Equity investors continue to ignore many of the headlines, while moves in other asset classes, particularly bonds and commodities, are reflecting the change in headlines and the macro environment far more clearly.

US equities advanced on Tuesday, led by semiconductor stocks, as investors once again attempted to buy the recent pullback and largely looked through the latest developments in the Iran conflict.

Part of this resilience is supported by corporate earnings. The second-quarter reporting season has started on a strong note, with approximately 88% of the roughly 66 S&P 500 companies reporting so far beating analysts' earnings estimates, according to FactSet.

However, investors should look beyond the headline beat rate. A significant share of the early reports came from major US banks, whose results benefited from exceptionally strong trading revenues amid heightened market volatility. These earnings may therefore not be representative of the broader corporate sector.

Attention now turns to some of the market's most influential companies. Alphabet, Tesla, and ServiceNow are all scheduled to report earnings tonight after the market closes. Their results and guidance are likely to provide a much clearer indication of whether current market optimism, particularly in technology and AI-related stocks, remains justified.

Markets:

• Equities: yesterday’s rebound in semiconductor and technology stocks faded quickly.

• Bonds: continue to move higher, US 10y yield around 4.64%, Japan 10y yield 2.74%

• Commodities: Oil prices continue to rise, with WTI around USD 86/barrel and Brent around USD 94/barrel

  Precious metals: higher, gold at USD 4’125/oz, silver trades above USD 59/oz

• Currencies: USD light uptrend

• Cryptos: give up yesterday’s gains - Bitcoin at USD 65k

• Volatility: remains low with the VIX index at 17

My View: Looking across the entire market rather than focusing on a single asset class: The recent market moves do not fully add up.

One of the oldest observations in financial markets is that bond investors usually recognize changing macroeconomic regimes before equity investors do. Bond markets tend to react more quickly to shifts in inflation expectations, monetary policy and economic fundamentals, while equity investors often remain driven by optimism and fear of missing out.

That divergence is becoming increasingly visible looking at current market patterns.

Yesterday's rally in semiconductor stocks looked more like another FOMO-driven rebound than the beginning of a sustainable move higher. As I expected, much of that strength faded quickly.

Meanwhile, bond yields continue to climb, oil prices remain elevated and geopolitical risks have not disappeared, even in the opposite. Those are not the ingredients that typically support record equity valuations.

The oil market deserves particular attention. Despite ongoing disruptions in the Middle East, oil prices still appear to underestimate the tightening supply situation.
US crude inventories have fallen to levels equivalent to roughly 43 days of supply, the lowest in approximately 45 years. By comparison, the long-term average is around 65 days, while inventories before the pandemic were closer to 90 days.
The market has largely absorbed the initial geopolitical shock, but the underlying supply buffer continues to shrink.

Higher oil prices eventually feed into transportation, manufacturing and consumer prices, increasing inflationary pressure. Rising inflation, in turn, usually results in higher government bond yields and tighter financial conditions.

History suggests that this combination is rarely supportive for richly valued equity markets.

For now, equities continue to price an optimistic scenario. Bond markets are pricing a more cautious one.

I continue to believe the bond market is sending the more credible signal.

Investors should watch the relationship between oil prices, bond yields and equities closely. If oil continues to rise while yields move higher, today's equity valuations will become increasingly difficult to justify.justify current expectations.

In my view, this is not a falling knife to catch, it is a knife that has only just started to fall.

Monday's trading session marked the beginning of the typical summer lull, but beneath the quiet surface, market behavior appears to be changing.

Geopolitics: Iran signaled it remains open to continuing discussions with the United States, leaving the door open for diplomacy. At the same time, attacks continued, while maritime traffic through the Strait of Hormuz remains severely restricted by both sides.

Technology
Alphabet announced it is developing a new AI server chip designed to run its Gemini models more efficiently, aiming to improve performance while reducing costs.

Meanwhile, AMD unveiled Helios, its first full AI rack system intended to compete directly with Nvidia. Microsoft confirmed it will deploy Helios racks in its Azure data centers, joining Meta, OpenAI and Oracle as early customers.

Markets:

• Equities: Technology try to rebound after last weeks sell-off.

• Bonds: Uptilt, US 10y yield around 4.58%, Japan 10y yield 2.71%

• Commodities: Oil prices starting the week lower, with WTI around USD 82/barrel and Brent around USD 88/barrel

  Precious metals: sideways, gold at USD 4’010/oz, silver trades near USD 57/oz

• Currencies: USD strengthened

• Cryptos: sideways - Bitcoin falling back to USD 64k

• Volatility: The VIX index falling back towards 18

My View: Markets reacted only briefly to the latest geopolitical headlines before giving back their gains. That increasingly short-lived reaction suggests investor sentiment may be starting to shift after months of buying every dip.

This changing market behavior is worth paying close attention to.

Only a few weeks ago, headlines such as renewed diplomacy with Iran or major AI announcements from Alphabet and AMD would likely have fueled gains throughout the trading session. Today, those rallies fade within hours.

The same pattern can be seen in oil. Prices initially fell on diplomatic headlines but quickly recovered as investors recognized that the underlying supply risks remain unresolved. Maritime traffic through the Strait of Hormuz is still heavily disrupted, while military activity continues despite renewed discussions.

Markets appear to be transitioning from an environment where every positive headline was rewarded to one where investors are becoming far more selective and cautious. Historically, these subtle shifts in market psychology often mark the beginning of a new regime.

Last week, semiconductor stocks suffered their worst weekly performance in more than a year. Naturally, many investors are asking whether this is a buying opportunity.

My answer remains no.

I continue to believe investors should keep their hands off. Despite the recent pullback, valuations remain demanding, positioning is still crowded, and growing questions are being raised about whether the enormous AI investment cycle can justify current expectations.

In my view, this is not a falling knife to catch, it is a knife that has only just started to fall.

The global AI trade is facing its biggest reality check in months.

