Good morning,
 
US equities finished higher yesterday, bouncing after three straight days of declines. The S&P and equal-weight rose 0.4%, while small caps outperformed as the Russell gained 1.1%. The S&P stopped a three day losing streak. We’ve tested and held the bottom-end of the 7600-7800 range of the S&P since early August. A modest decline in yields helped sentiment and only one sector, Real Estate, finished in the red. Materials (metals higher), Comm Services, Healthcare and Financials led. This despite crude continuing to climb. DELL saw sharp gains after its earnings, while other tech reporters like PANW and CRDO were sharply lower despite solid prints. ADP payrolls missed, easing some of the September rate hike push.
 
Equity futures were lower yesterday evening but began to strengthen along with the yen. We then drifted sideways for most of the overnight session but moved higher on Fed governor Waller’s comments leading off his speech, in which he said that we are finally seeing some signs of disinflation. He added he’s inclined to hold rates steady at the next meeting if August inflation data continues to show progress.
 

 
A few tech reports to digest this morning:
 
AVGO (-3%) reported a strong quarter but not blowout quarter. Concern of share loss in Google’s TPUs was allayed but revenue guidance disappointed.
SNOW (+25%) is up big on its report. The software company’s results showed AI is catalyzing growth rather than displace it.
HPE (-5%) is lower despite a solid quarter.
 
The DOJ filed a brief supporting OpenAI in its fight against NYT over the use of copyrighted material to train AI models. This cuts right to the foundation of these foundation models- the use of all written material ever created to build them.
 
Yields were lower heading into Waller’s speech and took another step down on the disinflation comments. The 2y and 10y are down ~5bp, 10y down 5bp and US Dollar Index is lower as well. The Swiss inflation surprise has sent the France up almost 1% against the Dollar and the yen is climbing almost 2%.
 

• US 2yr -5bps to 4.32%, 5yr -5bps to 4.49%, 10yr -4bps to 4.74%, 30yr -3bps to 5.23%
• USD index: -$0.63 to $98.93

 
Brent crude is higher again, looking to make it four straight but unable to push yields up. Iran claimed new attacks on US bases in the region. Gold and other metals are higher on the yield and dollar move. Bitcoin and ETH are up 1-2% but remain in their recent range.
 

 
European equities are mostly higher. Telecom, media, mining and financials are leading. Elliot has reportedly built a stake in Deutsche Telecom and is opposing its merger with TMUS. Consumer/luxury names are lower, pushing France to underperform. French election and fiscal developments are dominating the news in that country. Swiss inflation surprised to the upside. The central bank has pegged rates at 0% and consensus has them on hold through 2027. European PPI was hotter than expected and rise from last month. The Nikkei was down 0.2%. Yesterday’s spike in the yen triggered discussion of another yentervention. It was later attributed to condensed reaction to a bunch of hawkish talk from BOJ officials and Bessent. The yen continued to strengthen overnight. The 30y JGB auction was a bit softer than expected but could have been a lot worse. A September rate hike is almost 100% priced in, along with almost 3 hikes overall by March. Berkshire CEO Abel said BRK wanted to increase its ownership of Japanese trading houses. In China Shanghai was unchanged while Hong Kong fell 0.4% with the big consumer internet stocks lower. RatingDog Services PMI of 51.6 rose from July’s 50.4 and beat estimates of 50.6. Refiners will be allowed to begin exporting fuel this month as Beijing eases restrictions that have been in place since March, according to reports.
 

 
 
Earnings
After-Market: AGX, AVGO, AI, CHPT, FIVE, GOLD, HPE, NTAP, NTSK, PHR, PVH, SNOW, TLYS, WOOF
Pre-Market: BRC, CIEN, CPB, DLTH, GCO, LE, MOMO, PSNY, TTC, VSXY, WLY
After-Market: AMBA, ASAN, CURV, DOCU, DOMO, GWRE, IOT, LULU, NX, OXM, PATH, PL, SWBI, ZS
 
Economic Data:
US:

• Weely claims: 206K vs 205K cons, prior 204K
  • Continuing claims: 1779.0K vs prior 1771K
• Challenger Job cuts: 52.881K vs prior 33.429K
• Final Labor Productivity q.q: 1.4%, unchanged from initial
• Unit labor costs q.q: 1.2%, down from 1.3% intial
• July Trade Balance: $-88.6B vs $-90B cons, prior $-71.2B
• Exports: $310.7B vs prior $314.7B
• Imports: $399.3B vs prior $388.5B
• 10:00am Services PM
• 3:00pm Fed Hammack speech
• 4:30pm Fed Balance Sheet

Global:

• China RatingDog Services: 51.4 vs cons 50.6, prior 50.4
• Switzerland CPI: m.m: 0.4% vs 0.0% cons, prior -0.1%
• Europe PPI m.m: 1.6% vs 1.2% cons, prior -0.3%