This week will see Kevin Warsh's 1st Jackson Hole meeting as Chairman of the Fed and expect little drama. No change in rates is the most likely outcome despite investors goading the Fed via the 10 year UST market to raise rates. The 10 year is already at 4.74% and set to move higher setting a bearish outlook near term for risk assets. 

Median Brent Crude spot came from $107 per barrel in May down to $85 in June and has spiked back up again to between $90-95 per barrel in August. With no signs of tensions easing in the Middle East, the core inflation measure is likely to remain elevated at 3.5% or more, potentially till mid-November. 

We don't believe that the Fed's next move will be to raise rates to counter the inflationary pressure from energy price spikes but equally, there is little room for a cut over the next 6 months. With tariff imposition once again taking centre stage for the administration implying further cost increases on staple goods, inflation doesn't look like heading to the Fed's long term target of 2% for at least another 12-18 months. 

Nvidia reports this week, but all the major earnings have come and gone. Capex is heading still higher, cash flow is disappearing and investors are fretting over returns. We believe, this is presenting an opportunity to jump back on the technology gravy train for another round of upside. 

Alphabet's increase of the capex range for 26 was not on our expectation horizon and the 27 wording of 'significant' increase in capex has remained where we believed this would have been tempered. Free cashflow fell to a negative $5.9bn for the quarter. All this spooked investors and the stock had a rough week post results. 

However, we believe the AI revenue opportunity is alive and well. Enterprise take up of AI tools is increasing at a fast pace. During the quarter API token usage per minute was at 37bn per minute, a 37% uptick QoQ. The contracted backlog grew 12% QoQ to $514bn with management expecting 50% of this to turn into revenue over the next 18-24 months. 

Amazon witnessed the highest growth for years in its AWS revenue at 37% YoY and Microsoft witnessed a 43% YoY Azure revenue growth. Both increased their outlook on capex and saw free cashflow slump. Meta. Who’s a got one foot in and foot out of the data centre capex race (more on this next week) saw capex accelerating and cashflow decline from $8bn this time last year to $800mn this year. Meta has further issues in court in California where it is defending against claims that its platforms have been causing mental harm to children and teenagers. 

In the meantime, Apple announced record units sold with 22% Iphone growth resulting in 2.5bn phones sold to date. 

We thought about what all this means for valuation. The S&P500 Index (37% of which is technology weighted) according to consensus is trading on 21.5x forward P/E with 30% EPS growth in 26 and forecast growth od 14% in 27. The Equal weighted S&P500 is on 20x forward P/E but only 12% earnings growth this year and 11% next year. The clear implication is that the tech heavy un-weighted index is delivering more growth for a somewhat similar forward P/E. 

On a more granular basis, we see Alphabet offering the clearest valuation upside on 15-20% consensus earnings growth on 18x forward P/E, a discount to the index. Microsoft and Amazon trade at a small premium to the market but better growth and Apple is at a significant premium with lower growth making it the weak link in the basket in terms of GARP (Growth At a Reasonable Price). Meta is a special situation. The low valuation (15x forward P/E ) reflects some near term challenges. It would be prudent to let the legal case play its course given the binary nature of the outcome. 

Overall, valuations would support a technology sector re-investment heading into Q4.

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In this week's episode we discuss the economic releases from Europe and the UK. The ECB is set to announce its rate decision. We see no room for manoeuvre. The UK is likely to witness a small uptick in headline CPI. We see further reliance on the debt market going forward, making it virtually impossible for the BoE to lower rates in this cycle and may even be looking at a rate rise before year-end.

The Iran conflict doesn't look like its ending any time soon. Energy prices remain elevated creating a higher base for inflation in the US resulting in the 10 year UST staying above 4.5% and staying the Fed's hand in terms of interest rate declines. We don't believe an increase is on the cards before year-end but anyhow, lack of action is likely to keep the USD strong vs Euro and GBP in the coming weeks.

The earnings announcements come thick and fast this week with the US consensus earnings expansion forecast at 26% vs Europe's consensus forecast growth of 16% largely driven by the European oils integrated companies currently taking advantage of significantly higher oil prices.

Intel and Alphabet report on Wednesday after the close. This week presents a seminal potential turning point for the semiconductor trade. The SOX Index (Semiconductors) is already 20% below its June highs and investors are wary what Alphabet and the other hyperscalers might say about the capex cycle. 