Asian equities declined alongside US equity futures as the sell-off in semiconductor stocks accelerated. Investors are increasingly questioning whether the enormous capital being invested in artificial intelligence can ultimately justify today's extreme valuations.

The latest trigger came from Chinese AI startup Moonshot, which unveiled its new Kimi K3 model. The company claims its model can compete with the latest offerings from OpenAI and Anthropic, reviving memories of last year's "DeepSeek moment." At the same time, Chinese President Xi Jinping appeared at the country's premier AI summit, highlighting how quickly Chinese AI developers are closing the technology gap with their US competitors.

The market reaction has been significant. The Philadelphia Semiconductor Index has now fallen more than 19% from its late-June record high and is heading for its worst week since March 2025. On Thursday, the index reached its lowest level in almost two months.

The correction has been even more pronounced in Asia. South Korea's KOSPI, widely seen as one of the purest public plays on AI hardware demand, has dropped roughly 25% since its June 18 peak (closed today).

Markets:

• Equities: echnology leads another broad sell-off, with semiconductor stocks under heavy pressure. Nasdaq Futures are down around 2%.

• Bonds: Little changed, US 10y yield around 4.52%, Japan 10y yield 2.71%

• Commodities: Oil prices trading on their week highs, with WTI around USD 81/barrel and Brent around USD 87/barrel

  Precious metals: remain under pressure, gold below USD 4’000/oz, silver trades near USD 55/oz

• Currencies: no major moves

• Cryptos: under pressure - Bitcoin falling back to USD 62k

• Volatility: The VIX index climbs above 19

My View: Are investors finally beginning to reassess the AI story and recognize that this race may simply have gone too far for too long?

History repeatedly shows that when optimism reaches extreme levels, reality eventually returns. And it often does so brutally. Markets rarely unwind excess gradually. They usually overshoot in both directions.

The greatest risk remains with retail investors.
They are often the last to join a speculative boom, encouraged by banks, social media, headlines, and stories of effortless wealth. Unfortunately, they also tend to be the last to exit, usually after large losses have already been realized.

Today, many investors and finfluencers continue repeating the familiar message: "Buy the dip.""Stay patient.""Everything will soon be back to the moon." Perhaps they will be right one more time again.

But optimism in a speculative manner alone has never been an investment strategy.

Some investors and optimists describe the current decline as nothing more than a healthy consolidation. Others, with a more realistic perspective, see the beginning of a much deeper correction. At this stage, nobody knows which scenario will ultimately play out from this point.

What we do know is that valuations had reached extraordinary levels, expectations became increasingly unrealistic, and speculative behavior accelerated dramatically. Those are precisely the conditions that deserve caution.

At ETFMandate, I have been positioning my portfolio defensively for quite some time. You could argue that I was too early. That is also a fair observation. Timing the exact turning point of a speculative bubble is almost impossible.

However, for me, managing my own money, protecting capital has always been more important than participating in the final stage of market euphoria.

The past few trading days have been among the strongest periods of my 27 years of investment experience. That does not make me complacent, quite the opposite.
Markets remain extremely headline-driven. One unexpected announcement, one policy shift, or even a single social media post from President Trump could reverse sentiment within hours.

In the end, keeping reality in sight is the best way to achieve successful long-term investment results.

The latest US retail sales report confirms that consumers are still spending despite higher interest rates and persistent inflation concerns.

Retail sales rose 0.2% in June, exactly in line with economists' expectations. Lower gasoline prices reduced receipts at service stations, while motor vehicle sales accelerated and online spending remained strong, highlighting continued resilience in consumer demand.

The labor market also continues to hold up. Initial jobless claims fell to 208,000, well below the consensus estimate of 217,000, suggesting companies are still reluctant to lay off workers.

Neither report points to an economy in urgent need of support. Consumers are still shopping, and businesses continue to retain employees.

Markets: almost no market impact by latest numbers

My View: The headline numbers look reassuring, but they don't tell the whole story.

Beneath the surface, the financial health of many US consumers continues to deteriorate. Auto loan delinquencies remain elevated, student loan repayments are becoming an increasing burden again, and credit card balances with missed payments continue to rise, levels seen before financial crises in 2008.

Consumers are still spending, but many are doing so with increasingly stretched balance sheets.

If gasoline prices continue to climb, disposable income will come under further pressure. Higher fuel costs, elevated mortgage rates, and expensive consumer credit leave households with less money for discretionary spending. More and more Americans are being forced to focus on essential expenses rather than optional purchases.

For now, this is close to the outcome the Federal Reserve has been hoping for: inflation is easing without a sharp deterioration in employment or consumer demand. Following two encouraging inflation reports this week, today's data further strengthened the case for keeping interest rates unchanged at the July meeting. Markets now assign roughly a 90% probability that the Fed will leave rates unchanged.

However, I continue to believe that the Fed risks falling behind the curve.
The recent improvement in inflation was helped significantly by lower energy prices. Yet that support could disappear quickly if oil prices remain elevated, or rise further as geopolitical tensions persist. In that case, the recent decline in inflation may prove temporary, and July's inflation data could surprise to the upside.

If that happens, the market's confidence in imminent policy easing could be challenged once again.

While the economy still appears headed for a soft landing, the same cannot necessarily be said for some of today's highly valued technology stocks. They remain priced for near-perfect conditions, leaving little room for disappointment if inflation or interest rates move higher.

Producerr prices unexpectedly declined in June, providing financial markets with a second consecutive day of encouraging inflation data.

The Producer Price Index (PPI), which measures wholesale inflation, fell 0.3% during the month, surprising economists who had expected no change. Core PPI rose just 0.2%, while the closely watched core measure excluding trade services increased only 0.1%, also coming in below expectations.

This follows yesterday's softer-than-expected CPI report, where headline inflation rose only 0.4%.

Together, the two reports reinforce the view that inflation pressures eased during June, largely thanks to declining energy prices over the reporting period.

