The infoshot to help kick-start your week

 

Coming up this week:

Autumn Budget – Wednesday

With total UK government debt now estimated to be above £3tn for the first time, John Healey will be looking for ways to balance the books when he delivers his first Autumn Budget as Chancellor. On Tuesday, he ruled out raising Capital Gains Tax (CGT) and Prime Minister Andy Burnham has previously indicated there will be no increase to the main rates of income tax, NI or VAT. Instead, UK bank profits look a likely target to help meet fiscal goals. Raising the corporation tax banks pay from 3% to 5.5% could raise £1bn to £2bn a year, and a similar raise on the profits generated by gambling machines could add up to another £460mn.

Energy & tech reporting – Tuesday to Friday

BP, Shell and Chevron are all expected to post huge jumps in profits as the conflict in Iran continues to push oil prices to record highs. Investors will be looking out for signs that they might start increasing spending plans or whether they’ll prioritise paying off debt and increasing share buyback programmes.

Three more Magnificent Seven firms, Alphabet, Amazon and Microsoft, report their Q3 numbers this week. Capital expenditure and the impact of AI spending on cash flows will once again come under heaving scrutiny as the US’s tech index tries to avoid falling for the third week in a row.  

Last week:

Dip-buying not enough to turn the tide

Following the previous week’s AI sell off, investors started the week buying the dip on Monday. The positive momentum continued for a few days but was dashed on Thursday when the US’s leading tech index suffered its steepest single day decline since June. The sentiment shifted after Meta posted negative cash flow for the first time since 2012 and announced new non-voting shares to raise more capital for AI spending. Meta were also hit by their largest fine yet. A judge in New Mexico ordered the company to pay $25bn after they were found guilty of lying about how they handled user data.

Reports later Thursday morning suggested OpenAI have cut their latest valuation from $1.4tn to $1.25tn. OpenAI declined to comment on why they’ve lowered their fundraising target, but investor fatigue and the growing scepticism around the AI buildout may have played a role.

However, dwindling AI enthusiasm didn’t spread to HR departments last week, with Barclays bank announcing 5,000 job cuts as the company hands over more work and processes to AI. Barclays’ 5% cut in their global workforce is part of their ongoing modernisation plan. According to the bank, AI is simply the “icing on the cake” of the strategy. Nearly two thirds of the job losses target their support functions and developers.

Historic merger moves closer

Elon Musk announced that both SpaceX and Tesla have formed special committees to explore a potential merger. Based on current valuations, the merger would be the largest in history. If Musk can convince 50% of Tesla shareholders to vote for the merger, it would give him greater voting control at Tesla and open the door for deeper synergies between Tesla’s cars and robotics and SpaceX’s engineering capabilities and satellites.

UK inflation and jobs numbers boost rate hike chances

Our home market fell this week after higher-than-expected inflation data and another surge in the price of oil. The latest reading from the Office for National Statistics (ONS) showed inflation rose more than expected to 3.5%, primarily due to the rising cost of fuel. Unemployment fell more than expected to 4.7%, increasing the chances of a November rate hike by the Bank of England.

Last week’s oil prices will have done little to help challenges around inflation. Brent crude touched its highest price this year. It’s now up around 60% since the US and Israel launched their initial strikes on Iran at the end of February.

Israelis head to the voting booths tomorrow for the first time since Hamas’ attacks on 7 October 2023. Although polls indicate the current alliance between Prime Minister Benjamin Netanyahu and the ultra-orthodox parties lack a clear route to maintaining power, any significant policy change regarding the conflict in Iran or the situation in Gaza is likely to come down to how the Arab parties perform and what role they can play in a governing coalition.

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

The infoshot to help kick-start your week

 

Coming up this week:

AI under the earnings spotlight – Tuesday & Wednesday

AI hyperscaler spending will come under scrutiny again on Wednesday when Meta release their latest quarterly results. Last week’s release of Muse Wonder and Muse Wonderful, which according to Mark Zuckerberg has taken Meta to the “AI frontier”, comes too soon to have an impact on profits, but investors will be looking for signs that Meta’s investment in datacentres and AI infrastructure is starting to generate returns. 