Alphabet is likely to re-iterate its 2026 capex plan of between $175-190bn but might revise its previous guidance for 2027 which was set at significantly higher levels than 2026. 'Significantly' (paraphrase for management's sentiments for 2027) may well be paired back setting in motion a more subdued positioning on the semi trade. Just as a reminder, MIcrosoft's capex plan for 2026 is $190bn and for Amazon at $200bn. 

A quick look at who is the most cashflow resilient to cost pressure from increasing energy prices and higher overheads would suggest that Microsoft sits on top of the pile with Alphabet second and Amazon last. This is largely thanks to the higher margin other businesses at Alphabet and Microsoft that can offset any AI datacentre cost inflation. Analysts are looking for expansion on the operating margin for Alphabet from a current 32% to 35% over the next couple of years.

Amex reports on Friday and will most likely confirm our view of an increasingly polarised consumer base. Higher non-discretionary prices are affecting lower income consumers considerably more resulting in potential fall away from discretionary spend by a large portion of the consumer base. More on this in the coming weeks as consumer related stocks report.

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This week we discuss Iran's long game in the ongoing war, the week's economic releases, including US CPI as well as the potential scenarios from the upcoming earnings season.

Iran has no interest in ending the war. They are fully aware that the US administration wants a swift cessation ahead of the Mid-terms and a significant lowering in oil prices. Equally however, Iran is not equipped or able to escalate the war. The plan seems clear. Low level attacks on shipping on the Straits of Hormuz leads to US bombing of what they see as strategic sites followed by counterattacks on US bases in the Gulf. Not quite all out but not quite all quiet! A perfect scenario from an Iranian perspective to keep the pressure on the administration.

The end game, of course, is to create sufficient pressure on the current administration so that Congress falls to the Dems in November and effectively compromises the administration's continued execution of the war, thereby handing Iran an effective victory and control of the Straits. Iran also knows full well that the US administration is unlikely to escalate given its domestic pressures. 

From an economic perspective, we get CPI this week. Month on Month the headline is likely to be tempered given the de-escalation in the mid east. However, when the Fed chair speaks to Congress this week, the median forecast of 3.6% CPI will be  uppermost in his mind. We still don't believe that the Fed will raise rates (consensus expectations are now looking for 25bps increase before year-end) but reducing rates is becoming less and less likely particularly if the conflict lingers, as we expect.

UK GDP for Q1 26 is released this week and a potentially better than expected number is expected. Combined with a likely increase in reliance on the debt markets in Andy Burnham's new administration, expect the next potential move in UK rates to head higher to defend GBP and make UK government paper more attractive for foreign bond investors.

On the corporate front, US financials begin to report this week. Significantly higher Investment Banking fees thanks to the SpaceX IPO and increasing Net Interest Margins (NIMs) should see strong results momentum maintained by strong guidance. 

The yield curve in the US is steepening again allowing for better profitability for banks. The 2 year UST has remained steady just over 4% but the 10 year UST has been pushing towards 4.6% on the back of higher energy prices and the potential effects of a slowdown that this could bring with it.

Finally, ASML reports this week. ASML is now Europe's largest company but its guidance is globally consequential. What they say about demand and likely spend on AI going forward is likely to set the trend for the semiconductor industry and technology generally for some weeks to come. ASML's management is forecasting a E36-40bn revenue range for 2026, an 18% increase YoY. If they increase the range, expect the sector to grind higher. The company has also been shipping more than 50% of its tools for memory production, outpacing logic sales. 

On a risk basis, bad news or a slowdown in demand will result in significantly worse downside for the sector. Good news will only confirm investor expectations.

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This week we discuss the productivity gains in the global economy thanks to the AI spend revolution. We witnessed a consistent 2-2.5% productivity gain throughout the late 90’s-early 2000’s as China opened up and started a global trade boom. AI is likely to deliver a similar if not even bigger opportunity. Productivity dampens inflationary pressure and drives growth. 

In this week’s Ben’s Fireside Interview we talk to Martin Dubbey, CEO & founder of Harod Associates Group, one of the fastest growing fraud investigation and asset tracing businesses in the UK. Harod utilises a proprietary investigation and asset tracing technology platform which Martin and team architected and which he talks about. Harod’s clients include Family offices, Corporates and High net worths looking to protect their assets in a fast moving and digital world. Head to https://www.youtube.com/@bensmarketchat for the full interview.

The $750bn of AI spend this year and at least this number again next year, has resulted in a major boost for semiconductors and hardware at the expense of the vast number of MAG7 companies YTD. However, the SMH (US semiconductor ETF) has fallen over 10% in the last 2 weeks. Earnings are upon is for Q2 over the next couple of weeks and guidance will be key. Do investors believe that capex spend momentum will slow? In terms of the 2nd derivative (ie the pace of growth) this may well imply a slower pace.