Markets:

• Equities: supported by positive inflation reading

• Bonds: US government bond yields fall for a second day, US 10y yield around 4.55%, Japan 10y yield 2.68%

• Commodities: Oil prices extended rally, with WTI around USD 80/barrel and Brent around USD 86/barrel

  Precious metals: slightly lower, gold to USD 4’050/oz, silver trades near USD 58/oz

• Currencies: USD fell a second day

• Cryptos: rallied - Bitcoin moving above USD 65k

• Volatility: The VIX index fell back below 16 (attractive for hedging)

My View: I continue to believe investors should be careful not to overinterpret these inflation reports.

Both yesterday's CPI and today's PPI are backward-looking. They largely reflect the sharp decline in oil prices that occurred during the reporting period. Since then, the environment has changed considerably.

Following the renewed escalation in the Middle East, the United States is officially back at war with Iran, while energy prices have already rebounded significantly. If oil prices remain elevated, or rise further, the inflation picture could deteriorate again over the coming months.

Higher energy costs eventually feed through transportation, manufacturing and services, creating the risk of renewed second- and third-round inflation effects across the broader economy.

For that reason, I continue to view these two encouraging inflation reports as a potential bull trap. Financial markets appear to be pricing a much more benign inflation outlook than current geopolitical developments justify.

As a result, I still believe US interest rates are likely to remain higher for longer than markets currently expect. Inflation risks have not disappeared, they may simply have been delayed.

Another factor currently worth watching is volatility. Despite ongoing geopolitical uncertainty and rising inflation risks, implied market volatility remains at relatively low levels. This makes equity hedging more attractive, as option premiums are still comparatively inexpensive. For investors looking to protect gains or reduce downside risk, the current environment offers an opportunity to establish hedges at a lower cost than during periods of market stress.

US inflation surprised to the downside today, providing financial markets with welcome relief after months of persistent inflation concerns.

Consumer prices rose 3.5% year-over-year in June, below the 3.8% consensus estimate and down from 4.2% in May, as lower energy prices helped ease overall price pressures.

On a monthly basis, the Consumer Price Index (CPI) declined 0.4%, compared with expectations for a 0.2% decline. It marked the largest monthly drop in headline inflation since April 2020.

Core inflation, which excludes the more volatile food and energy components, was unchanged during the month, bringing the annual core inflation rate down to 2.6%, well below the expected 2.9%.

The report suggests that the recent spike in inflation may have been, at least partly, driven by lower energy prices.

While one month's data does not establish a trend, it offers some relief.

Markets:

• Equities: Investors remain surprisingly calm despite the renewed escalation

• Bonds: US government bond yields fall on softer inflation print, US 10y yield around 4.58%;

• Commodities: Oil prices extended rally, with WTI around USD 80/barrel and Brent around USD 85/barrel

  Precious metals: move higher, gold to USD 4’050/oz, silver trades near USD 59/oz

• Currencies: USD weakens

• Cryptos: gain - Bitcoin moving above USD 64k

• Volatility: The VIX index fell back below 17

My View: Today's inflation report is undoubtedly in favor for financial markets. However, investors should remember that inflation data is backward-looking.

Particularly in the current environment, with sharp swings in energy prices, it is important to interpret the figures carefully before drawing conclusions. The softer inflation reading was largely expected after oil prices fell from around USD 95 per barrel to nearly USD 70 during the reporting period.

Since then, the environment has changed significantly. Driven by the latest developments in the Middle East, energy prices have already rebounded by roughly 15% this week.

Should the conflict continues or escalates — my view — higher oil and energy prices are likely to feed back into headline inflation. The longer geopolitical tensions persist and oil prices remain elevated, the greater the risk of second- and third-round inflation effects spreading through the broader economy. Higher energy prices have an immediate impact on transportation costs, which eventually feed into the prices of a wide range of goods and services.

For that reason, I continue to believe that markets are underestimating the risk of higher inflation. While today's report is encouraging in the short-term, it should not be interpreted as a definitive signal that the inflation battle has been won. The geopolitical backdrop, and its impact on energy markets remains the key variable to watch.

The United States has officially re-entered military conflict with Iran. Overnight, US President Donald Trump formally notified Congress that the US is again at war with Iran, triggering a new 60-day authorization window for military operations.

At the same time, the US reinstated its blockade against Iran, aiming to prevent commercial shipping from accessing Iranian ports.

President Trump also threatened to impose a 20% toll on vessels transiting the Strait of Hormuz, arguing that the United States should be compensated for its role as the waterway's security guarantor. The proposal marks a sharp shift from his previous stance, when he repeatedly argued that no country should charge tolls or fees on an international waterway.

Iran responded by stating that it "always has been and forever will be the guardian of Hormuz."

Meanwhile, military exchanges between the United States and Iran continued overnight, with both sides launching additional strikes.

Markets:

• Equities: Investors remain surprisingly calm despite the renewed escalation

• Bonds: Most government bond yields continue to move higher; US 10y yield around 4.62%; while Japan shows signs of stabilization with the 10-year yield easing to 2.70%

• Commodities: Oil prices extended yesterday's nearly 10% surge, with WTI above USD 80/barrel and Brent towards USD 86/barrel

  Precious metals: Gold stabilized after briefly falling below USD 4’000 yesterday, recovering to USD 4’020/oz. Silver trades near USD 58/oz

• Currencies: USD broadly unchanged

• Cryptos: stable - Bitcoin moving towards USD 63k

• Volatility: The VIX index edged slightly higher above 17

My View: I remained relatively isolated with my view that this conflict was far from over while many investors celebrated the Memorandum of Understanding as if the geopolitical risk had been fully resolved.

For that reason, I maintained my oil exposure. Although I took profits on roughly half of the position after the initial rally, I reinvested those proceeds at the beginning of last week as signs increasingly pointed toward renewed escalation.