Following an 11% fall during the tech sell off last week, SpaceX will release their latest quarterly earnings on Wednesday. Tesla also publish their Q3 report this week, and we could see some interesting commentary on a potential Elon Musk-led merger of the two firms.

Second round of Brazil’s election – Sunday 

Latin America’s largest economy will go to the polls on Sunday. Flávio Bolsonaro, son of the imprisoned former President Jair Bolsonaro, defied expectations to win the first round two weeks ago and looks likely to secure power.

Bolsonaro Jr has promised cuts to spending and welfare, more oil drilling and investment in the critical minerals sector. His father, who will be pardoned by his son if he succeeds, significantly increased deforestation in the Amazon during his tenure, and a return to more lax environmental policies could have a worldwide knock-on effect that accelerates global warming. If Bolsonaro Jr wins, Trump will have secured another populist right-wing ally in Latin America, leaving Mexico and Uruguay as the largest remaining left-wing governments.   

Last week:

AI sell off

A troubling week for AI shares saw the US’s tech index tumble nearly 4.5% when markets closed on Friday.

Rising US inflation numbers helped trigger the Wednesday-to-Friday sell off. The final inflation numbers before the US midterms from the Bureau of Labor Statistics showed inflation rose to 3.7% in September. The Producer Price Index (PPI) soared well above expectations to 6.3%, the largest increase since December 2022 and more than triple the Fed’s 2% target. Chances of a rate hike have increased on the back of the readings.

Problems in the neocloud sector (rentiers of GPU computing power and AI infrastructure) exacerbated the sell off at the centre of the AI trade. CoreWeave caused a panic when some of their bond yields reached 15% making it harder for the company to borrow more money to cover their spending plans. 11% owned by Nvidia, CoreWeave are very entangled in the circular funding between AI hyperscalers and have large compute contracts with Microsoft, Alphabet, Oracle and Meta. Another Nvidia backed neocloud, Firmus, recently withdrew their IPO listing after plans to build 1.6 gigawatts of AI data centre infrastructure were cancelled. This weekend Microsoft terminated their involvement in the project with Nscale to build the UK’s largest AI data centre in Loughton, Essex, due to power supply issues.

All the turmoil in the AI trade sent investors to more defensive assets and regions, with our home market benefiting and having its best week in six months.

More mixed results for US banks 

We saw some more mixed results from the major US banks that reported last week. JP Morgan and Wells Fargo both missed revenue expectations, whereas Goldman Sachs and Citigroup beat expectations. All were relatively bullish in their comments on the AI boom, and despite the problems in the US economy, they remain optimistic about the health of US consumers and businesses.

Oil prices surge as Trump gets closer to Putin

A week on from Trump’s deal to import Russian diesel, oil prices surged 10% sending barrels of crude and brent over $101 and $110 respectively. On Friday, Trump blocked new sanctions on Russia two days before they were due to take effect. As Trump gets closer to Putin and the divisions between Trump and Zelensky grow, the SpaceX owned Starlink implemented a speed limit on their terminals hampering the effectiveness of Ukrainian drones and the ability to defend against incoming Russian ballistics.

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

The infoshot to help kick-start your week

 

Coming up this week:

Big banks reporting for Q3 – Tuesday & Wednesday 

Several big US banks, including JP Morgan, Bank of America, Morgan Stanley and Citigroup, are set to release their Q3 earnings. With trading volumes smashing records in Q2, most of the banks heralded the health of the US economy. Three months on, inflation remains stubborn, interest rates have been risen, and US national debt has surpassed the $40tn mark. Analysts will be keeping a keen eye on whether the banks’ optimism has changed, particularly now the US financial sector has fallen more than any other sector in the past month declining around 4%.

Last week:

US markets reach record high as IMF warns about threats to global growth

On Tuesday, the US’s leading index achieved a record high despite the sell-off in bonds. Markets rallied in response to high earning expectations thanks to the trillions of dollars pouring into AI infrastructure. According to Factset, analysts are expecting Q3 earnings growth of 29.5%. Chipmakers Nvidia and Micron are expected to account for more than a third of that growth. Some of this bullishness was dented on Thursday after OpenAI told investors that revenue for this year will be $50bn, $20bn less than estimated in September.

