Preview of US Stock Market | All three major stock index futures rose. The U.S. CPI for July will be released tonight. Nebius (NBIS.US) surged after its earnings report.

Pre-Market Market Trends 1. On August 12 (Wednesday), U.S. stocks were up before the opening, with all three major stock index futures rising. As of the time of writing, Dow futures rose 0.12%, S&P 500 futures rose 0.26%, and Nasdaq futures rose 0.71%. 2. As of the time of writing, Germany's DAX index rose 0.35%, the UK's FTSE 100 index fell 0.04%, France's CAC 40 index fell 0.22%, and the Europe Stoxx 50 index rose 0.13%. 3. As of the time of writing, WTI crude oil rose by 0.49%, trading at $83.61 per barrel. Brent crude oil increased by 0.29%, trading at $89.17 per barrel. Market News "The Anchor of Global Asset Pricing" Faces a Critical Moment! If the U.S. CPI Delivers a Dovish Surprise Short covering in U.S. Treasuries may boost the rally in risk assets. Wall Street strategists are almost more divided than ever on whether the Fed will choose to resume rate hikes next month. However, one thing is not disputed: The U.S. CPI inflation report due on Wednesday will largely determine the Fed's next move. According to swap market trading, traders are currently pricing in about a 50% probability of a 25 basis point hike. Following the unexpected weakening of July's non-farm payrolls, Wall Street has almost created a 50:50 extreme split pricing on whether the Fed will hike 25 bps in September; additionally, the Fed, under Powell's leadership, has clearly reduced forward guidance, forcing the market to rely on hard data to determine the policy path. Therefore, the impact of July's CPI data is clearly asymmetricmild inflation data may further weaken the rationale for rate hikes, but unexpectedly hot data is more likely to quickly shift expectations back to a baseline scenario of a September hike. For the "anchor of global asset pricing," the 10-year U.S. Treasury yield, the current risk-return in the bond market has clearly tilted towards pricing in "rapid declines in yields driven by July's moderate CPI," mainly because macro data and the CTA bond market position structure are resonating positively. Fed Officials Warn of Inflation Risks! Tonight's July CPI Expected to Be Key Decision in Rate Hike Path. Leading up to the U.S. July CPI, several policymakers warned of the risks of persistently high inflation. Chicago Fed President Goolsbee expressed that he is more concerned about excessive inflation than any softness in the labor market. Harmak stated in an interview on Monday that a single 25 basis point hike may not have much impact on the overall economy; therefore, if the Fed needs to further reduce inflation through monetary policy, it may ultimately need to take "a certain number" of rate hike actions. However, she emphasized that there is currently no desire to pre-judge how many hikes will be necessary or to pre-establish an endpoint for this round of policy adjustment. Last week, St. Louis Fed President Bullard also suggested that with inflation above the Fed's 2% target, policymakers cannot afford to endure higher inflation while waiting for strong productivity growth potential. Fed Governor Cook similarly reiterated last week that if inflation does not continue to slow down, she is prepared to support further rate hikes, warning that as inflation remains above the 2% target for an extended period, the Fed may not have much time left to wait, or the difficulty of controlling inflation in the future will increase further. Minneapolis Fed President Kashkari asserted that the Fed should start gradually raising rates to curb inflation that remains above target, avoiding the need for more aggressive rate hikes in the future due to further entrenchment of inflation. "AI Computing Power Demand Indicator" Sees Record-Breaking Earnings! Hon Hai Posts 35% Surge in Q2 Profit, July Revenue Soars 54% The AI infrastructure super cycle continues. Hon Hai's latest quarterly profit growth exceeded analysts' consensus expectations, highlighting the sustained strong demand from major cloud computing companies and AI application leaders such as Anthropic and SpaceX for NVIDIA Corporation's AI GPU server cluster product line. The financial report shows that in the three months ending in June, Hon Hai's net profit surged 35% year-on-year to NT$60 billion (approximately $1.9 billion), surpassing analysts' average expectation of NT$58.4 billion. The company had reported a 40% rise in quarterly revenue before. July revenue also spiked 54.2% to NT$946.5 billion. Analysts expect Hon Hai's cumulative revenue this quarter will continue to grow significantly, up 32% against last year's high base. In terms of the outlook that the market is focused on, Hon Hai's management expects that AI server rack shipments in the third quarter will continue to achieve "high double-digit growth" quarter-on-quarter, and Hon Hai will increase capacity in the U.S., including