Markets should not dismiss the current wave of rhetoric and threats. While headlines are often noisy, they reflect a geopolitical environment that remains highly fragile. My assessment has not changed.

I expect the conflict to remain elevated throughout this new 60-day window, with the risk of further escalation remaining significant.

At the same time, pressure on the United States and President Trump continues to build. The administration faces approaching midterm elections, while any prolonged disruption to energy markets could quickly translate into higher inflation, slower global growth, and renewed economic stress.

The proposed "guardian" role for the Strait of Hormuz also raises practical questions. Securing one of the world's busiest shipping lanes is extraordinarily difficult. Even with a naval presence, commercial tankers remain vulnerable to asymmetric attacks, including drones, missiles, and small fast boats. Preventing such incidents on a sustained basis would be extremely challenging.

For now, financial markets continue to price a relatively benign outcome. Whether that optimism proves justified will largely depend on developments in the Strait of Hormuz over the coming days and weeks.

This week start turned into a roller coaster for the South Korean stock market. South Korea’s benchmark KOSPI triggered a market-wide circuit breaker on Monday after plunging more than 8%, as a renewed selloff in heavyweight semiconductor stocks deepened concerns over artificial intelligence valuations and the outlook for memory-chip earnings.
The curcuit breaker gets triggered when the index falls by >8%. The trading halts for 20 minutes.

The sell-off accelerated after the geopolitical situation in the Middle East deteriorated further. Following their trading debut last Friday in New York, SK Hynix plunged nearly 13%, while Samsung Electronics slumped almost 9% after the United States launched another wave of attacks on Iran, Iran retaliated, and Tehran announced the closure of the Strait of Hormuz.

Remarkably, the KOSPI has triggered more circuit breakers over the past seven months than during the previous 28 years combined since the system was introduced in 1998.

A circuit breaker is a temporary trading halt designed to prevent panic-driven buying or selling during periods of extreme market volatility. By pausing trading, regulators aim to give investors time to assess new information, reduce emotional decision-making, and maintain orderly financial markets.

Markets:

• Equities: Global equities remain under pressure, although European markets continue to show relative resilience

• Bonds: Government bond yields moved higher; US 10y yield around 4.59%, Japan 10y yield at 2.79%

• Commodities: Oil prices continued to rise, with WTI above USD 74/barrel and Brent towards USD 79/barrel

  Precious metals: Gold eased to USD 4’060/oz and silver trading at USD 58/oz

• Currencies: USD trading sideways

• Cryptos: weak - Bitcoin falling towards USD 62k

• Volatility: VIX climbing towards 17

My View: The events in South Korea may offer a preview of what could eventually unfold across global technology markets if the AI bubble begins to unwind.

The AI rally has become increasingly concentrated, heavily leveraged, and driven by exceptionally optimistic expectations. When sentiment changes, liquidity can disappear surprisingly quickly, forcing indiscriminate selling and triggering sharp declines.

The recent circuit breaker in South Korea is therefore more than just a local market event, it serves as a reminder that even the strongest bull markets can reverse rapidly once confidence starts to crack.

Markets often appear calm until they suddenly aren't.

The Federal Reserve published the minutes from its latest FOMC meeting yesterday, reinforcing a more hawkish stance than many investors had anticipated.

The FOMC unanimously voted last month to keep the federal funds rate unchanged at 3.50%–3.75%. According to the minutes, policymakers do not expect interest rate cuts before Q2 2027.

The Fed continues to point to stubborn inflation as its primary concern. Following last month's meeting, nine of the eighteen FOMC members indicated they would support at least one additional rate hike this year if inflation remains above the Fed's 2% target.
A majority of officials also acknowledged that further tightening could become appropriate should inflation prove persistent.

Until yesterday's release, financial markets had largely priced out any further rate hikes in 2026.

Following the renewed escalation in the Middle East and the sharp jump in oil prices during last two days, expectations for another Fed rate hike have started to re-emerge, although this view is still far from being fully reflected across financial markets.

Markets:

• Equities: US equities managed to recover most of yesterday's losses, while other major markets remained under pressure.

• Bonds: Government bond yields remained elevated; US 10y yield held around 4.58%, Japan 10y yield at 2.88%

• Commodities: Oil prices gave back part of yesterday's sharp gains, while precious metals recovered

• Currencies: USD almost unchanged

• Cryptos: stabilized - Bitcoin trading between USD 62-63k

• Volatility: VIX declined back below 17

My View: Investors continue to ignore both the Fed's message and the recent inflation data. The prevailing market narrative still assumes that everything will work out just fine.

The key question is when the repricing across asset classes will begin.

Bond investors have already started to react. Higher yields suggest that fixed-income markets are taking inflation risks and the Fed's increasingly hawkish tone more seriously.

Equity investors, however, continue to dismiss almost every negative headline. So far, they have been right. Major stock indices remain close to record highs, and every setback has been followed by a rapid V-shaped recovery.

Many investors have never experienced a prolonged bear market or significant portfolio losses. The past years have reinforced the belief that every dip should simply be bought.

The question is not whether markets can continue to ignore bad news for a while longer, they clearly can.
The more important question is: How long will this continue? And at what point will bad news once again be treated as bad news?

That shift in sentiment, whenever it comes, could trigger a much broader repricing than many investors currently expect.

The Middle East conflict re-escalated overnight after Iran reportedly attacked two oil tankers transiting the Strait of Hormuz near Oman.

In response, the United States launched strikes against several targets inside Iran. Iran then retaliated with attacks on US military assets in Bahrain and Kuwait.

Speaking at the NATO summit this morning, US President Trump declared that the previous ceasefire was over and stated that negotiations with Iran were no longer possible.

Markets:

• Equities: Broadly lower, led by technology stocks (-1.4%).

• Bonds: yields moved higher as oil prices surged, with the US 10-year yield rising to 4.58%.