With AI development and the race for superintelligence showing no signs of slowing down, OpenAI CEO, Sam Altman advocated for a light touch regulatory stance in an interview on Monday. He said that the world should just accept “some bad things happening” in exchange for the benefits AI may bring. Later in the week, Axios reported that top executives at OpenAI and Anthropic have been privately preparing for a “day after event” within the next six to twelve months that causes a major public and political revolt against AI.

Speaking in Singapore, International Monetary Fund (IMF) Managing Director, Kristalina Georgieva warned that the AI investment boom, high energy prices and record levels of public debt are threatening global growth. Georgieva said spending on AI as a proportion of GDP will surpass the buildouts for railroads, power grids and telecoms combined, but will widen global inequality due to the limited geographical scope of the AI supply chain. She also warned that IMF research estimates that 40% of jobs will be augmented or eliminated by AI, with this rising to 60% in advanced economies.

Trump teams up with Putin to try to drive down diesel prices 

Oil prices were volatile again last week after tankers were attacked in Hormuz and signs that the US military is considering more strikes on Iran. Prices came down a little after Trump said he won’t attack Iran before the midterm elections in November.

After convincing other G7 nations to release 100mn barrels of stockpiled oil the previous week, Trump struck a deal with Vladimir Putin to immediately release 300,000 tonnes of Russian diesel into the “American and global marketplace”. A further 1.5mn tonnes are set to be released from November. With his poll numbers still through the floor, Trump will be hoping the diplomatic backlash is worth it, and the Russian oil can drive down domestic prices before the midterms. However, the first 300,000 tonnes literally just covers around half a day of US diesel consumption, so its potential price impact looks questionable.

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

The infoshot to help kick-start your week

 

Coming up this week:

Fed minutes – Wednesday 

Friday’s Bureau of Labor Statistics (BLS) report showed the US only added 29,000 jobs in September, significantly below the 90,000 that was expected. July and August’s gains were also revised downwards. Analysts will be looking out for any notes on what the Fed is considering if the US jobs market starts falling when the latest FOMC minutes are released on Wednesday. Declining jobs numbers may limit the Fed’s ability to combat inflation through interest rate hikes.

Last week:

Party conference offers policy plans

In his first conference speech as Labour party leader and Prime Minister, we got several important policy updates from Andy Burnham. From April 2030 the government will finally “rip the plaster off” and amend the pensions triple lock to not necessarily keep pace with workers’ earnings. Electoral reform is back on the agenda, and a new in-out EU referendum could be included in the next Labour election manifesto. Prior to the conference, the reboot of Help to Buy to become the Your First Home Scheme sent housebuilding stocks up on Monday.

Away from the conference and in markets, the UK’s leading index had its worst week since April falling 2.2% due to turbulence in the bond markets that increased borrowing costs and yields. Another sharp sell-off in government bonds pushed the 10-year yield to its highest level since 2007, and the 30-year yield briefly went above 6% for the first time in nearly three decades.

G7 to release 100mn oil reserves in response to Trump threat

Following Trump’s threat to stop US diesel exports, G7 leaders agreed to release 100mn barrels of diesel and crude oil from their stockpiles. They’ll release 50mn barrels of each in an attempt to ease prices. Here in the UK, diesel reached a record at the pump price of £2 a litre on Friday. The price of crude did fall following the news but it’s still up 38% since the war in Iran began in February.

There was some good news related to the volume of oil coming out of the Middle East. According to reports, data apparently shows volumes have almost returned to pre-war levels. Shuttle tankers, pipelines and US naval escorts have helped get more oil moving but how long it remains this way is debatable given the possibility of the US escalating the conflict again after the midterms.

“Morally-binding” accord staves off regulation for now

On Tuesday Trump and the leaders of various AI companies signed a voluntary accord on AI development and safety. The accord contains no actual guardrails or new regulations around AI safety and relies solely on “morally binding” self-policing.

The day before, chipmaking giant Nvidia announced an additional share buyback of $150bn. They will now repurchase a record $235bn shares through 2028. They also announced their Open Agent Safety Platform aimed at improving the security for third-party systems that deploy AI agents.