in Texas and Wisconsin. Hon Hai's management clearly stated in the earnings announcement that AI computing infrastructure is driving the company's performance growth and holds a "strong" outlook for AI servers. Braking for Frenzied Retail Investors: South Korea Tightens Leverage ETF Regulations Again, Leverage on Individual Stocks Requires "5 Days of Simulation Trading." South Korea will require new investors in individual stock leveraged ETFs to complete simulated trading practice, further tightening regulatory provisions for these high-risk products that amplify market volatility. The Financial Services Commission (FSC) of South Korea stated in a release that new investors in single-stock leveraged ETFs must complete at least five days and a total of at least five hours of simulated trading. This new regulation will take effect from August 19, applying equally to both domestic and overseas investments. This measure follows a previous round of sharp declines that resulted in investors holding losses in the billions of dollars, and is the latest effort from regulators to curb retail access to leveraged ETFs. Previously, regulators raised the minimum cash margin for such trades to 30 million won (approximately $21,000) and extended the mandatory online training time for new investors in single-stock leveraged products to three hours. IEA: Despite Declining Demand Global Oil Supply Gap Will Still Widen. The International Energy Agency (IEA) indicated that as the Iranian conflict escalates again, even though high oil prices will impose a further blow to demand, global oil stocks are projected to decline by more than double the previous estimate this quarter. The IEA stated in its monthly report that due to a new round of hostilities and maritime disruptions hindering production recovery, the global oil market will face a daily supply gap of 1.8 million barrels, and the supply gap could reach the largest level in five years by 2026. The IEA has nearly raised its forecast for the decline in global oil demand this year by 50% to 1.6 million barrels per day, while global stocks are once again tightening. This will be the largest decline in demand since the COVID-19 pandemic was declared in 2020 when calculated on an annual average. The IEA expects that as the oil market shifts back toward a supply surplus, global depleted inventories will be replenished next year. The agency noted that member countries such as the U.S., Japan, and Germany, which announced record releases of oil reserves in March, now need to replenish their emergency oil reserves. It is reported that the U.S. and Iran are currently not in discussions to extend the ceasefire. A senior Iranian official stated, "There are currently no discussions between Iran and the U.S. about extending the ceasefire; from Iran's perspective, the ceasefire does not have an effective date, so there is no need for any extension. The U.S. violated the temporary agreement 48 hours after it was reached and withdrew from it a few days later. One of the current discussion issues is the U.S. rejoining the memorandum of understanding and determining the timeline for fulfilling its commitments, but there has been no progress on this issue." Individual Stock News Strong Demand for AI Fuels Growth, Nebius (NBIS.US) Q2 Revenue Exceeds Expectations. On Wednesday, Nebius Group announced its second-quarter revenue exceeded market expectations, driven by strong demand for artificial intelligence infrastructure and cloud services, allowing the company to secure larger contracts and raise pricing for computing capabilities, resulting in a roughly 15% increase in its stock price during pre-market trading. Data shows that total revenue for the quarter ending in June was $582.3 million, surpassing analysts' average expectation of $572.75 million. Revenue from its core business, AI cloud services, accounted for approximately 98% of the group's total revenue, with a year-on-year growth rate exceeding 500%. The company also reaffirmed its fiscal year 2026 full-year earnings guidance and stated that demand for AI computing capabilities continues to accelerate, aiding its acquisition of larger and higher-margin customer contracts. Nebius disclosed that four significant AI cloud service agreements were signed this quarter, with each having an average total contract value exceeding $1 billion, nearly quadrupling the total contract value from the previous quarter. The company indicated that its pricing power has strengthened this quarter, benefiting from strong demand for next-generation AI chips and increases in rental rates for the previous generation of GPUs. About 70% of the agreements signed during the period included customer prepayments covering 50% to 60% of the related capital expenditures. CoreWeave (CRWV.US) Backlog Exceeds $104 Billion, Upgrades Full-Year Guidance. CoreWeave achieved $2.58 billion in revenue for the second quarter, a 112% year-on-year increase, exceeding