obvious alarm either from the components that feed into PCE inflation (the Fed’s target measure). See our US economists’ inflation recap here.

That backdrop meant investors continued to dial back the chances of a Fed hike, with US Treasury yields coming down across the curve. For instance, the 2yr yield (-5.9bps) was down to 4.14%, whilst the 10yr yield (-4.2bps) fell to 4.55%. We also heard from Fed Chair Warsh once again, who was appearing before the Senate Banking Committee. The new Chair said he “repeatedly” told Trump that he would be independent, but there were no major policy headlines from his session and little to point towards an imminent hike. Separately, Fed Governor Cook maintained a hawkish-leaning tone, saying that the FOMC can take its time to observe more data but that “If we do not see signs of disinflation soon, I am prepared to act”.

As all that was happening, oil prices fluctuated amidst the competing headlines out of the Middle East, but they ultimately stabilised after their sharp jump earlier in the week. In terms of the latest developments, oil prices initially eased back yesterday but then edged higher as US forces conducted new strikes overnight and the WSJ reported that Trump was leaning towards expanding military operations against Iran. But overall, Brent crude has been broadly flat, with a modest +0.26% increase yesterday to $84.95/bbl, and overnight it’s since fallen back -0.22% to $84.76/bbl.  

For US equities there was another decent performance as well yesterday, aided by the dovish repricing. Moreover, the latest earnings results added further support, with BlackRock (+6.63%) as the second-best performer in the S&P 500 yesterday after its results beat expectations. So that helped the S&P 500 (+0.38%) to post a second daily increase, despite a drag from chip stocks, as the Philly semiconductor index fell -2.08%. But other tech stocks fared better, with the NASDAQ up +0.62%. Moreover, the Mag-7 rallied +2.31%, led by Apple (+4.01%) after it received government approval to roll out Apple Intelligence in China.  

Those themes have continued overnight, with weakness among chip stocks dragging down some of the major indices in Asia. For instance, it’s been another volatile day for the KOSPI (-6.55%), which is currently on track for a two-month low as it stands, having shed over -25% since its peak less than a month ago. And we’ve seen weakness in Japan as well overnight, with the Nikkei down -2.48%, and in mainland China the CSI 300 (-0.91%) and the Shanghai Comp (-0.82%) have also fallen. The one exception to that is the Hang Seng, which is up +1.93% this morning.

In other news overnight, the Bank of Korea delivered their first rate hike since 2023, with a 25bp hike that took the policy rate to 2.75%. The move was in line with consensus, and their statement said that “inflation is expected to remain above the target level for a considerable time”, and they said that growth this year “is expected to considerably exceed the May forecast of 2.6%.” Meanwhile, they also signalled further hikes ahead, saying that “it is judged that it will be necessary to continue a policy stance consistent with further rate hikes”.

Staying on central banks, we also heard from the Bank of Canada yesterday, who kept rates unchanged as the consensus expected. There was some optimism however, as their statement said that the economy was “showing signs of improvement”. But the market reaction was pretty muted, and the decline in 10yr Canadian bond yields (-4.3bps) was almost exactly in line with that for 10yr US Treasuries.

Earlier in Europe, there was also a weaker performance yesterday, with yields moving higher as concern grew on the inflation side. The problem was that even as oil prices fell back, natural gas prices continued to tick higher, with European futures hitting a fresh 3-month high yesterday of €54.35/MWh. So that backdrop saw yields on 10yr bunds (+0.7bps), OATs (+1.8bps) and BTPs (+2.6bps) all move higher, although the STOXX 600 (+0.10%) managed to eke out a modest gain, even as the DAX (-0.59%) and FTSE-MIB (-0.85%) saw larger declines.

Finally, with Andy Burnham set to become UK Prime Minister next week, the FT reported that the next Chancellor of the Exchequer was likely to be Shabana Mahmood, the current home secretary. This had been a key focus for UK markets in recent days, and the pound strengthened on the headlines, ending the day up +1.12% against the US dollar at $1.3540. Moreover, gilts also extended their outperformance after the news, with the 10y yield (-3.8bps) down to 4.94%, the opposite direction to yields in continental Europe.

Looking at the day ahead, US data releases include retail sales and pending home sales for June, the NAHB’s housing market index and the Philadelphia Fed’s business outlook survey for July, and the weekly initial jobless claims. Meanwhile in the UK, we’ll get the monthly GDP print for May. Otherwise, central bank speakers include the Fed’s Logan and Schmid. Finally, today’s earnings releases include Netflix, Morgan Stanley and Johnson & Johnson.

Tyler Durden Thu, 07/16/2026 - 08:25

Lauren Betts went into the ESPYs with intention and went on to have one of the most memorable moments of the night.