The confidence signals sent by Nvidia’s buyback expansion were countered somewhat when some of Anthropic’s IPO prospectus was leaked the next day. 80 pages of the IPO S-1 filing are dedicated purely to the risks of the technology, with only 48 focused on the actual business. Amongst the risks were “self-preserving behaviours” and the abilities to “resist shutdown” and “conceal or manipulate information”. We also got some financial numbers for 2025 which showed the company made a net loss of $42bn, and that a quarter of its revenue that year came from just two undisclosed clients. With $518bn in cloud computing and infrastructure obligations coming up, the full prospectus will come under heavy scrutiny when it’s finally released. Anthropic are still set to target a $2tn valuation when they launch their IPO in November.

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

The infoshot to help kick-start your week

 

Coming up this week:

Labour Party Conference – Monday to Wednesday

John Healey will give his first speech as chancellor at the Labour Party Conference today. Exactly a month before he’s set to deliver his first budget, he’s expected to announce a “new age of industrialisation”. Many are anticipating a relatively light autumn budget with big decisions being put off until the spending review next year.

Figures from the Office for National Statistics (ONS) showing UK national debt reached £18.3bn in August, £3.5bn more than expected, will put more pressure on Healey and Burnham’s government to stick within their fiscal rules as they go hunting for growth.

JD Wetherspoon earnings report – Friday 

Back in July, JD Wetherspoon issued a profit warning as the higher cost of food, labour and energy started eating into their numbers. Drinkers are still coming through the doors and there should have been a bump in footfall during the World Cup, so the latest results will shed an interesting light on the impact soaring energy prices and inflation are having on the UK hospitality industry. 

Coming up this week:

US-China Washington summit

The latest US-China summit went as expected with pageantry being prioritised over policies. The trade truce between the two nations was extended by two months and they agreed to establish a “communication channel” to report AI incidents before their next meeting in November.

While all the major AI moguls dined in the White House, markets reacted positively to the lack of new guardrails around AI development despite a fresh batch of stories containing more examples of agents going off script and hacking government institutions, like the Australian healthcare database. The leading US tech index is now up 2.45% since former Anthropic researcher Jacob Coxon’s tweets on the existential threat from superintelligent AI went viral three weeks ago.

Meta’s share price soared after its new personal AI assistant, Muse, went top of Apple’s App Store before going into reverse on Friday after Goldman Sachs raised doubts about hyperscalers abilities to generate returns on their massive capex. Goldman estimated AI users need to start spending “$1tn annually” for firms to get any solid returns on their investments.

In a worrying development for the AI boom, Oracle issued a “force majeure” notice to Blue Owl Capital regarding their $165bn Jupiter data centre project. Oracle want to be able to delay rent payments if the project is delayed past 2028. A number of data centre building and services firms have delayed their IPOs in recent weeks as the public backlash against data centres threatens to curtail development plans across the US.

Costco earnings beat expectations as oil ban looms

Mega retailer Costco Warehouse beat revenue estimates in their latest quarterly earnings report. Their low-price bulk model and discounted fuel drew in more customers as US consumers try to cope with the inflation pressures caused by the war in Iran.

There were reports that the US administration is considering an oil export ban to get domestic prices down before the US midterms. Trump endorsed the idea saying, “I’ve said let’s not send out the diesel.” An export ban would drive up prices across the globe, and particularly in Europe.

Inflation worries cause another bond market crisis

Concerns about inflation led to another rout on the bond markets with yields reaching new highs once again. The sell off saw the 30-year US treasury bond yield reach 5.5%, its highest rate since June 2004. Japan’s 10-year yield rose to its highest level since August 1996. Here in the UK, 10-year government bond yields are now sitting at a 19-year high of 5.38%, putting more pressure on Healey’s upcoming budget.

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

The infoshot to help kick-start your week

 

Coming up this week:

US-China summit in Washington – Wednesday to Friday

The soon-to-be-expiring trade truce and the global energy crisis might have to take a backseat to AI when Trump and Xi meet this week in Washington.

After a week of nonstop press coverage that has seen the existential threat from superintelligent AI enter the mainstream discourse, investors will be watching out for any agreements that allow for a mutual ‘slowdown’. On Sunday, Treasury Secretary Scott Bessent said a new AI safety notification mechanism has been proposed for the two leaders to consider during the summit. While it looks unlikely either Trump or Xi will be willing to put further guardrails in place, according to leaks this weekend, some senior officials in the Trump administration are frustrated about his refusal to take the subject seriously. It is suggested they may try to convince Trump to push for more oversight and international agreements with China.