Equally, if we see guidance from MAG7/Hyperscalers that AI related ROI is starting to grow, a potential rotation from PHASE 1 (the hardware beneficiaries) to PHASE 2 (the spenders) may well ensue implying a strong finish to the year for MAG7. Q3 guidance therefore could present a seminal turning point for the technology sector and focus therein.

It looks like the war with Iran is back. It didn’t really ever go away. Anthony Scaramucci told us a few weeks ago that the US does not control the narrative. This war and economic consequences are likely to linger for many more months. Will this be enough to dislodge the growth trajectory in the US? We don’t think so. Despite the short term impact on inflation, longer term, productivity is likely to dampen the energy spike.

We remain overweight the US going into the second half and increase exposure to US small caps as productivity gains tend to have a democratising effect on smaller company performance vs their larger rivals. 

Europe remains a backwater for us despite its cheap valuation and EM is a cheaper play on the semiconductor trade in the US given the over reliance in the indices to TSMC, Samsung and Hynix. If we are witnessing a transition, EM, at least at the headline Index level, may not fair so well for the balance of the year.

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We have a very interesting discussion this week with Martin Dubbey. Martin is the founder and CEO of Harod Associates Group, one of the fastest growing fraud investigation and asset tracing businesses in the UK. Harod utilises a proprietary investigation and asset tracing technology platform which Martin and team architected and which he talks about in the interview.

Martin is a seasoned professional and public servant. He set-up Harod back in October 2010 having spent a number of years as head of cocaine intelligence at HM Revenue & Customs & was a senior co-ordinating officer at the Serious Organised Crime Agency. Today Harod has completed over 4500 investigations, has 50+ investigators globally and has identified over $3bn of assets through International tracing. Harod has also developed in-house proprietary technology sourcing data from the dark web, social media and other sources to find patterns and follow leads that would otherwise take weeks if not months to track down and pursue. The team is composed of former Serious Organised Crime Investigators and computer scientists. Thanks to the advances in computing, technology and AI, crime has no borders. Harod aims to find, track and bring fraud and criminality to justice using its professional team and technology platform.

Martin shares many fascinating ‘war stories’ and tells us how prevention is always better than trying to reclaim lost assets after a crime has been perpetrated. We talk about the advances and challenges that AI is presenting in the industry. We also get to hear about techniques criminals use to try to extract information and assets from victims. With a crypto economy getting larger and larger, trying to find monies is becoming a task that not even cross border law enforcement authorities are able to deal with. Harod is one of the few that are able to fit all the pieces together. As Martin says in the interview “If the money stays in one bank account for more than 1 day, there’s something wrong with the bad guys”.

Harod’s clients include family offices, corporates, wealthy individuals and institutions who are either looking to put in place policies to prevent fraud or who need Harod to chase and track down assets that have been illegally taken.

Martin also appears in a Netflix dram documentary blockbuster, Icarus in his role of Chief Investigator on the Sochi Olympic doping scandal. The film is based on work in breaking up a  nation state doping conspiracy at the Sochi Winter Olympics. Fraud can occur in all walks of life and Harod has set its vision on chasing down the bad guys, supporting clients and retrieving client assets in a time when law enforcement agencies worldwide are facing major resourcing issues.
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This week we focus on 3 key topics, the potential peace plan between the US & Iran, the options the new Fed governor has in the short-term & the maturation of the bitcoin story.

Both the US & Iran have intimated that a peace plan is in motion. We discuss what investors care about and what can wait. The market needs to see a Straits re-opening (even if tolls will be renamed into something more palatable eg an ecology fund!). Investors are less concerned about an Israel deal, Uranium enrichment discussions, reparations or size & magnitude of asset unfreeze. Whilst those issues are clearly significant from a geo-political perspective, they are nonetheless non-market sensitive issues and are likely to get kicked down the road.  Therefore, the most likely outcome (largely discounted by investors already) is an agreement to end the war with the lifting of the US blockade & the re-opening of the Straits. From a market perspective, that’s deal done and time to move on.

This could make Kevin Warsh’s life ( the new Fed governor) significantly easier. The inflationary pressure from higher energy prices could dissipate sufficiently to allow him to drive Fed rates lower. However, the PCE Indicator (The Fed’s favoured inflation signal) for April is out on Thursday and the expectations are for a rise of 0.3% MoM to 3.4%, well ahead of the Fed’s 2% long-term target. With the Effective Fed rate at 3.62%, there’s little room for the FOMC to move on rates. 