• Commodities: oil prices jumped around 6%, while precious metals traded lower

• Currencies: USD strengthened

• Cryptos: Broad weakness - Bitcoin falling below USD 62k

• Volatility: VIX moved back above 18

My View: The re-escalation is real. I have consistently argued that this conflict was far from over, and the latest developments support that view.

Financial markets had largely priced in a lasting ceasefire and the end of this conflict. Oil prices had already fallen back to pre-war levels last week, while investors increasingly assumed geopolitical risks had largely disappeared.

At the same time, I repeatedly highlighted the risk of renewed inflation should oil prices move sharply higher again. That risk is becoming increasingly relevant. Markets have already priced out any further Fed rate hikes this year, leaving markets vulnerable if energy-driven inflation returns.

The key question now is whether this is simply another short-lived escalation before a new ceasefire is negotiated, or whether the conflict is entering a more dangerous phase.

From a political perspective, President Trump is unlikely to welcome a prolonged military conflict ahead of the US midterm elections, suggesting there remains a strong incentive to contain the situation.

If this proves to be another one-day escalation, markets could stabilize relatively quickly. However, if hostilities continue to spread across the region, investors may have to price in a much more severe combination of higher inflation, rising energy prices, and slowing economic growth. In that scenario, the market impact could be significantly more severe than during the February and March escalation.

After taking profits on part of my oil exposure previously, I deliberately kept a remaining position. This morning, I increased my oil exposure again through a speculative trade based on the view that supply disruptions could intensify if tensions continue to escalate. In particular, there remains a meaningful risk that the Strait of Hormuz could once again be closed, significantly disrupting global oil flows.

The position is intended to benefit from a renewed spike in oil prices should geopolitical risks continue to deteriorate.

This morning, South Korean technology giant Samsung Electronics reported preliminary second-quarter results that exceeded expectations, delivering another record quarter driven by the ongoing artificial intelligence investment boom.

The world's largest memory chip manufacturer expects operating profit of KRW 89.3 trillion (approximately USD 58.4 billion) for the second quarter of 2026, significantly above the previous record of KRW 57.2 trillion achieved in the first quarter. The strong performance was primarily fueled by exceptional demand for AI memory chips.

Despite the record earnings outlook, Samsung shares plunged 8.5%.

At the same time, SK Hynix, the world's second-largest memory chip producer, lowered the fundraising target for this week’s planned Nasdaq ADR listing following the recent decline in its share price. The company now aims to raise approximately KRW 43.1 trillion (around USD 28 billion) through the offering.

Markets:

• Equities: South Korea's Index KOSPI plunged more than 8% intraday before recovering to close almost 5% lower; US Nasdaq Futures are down around 1%, led by broad weakness across semiconductor and AI-related stocks.

My View: The market reaction highlights just how elevated expectations have become and how extreme investors are positioned.

Samsung delivered record profits, yet investors focused on revenue growth that failed to satisfy increasingly unrealistic expectations. Any sign that the extraordinary pace of AI spending could moderate is now enough to trigger heavy selling across the entire semiconductor sector.

This is another reminder of how crowded positioning has become. A single corporate announcement erased hundreds of billions of dollars in market value across the industry and pushed the KOSPI down more than 8% intraday. This is a clear sign that investor nervousness is rising rapidly.

Already for some weeks, I have argued that the AI investment cycle is showing characteristics of a classic bubble. The assumption that growth can continue indefinitely at the current pace, most of it debt financed, is becoming increasingly difficult to justify.

We are seeing more warning signs. Free cash flow at many hyperscalers is deteriorating as capital expenditures continue to explode. At some point, these investments will need to generate adequate returns. If they do not, write-downs and a reassessment of investment plans could follow much sooner than many investors currently expect.

At current stage, the market has become a battleground between bulls and bears, explaining the violent swings we have witnessed over recent weeks. Optimism within the bulls remains extremely high, ignoring that cracks are beginning to appear beneath the surface.
Most bullish investors continue to ignore these warning signals, until it is too late.

Below the surface, many risks are already quietly building. As always, I invest my own money alongside my views, and my conclusion remains unchanged: better be safe than sorry.

The latest US labour market report delivered mixed signals.

The US economy added 57’000 jobs in June, well below expectations of 115’000 and down from the revised 129’000 jobs created in May. Despite the weaker hiring, the unemployment rate declined to 4.2%, highlighting that the labour market remains relatively resilient.

Markets:

• Equities: European markets moved markedly higher, while US equity futures also advanced following the release, although gains remained more moderate than in Europe

• Bonds: Treasury yields declined after the report, with the US 10-year yield easing to 4.48%.

• Commodities: Precious metals rallied. Gold climbed to around USD 4’150 and silver towards USD 62 - oil trading little changed: WTI USD 68 and Brent USD 71/barrell

• Currency: The US dollar weakened against most major currencies

• Cryptos: recovered with Bitcoin climbing back to almost USD 62k

• Volatility: remains low - falling below 16

My View: The latest employment report paints a mixed picture, however suggests labor market to continue being resilient. While hiring is clearly slowing, there are still no signs of a meaningful deterioration, that would force the Federal Reserve to change its stance.

As highlighted by Fed Chair Kevin Warsh yesterday, the Federal Reserve's primary concern remains inflation, not employment. As long as the labor market stays healthy enough, the Fed has room to keep monetary policy restrictive.

I therefore continue to expect higher interest rates for longer, with another rate hike remaining a realistic scenario. Markets are increasingly pricing the next potential hike for September. A move in July is not unlikely, however markets do not price this in.
Overall, equity investors remain too optimistic, expecting the Fed to continue supporting financial markets.

As I have stated repeatedly over recent weeks, I believe the Fed risks falling behind the curve if inflation continues spreading into second- and third-round effects.

For now, markets continue to move sideways near record highs as bulls and bears battle for direction. Next week's earnings season should provide a much clearer picture of corporate fundamentals and whether the earlier spike in energy prices during the Middle East conflict has started to impact company results and profit margins.