The hubby of a Canadian woman who was arrested after allegedly slapping a Trump-supporting teen on the Point Pleasant Beach boardwalk over Fourth of July weekend claims his wife did nothing wrong.

The Big Pharma Psychedelic Buyout Spree Has Begun

Submitted by QTR's Fringe Finance

Massive validation for psychedelics…not as drugs, but as investments could be moments away. Just months after I argued for the millionth time that psychedelic drug developers were likely to become acquisition targets as the sector gained legitimacy, it looks like the first major domino may finally be falling.

According to a Bloomberg report published moments ago, Eli Lilly is in talks to acquire AtaiBeckley, one of the leading developers of next-generation psychedelic therapies. While nothing is finalized, Bloomberg reports a deal could be announced as soon as this week, with Lilly negotiating at a premium to AtaiBeckley’s roughly $2 billion market value.

If this transaction gets across the finish line, I don’t think it’ll be remembered as an isolated acquisition. I think it’ll be remembered as the moment Big Pharma officially entered the psychedelic arms race.

I’ve been writing for well over a year that investors were dramatically underestimating how this story would unfold. Most people focused exclusively on whether psychedelic drugs would work. I was far more interested in what would happen once they did.

Back in January when absolutely no one was talking about the sector, I officially hung my balls out there and name it my “Best Idea” sector for 2026. I argued that these companies didn’t need everything to go right. They simply needed legitimacy. Once regulators, clinicians and large pharmaceutical companies accepted these therapies as real medicine instead of fringe science, today’s tiny clinical-stage companies could quickly become strategic assets.

That thesis suddenly looks a lot less theoretical. According to Bloomberg, Lilly has been quietly evaluating the psychedelic space for some time. The acquisition target makes perfect sense.

While the company has become synonymous with obesity drugs over the last several years, many investors forget Lilly built one of the most successful antidepressants in history with Prozac and has continued investing heavily in neuroscience, Alzheimer’s disease and non-opioid pain therapies. Psychedelics are simply the logical next frontier…and I’ve constantly argued they could be a threat to antidepressants.

None of this should come as a surprise to longtime readers.

Just weeks ago, one of my “26 Stocks to Watch for 2026,” Definium Therapeutics, exploded higher after reporting successful Phase 3 results for its LSD-based treatment for major depressive disorder.

The stock surged more than 60% in one session and roughly tripled from where it began the year. When I wrote about those results in June, I reminded readers that my bullish thesis on psychedelics had never been based solely on clinical efficacy. It was based on legitimacy.

I’ve been pounding the table on psychedelic companies since early 2025 because I believed the science was continuing to improve while Washington’s posture toward the sector was quietly changing underneath the surface.

I was writing about these stocks 18 months ago, first in January 2025, calling the psychedelic names “stocks to watch” for the year. Then, in July 2025, urging patience in these positions: Being Early—And Patient—In Psychedelics

Earlier this year I argued that Robert F. Kennedy Jr.’s Department of Health and Human Services would likely help accelerate institutional acceptance of these therapies, particularly for veterans suffering from PTSD, addiction and depression.

In April, after the administration’s executive order supporting psychedelic research, I reiterated my bullish stance and argued that we were moving from the phase where these therapies were ignored into the phase where institutions would be forced to engage with them seriously. That transition appears to be underway.

The administration has publicly supported psychedelic research, federal agencies appear increasingly willing to engage with the field, states continue building regulatory frameworks around treatment programs and the stigma surrounding these compounds has steadily eroded.

Back in January, I wrote that the market was dramatically underpricing one simple reality. These weren’t speculative science projects anymore…they were organized, capitalized pharmaceutical development programs.

As I wrote earlier this year, these companies don’t necessarily need dozens of approvals. They need legitimacy. Once legitimacy arrives, capital follows.

Today we’re beginning to see exactly what that looks like.

I've also remained a believer that the AdvisorShares Psychedelics ETF (PSIL) is one of the best ways to gain diversified exposure to the theme. Earlier this year, I even reiterated what many people thought was a ridiculous prediction when I first made it: that PSIL could eventually trade north of $100 if psychedelic medicine evolves into a mainstream investment theme.

That isn't a forecast for next month and it certainly isn't a guarantee. It's simply a reflection of what can happen when an entire sector goes from being dismissed and ignored to becoming institutionally accepted. Markets have a long history of dramatically underpricing paradigm shifts before ultimately overshooting in the opposite direction. If psychedelics follow a similar path, I still believe the long-term upside for the broader sector could be substantially larger than most investors currently imagine.

Importantly, I don’t think Lilly will be the last major pharmaceutical company knocking on these doors.

If psychedelic therapies continue producing successful Phase 3 data, larger drugmakers will increasingly face a choice. Either spend years and billions attempting to build internal psychedelic programs...