Costco earnings report – Thursday 

Mega retailer, Costco Wholesale will provide a valuable insight into the health of US consumers when they release their quarterly earnings on Thursday. US drivers have been turning to Costco’s warehouse club as they stock up on fuel at discounted prices instead of heading to the pumps for regular top ups. Costco recently started rationing motor oil and it’ll be interesting to see how supply side pressures impact their expectations for earnings going forward.

Last week:

Tech bounces back from the apocalypse 

Across the globe, tech stocks and shares of firms involved in the AI supply chain fell last Monday after the leaders of the US AI frontier labs all called for a slowdown in AI development.

Trump dismissed the calls, calling them a “sick conspiracy “and posted the only “guardrails” AI needs are a “STRONG AND SMART (High IQ) PRESIDENT”. Nvidia CEO, Jensen Huang, also rejected the calls, speaking at the Salesforce Dreamforce conference, “The market forces are already there. We don’t need any new laws. We don’t need new regulations.” The comments from both seemed to reassure investors that no slowdown was imminent, stabilising markets on Tuesday.

Energy crisis deepens

The prices of both brent and crude oil fell by more than 5% last week but there were more worrying signs around global supplies.

Mike Wirth, Chevron’s CEO, said all the mechanisms to help control prices and prevent a supply risk “have been largely played, and we don’t have nearly the buffers in the system that we did when it [the war in Iran] began.” The International Energy Agency (IEA) warned we won’t see supplies return to normal until 2027 and said the “global refining system is stretched to the limit”.

With the US midterm elections just six weeks away, polling by CNN this weekend showed Trump’s current approval rating for gas prices is at minus 80%. TTF natural gas is now up 141% since the war began. The spike in jet fuel, up 85%, has forced several US airlines to start cancelling flights and adjusting schedules around Thanksgiving and Christmas.

As widely expected, the Federal Reserve voted to increase interest rates for the first time in three years to help combat inflation. Markets reacted remarkably well to the news, with many aware that a higher two or three basis point rate hike might actually be required to start tackling the inflation problem.

Canada offered chance to become EU associate member

European Commission President, Ursula von der Leyen has proposed that Canada should become the EU’s first “associate member”. Canadian President Mark Carney welcomed the proposal on Thursday and listed AI, critical minerals, defence, energy security and the space sector as the key areas Canada and the EU could cooperate more closely on. Trump labelled the proposal a “hostile act” and said he will put “very serious tariffs or stop trading with Europe, on many things” if membership status is granted.

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

The infoshot to help kick-start your week

 

Coming up this week:

Fed interest rate decision – Wednesday

Following the latest inflation data from the Bureau of Labor Statistics, which showed PPI increased 0.4% in August and CPI remained high at 3.4%, the odds of a Federal Reserve rate hike have increased to 85%. In a little under a month, the odds have gone from around 50% to a near-certainty. If the Fed doesn’t increase rates, it’s likely to raise some serious questions about its independence and credibility, potentially driving US Treasury yields to record highs. 

BoE interest rate decision – Thursday 

Here in the UK, the Bank of England (BoE) is expected to hold rates at 3.75% on Wednesday. Three of the Bank’s nine committee members voted to hike rates at the last meeting, and it’ll be interesting to see if that changes. Inflation is set to be forced upwards when Ofgem’s next price cap starts in October sending household energy bills up 4%. The UK’s better-than-expected recent economic growth coupled with persistently rising energy prices might prompt more committee members to vote for a hike in the autumn months.

BoJ interest rate decision – Friday

With the yen’s recent improvement, the Bank of Japan (BoJ) are expected to raise interest rates to 1.25%, the highest they’ve been for more than 30 years. US Treasury Secretary, Scott Bessent, said on Tuesday he expects Japanese interest rates to rise after the US Treasury intervened in exchange markets to prop up the yen in July.