Warsh still has other tools to hand to create liquidity in the system. He can reduce the reserves levels the banks have to hold (ie create more liquidity), or lower the rates offered to banks holding deposits at the Fed (so they go looking for alternative sources of higher returns in the private markets) or alter the rates offered through the emergency discount window. All these liquidity enhancing strategies do not require an FOMC vote and can be executed unilaterally. 

Markets remain buoyant however transitory or not inflation turns out to be given that over the longer term, Warsh is likely to pull the Fed rates lower faster than his predecessor would have done.

Bitcoin has matured into a young adult (in asset life cycle terms!). Bitcoin is down 12.5% YTD and Ethereum is down 24.5%. But even worse for investors, volatility has more than halved since the period between 2017-2021. We discuss the impact of Institutional investors in the free-float, the impact of regulation, the declining effect of FOMO, the rise of Stablecoins & how the ‘halving’ process implies less tension in the price of bitcoin going forward.

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DESCRIPTOR - This week we focus on the macro outcomes of President Trump’s visit to China and the potential leadership challenge in the UK. We’ll also discuss the bounce back of software vs semiconductors and why this could be a false dawn.

President Xi welcomed President Trump with pomp & ceremony to China. However, he also had Trump’s advisors and possibly 99% of the rest of us racing to our nearest Google Search engine to look up who Thucydides was and what was the trap he was referring to. 

This was clever one-upmanship on Xi’s part, using an analogy from Greek ancient history to imply that a rising new nation will almost always clash militarily with the current incumbent empire through war. It was both a warning and a statement of intent on Xi’s part.

Up and until 2022-23 when AI expenditure began to accelerate in the US, there was some truth to the waning of the US star in favour of a rejuvenated China using its belt & road initiative as a way to position itself as the new and rising economic behemoth.

However, the US spend on AI and re-acceleration in its technological dominance has pushed back China’s ambition and is allowing the US a longer lifeline. Investors are hailing this extended status quo of Western values through AI dominance by aggressively buying the early out performers. 

There may be more to the market resurgence than just productivity gains thanks to AI. The extension of the post war establishment may also be playing a subliminal part in investors’ insatiable appetite for risk assets.

Could Andy Burnham be the next UK PM? If so, what does he stand for?

On past statements and positioning, Burnham appears a more left leaning candidate than Starmer. Of course, when and if he gets into No.10, he may well soften his stance and take a more pragmatic line.

However, he has in the past suggested a straight 10% lower rate of tax in combination with a higher band at 50%. He’s also criticised Rachel Reeves attempt to cut the spend on the welfare system and has taken a more conciliatory tone to immigration.

Sadly demographics do not support this stance. The UK collects £1.23trn in tax contributions and spends nearly £1.4trn on welfare, pensions, defence etc. The resultant £133bn gap is getting bigger as more and more of the boomer group retire but also the welfare state continues to expand. 

Over reliance on the debt markets will harm UK growth thanks to higher interest rates required to attract investors. 2 weeks ago we saw the highest coupon offered on 30-year gilts since 1998.

A Burnham administration, at least on past statements, appears more profligate than the current team and markets are unlikely to take well to a change of leadership.

The Software ETF (IGV) has been on a strong run in the last month. Maybe software is not for the chop thanks to AI. We would suggest continued caution. Listen & watch to see why.

Always do your own research or seek the advice of your professional financial advisor.

You can find us on LinkedIn and YouTube, Money Matters, Ben Hakham CEO at Traderoutes Capital.

This week we concentrate our attention on copper. Anthropic’s $1.8bn deal with Akamai & Nvidia’s $2.1bn deal with IREN announced last week for further capacity expansion throws a glaring light on the infrastructure requirements required to drive the AI revolution.

In 2026 alone AI related data centre capex announcements amount to $650bn, a 32% increase on 2025. New GW growth capacity implied is a 14% increase on 2025. This means that both data centre copper demand as well as grid expansion to accommodate the DC usage will imply an incremental 650k ton demand by 2030 from a current 260k tons. Combined with short term supply constraints, the copper price has spiked 11% in May alone to stand at an increase of 12% in 2026 YTD at $6.49 per lb.

