June CPI Cools to 3.5% and Reopens the Rate-Cut Door. JPMorgan Blows Out While IBM Sinks 22%.

Tuesday, July 14, 2026, written around the 8:30 CPI release with US futures wavering. The trifecta the last note flagged as a single 48 hour test has arrived, and the data broke the bulls’ way. June CPI came in far cooler than feared, memory stocks that were flushed on Monday snapped back hard, and JPMorgan opened bank earnings season with a blowout, while the two offsets are an IBM warning that sank the stock 22 percent and an oil spike as President Trump moved to levy a 20 percent fee on cargo crossing the Strait of Hormuz. Consumer prices fell a seasonally adjusted 0.4 percent in June, the largest single month decline since April 2020, dragging the annual rate down to 3.5 percent against the 3.8 percent economists expected and down from 4.2 percent in May, with core easing to 2.6 percent. Overnight, Seoul staged a sharp recovery from its Black Monday, Samsung rose almost 6 percent and SK Hynix bounced 4.5 percent, and in US pre-market SK Hynix’s listed shares jumped about 7 percent with Micron, SanDisk and Western Digital all higher. It all lands the same morning new Fed Chair Kevin Warsh takes the stand before the House for his first testimony as chair.

Top Call: The Feared Trifecta Broke Dovish, but June’s Cool Print Meets July’s Oil, and Warsh Gets the Last Word

The one thing to carry into the open is that the setup that looked so dangerous 24 hours ago resolved in the bulls’ favor on the data, yet the tape is caught between a backward looking print and a forward looking oil shock, and a brand new Fed chair now gets to referee. The good news is real. A headline CPI falling 0.4 percent on the month is the softest inflation reading in six years, core at 2.6 percent is genuinely benign, and both undershot expectations by a wide margin, which is enough to pull the front end of the curve lower and revive a conversation about a fall rate cut that had been left for dead. Layer on a memory complex that is snapping back from Monday’s forced selling and a JPMorgan print that blew past estimates, and the morning has three separate reasons to feel better. The catch, and it is the whole game, is that June’s cool number was manufactured by June’s oil crash and a gasoline price that dipped below four dollars, and that tailwind is already reversing in July as Brent pushes back toward the mid 80s on Trump’s threatened Hormuz fee and a reimposed naval blockade. So the market gets a dovish data point and a hawkish real time input at the same moment. Our read is that this is a constructive morning that the bears cannot easily rebut on the numbers, but it is not a green light, because the single most important variable is now Warsh’s tone. A new chair leaning hawkish to build credibility against an oil driven impulse could cap the relief and keep the 30 year pinned above 5 percent, while a chair willing to look through the oil noise and lean on the soft core print would let this rebound run. We would treat the CPI as a reason to fade Monday’s panic, not to chase, until Warsh has actually spoken.

Inflation: The Softest Print in Six Years, and a Real One

Start with the number that reframes the week. The June CPI fell 0.4 percent from May, the biggest monthly decline since April 2020, and the annual rate dropped to 3.5 percent from 4.2 percent, a full three tenths below the 3.8 percent consensus. Core, which strips out food and energy, was flat on the month and eased to 2.6 percent year over year against the 2.8 percent expected, and that core figure matters more than the headline because it is the one the Fed watches for the underlying trend. The driver was energy. June’s collapse in oil, itself a product of the brief and now broken ceasefire in the Iran conflict, pulled gasoline sharply lower and did most of the work, but the fact that core also came in soft tells you this was not purely an energy illusion. For a market that spent Monday pricing the odds of a Fed hike this year up toward the mid 60s in percent, this print is a genuine rebuttal, and it nudges the odds of a September cut back toward a coin flip from near zero.

Our take is that this is the best inflation news of the year and the market is right to rally the front end on it, but the celebration has a shelf life measured in weeks, not months. The uncomfortable truth is that the disinflation was rented from an oil market that has already changed its mind. Crude has round tripped from June’s lows back toward the mid 80s on Brent, and if the Hormuz disruption holds, the July and August prints will hand back much of what June just delivered. So the honest framing is that inflation is cooling in the rear view mirror while the windshield shows a fresh energy shock, and a data dependent Fed has to weigh a soft realized number against a hardening forward path. We think the print takes the tail risk of an imminent hike off the table and gives risk assets room to breathe today, but it does not settle the debate, and anyone treating 3.5 percent as the all clear is reading only half the picture.

Memory and IBM: The Rebound Is Real, and IBM’s Warning Quietly Confirms the Scarcity Thesis

The overnight reversal in memory is the second leg of the better tone, and the way it happened matters. After Monday’s record 15 percent SK Hynix collapse and a near 9 percent Kospi crash, bargain hunters came in hard. The Kospi rebounded more than 2 percent with institutions net buying over a trillion won, Samsung climbed almost 6 percent and SK Hynix recovered 4.5 percent in Seoul, and the bid carried into US pre-market where SK Hynix’s listed shares rose about 7 percent, SanDisk gained over 4 percent, and Micron, Western Digital and Seagate all added more than 3 percent while Nvidia edged up over 1 percent. Applied Materials, Teradyne and Monolithic Power all jumped as the equipment names joined the recovery. This is exactly the shape you want to see after a positioning flush, a fast recovery led by the same names that were dumped, and it supports the argument the last note made that Monday was a mechanical unwind of an overcrowded, over levered trade rather than a verdict on the underlying demand.

