1) US Equities
2) Fed Policy
3) US Inflation
4) Geopolitics
5) Corporate Earnings
We’ve just updated trending themes with this week’s must-read publications from our network of over 300 research providers.
WHAT’S NEW ON THE PLATFORM
Banks: Capital Markets Momentum Remains a Key Tailwind
Many of the major US banks have reported Q2 earnings this week, with results highlighting how much the sector is benefiting from the ongoing AI-driven capital markets boom. As we highlighted in this week’s chartbook, CFRA’s Global IPO Market: A New Supercycle Takes Place—notes that global investment banking fees rose 17% YoY to $79.9bn in 1H26, with equity capital markets fees surging to 60%. Upcoming IPOs such as OpenAI and Anthropic should further support revenues at major investment banks.
However, the boom is largely US bank centric. So, does that mean US banks are the only play in the sector? Looking beyond the current earnings season, RBC’s Global Investment Banks – Capital Markets Scorecard: A Strong Q2 in the Bag, Off to Q3 expects US and European bank performance to diverge again in Q3, with US banks better positioned to benefit from stronger capital markets activity and technology-related issuance. That’s not necessarily a good thing, should the boom lose steam, according to the FT’s Unhedged column, who wrote this week, ‘’It’s not too much of a generalisation to say: the big banks are a straight AI play now.”
Perhaps value plays are more attractive? Indeed, away from AI boom, such as in Europe, investors are increasing their bank exposures. In BofA’s European Fund Manager Survey: Goldilocks Regime Drives a Risk-On Rotation, banks have become the largest consensus overweight sector at +49%, the highest level since February 2022. HSBC’s recent deep dive on banks, Global Banks: Macro Shift, New Country Calls – Upgrade US to Positive, Downgrade Mainland China to Neutral is constructive on US banks, but also favours European and reform-oriented Asian banks. We also wanted to highlight the work of financials research firm, Carraighill, who went long on European banks when they were an out of favor ‘’deep value’’ play. See their latest work and recommendations in Eurozone Banks: Greece Joins Portugal and Netherlands in Leading Deposit Growth, French CS iExpands. Finally, also see Veritas Research’s Canadian Banks: Credit Stability Meets Capital Relief which argues that Canadian banks remain well positioned thanks to resilient credit trends, stable household finances and lower capital requirements.
Strait of Hormuz Back in Focus as Energy Security Risks Re-Emerge
With geopolitical tensions in the Middle East resurfacing and the Strait of Hormuz once again emerging as a key flashpoint for global energy markets, investors are reassessing the risks to oil supplies, inflation, and economic growth. In “The Implications of a Renewed Closure of the Strait” Capital Economics notes that while markets still expect disruptions to be temporary, a prolonged closure could trigger a sharp oil price spike, reignite inflation, and slow growth across major economies. Piper Sandler’s “All Roads Lead to the Disruption of Energy” argues that regardless of whether the US opts for negotiation or escalation, intermittent energy flows through the Strait may become the new normal, keeping markets on edge. Deutsche Bank’s “What’s the Pain Threshold: when will higher oil prices drive a bigger selloff?” examines how much higher oil prices would need to rise before triggering broader market stress, concluding that Brent would likely need to remain above $110/bbl for a sustained period to generate a meaningful selloff in risk assets. Finally, Goldman Sachs’ “Risks From Lower Gulf Flows and Higher China Imports” points to tightening supply conditions and a potential recovery in Chinese demand as key upside risks, warning that Brent could overshoot $110/bbl if Gulf export recoveries stall and supply disruptions persist.
The AI Momentum Trade; It Works Until it Doesn’t
As the tech sell off continues, we’re flagging up Matt King’s (Satori Insights) presentation from a couple of weeks ago, Meaning, Margins and Momentum: Prospects for Regime Change Under AI and a Warshian Fed. King attempts to untangle the circular web that unites tech capability, profits and broader market pricing, to recognize the potential for sudden regime change, and the unravelling of the AI trade.
WHAT’S COMING UP FROM OUR PROVIDERS
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Date: Thursday, July 23
Time: 4:00 PM London (BST) / 11:00 AM New York (EDT)