Last week:

Oil hits $100 a barrel sending markets downwards

Markets across the globe fell as the price of crude oil rose above the $100 mark for the first time since May. On Thursday, Saudi Arabia had to suspend operations through its East-West pipeline after a Houthi drone strike. Saudi oil traders have said they will run out of oil exports if the pipeline doesn’t reopen within days, hampering around 4% of the global oil supply. Yesterday, the Houthis also captured the island of Perim expanding their control of the Bab al-Mandab strait.

Supply pressures forced US retailer Costco to start limiting how much motor oil consumers can buy to 40 gallons per week. While that won’t have much impact on regular consumers, it will hit small businesses and farmers who rely on buying the product in bulk.

With no end in sight to the conflict in Iran, the prospect of further domestic inflation and his polling numbers falling through the floor, President Trump used his speech at the Republican midterm convention to urge his supporters to “cheat like hell” and promised a $5,000 “dividend” to all US adults if the Republicans manage to win the House of Representatives and the Senate. 

Existential threat from superintelligence dominates headlines 

US AI firms were put firmly back in the spotlight following viral posts by former Anthropic and OpenAI employee, Jacob Coxon. While short on detail, Coxon’s posts on the existential threat posed by superintelligence rapidly raked in 100mn views, secured him spots on several major news networks and have dominated the headlines since.

This has led to fresh calls for more regulation and oversight from across the political spectrum, with immediate controls around recursive learning (the ability for AI to self-improve through its own coding) and chain of thought experiments (allowing AI to write reasoning logic in a format we can’t understand) top of the agenda. During his trip to Ireland, Trump dismissed those calls saying critics were “bringing up things that won’t happen”. People hoping for a slowdown in the push for superintelligence, will be praying something comes out of the next US-China summit in Washington on 24 September as it’s clear the current US administration will stop at nothing in the race with China.

From an investing perspective, the existential threat posed by superintelligent AI has been clearly articulated many times over the last few years (see “If anyone builds it…” or any interview with Nobel Prize winning “Godfather of AI”, Geoffrey Hinton), and as political and public pressure grows, we may see a global pause or halt which would dramatically change the current market outlook, especially in the US and certain parts of Asia. All the data centre buildouts and debt spending have effectively been to fuel the race towards superintelligence, and it’s looking increasingly unlikely the current outputs from US ‘Large Language Models’ (LLMs) will ever reach any form of profitability if they remain where they are today. In our view, what we’ve seen this week has only added support for the case of prioritising diversification and being wary of US big tech and AI hyperscalers.  

ECB increase rates, while concerns grow over the future of Europe’s largest economy

The European Central Bank (ECB) raised interest rates in line with expectations on Wednesday. Markets are predicting two more rate hikes before the end of the year. The ECB blamed the conflict in Iran for pushing up inflation and said, “inflation is set to remain well above target for an extended period.”

In German bond markets, the far-right Alternative for Germany’s (AfD) election win in Saxony-Anhalt sent the 10-year Bund yield close to a 15-year high. The AfD didn’t win an overall majority, but their rapid rise is raising serious questions about the prospects for Europe’s largest economy. After Trump congratulated the AfD, the embattled German Chancellor, Friedrich Merz, cancelled his scheduled call with the US president and accused the AfD of seeking “ethnic cleansing” and said their “remigration” policies will destroy the German economy.  

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

The infoshot to help kick-start your week

 

Coming up this week:

US inflation data – Thursday & Friday 

Following last week’s US jobs data boosting the chances of a Fed interest hike this month, all eyes will be on the latest inflation data this week.

PPI and CPI numbers will be released on Thursday and Friday. Inflation worries have increased again after fresh strikes sent oil prices higher and Iran announced a new restricted zone accompanied by maps of a new shipping corridor through the Strait of Hormuz. 

ECB interest rate decision – Thursday 

As central banks come under more pressure to raise interest rates, expect the European Central Bank (ECB) to lead the way by raising its key interest rate +0.25% on Thursday. Eurozone inflation increased to 3.3% in August, way above the ECB’s 2% target, with energy inflation soaring to 14.3%.  

Apple’s “Surprise and Shine” showcase – Wednesday 

Apple will be hosting their annual product showcase this week. Apple’s plans and growth prospects have been far less AI-obsessed than their Mag’ 7 counterparts, and it’ll be interesting to see if that approach looks set to continue.

