MacroMicro

Is AI entering a bubble?
Markets are reassessing the next phase of the AI cycle.
MM AI analyzes through three key perspectives:
capital expenditure, cash flow & profitability, and market expectations.

Our August Investment Monthly Report takes a broader view of the market, exploring three key questions:
Will the Fed need to raise rates this year?
What are the latest earnings telling us about the AI investment cycle?

As markets shift their focus from capital spending to cash flow and profitability, how should investors rethink asset allocation?

The AI trend remains intact, but the market's pricing logic is evolving.

Start with MM AI Now: https://pse.is/9fbwus

The U.S.–Japan intervention is more symbolic than substantive, as Washington is unlikely to commit major funds to supporting the yen over time.

The U.S. appears focused on containing disorderly depreciation rather than engineering a sustained rally. Its direct capacity remains limited, with the Exchange Stabilization Fund far smaller than the USD 35–60 billion Japan has deployed in a single round of intervention. Even expanded Treasury resources would face funding and market constraints.

Support may therefore be temporary. Wide U.S.–Japan rate differentials, further Fed hike risks, and fiscal spending that could delay BOJ tightening still point to structural yen weakness. A sustained reversal has yet to emerge.
https://t.co/I7tzpXZ5PG

MacroMicro’s Korea Fear & Greed Index edged up to 8.44 after hitting a record low last week. Despite the slight rebound, sentiment remains firmly in extreme fear territory.

💴Japan's record JPY 8.45trn intervention bought time, not a turn in the yen. The largest single-day yen purchase on record, plus reported U.S. Treasury action, pushed USD/JPY back toward 157. But the ESF holds only about EUR 13bn and $24.5bn, and wide rate differentials leave the yen structurally soft.

Big Tech's cash flow squeeze is a funding question, not a demand one. Google, Meta and Amazon lifted 2026 capex guidance to $195–205bn, $130–145bn and $220bn, turning Q2 free cash flow negative at Google and Amazon. Backlog coverage still improved at three of four hyperscalers. Korea shows the same gap: SK Hynix's revenue rose 257% but the stock fell 9.6% on forced ETF liquidation.

The Fed's 9–3 hold was the widest split since 2016, but with the 10-year at 4.7% and June core PCE at 0.13% MoM, the long end did the tightening.

📥This week's commentary covers the yen, hyperscaler funding, Korea memory, and the Fed👇
🔗 https://pse.is/9f36gr

📈July was a rough month for tech. So heading into August, the real question isn’t just whether tech bounces. It’s whether leadership is starting to broaden.

We’re sharing our latest Investment Dashboard, built around 3 themes:
1. Fed dissent is rising
2. Geopolitical volatility is back
3. The AI trade is shifting from capex and pricing power to cash flow and earnings

Our base case: we still prefer equities over bonds, but we’re broadening from tech into non-tech areas like financials and domestic demand.

We’re also watching 3 key signals closely:
- Semi revenue vs. inventory
- Taiwan export growth
- WTI / US-Iran pressure

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