Markets were once again looking to Federal Reserve Chair Kevin Warsh for clues about the future path of interest rates. Speaking at the ECB Forum in Portugal, Warsh deliberately avoided providing any forward guidance on monetary policy.

His statement that "prices are too high" reaffirmed the Fed's commitment to restoring price stability, suggesting policymakers are in no rush to declare victory over inflation.

The comments came ahead of another important round of economic data. ADP reported that the US private sector added 98'000 jobs in June, below expectations, while Challenger, Gray & Christmas announced that planned job cuts fell to just under 46’000, slightly below last year's level. The mixed signals leave investors waiting for Thursday's official Nonfarm payrolls report, which has been brought forward due to the Fourth of July holiday.

Markets:

• Equities: Took a hit after Warsh’s comments, led by Tech

• Bonds: Yields moved higher

• Commodities: Silver and gold both moved higher

• Currency: USD strengthened

• Cryptos: higher with Bitcoin back above USD 60k

My View: Warsh message came across clearly: inflation remains his primary concern.

As I have commented for weeks, markets have largely ignored the inflation data. Investors seem convinced that inflation is no longer the problem. Investors continue to focus on the prospect of future easing while dismissing inflation data that remains well above the Federal Reserve's target. That complacency leaves little margin for disappointment if inflation proves more persistent or the labour market remains resilient.

Thursday's nonfarm payrolls report will likely become the week's defining event. A strong labour market would reinforce the argument that the Federal Reserve can maintain restrictive policy for longer, or even consider another rate hike if inflation remains stubborn. A weaker report would strengthen hopes that inflation can cool without pushing the economy into recession.

That is precisely the outcome investors are currently pricing in: an economy that slows just enough to end the tightening cycle, but not enough to damage corporate earnings. It is an attractive narrative, but also a fragile one.

Another point to keep in mind, the US economy has become increasingly dependent on rising asset prices. Strong financial markets support household wealth, confidence and consumer spending. At the same time, this creates vulnerability. Should equity markets experience a meaningful correction, the negative wealth effect could quickly feed into weaker consumption and slower economic growth.

The current market rally therefore rests on a very narrow runway. Expectations remain high. I believe investors’ portfolios are positioned too optimistic. Valuations remain stretched, and there is no room for disappointment.

Friday after market close new attacks started between US-Iran after Iran was Just when markets appeared to believe the worst was behind them, tensions in the Middle East flared up once again.

Late on Friday, shortly after US markets had closed, fresh hostilities erupted between the United States and Iran. The renewed escalation followed reports that Iran had attacked a commercial cargo vessel transiting the Strait of Hormuz earlier that day, prompting retaliatory US strikes.

Both sides quickly agreed to another temporary truce. According to US officials, Washington and Tehran have agreed to halt military operations and resume negotiations over the Strait of Hormuz and other outstanding issues. Shipping traffic through the world's most important energy chokepoint has continued, although at a slower pace than normal.

Markets: The announcement of the renewed truce came early enough before Monday's market opening to avoid a potential wave of panic selling.

• Commodities: Oil prices stopped falling as traders once again priced in a modest geopolitical risk premium

My View: While fears of a complete disruption to energy supplies have eased, uncertainty remains elevated.
As I have repeatedly highlighted over recent weeks, the road to peace is unlikely to be a straight line.

The White House continues to present an optimistic picture, but announcing a deal is one thing, implementing it is another. Rolling back decades of sanctions, rebuilding trust, and agreeing on long-term security arrangements will be far more difficult than issuing positive headlines.

The current agreement clearly provides Iran with breathing room and appears to be favourable for Tehran in the near term. At the same time, there remains a meaningful risk of renewed escalation at any moment. One incident, one miscalculation, or one failed negotiation could quickly reverse the recent progress.

For investors, the key message remains unchanged: do not mistake a pause in hostilities for a lasting peace. The geopolitical risk premium has declined, but it has certainly not disappeared.

Yesterday’s inflation print showed the highest reading since October 2023. The core Personal Consumption Expenditures (PCE) Price Index, which excludes food and energy, rose 0.3% in May, lifting the annual rate to 3.4%. Headline PCE inflation accelerated to 4.1% year-on-year, marking its highest level since April 2023.

Despite higher inflation, the US consumer continues to spend. Personal consumption expenditures increased 0.7% during the month, comfortably exceeding expectations and highlighting the resilience of consumer demand. Meanwhile, first-quarter US GDP growth was revised higher to an annualized 2.1%, underlining that the economy remains on solid footing despite elevated interest rates.

Markets:

• Equities: US equity futures remained positive following the release, with investors largely shrugging off the stronger inflation data.

  Bonds: Treasury yields edged lower as markets slightly reduced the probability of an aggressive tightening cycle, although expectations for a September rate hike remain high.

  Commodities: Precious metals traded mixed while oil prices remained broadly stable.

  Currencies: The US dollar showed limited reaction following the data release, falling slightly from its recent highs.

My View: Inflation is proving to be far more persistent than many investors had hoped. The latest US inflation data showed another acceleration, with the Federal Reserve's preferred inflation measure reaching its highest level in well over two years.

The report comes just over a week after the Federal Reserve, under its new Chair Kevin Warsh, delivered what markets interpreted as a notably hawkish message on inflation and interest rates.

Markets now largely expect another rate hike in September. However, this expectation is far from being reflected across all asset classes. Equity markets, in particular, continue to behave as if monetary policy will have little impact, with US indices pushing towards new record highs almost daily.

In my view, the Federal Reserve risks falling behind the curve. Inflation has become increasingly broad-based, while resilient consumer spending and stronger economic growth continue to support demand. Delaying further policy tightening increases the risk that second- and third-round inflation effects become more deeply embedded in the economy.

For now, equity investors appear willing to ignore these risks. History shows, however, that markets can remain complacent for longer than expected, until they suddenly are not.