...or simply acquire companies that have already done the difficult clinical work.

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History suggests acquisitions usually become the preferred option.

Large pharmaceutical companies routinely buy innovation rather than inventing everything themselves. Oncology, gene therapy, obesity drugs and biotechnology more broadly have all gone through similar acquisition waves as promising clinical data accumulated.

There’s little reason to believe psychedelics will prove different.

In fact, the economics may become even more compelling. Many of these companies still carry relatively modest market capitalizations despite owning potentially valuable intellectual property and late-stage assets. For a pharmaceutical company generating tens of billions in annual revenue, paying several billion dollars for a differentiated neuroscience platform may ultimately prove inexpensive if these treatments become standard of care.

That’s exactly why I’ve been saying for more than a year that investors shouldn’t think only about FDA approvals. They should think about strategic value.

Clinical success doesn’t just create future revenue, it creates scarcity. And scarcity is exactly what fuels acquisition premiums. I’ve long believed the market was dramatically underestimating this possibility.

Today’s Lilly-AtaiBeckley news doesn’t prove the entire thesis. But it certainly looks like the first major piece of evidence that the industry’s next phase has arrived.

If anything, I think the acquisition race is only beginning. As more late-stage trial results emerge, more regulatory milestones are reached and institutional acceptance continues expanding, I expect the list of potential buyers to grow rather than shrink.

For years, psychedelic investing has been on the fence. Lilly just legitimized it. And my readers we were at the party first.

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QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

As of May 20, 2026 I personally no longer actively trade (read my story here). My investing/saving is done by recurring contributions mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

And all positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

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Tyler Durden Thu, 07/16/2026 - 08:05

Learn a new language.

Anthony Michael Hall is heading back to high school in the new celebrity game show.

A 'good job' in the company Slack channel isn't going to cut it.

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New Poll Shows American Voters Overwhelmingly Reject Communism, Dealing A Blow To DSA

The Democratic Socialists of America are intensifying their consolidation of power within the Democratic Party, winning low-turnout local elections as establishment Democrats struggle to contain the spread of socialism and Marxism within their DEI kingdom.

DSA leaders and politicians have openly embraced anti-American rhetoric centered on dismantling capitalism and calling for revolution, while their unofficial spokesperson, Hasan Piker, has amplified inflammatory calls to "kill capitalists."

Hasan Piker calls on his followers to kill capitalists:

“Yeah kill them! KiII those motherfuckers and murder those motherfuckers in the streets. Let the streets soak in their fucking red capitalist blood, dude.”

Democrats are campaigning with him. pic.twitter.com/YiZxGgRkgc

— Eyal Yakoby (@EYakoby) April 9, 2026

The larger question is whether mainstream America is prepared to follow DSA revolutionaries toward a violent revolution from within the nation to sow chaos, as federal investigations grow over the group's alleged links to foreign subversion networks connected to Cuba and China.

Convincing average voters to embrace a far-left agenda, especially one wrapped in revolution and anti-capitalist rhetoric, will be an extraordinarily difficult sell to folks who just want to live life and own property.

Frank, Aaron, Hank and Sam are Communist insurgents, radicalized marxist revolutionaries hiding behind personal ideologies to justfy their 1A expressions of the right to promote the insurrection of the Constitutional Republic of the United States of America pic.twitter.com/XLzzjisOqd

— AnimalFarm1945 (Moshe) (@Farm1945A) July 6, 2026

Washington, DC-based research and polling firm Echelon Insights has captured a new sentiment snapshot of voters from a poll last week that showed just how unpopular DSA, socialism, and communism are... 

The clearest takeaway is that voters strongly prefer market-oriented ideas:

• Free-market economy: 53% favorable, 12% unfavorable, a +41 net rating
• Capitalism: 49% favorable, 29% unfavorable, +20
• MAHA: 39% favorable, 33% unfavorable, +6
• Social democracy: 36% favorable, 31% unfavorable, +5

Most political parties, figures, and left-wing movements are underwater, with socialism and communism ranking the worst:

• Democratic Party: 43% favorable, 52% unfavorable, -9
• JD Vance: 39% favorable, 53% unfavorable, -14
• Republican Party: 40% favorable, 56% unfavorable, -16
• Democratic Socialists of America: 25% favorable, 46% unfavorable, -21
• Donald Trump: 38% favorable, 61% unfavorable, -23
• MAGA: 32% favorable, 57% unfavorable, -25
• Socialism: 23% favorable, 52% unfavorable, -29
• Communism: 5% favorable, 78% unfavorable, -73

Echelon Insights: Net Favorability Ratings

🟢 Capitalism: +20
🟢 MAHA: +9
🟤 Free Palestine movement: -14
🟤 DSA: -21
🟤 MAGA: -25
🟤 Socialism: -29
🟤 Communism: -73https://t.co/GtGphxr02l pic.twitter.com/iUMiPRucZz

— InteractivePolls (@IAPolls2022) July 14, 2026

The survey suggests that Americans remain strongly supportive of free markets and very negative toward socialism and communism, even as both major political parties and many top political figures suffer from plunging ratings.

