Good morning investors! The US-Iran war has no end in sight as stocks keep going higher.
Today we cover:
US producer prices flat
Cisco reports
Bond market warning
📊 Economy and News
US Producer Prices Flat in July, Softening Inflation Pressure
US producer prices held steady in July, coming in below expectations and adding to signs of easing inflation.
The Producer Price Index for final demand was unchanged last month after a revised 0.1% drop in June, the Labor Department reported. Economists had forecast a 0.2% rise. Goods prices fell 0.7% (led by energy), while services rose 0.2%.
Over the past year, the PPI climbed 4.7%, down from 5.5% in June. Core PPI (excluding food and energy) increased 0.2%.
The softer reading follows mild consumer inflation data and unexpected job losses, strengthening the case for the Federal Reserve to keep rates unchanged at its mid-September meeting.
Global hits:
Euro zone bond yields edge lower on US inflation data.
Argentina monthly inflation rises in July to 2.1%.
Fitch affirms U.S. credit rating at AA+ with stable outlook.
Reminder: Trade court upholds Trump’s closure of ‘de minimis’ loophole. Also, read this CNBC article on why the Iran war risks bringing the G7′s fastest-growing economy to a halt
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📈 Stocks
S&P 500 7,798.99 (+0.65%)
DJIA 53,839.99 (+0.13%)
NASDAQ 26,803.02 (+0.81%)
BRENT CRUDE 87.01 (-1.91%)
* Prices as of Aug 14th, 12:20 AM UTC
Cisco shares fell 8.4% even after the company posted better-than-expected fourth-quarter results and raised guidance.
Revenue rose 18% to $17.3 billion, beating the $16.8 billion consensus. For the current quarter, Cisco forecast $18–18.2 billion, well above the $16.8 billion estimate.
Analysts at Piper Sandler called the guidance “conservative given the current demand environment,” noting some investors may view growth as peaking. The stock had gained more than 60% this year heading into the report.
CEO Chuck Robbins highlighted a “record year” and “record quarter,” while defending the cautious outlook as the company starts its new fiscal year. Hyperscaler infrastructure orders reached $4 billion in the quarter, bringing the full-year total to $9.3 billion.
Shares closed at $113.47, well below their June high of $130.
Interesting: Reddit shares jumped 11% on the social media company’s inclusion in the S&P 500.
Classic car auctions in Monterey could reach a record $500 million this week. A new generation of millennials and Gen Zers is taking over the collecting market from baby boomers and bidding up modern supercars from their own youth.
Surprising: Workday shares popped nearly 18% for their best day since 2016 on a report that private equity firm Silver Lake is in talks to buy the human resources software maker. In other news, Meta to open source its most powerful AI model as it takes swipe at OpenAI, Anthropic.
💵 Personal Finance
Bond Market Warning: High TIPS Yields Signal Weak Stock Returns Ahead
A key signal from the bond market points to potential trouble for stocks, according to Jefferies.
Strategist Desh Peramunetilleke argues the 10-year Treasury inflation-protected securities (TIPS) yield is a better gauge than the regular 10-year Treasury. Currently at 2.36%, TIPS yields above 2% (the 70th percentile) have historically coincided with weak equity returns.
Since 1997, the S&P 500 averaged just 0.2% monthly gains in such periods. Japan’s market fared worse with a 0.5% average monthly loss, while Latin America managed a 0.3% gain.
Peramunetilleke sees real yields near 2.5% remaining elevated. Rising fiscal risks—highlighted by the U.S. budget deficit jumping to $432.3 billion in July—and heavy AI-related borrowing are driving up the term premium. Global capital expenditures are expected to surge 28% in 2026.
With the Fed taking a more hands-off approach, he does not expect the term premium to ease soon unless inflation and deficits are controlled.
In this environment, he recommends focusing on quality and yield. Historically strong sectors include software, financial services, and discretionary retail. A screen for high-quality, low P/E yield stocks highlighted JPMorgan Chase, Pfizer, ConocoPhillips, McKesson, and Dollar Tree.
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