analysts' average expectation of $2.56 billion. The company recorded a net loss of $626 million, or $1.14 per share, primarily due to high-interest expenses incurred for expanding infrastructurenet interest expenses for the quarter reached $640 million, more than double from the same period last year, but still significantly better than analysts' average expected loss of $1.41 per share. The most exciting data for the market from CoreWeave's second quarter is that the revenue backlog reached about $104 billion, a year-on-year increase of 246%, continuing to rise from $99.4 billion at the end of the previous quarter. The full-year revenue guidance for 2026 was upgraded from $12 billion to $13 billion to $12.4 billion to $13.2 billion. Analysts had previously expected annual revenue of $12.63 billion. Strong Demand for AI Optical Communication Drives Growth! Lumentum (LITE.US) Q4 Results and Q1 Guidance Both Exceed Expectations. Lumentum's fiscal Q4 revenue grew by 109.3% year-on-year to $1.006 billion, better than analysts' average expectation of $990 million. Adjusted net profit was $326 million, a year-on-year increase of 415%; adjusted earnings per share were $3.23, higher than analysts' average expectation of $2.97; adjusted gross margin was 50.4%, up 1260 basis points year-on-year, better than analysts' average expectation of 48.8%; adjusted operating margin was 36.6%, up 2160 basis points year-on-year. The first-quarter guidance for fiscal year 2027 given by Lumentum also exceeded expectations. The company expects first-quarter revenue to be between $1.225 billion and $1.275 billion, with a midpoint of $1.25 billion higher than analysts' average expectation of $1.15 billion; adjusted earnings per share are expected to be between $4.05 and $4.35, with a midpoint of $4.20 exceeding analysts' average expectation of $3.58. Super Micro Computer, Inc. (SMCI.US) Quarterly Revenue Outlook Far Exceeds Most Optimistic Expectations, Further Evidence of the AI Computing Craze. Revenue for the quarter ending in September is expected to reach $14.5 billion to $15.5 billion, with adjusted earnings per share expected to be between $1.01 and $1.10. Market compilations show that analysts' average revenue expectation is around $12 billion and earnings per share of $0.74, while this outlook even surpasses the most optimistic revenue forecast of $13.3 billion. Super Micro Computer, Inc. further anticipates that revenue for the new fiscal year starting in July will reach $65 billion to $72 billion, while analysts' average expectation is only $54.4 billion. Consumer Electronics Industry Given Another Price Increase Notice: Microsoft Corporation (MSFT.US) Reportedly Raised Windows 11 Licensing Fees. The consumer electronics industry has already experienced cost increases due to semiconductor shortages, and the software aspect seems to be showing troubling signs as well. Microsoft Corporation reportedly raised the Windows 11 licensing fee by 7% to 10%, a significantly larger increase compared to previous years, with higher-end CPUs incurring higher licensing fees. ASUS and Acer plan to raise prices by about 5% later this year, with ASUS products averaging a 30% increase since Q4 2025. Musk: AI Will Make Up 99% of SpaceX's (SPCX.US) Valuation in Five Years, Aiming to Build 10 Gigawatts of Computing Power by Next Year End. In a recent all-hands meeting at SpaceX, Elon Musk outlined the company's future development blueprint, placing AI at the highest strategic priority. According to his estimation, SpaceX's AI business will rapidly surpass traditional aerospace-related businesses to become the core pillar driving the company's revenue and valuation, while rockets, spacecraft, and Starlink will take on more of a supporting infrastructure role. Musk said, Our AI business revenue will not just potentially exceed all of SpaceX's other business revenues in September; it is certain to do so. He further stated, "I dare say that in five years, AI will absolutely make up 99% of the company's valuation, and at that point, SpaceX's total value will be an astronomical number." Musk called gaining a competitive edge in the AI space the most important message of this meeting: We must dominate the AI track because the future's dominant force will be AI and Siasun Robot & Automation. Musk stated that SpaceX has built "the world's most powerful AI training cluster," aiming to expand existing computing capacity by about tenfold by the end of next year, targeting 10 gigawatts. Musk mentioned, If we achieve 10 gigawatts of AI computing power by the end of next year, it will generate annual revenue of $300 billion to $500 billion, which is a massive number. Samsung (SSNLF.US) and SK Hynix (SKHY.US) Considering "Epic" Dividend Buyback, Totaling Over $140 Billion. Reports indicate that Samsung Electronics and SK Hynix will likely announce a new shareholder return plan as early as the end of August, with a combined return scale