1) US Equities
2) Fed Policy
3) Corporate Earnings
4) Artificial Intelligence
5) Asset Allocation
We’ve just updated trending themes with this week’s must-read publications from our network of over 300 research providers.
The Fed’s Credibility Test: Pause Today, Hike Tomorrow?
Building on last week’s discussion of the Fed’s inflation dilemma, attention has now turned from whether the Fed would hike to whether its policy stance remains credible. The Fed ultimately left rates unchanged despite growing expectations of a hike, with three FOMC members dissenting in favour of tighter policy. Not everyone viewed that decision negatively. Capital Alpha’s ”Warsh: Unchanged Rates Don’t Mean Fed Isn’t Attacking Inflation“ argues that holding rates steady reflects a focus on underlying inflation trends rather than a reaction to a single data point. Capital Economics’ “US Economics Update: Fed Holds as Markets Struggle to Get a Handle“on Warsh similarly argues that the hold was broadly consistent with softer inflation and employment data. Even TS Lombard’s “FOMC: All Spin, No Delivery (or Forward Guidance)”agrees that a July hike would have been difficult to justify, though it criticises the Fed for offering little clarity on the path ahead.
The bigger debate is whether the Fed weakened its inflation-fighting credibility. Yardeni Research’s “Warsh Fails First Credibility Test: Bond Vigilantes Want More Than Hawkish Squawks” argues that the Fed’s hawkish rhetoric was not matched by action, contributing to higher long-term bond yields. Bank of America’s “July FOMC Review: Doved and Confused” also suggests that markets interpreted parts of Warsh’s messaging as dovish, raising doubts about the Fed’s commitment to price stability. Meanwhile, Ned Davis Research’s “Warsh Fed Focused on Big Picture Questions” warns that persistent pressures from wages, shelter costs and supply chains could leave the Fed exposed to another inflation resurgence if it remains too patient.
Themes to Favourite:Fed Policy, US Inflation, US Treasuries, US Growth
Corporate Earnings Confirm AI Demand, but the Market Wants Returns
The latest earnings season continues to highlight a notable disconnect between fundamentals and market reactions. BofA’s Earnings Tracker Week 2: Strong Results, Selective Rewards and 2Q Earnings Half Time Update: Breadth of Strength show one of the strongest earnings backdrops since 2021, supported by robust technology results, positive revisions and healthy guidance trends. Yet stock reactions have become increasingly selective, suggesting investors are no longer rewarding AI exposure indiscriminately. This framing aligns with Arete’s Alphabet: Misunderestimated, which argues the market remains overly focused on AI investment levels while overlooking the strength of the demand environment underpinning them.
What is driving the divergence is a growing focus on monetisation and returns rather than demand itself. Microsoft provided perhaps the strongest evidence of sustained AI adoption in BofA’s “Microsoft: Azure beat and Copilot seat additions validate Microsoft’s AI strategy“, with Azure growth accelerating to 43%, Copilot seats exceeding 30 million and RPO rising sharply. BofA’s “Meta Platforms: Core growth intact and AI options growing; Reiterate Buy” similarly highlighted continued AI-driven gains across advertising and engagement. Radio Free Mobile’s “Qualcomm, Arm, Meta and Microsoft – Results Rush” also pointed to ongoing cloud acceleration, AI infrastructure shortages and strong hyperscaler demand, reinforcing the view that end-market AI demand remains healthy across both enterprise software and infrastructure.
The key debate is whether today’s investment cycle can ultimately generate sufficient returns. Pennock Idea Hub’s “The AI Monitor: The Bill Arrives” argues that investors are becoming increasingly sensitive to the cash-flow implications of AI spending, while Capital Economics’ “Are the Wheels Falling Off the AI Stock Market Train?” notes concerns around valuation, monetisation and future supply growth despite resilient earnings. The supply chain continues to validate the demand side of the story, with Jefferies’ “Implications from SK Hynix Results” highlighting ongoing HBM tightness and strong memory demand, while BofA’s “Qualcomm: Handsets stable, diversification progressing, data center execution pending” shows AI-related revenue opportunities expanding even as margin pressures emerge. For investors, positioning therefore remains concentrated in hyperscalers, AI infrastructure and memory beneficiaries, but the market is increasingly differentiating between companies merely spending on AI and those demonstrating a credible path from AI investment to sustainable cash-flow generation.
Themes to Favourite: Corporate Earnings, Big Tech, Artificial Intelligence, US Equities
WHAT’S COMING UP FROM OUR PROVIDERS
NDR Webinar: AI Debate: Bubble, Correction, or Secular Opportunity?
In this special roundtable discussion, NDR’s Chief Strategists: Tim Hayes, CMT, Ed Clissold, CFA, Joe Kalish, and Pat Tschosik, CFA, CMT will discuss whether today’s AI-driven market leadership is approaching a correction, a cyclical peak, or remains part of a longer-term secular opportunity.
In the webinar, NDR will discuss the following topics:
- The difference between an AI correction, a cyclical top, and a secular bear market
- The market, macroeconomic, and technology indicators that could signal a turning point
- Key risks that could challenge the AI investment theme
- Whether AI-related opportunities still have room to run
- Portfolio positioning considerations for the next 12–18 months
Date: Thursday, August 6
Time: 4:00 PM London (BST) / 11:00 AM New York (EDT)
Benchmark Webinars: Powering the Modern Battlefield – Drones, Batteries and Critical Minerals
Benchmark’s webinar examines how rising geopolitical tensions and increased defence spending are driving military electrification, reshaping critical mineral demand, accelerating supply chain localisation, and advancing next-generation battery technologies.
Date: Thursday, August 20
Time: 9:00 AM or 3:00 PM London (BST) / 4:00 AM or 10:00 AM New York (EDT)
