CPI Relief Meets Oil Shock as AI Stocks Surge

Grant Calloway

Seven thirty in the morning on the floor, and, uh, every screen from the main room to the annex was blinking the exact same number. Three point four percent. July consumer price index comes in right on the nose, matching consensus down from three point five in June, with a point one percent bump month over month. Now, after that nasty shock last week when nonfarm payrolls contracted by twenty three thousand, people were starting to whisper that dirty twelve letter word again. Stagflation. But this print, well, it put out the fire, at least for a few hours. Premarket tape jumped instantly. S and P five hundred futures up zero point two percent, Nasdaq one hundred futures gaining zero point six, and the ten year Treasury yield backed off to four point six six eight percent. Fed funds futures are already adjusting, bringing September rate hike odds right back down below forty five percent.

Grant Calloway

So, does that mean the Fed gets to sit on its hands in September and take a breath? Maybe. But, uh, don't pack up your hard hats just yet. You see, while the headline CPI number brought a sigh of relief, the energy tape is telling a very different, much dirtier story. Brent crude is sitting right near ninety dollars a barrel, WTI around eighty two eighty three, and that is not just supply and demand at work. On Tuesday, US naval forces fired on a Panama flagged ship attempting to cross the Gulf of Oman. That single kinetic event put a hard geopolitical floor under commodity prices overnight. And when crude sits at ninety bucks, it creeps into everything, shipping, trucking, plastics, aviation, you name it.

Grant Calloway

I mean, look, look at the long end of the curve. The thirty year Treasury yield is hanging out at five point two four percent. Think about what that's telling us. The bond market isn't convinced inflation is dead and buried. It's looking past this single three point four percent CPI print and staring straight at ninety dollar oil, sustained fiscal deficits, and supply chain frictions in the Middle East. On one hand, you have a labor market that just shed twenty three thousand jobs, which screams economic slowdown and calls for monetary easing. On the other hand, you've got crude oil threatening to reignite input costs and a thirty year bond yield screaming that long term money demands a heavy risk premium. So if you ask me whether the inflation fight is over, I'd say this tape is still tighter than a drum, and the Fed is caught right in the middle of it.

Grant Calloway

Now, if you turn your head toward tech, the mood is, uh, considerably punchier. Last night after the bell, Super Micro Computer dropped earnings that completely lit up the board, and cloud infrastructure provider CoreWeave backed it up with massive momentum of their own. Remember last week when everyone was questioning if AI hardware CapEx was going to stall out? Well, these reports just put a heavy boot on the accelerator. We are seeing premarket bids spilling across the entire ecosystem. Optical component maker Coherent, ticker C O H R, is trading up ahead of its own results as traders bet that data center interconnect demand is nowhere near a peak.

Grant Calloway

Out outside of tech, it's a bit more measured. The K B W Nasdaq Bank Index edged up zero point four six percent to one hundred ninety two point zero three, reflecting some calm in the financial sector after those yield movements. And Cisco Systems, ticker C S C O, is sitting quietly right near the flat line, waiting in the wings for its own post close earnings release tonight. People want to see if enterprise enterprise networking spend is keeping pace with the hyperscalers.

Grant Calloway

Before we look at what's on deck for the rest of the session, a quick quick nod to our sponsor Jellypod. If you want automated, tailored audio market summaries delivered straight to your phone before the opening bell rings, head over to jellypod dot com. It's a quick, effortless way to get your morning breakdown before the noise starts.

Grant Calloway

Looking ahead to the rest of the day and tomorrow, keep your eyes glued to earnings from alternative AI infrastructure plays like Nebius Group, ticker N B I S, and Cerebras Systems, ticker C B R S. They are going to show us whether this capital spending boom is concentrated in just a few giants or spreading into the broader ecosystem. We've got the opening bell coming up in just a few minutes, the greatest four hundred milliseconds in capitalism. Remember, price is what you pay, value is what you get, and never mistake a quiet premarket for a soft session. Quick legal reminder, this show is for informational and educational purposes only and does not constitute financial advice. All right, floor's opening up, let's go see where the trades land.