exceeding 200 trillion won (approximately $141.2 billion), which would set a historical high. Both companies have stated that the specific timing and scale have not yet been finalized. Market anticipation for large-scale shareholder returns has rapidly intensified. Meanwhile, Singapore's sovereign wealth fund Temasek plans to directly invest in the South Korean stock market for the first time using its own funds, intending to build positions in Samsung Electronics and SK Hynix. Benefiting from these two pieces of news, the stock prices of both companies rose about 6% on the day, driving the KOSPI index above 6500 points. Raising Funds for a 100 Billion AI Gamble! Reports Suggest Oracle Corporation (ORCL.US) Launching a New Round of Layoffs: Some Teams' Cutbacks May Reach Double Digits. According to internal documents and several informed sources, Oracle Corporation is developing a new round of layoff plans to cut employee costs. Some teams could see layoffs totaling double-digit percentages, with the company asking managers to submit a list of affected employees, aiming to complete cost reduction before the start of the second fiscal quarter on September 1. This marks another large-scale layoff by Oracle Corporation within the fiscal year 2026. According to recent official documents submitted by the company, as of May 31, 2026, Oracle Corporation's total employee count has decreased by approximately 21,000, a 13% reduction, with about 141,000 full-time employees remaining globally. The company first formally acknowledged in its annual report that the application of AI is one of the reasons for job cuts. Oracle Corporation specified in the documents: The adoption and deployment of AI technology in the operation of the company has already led to, and may continue to lead to, a reduction in the number of employees. This restructuring comes at a high cost: Oracle Corporation paid $1.84 billion in severance and other departure-related costs during fiscal year 2026, far exceeding the $374 million from the previous fiscal year. Notably, this round of layoffs nearly erased the employee growth brought by Oracle Corporation's $28 billion acquisition of Cerner in 2022. Alphabet Inc. Class C (GOOGL.US) "Making Inroads" into the Latin American Digital Economy! Adds Three New Submarine Optical Cable Corporation Systems to Connect Countries Like Chile and Panama. Alphabet Inc. Class C announced on Tuesday that it will lay three new submarine cable systemsAlisios, Canoa, and OlaLuzin the Americas. According to the press release, Alisios will connect the Dominican Republic, Panama, and Chile; Canoa will connect the Dominican Republic with Bermuda; and OlaLuz will connect the Dominican Republic with Florida, USA. Chile is striving to establish itself as a digital hub in the region, leveraging its economic and political stability, extensive fiber optic networks, submarine cables, and rich renewable energy resources to attract technology companies. In addition to the newly added Alisios submarine cable, other ongoing projects include the Humboldt submarine cable supported by Alphabet Inc. Class C, which will cross the Pacific to connect Chile and Australia. General Motors Company (GM.US) Reaches Up to $4.5 Billion Parts Procurement Agreement to Mitigate Supply Chain "Choke Point" Risks. General Motors Company has recently reached a unique parts procurement arrangement worth up to $4.5 billion, aimed at preserving cash while safeguarding against supply chain disruptions that have devastated the global auto industry in this century. According to a public document submitted on Tuesday, this procurement financing tool worth up to $4.5 billion involves a company called Procura Auto Parts, which specializes in the procurement of rare or critical parts. Procura will receive funding from a bank syndicate led by JPMorgan and Banco Santander S.A. Sponsored ADR and will make prepayments to specific suppliers on behalf of General Motors Company. In return, General Motors Company will issue a formal written commitment known as the "Irrevocable Payment Undertaking" (IPU) to repay Procura after the relevant parts are put into production, no later than July 31, 2029. This arrangement allows General Motors Company to move inventory costs off its balance sheet while better securing future supplies. General Motors Company declined to disclose the specific parts targeted by this agreement. The "problem parts" faced by the automotive industry include semiconductor chips (including dynamic random-access memory), rare earth materials, and wiring harnesses. Important Economic Data and Event Alerts Beijing Time 20:30: U.S. July CPI. Beijing Time 22:30: U.S. Crude Oil Inventory Change for the Week Ending August 7. Beijing Time 01:00 the next day: U.S. 10-Year Treasury Auction on August 12. Earnings Forecast Thursday Morning: Cisco Systems, Inc. (CSCO.US), Coherent (COHR.US) Thursday Pre-Market: JD.com, Inc. Sponsored ADR Class A (JD.US)