Nate Silver's January 2026 ratings gave Echelon an A- score, with its predictive score indicating that the polling firm is expected to outperform the average pollster. Echelon also performed well during the 2024 election cycle, recording an average polling error of roughly 2 percentage points.

The polling data help explain why establishment Democrats have become increasingly alarmed by the rise of DSA, which they view as derailing the party in future elections because revolution is just not popular with the average voter.

Even a former Bill Clinton adviser wrote in a Wall Street Journal op-ed last week calling for investigations into DSA for possible foreign influence and subversion networks.

Ultimately, DSA is making a massive political gamble that it can persuade enough Americans and migrants to embrace class struggle and pursue a revolution. The problem is that such a move risks provoking a federal response, particularly as U.S. officials increasingly examine whether elements of DSA's revolutionary movement are intertwined with foreign influence and subversion networks.

After all, DSA has admitted that it is a "partner" of the sanctioned ICAP…

Perhaps that helps explain why the group is so eager to pursue Marxist revolution.

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UBS: TSMC's 'Surprise CapEx Hike' Reinforces Confidence In AI Supply Chain

TSMC, or Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, raised its 2026 spending and revenue outlook on Thursday morning, a move UBS analysts said "boosts confidence in the AI supply chain."

TSMC manufactures chips designed by companies such as Nvidia, Apple, AMD, Qualcomm and Broadcom. It is a major supplier of Nvidia chips used in AI data centers. The company now expects 2026 capital expenditures of $60 billion to $64 billion, up from its previous forecast of $52 billion to $56 billion, while projecting dollar-denominated revenue growth of slightly more than 40%.

Here are second quarter results (courtesy of Bloomberg):

• Net income NT$706.6 billion, estimate NT$623.73 billion
• Gross margin 67.7%, estimate 67.1%
• Operating profit NT$766.6 billion, estimate NT$742.75 billion
• Operating margin 60.3%, estimate 58.6%
• Sales NT$1.27 trillion, estimate NT$1.27 trillion

Third quarter forecast:

• Sees sales $44.6 billion to $45.8 billion, estimate $43.11 billion (Bloomberg Consensus)
• Sees gross margin 65% to 67%, estimate 65.9%
• Sees operating margin 56% to 58%, estimate 57.7%

"AI-related demand continues to be extremely robust," TSMC Chairman C.C. Wei told analysts on a post-earnings call. 

TSMC also plans to invest another $100 billion in Arizona, lifting that total commitment to $265 billion. The expansion will include additional 2-nanometer chip plants and advanced packaging facilities to meet multi-year demand across the Americas. 

Wei added, "This is to build several or more semiconductor logical wafer fab for two nanometer MP [mass production] technologies, as well as advanced packaging fabs to support the strong multi-year demand from our leading U.S. customers."

CFO Wendell Huang said, "Our conviction in the AI megatrend is very strong.The capex in the next three years will be even more, significantly higher than in the past three years."

UBS analyst Crystal Hsu told clients earlier that "TSMC's Surprise Capex Hike Boosts Confidence In AI Supply Chain."

Hsu continued:

Despite TSMC's relatively conservative gross margin outlook for Q2 and Q3, investors generally believe the company prioritizes customer relationships and may smooth margin trends through the second half of the year.

The increase in capex guidance to USD 60–64 bn came as a positive surprise, as TSMC rarely raises capex guidance in Q2 and the magnitude of the revision exceeded 10%. Investors expect a positive read-through for the semiconductor production equipment (SPE) space.

More importantly, TSMC's constructive commentary could help restore market confidence, as many investors see little change in the underlying fundamentals despite the market pullback over the past month, which appears to have been driven largely by positioning and sentiment rather than by a deterioration in fundamentals.

Shares of TSMC were marginally higher in Asia, closing up a little more than 1%. The stock has gained 59% this year as the AI boom propels chipmakers to new highs. But in recent weeks, the AI trade has hit a brick wall as Goldman warns of rising hyperscaler bond issuance and mounting stress in credit markets.

TSMC's accelerating expansion comes a day after ASML Holding delivered strong earnings and raised its full-year guidance. ASML produces lithography machines, the equipment that chipmakers such as TSMC use to manufacture advanced semiconductors.

Tyler Durden Thu, 07/16/2026 - 06:55

Owen Flowers and Thalha Jubair were convicted for their roles in the attack, which led to large costs for Transport for London.