VP Weekly Wrap - 7 August 2026

Still risk-on - Aug. Macro Snapshot

(3 August)

• Our Macro Risk Indicator remains “risk-on” with G3 growth LEIs rebounding. US earnings estimate revisions are rising again, while low savings rates continue to sustain spending and profits.
• We believe the Situational Awareness stop-out marks a tradeable low in semis and AI. Semis remain capital scarce on our capital cycle models, while their crowding score has now reset to more neutral levels.
• The consensus reaction to the July Fed hold is that Warsh is going to be tested by markets in the coming months, pressuring him into a September hike. We lean against a hike this close to the mid-terms, as we expect core inflation to remain capped.

Section Summary

• Cyclical Asset Allocation: Macro Risk Indicator remains “risk-on” as growth stays resilient
• AI Bubble Watch: Buy the dip on semis, seeing some LPPL buy signals, market breadth resilient
• G3 Leading Indicators: Growth LEIs rebound, inflation impulse continues to fade
• Policy shifts: Main risk in 2H26 is lagged effect from policy tightening, but we are not there yet
• Inflation: US core inflation to remain capped, STIR markets already priced for inflation upside
• Equity: Earnings estimate revisions rising again, corroborates macro tailwinds
• Sector Allocation: OW: Semis, Energy, Financials, Materials; UW: Consumer, Healthcare
• Fixed Income: Surging real yields offer great value, watch 2s5s10s for signs Fed is offside
• FX: Politics trumps economics: take profit on short CHF vs long JPY
• Commodities: Neutral cyclical outlook, but upside risks for oil remain