This year’s event, dubbed “Surprise and Shine”, will be the first without Tim Cook since he stepped down as CEO earlier in the year. Rumours suggest replacement CEO John Ternus, and his team, will showcase the foldable iPhone Ultra, the latest Apple watch, and the “new Siri experience”.

Last week:

Parts of the AI supply chain soar

Key parts of the AI supply chain, Dell and Broadcom, posted their Q2 earnings last week.

Demand for AI hardware and servers saw Dell’s revenue break records, increasing 58% year-on-year and Broadcom’s AI semiconductor revenues more than tripled in the same period. Both share prices surged in response, but the US’s tech index was relatively flat overall due to increased rate hike chances and rising oil prices.   

Gilt yields surge

Higher oil prices put fresh pressure on bond markets sending yields across the globe up. 30-year UK gilt yields hit 5.80% their highest level since 1998 and their equivalent US government bond yields also reached their highest level since 2008. Japan’s 10-year yield hit 3% for the first time in thirty years, doubling the rate it was at when Sanae Takaichi became Prime Minister.

Yields did pull back later in the week as the rise in oil prices slowed. All the turmoil in bond markets doesn’t show much sign of slowing down, as investors, perhaps rightfully, worry about inflation, government debt and corporate debt fuelled by AI hyperscalers.

More gold moved out of North America

De Nederlandsche Bank, the central bank of the Netherlands, confirmed last week that they’d relocated 86 tonnes of their gold from the US and Canada to London. Citing “increasing geopolitical unrest” the Bank’s Governor Olaf Sleijpen said “we need to strengthen our resilience and preparedness” without giving many actual details on what he’s preparing the bank for. Selling 59 tonnes and buying them back in London limited how much actual gold was physically moved. The relocation follows a similar decision by the Bank of France, which moved 129 tonnes of gold from New York to Europe between July 2025 and January 2026.

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

The infoshot to help kick-start your week

 

Coming up this week:

Strikes start again in Iran – Wednesday 

Oil climbed above $90 a barrel over the bank holiday weekend, after the US targeted rocket launchers on Larek Island to stop the Iranians from deploying mines in the Strait of Hormuz. Economic sanctions had been the preferred approach of the US over the last month but there’s been little success at getting Iran back to the negotiating table. Iranian leaders appear prepared to drag talks out until at least after the US midterm elections in November.

Prior to the latest strikes, traffic through Hormuz had increased 30% week-on-week. Expect it to fall back again this week if tensions can’t be de-escalated.

US microchip, semiconductor and cloud storage earnings – Tuesday to Thursday 

Dell, Broadcom and Snowflake all release their latest earning reports this week. As they try to justify their current valuations, analysts will be expecting to see semiconductor and microchip demand mirroring data centre buildouts, and enough cloud spending to justify AI growth narratives.

Last week:

Jackson Hole Symposium 2026 

The odds of a September Fed interest rate hike increased on Friday after Kevin Warsh’s clearer and more hawkish speech at the Jackson Hole Symposium in Wyoming.

Warsh made it clear that he sees inflation rates “as more concerning” than the state of the labour market. This week’s ADP payroll and official US unemployment data may also increase the odds of a hike if they match expectations.

Nvidia reports record-breaking revenue & ‘careless’ Meta settle in rapid time

US markets and tech stocks rallied last week following Nvidia’s latest earnings report.

The chip giant reported quarterly revenue of $96bn, double what it made in the same period in 2025. They expect revenue to increase to $108bn in Q3. Bullish as ever, CEO Jensen Huang said, “AI has reached its inflection point” and in relation to soon-to-be-listing AI firms “Investing in these companies are a once in a generation opportunity… The only regret that I have is that I didn’t invest more and sooner.” The share price did surge after the results but there was a -4.5% reversal on Friday as investors looked to take profits amidst renewed worries about Nvidia’s biggest customers, and Warsh’s tone on interest rates.  

In other big tech news, Meta settled within just three days of their trial in California over allegations that Facebook and Instagram knowingly designed addictive features that were harmful to children’s mental health. They agreed to pay $18bn to settle the case before Mark Zuckerberg was due on the witness stand. They also committed to introduce new safeguards to make their platforms safer for young people. The share price rose in response, with investors relieved the settlement was way below the $200bn the states had sought.