The AI rally received a fresh boost after Micron Technology delivered another blockbuster quarter, reigniting investor enthusiasm across the semiconductor sector.

Micron reported second-quarter revenue that was four times higher than a year ago and issued a sales forecast that comfortably exceeded Wall Street expectations. The company also beat estimates across virtually every key financial metric, including revenue, earnings per share and adjusted gross margin.

One figure stood out in particular. Micron reported a gross margin of 84.9%, up from 74.9% in the previous quarter and just 39% a year earlier. That now exceeds the gross margins of every major US technology company, surpassing Meta's 81.9% and Nvidia's 75%. The AI infrastructure boom continues to fuel unprecedented demand for high-bandwidth memory (HBM), allowing Micron to achieve record profitability almost as quickly as customers can secure its chips.

Investors rewarded the results immediately. Micron shares surged as much as 15% in after-hours trading, lifting sentiment across global equity markets. Nasdaq 100 futures climbed around 2%, while South Korea's Kospi jumped nearly 7% as investors rushed back into AI-related stocks.

Markets:

• Equities: AI-related semiconductor stocks rallied, led by Micron. Nasdaq 100 futures gained around 2%, while Asian technology shares posted strong gains.

My View: The latest results reinforce one message: demand for AI infrastructure remains exceptionally strong. Memory chips have become one of the most critical components powering the AI revolution, with hyperscalers and technology companies continuing to invest aggressively in new data centres.

Readers of my comments on ETFMandate know that I have been, and remain, skeptical of the current AI boom.

However, for the time being, AI has become the new gold. Every major technology company is racing to build AI infrastructure, and demand for advanced memory chips continues to outpace supply. Fear of missing out the race dominates and intensifies the process. AI companies are buying virtually every chip they can get, creating persistent shortages and giving manufacturers such as Micron significant pricing power. The explosive improvement in gross margins clearly illustrates how favourable the current market environment has become for leading chip producers.

Micron's exceptional earnings have once again reset expectations for the AI memory trade and may have given the broader AI rally a fresh lease on life.

The key question now is whether this is merely another short-covering bounce or the beginning of a new leg higher for technology stocks. Momentum could return even we are already at lofty, dream-driven valuation levels.

I remain skeptical. The AI investment boom is real, but so is the risk of excessive optimism. History shows that markets often overshoot, especially when capital flows become concentrated in a handful of high-growth names. The semiconductor sector remains one of the most crowded trades in global equity markets, leaving little room for disappointment.

For investors who have enjoyed the extraordinary rally in chip stocks, Micron's outstanding earnings may provide an attractive opportunity to take some profits and reduce exposure.

Despite Micron's impressive results, my view remains that downside risk and potential bigger correction is much higher than upside potential on the sector and AI names, therefore, continue to position my portfolio accordingly.

More oil tankers are once again openly crossing the Strait of Hormuz as diplomatic efforts between the United States and Iran continue to make progress. Both Washington and Tehran have signaled early advances toward ending the conflict, although negotiations are expected to be lengthy and both sides continue to present differing interpretations of the discussions.

As fears of a prolonged disruption to global oil supplies continue to fade, crude prices have extended their recent decline.

Markets:

• Crude prices fell to their lowest levels since March. WTI declined to around USD 71 per barrel, while Brent slipped toward USD 74 per barrel.

My View: US President Trump appears to have realized that lower oil prices are essential to relieve the US economy and consumers from high energy costs. The easiest way to achieve this is to let Iranian oil flow again and pay a political price Iran is willing to accept in exchange for keeping the Strait of Hormuz open.

The market is increasingly pricing in a scenario where the Strait remains open and the risk of a major supply disruption continues to diminish. While negotiations are still at an early stage and far from a final agreement, falling oil prices suggest investors are becoming more confident that the worst-case scenario can be avoided.

Even if a lasting agreement is reached, it will take time before global oil flows fully normalize. Supply chains were abruptly disrupted at the end of February, shipping routes had to be rerouted, and parts of the energy infrastructure were damaged during the conflict. Restoring production, repairing infrastructure, and rebuilding normal logistics cannot happen overnight.

As a result, while geopolitical risk premiums may continue to decline, the physical recovery in oil supply is likely to be a gradual process rather than an immediate return to pre-conflict conditions.

Lower energy prices would ease some global inflationary pressures and reduce the risk of aggressive monetary tightening by central banks.

However, I remain cautious. The negotiations are likely to be complex, and geopolitical headlines can change quickly. Any setback in the talks could trigger another sharp rebound in oil prices and increase market volatility.

I already took some chips off the table on my oil position early last week, while keeping a certain allocation in case the talks end without a deal or the situation re-escalates, a scenario that, in my view, still carries a meaningful probability.

For now, the direction of travel looks encouraging, but it is far too early to declare victory.

After several bumpy sessions in recent weeks that were followed by swift recoveries, technology stocks are heading for another tumble today, with Nasdaq 100 futures pointing sharply lower and tech-heavy Asian markets swept by heavy selling.

Korean regulators recently issued warnings over leveraged ETFs as margin debt and retail borrowing had reached extreme levels. The resulting deleveraging forced investors to reduce positions, amplifying the decline.

In South Korea, artificial intelligence winners SK Hynix and Samsung both plunged more than 12%, while Taiwan's technology sector remains under pressure after months of FOMO-driven speculation and a surge in retail borrowing. Foreign investors aggressively sold semiconductor stocks, contributing to a nearly 10% plunge in the Korean KOSPI index and temporarily triggering a trading halt.

Concerns over monetary policy, largely ignored by markets during the last two week, have resurfaced. Following inflation figures and the Fed's hawkish message, investors are finally increasingly worried that interest rates may remain higher for longer, a particularly challenging environment for highly valued technology stocks.

Markets:

• Equities: Global sell-off driven by semiconductors and Nasdaq Futures falling nearly 3%

• Bonds: Almost unchanged - US 2-year Treasury yield 4.21% US 10y yield at 4.50% and the Japanese 10y yield at 2.68%.

