No flash of genius from the Messi(ah) or miracle for the wrestlers of the Albiceleste, who logically go down, but painfully, against La Roja. A deadly, dull match where the only real spectacle was the surreal, American-style halftime show… In the meantime, bombings, retaliation, offensive attacks and blockade have resumed in the Strait of Hormuz just when you thought it was safe to relax into the summer. As a result, energy prices saw their largest weekly increase, eclipsing or rather already outdating the much lower than expected US CPI print for June.
While the war on inflation hasn’t yet be won by central bankers, innovation continues to rage on with the release of Kimi K3 by a Chinese company (Moonshot AI). This open-weight model is reportedly going toe-to-toe with the best from OpenAI and Anthropic… and it’s much more efficient! That’s another data point in the « China is catching up faster than expected » narrative. For investors, the read-through is the same one we’ve seen with DeepSeek: if frontier-level capability keeps getting commoditized by open-weight Chinese models, it puts pressure on the pricing power and moat assumptions baked into US AI valuations, and thus doubts about monetizing at some point the current hyperbolic capex expenditures.
Cost per task: lower is better!
Weighted avg cost (USD) per intelligence index task
As far as growth is concerned, our ISM mfg model points to a strong acceleration in factory activity at the start of the 3rd quarter after both the Empire State and Philadelphia Fed rose more than expected in July, likely helped by the relief sentiment related to the MoU signed mid-June between US and Iran. The Philadelphia Fed was especially strong as it jumped +31 points in July to 41.4, the highest reading since the post-covid re-opening (Nov 2021).
Our ISM mfg model forecasts a reading of 61.4 for July vs. 53.3 observed and 54.2 forecasted the prior month
Bottom-line: July’s regional surveys from Philadelphia and New York (the 2 earliest reads on manufacturing activity) point to firming manufacturing momentum and a better labor tone, with price pressures no longer intensifying. They clearly argue for the ISM mfg remaining in expansion (well above 50), consistent with the structural tailwinds (AI capex, defense spending, energy infrastructure) that we have already flagged previously.
Looking ahead, I see two risks that unfortunately aren’t mutually exclusive, but could simply occur one after the other. Either the economy keeps accelerating and overheats, dangerously raising the risk of monetary tightening… and/or, with the resumption of hostilities in Iran and a much larger unwinding of the AI trade, this year cyclical upturn will turn out to have been just a flash in the pan, giving way to a more severe growth slowdown in H2, with higher energy prices eventually too, putting stagflation risks back in the spotlight.
Economic Calendar
Turning back to the economic and financial markets agenda, the ECB’s decision, the July flash PMIs and the Q2 earnings season, will be the main scheduled events of this week.
Starting with the ECB, it is widely expected to keep its target deposit rate on hold at 2.25% (Thursday). According to market expectations, a second hike in the deposit rate to 2.5% should happen at its September meeting and then it will remain pat for the remaining of the year.
The day after, on Friday, flash July global PMI indices will be out. They will give a health check on the major economies amidst ongoing geopolitical risks, the up and down of energy prices and inflation, the AI trade and “higher for longer rates” overall. The first reads for US manufacturing activity in July (Empire State and Philadelphia Fed released this week) pointed to an acceleration in this sector.
Otherwise, the UK will also have a new leader take over today, when Andy Burnham will officially move to Downing Street as the country’s new Prime Minister. Will he last longer in this position that his last three predecessors? Bets are open. Staying in the UK, we will get the June CPI and PPI data (Wednesday), where the consensus expected muted prices increases (+0.1% MoM for the headline with annual core inflation ticking down to 2.5%), which should comfort the BoE in its wait and see posture on average as ongoing hawkish dissent voices will likely persist. Elsewhere, the Japan inflation print for June will also be released on Friday, which in case of upside surprise may eventually push the BoJ to accelerate its slow-motion hiking marathon.
Finally, it will also be a very busy week for corporate earnings, with Alphabet, Tesla, Intel, IBM, GE, Amex, NextEra Energy or Lockheed Marin, among others, reporting in the US. SK Hynix, as well as the Swiss market’s Holy Trinity (Nestlé, Roche, Novartis) will also report this week, along with SAP and several European banks.
https://earningshub.com/earnings-calendar/week-of/2026-07-20
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