Pubs and bars enjoy Burnham bounce

Here in the UK, a survey by multiple trade bodies, including the British Beer and Pub Association, suggest the hospitality industry is going through a “Burnham bounce”. Prime Minister Andy Burnham has positioned himself as an ally of the industry, announcing business rate discounts and producing lots of content featuring him pulling pints and DJing. Of those surveyed, those that feel the government will benefit the industry increased from 18% to 37%.

As expected, tax was cited as the biggest barrier for businesses as many in the industry continue to call on the government to cut VAT on hospitality from 20% to 10%. Nearly a quarter of UK pubs, bars and restaurants are currently losing money and one in six are thought to be at risk of going bust by July 2027. According to UKHospitality, 89,000 jobs have been lost in the sector since the last Budget.

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

The infoshot to help kick-start your week

 

Coming up this week:

Nvidia Q2 earnings – Wednesday 

The world’s largest company by market cap, Nvidia, will round off the summer’s tech and AI-related earning reports on Wednesday. 

Analysts are expecting Nvidia to report a 96% year-on-year increase in revenue and more gains in Q2 than Q1.

Jackson Hole Economic Symposium

Following all the recent drama in bond markets, all eyes will be on US Federal Reserve Chair, Kevin Warsh, when he delivers his first keynote speech at the annual Jackson Hole Economic Symposium on Friday.

After sending confusing signals during his first press conference as Fed Chair in July, bond traders will be looking for Warsh to provide clearer details on how he plans to deal with inflation.

Last week:

K-shaped economy leads Walmart Woes

Last week’s CPI release by the Bureau of Labor Statistics showed annual US inflation cooled to 3.4% taking some pressure off the Federal Reserve to raise interest rates. The odds of a rate hike at the next meeting in September have fallen to 42%.

On the subject of the war, the 60-day ceasefire between the US and Iran has now expired.  Negotiations showed few signs of progress last week. Trump threatened to bomb Oman if Omani officials agree a deal with Iran over the Strait of Hormuz. This week, the US government is set to lay out a programme of new sanctions against Iran it has dubbed “economic D-Day.” Iran have threatened an “earthquake-like” retaliation if they go ahead.

US debt hits $4tn as bond yields reach twenty year high

Last week, US national debt reached the $40tn milestone sooner than expected. Heavy spending under the Trump and Biden administrations, Trump’s tax cuts and spiralling interest costs have caused the debt level to more than double in just 10 years.

Serious concerns about the health of the US economy, the impact the rising cost of bonds could have on the debt-laden AI industry, and inflation sent yields on 30-year US treasuries to 5.34% on Tuesday, their highest level in 20 years. The Treasury Department announced on Wednesday that it will increase the next round of bond buybacks from $2bn to $4bn, helping to ease yields and bring them back down to 5.18%.

Trade talks between the US and Canada collapsed on Friday. A new 50% US tariff will be placed on a range of Canadian goods from 8 September 2026. Trump claimed Canada “wants the benefits of being a state without being one”. Canadian PM Mark Carney called the tariffs a “miscalculation” and said they are designed to “hurt and divide us”. Carney confirmed Canada would reluctantly match Trump’s tariffs “dollar-for-dollar”.

UK markets outperform but jobs situation remains worrying 

Our home markets were some of the only to finish the week up as they outperformed major US, Asian and European markets thanks to a rebound in mining stocks and another rotation away from tech into more defensive and traditional assets.  

There was less positive news concerning the UK jobs market. Unemployment stayed at 4.9% as vacancies fell to a five-year low. The Office for National Statistics (ONS) cited labour and operating costs as the main reason for smaller firms scaling back hiring.

According to recruitment specialist, Adzuna, UK graduate jobs have now tumbled to their lowest level since tracking began ten years ago. Only 8,373 roles for university leavers were advertised in July, that’s 45% less than this time last year, and a huge way off the 55,000 positions available in 2017. Teaching, travel and construction were the only sectors to add roles as more and more large employers hold back on hiring hoping that AI and automation will be able to fill the gaps.

Notice:

For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.

The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.