We’ll delve into the demand;supply environment for copper and conclude that a major supply deficit is developing which is likely to bolster continued price uplift for the commodity. We’ll also discuss the net beneficiaries at a stock and ETF level and highlight the significant margin opportunity for these companies thanks not only to the improvement in the underlying copper price BUT also the impact of bi-product price appreciation resulting in historically low cash costs of production.

We also assess the latest macroeconomic announcements from last week and conclude that our medium-term conclusion of overweight exposure to the US economy at the cost of Europe and UK is backed up by the latest economic releases & Japan’s central bank is set to increase interest rates as early as June 16th implying a potential recovery in the Yen.

With stagflation looming in Europe & UK, a Long Yen vs Euro & GBP may be a prudent consideration.

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This week we parse through Jay Powell’s decision to remain on the Fed rate setting board and the key results from last week. 

Alphabet rose (justifiably) by 10% whilst Meta fell 10% (unjustifiably in our opinion) by 10%.

Jay Powell becomes one of 8 members of the Fed rate setting committee that are non-aligned with the Trump administration wish to keep reducing rates at almost any cost. The other 4 Trump appointed governors are likely to push through with the dovish agenda. 

Question is, how many of the 8 will turn? We think that ceteris paribus, re the economy ie assuming we remain in the current range of activity, the Fed will likely reduce by a further 25-50bps this year. A positive for risk assets.

A slew of major results were announced and digested last week. We’ll not dwell on each suffice to say that Alphabet came in as the champ whilst Meta won the wooden spoon in terms of share price reactions.

As an ongoing theme, capex continued to rise but companies also highlighted faster data centre growth and capacity uptake as well improved metrics on margin and uptake thanks to the AI capex initiatives.

Meta has been perceived of late as a net loser in the AI race. They are spending almost as much on capex as the DC players but with no DC platform and have, what some may call, a lame LAMA LLM (Large Language Model) product. 

What the market, we believe is missing, is that Meta probably has the most transparent route to AI monetisation of all the MAG7. Ad revenue targeting is already allowing for a re-acceleration in revenues. According to consensus estimates, revenue is set to rise by 25-30% this year and next. That’s a $130-150bn incremental growth over 2 years. Even at this early stage that’s pretty impressive ROI and payback.

In terms of valuation, Meta (according to consensus estimates) is trading on 20x 26 p/e with revenue growth of 25-30%. This is by far the most attractive of the MAG7.

Meta has been through investor shunning before and then bounced back. This could well be another such episode.

Mastercard & Visa are a backbone to any global portfolio in our opinion. Little in last week’s announcement and guidance has shifted our view. These act as a duopoly in a global payment processing market with EBITDA margins in excess of 65%. There are few if any existential threats to their dominance, at least on the medium term horizon.

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This is a big week for markets with over 44% the S&P500 Index in capitalisation terms announcing results. The most significant are Visa, Alphabet, Microsoft, Amazon, Meta, Ely Lilly and Mastercard. Just these companies combined account for 33% of the S&P500 Index.

The DOJ have announced that they will drop their charges on current Fed head Jay Powell. No doubt pressure from up top has induced this change of heart to allow for the easy passage to crown Kevin Warsh as the new Fed governor.

We’re unlikely to see any movement from the FOMC this Wednesday but clearing the way for a May Warsh appointment brings a resumption in interest declines back to the top of the agenda and hence a re-awakening in risk assets.

In the meantime, European inflation numbers out this week are likely to re-enforce stagflationary fears in the Eurozone as this will be combined with Q1 GDP growth, most likely close to zero.

The US core CPE is also due this week and likely to be closer to 3.2% vs 3% in Feb and way off the Fed’s 2% target. However, Q1 GDP growth is likely to suggest an annual run-rate of 2.1%. This is at least better than an inflationary/no growth environment we’re witnessing in Europe.

On the corporate front, we talk about the dynamics of the last 3 major Top 10 stock concentration eras. The Nifty 50 during the 60’s & 70’s when the top 10 stocks accounted for 30% of the S&P500 Index, the dot com boom in the early 2000’s when the top 10 accounted for 25% of the Index and the current crop of top 10 stocks accounting for 40% of the S&P500 Index. 

We discuss the valuation differentials, the earnings growth outlook and the point in the cycle. We conclude that the latest AI driven cycle and the top 10 stocks by capitalisation are still in the ‘early innings’ of the current cycle.

We also discuss Intel’s results from last week and how the CPU is the latest chip type to join the AI ‘growth train’.

Always do your own research or seek the advice of your professional financial advisor.

You can find us on LinkedIn and YouTube, Money Matters, Ben Hakham CEO at Traderoutes Capital.