Morning Brew August 6 2026

Good morning.

Wall Street was mixed yesterday as the AI trade again struggled with very high expectations. The Dow gained 0.5%, while the S&P 500 slipped 0.2% and the Nasdaq lost 0.8%. SpaceX tumbled 13.6% as investors questioned how long the company can sustain such aggressive AI-related spending. Advanced Micro Devices guided quarterly revenue above expectations, reflecting still-strong AI demand, but the shares fell 7% as the market wanted more. Since the SpaceX IPO, the stock has fallen to around 108 from levels between 135 and 160, while Tesla has lost around 18% over the same period. Rubens commented:  SpaceX and AMD earnings: strong numbers meet stronger expectations

Eli Lilly jumped 4.9% after beating estimates and raising guidance. Sandisk, however, fell 8% despite better earnings and a strong forecast, another sign that expectations in the AI and memory trade remain very difficult to beat. In Europe, HSBC fell 4.7% after multiple broker downgrades and reports that China expanded personal income tax to include returns from Hong Kong insurance policies. Novo Nordisk also weighed on the index after softer Wegovy sales, while the DAX slipped 0.3%, dragged lower by Infineon, which fell 5.7%.

The macro picture remains tricky. Inflation pressure is still present, but the weaker ADP report and hopes that negotiations with Iran could reduce price pressure have lowered the probability of a September Fed hike to around 55%. The implied year-end rate still suggests roughly 30 basis points of additional tightening, so the market has not fully abandoned the higher-for-longer story.

Yields are stable, with the U.S. 10-year around 4.60%. The USD Index is at 99.70, EUR/USD has risen to 1.1570, cable is around 1.3460, and USD/JPY is in wait-and-see mode near 157.70. Traders remain wary of the next step from the Bank of Japan, which is probably exactly where the BoJ wants them.

Precious metals were strong yesterday. Gold broke above its 50-day moving average and moved above 4,200 to trade around 4,265. Silver rose to 62, with its 50-day moving average near 62.40. One-month at-the-money volatility in silver is around 40%, so the move remains impressive but also risky.

U.S. private payroll growth slowed sharply in July. The ADP report showed private employment increasing by 44,000 jobs, below the 70,000 expected and down from a previously reported 98,000 in June. That keeps the market focused on tomorrow’s nonfarm payrolls report, where Reuters consensus is around 80,000, with estimates ranging from 10,000 to 140,000.

AI remains firmly in the headlines, and not only because of earnings. Meta said one of its AI models hacked another company during cybersecurity testing, raising fresh questions about how developers can contain increasingly capable AI systems. Alphabet also reported a leadership shake-up in its AI division, with AI chief Demis Hassabis stepping back from his main managerial role and several Gemini leaders leaving. Alphabet shares fell 4% after the news. Samsung Electronics and SK Hynix face growing calls from investors wanting a greater share of excess cash via dividends or buybacks, after the pair provided scant detail on capital returns when reporting AI-driven record profit.

On the Fed side, Governor Lisa Cook said she is open to the idea that the central bank may need to raise short-term interest rates to deal with inflation that remains too high. That is not what equity markets want to hear, but it is consistent with a Fed that still sees inflation as unfinished business.

Asia was weaker this morning, with Japan’s Nikkei down around 2% as heavyweight technology stocks followed Wall Street lower. The message remains the same: AI is still the dominant market theme, but it has become harder to satisfy investors when spending plans keep rising.

The Middle East remains the key geopolitical risk. A proposed deal between Iran and Oman, aimed at helping end five months of war between Iran and the United States, would reportedly give Tehran control over ships entering the Gulf through the Strait of Hormuz. If confirmed, that would be one of the biggest concessions yet to Iran and would keep energy markets highly sensitive to headlines.

In Europe, Commerzbank said net profit rose 94% in the second quarter, beating analyst expectations as speculation around a possible UniCredit takeover continues. Siemens also reported its highest-ever quarterly industrial profit and new orders, beating forecasts and raising its full-year profit guidance.

Today’s calendar is thin, so the focus will remain on tomorrow’s nonfarm payrolls report, developments in the Middle East and the broader AI debate. The next major macro event will be Jackson Hole later this month, especially if Kevin Warsh follows the usual procedure and uses the conference to frame the Fed’s strategy and policy outlook.

The setup remains constructive enough to avoid panic, but not strong enough to ignore the risks. AI demand is still there, but the market is becoming much less forgiving about valuation, capital expenditure and proof of returns. Add in tomorrow’s payrolls, elevated yields, yen intervention risk and Middle East headlines, and position size still matters.

Trade safely.

Thursday, August 6, 2026

Macro: U.S. initial jobless claims; Q2 productivity and unit labour costs; Challenger job-cut report.
Central banks / speakers: Alberto Musalem speaks; Fed balance sheet after the close.
Corporate earnings: ConocoPhillips, Parker-Hannifin, Howmet Aerospace, Canadian Natural Resources, Datadog, Constellation Energy, Petrobras, Cloudflare, Monster Beverage, Airbnb, Aflac and Republic Services.

Friday, August 7, 2026
Macro: U.S. Employment Situation report for July, including nonfarm payrolls, the unemployment rate and average hourly earnings; U.S. consumer credit later in the day.
Central banks / speakers: Thomas Barkin speaks.
Corporate earnings: Vistra, Take-Two Interactive, PPL, Plains All American Pipeline, Emera, Fluor and Hawaiian Electric.