• Commodities: Oil prices almost unchanged - WTI: USD 73/barrel, Brent: USD 77; Precious metal prices fall - gold trading at USD 4115 - silver USD 62

• Currencies: USD strengthened against major currencies

• Cryptos: following the sell-off - Bitcoin at USD 62k

• Volatility: VIX index is up to 20

My View: The trigger was not one single event, but a classic late-cycle unwind. Excessive leverage, crowded AI positioning and renewed rate-hike fears collided at the same time. I have highlighted several times in recent weeks that investors should not ignore the risk of a market re-pricing as I expect interest rates remain higher for longer.

The market is lately driven by the retail investors, usually not a good sign and marking a late cycle stage. Institutional investors and insiders already moved to the sidelines.

The problem with crowded trades is that everyone rushes to the exit simultaneously. When valuations become detached from fundamentals, even minor disappointments can trigger outsized moves.

The weakness comes only days after the historic SpaceX IPO. After briefly surpassing a valuation of USD 2 trillion, the company is now at risk of losing that milestone again as investors reassess lofty valuations across the technology sector.

After years of seemingly endless gains, investors have grown used to buying every dip. Let’s see what happens this time.

Yesterday evening, the first Federal Reserve meeting under new Fed Chair Kevin Warsh took place.

As expected, the Fed left its benchmark rate unchanged at 4.25%.

Warsh, recently selected by President Donald Trump to replace Jerome Powell, struck a more hawkish tone than markets had anticipated, emphasizing the importance of maintaining price stability.

While the central bank predictably kept rates unchanged, policymakers appeared divided on the outlook. Their latest projections showed that nine officials expect at least one rate hike this year, with six of them anticipating two or more increases. Another nine members expect no change or even a rate cut.

Markets:

• Equities: US futures are higher after yesterday's decline.

• Bonds: Short-term yields moved higher. The US 2-year Treasury yield climbed from 4.07% to 4.22% before easing back to 4.18%, while long-term yields remained relatively stable, with the US 10-year Treasury yield at 4.45% and the Japanese 10-year yield at 2.62%.

• Commodities: Oil prices continue to decline - WTI: USD 74/barrel, Brent: USD 78; Precious metals initially weakened but recovered today, with gold trading at USD 4290 - silver USD 68

• Currencies: USD strengthened against major currencies

• Cryptos: falling with Bitcoin at USD 66k

• Volatility: After a modest reaction to the Fed decision, the VIX fell back to around 17

My View: I have consistently questioned market expectations and repeatedly warned that investors could be moving in the wrong direction. For months, I have highlighted the possibility that rate hikes, rather than rate cuts, could become the dominant theme in 2026.

Markets are not always rational. The crowd often follows momentum, and periods of excessive optimism tend to push investors in the same direction.

Looking back and see what markets did, I obviously turned cautious too early.

Falling oil prices over recent days are providing some relief from inflationary pressures. However, the situation in the Middle East remains unresolved. Even if the so called deal with Iran is signed and the Strait of Hormuz reopens this Friday, it will take days, if not weeks, before supply chains and oil deliveries normalize.

Moreover, during the 60-day negotiation period, anything can happen. Markets could once again be confronted with geopolitical headlines capable of rapidly changing sentiment.

As I have stated previously, much of the economic damage has already been done. Yet markets continue to ignore this reality and are focusing on, in their view, tremendous potential in AI.

A repricing of risk assets is still necessary, in my view.

The main argument against such a repricing is that a considerable number of institutional investors are still sitting on the sidelines, waiting for precisely such an event. This could limit the downside, as fresh capital may eventually step in.

So far, however, the market rally continues to be driven largely by retail investors. That is rarely a healthy sign and should not be ignored.

Last night, Japan's central bank raised its policy rate to 1.0%, in line with economists' expectations. It marks the highest level since 1995 and represents another step in the policy normalization process that began in 2024.

Meanwhile, the Reserve Bank of Australia (RBA) left its benchmark rate unchanged at 4.35%.

Markets:

• Equities: broadly green

• Bonds: yields lower - US 10y 4.45%, Japan 10y 2.65%

• Commodities: Oil prices continue to decline - WTI: USD 78/barrel, Brent: USD 81; Precious metals stable with gold USD 4340 - silver USD 70

• Currencies: no major moves

• Cryptos: higher with Bitcoin reaching USD 67k

• Volatility: falls to 16

My View: Following last week's ECB rate hike, we are now seeing another major central bank moving further along the tightening path. Besides addressing inflation concerns, the Bank of Japan is also seeking to provide support for the yen, which has remained under pressure.

The 25-basis-point hike itself is not the real game changer. What matters much more is the future path of interest rates. In the short term, lower oil prices are providing some relief and easing inflation concerns. It remains to be seen whether this trend will continue.

I also remain skeptical about the prospects for a lasting agreement with Iran. In my view, President Trump has mainly gained another 60 days, but the underlying issues remain unresolved and a comprehensive deal is still far from certain.

The key event this week will be tomorrow's Federal Reserve decision and the first press conference by the new Fed Chair, Kevin Warsh.

In line with market expectations, I do not expect a rate hike. However, the tone set by the new Fed Chair will be closely watched. Markets will be looking for clues on the future path of monetary policy and whether the Fed remains primarily focused on fighting inflation or becomes increasingly concerned about slowing economic growth.

Historically, markets have often tested incoming Fed Chairs, while midterm election years have tended to be more challenging for equities. At the same time, investors have become accustomed to policy support and increasingly aggressive attempts by politicians and policymakers to calm markets and sustain confidence.

This creates a dangerous environment. The stronger and faster markets are pushed higher, the greater the risk that any reversal could be equally rapid. History shows that highly concentrated and policy-supported rallies can unwind much faster than they were built, with declines extending far beyond what most investors initially anticipate.