But the most interesting tell of the morning is buried inside a stock that fell 22 percent. IBM warned on preliminary Q2 results, guiding revenue to about 17.2 billion dollars against the 17.85 billion expected and adjusted EPS to 2.93 dollars below the 3.02 dollar estimate, and CEO Arvind Krishna’s explanation is the part that matters. He said that in the last few weeks of June, clients shifted their quarterly capital spending toward servers, storage and memory purchases to secure supply constrained infrastructure ahead of expected price increases, and that large software deals slipped as a result. Read that again, because it is the memory scarcity thesis stated in a competitor’s earnings warning. IBM did not miss because AI demand is weak, it missed because customers are so desperate to lock up scarce memory and hardware capacity that they are diverting budget away from software to do it. Our take is that this is bearish for enterprise software and the read through to names like the broader infrastructure software group is real, but it is quietly bullish for the memory layer, and it is a far better piece of evidence for the durability of the buildout than any sell side note. We stay constructive on the scarce memory names and would treat the IBM warning as a confirmation, not a warning, for that part of the complex.

Banks: JPMorgan Blows the Doors Off to Open Earnings Season

The first hard, non AI read on the real economy landed strong. JPMorgan opened the season with EPS of 6.14 dollars against a 5.85 dollar consensus and revenue that came in well ahead of estimates, one of the cleaner beats the bank has posted in recent quarters, and Wells Fargo also reported results ahead of expectations. Goldman Sachs, Bank of America and Citigroup follow before the bell, with Goldman expected to show a rebound in trading and dealmaking that pushes EPS into the low 14 dollar range, and Citigroup drawing the most attention as the long time laggard that has quietly turned itself into a name analysts want to own after a Q1 that delivered its best revenue in a decade. The single metric to watch across all of them is net interest margin, because with the long end near its highs and the curve steepening, the spread between what banks earn on loans and pay on deposits is where the rate environment shows up in the numbers.

Our take is that a JPMorgan blowout on the same morning as a cool CPI is a powerful one two punch for the bull case, because it says the real economy under a narrow, AI led index is not just holding up but accelerating, which is exactly the reassurance a market rattled by Monday’s memory rout needed. The caveat is that JPMorgan is the best house on the street and its beat does not automatically extend to the group, so the tone of Citigroup’s turnaround and any crack in credit quality commentary will tell you more about the broad economy than JPMorgan’s headline. But on balance the banks are validating the soft landing framing this morning, and that matters more than usual with the AI trade still finding its feet.

Oil and Iran: Trump’s Hormuz Fee Reignites the War Premium

The offset to all the good news is crude, and it is not subtle. President Trump moved to impose a 20 percent fee on all cargo transiting the Strait of Hormuz and the US Navy is reimposing its blockade against Iranian shipping, an escalation from Monday’s fourth strike round, and Iran’s Revolutionary Guard struck at least two UAE tankers in the Strait, killing one mariner. WTI rose about 3 percent toward 80 dollars and Brent climbed roughly 4 percent toward the mid 80s, reclaiming the war premium that had bled out through June. The waterway carries close to a fifth of the world’s seaborne oil and gas, so a genuine disruption there is the one macro event that can override a cool inflation print, because it feeds directly back into the next one.

Our take is that the oil move is the reason this morning is not a clean risk on session, and the cross asset tells confirm it. Gold is steadying rather than surging on the geopolitics, and the front end is rallying on CPI rather than on a flight to safety, which says the market is treating Hormuz as an inflation and rates story more than a pure fear trade. As long as the disruption is a fee and a blockade rather than a physical closure of the Strait, the base case is that this is a premium rather than a permanent supply loss, and the global market remains well supplied on paper with OPEC-plus barrels and record Russian exports. But the direction of travel is wrong for disinflation, and it is the single cleanest reason to distrust the durability of today’s soft CPI.

Macro: Warsh Takes the Stand at the Most Loaded Possible Moment

Everything funnels to the same place it did in the last note, the new Fed chair, except now he walks to the microphone hours after a dovish inflation surprise and an oil spike pulling the other way. Kevin Warsh, sworn in on May 22, delivers his first testimony as chair before the House Financial Services Committee today and the Senate Banking Committee on Wednesday, with the Fed’s policy rate held at 3.5 to 3.75 percent. In prepared remarks he struck a tone of institutional reinvention, saying the Fed is at a hinge point in history and that if it gets policy right, and he said it will, the inflation surge of the last five years will be a thing of the past. That is the language of a chair who wants to own the disinflation narrative, and the market has almost no read on how he will handle live questioning.

Our take is that Warsh’s debut is now more important than the CPI number that preceded it, because the print gives him cover to sound either way and the market cannot yet predict which he will choose. A chair who seizes on the soft core reading to signal patience would validate the front end rally and give the memory and small cap bounce room to extend. A chair who leans hawkish, points at the oil spike, and reminds Congress that a 3.5 percent headline is still well above target could reverse this morning’s relief in an afternoon and push the 30 year, already above 5 percent, higher. Our lean is that a brand new chair trying to establish anti inflation credibility is more likely to lean hawkish than dovish at his first hearing, which is why we would respect the CPI bounce but not chase it until his prepared caution meets the unscripted questions.

Sector Spotlights

AI and Semiconductors: The group flipped from Monday’s epicenter of selling to this morning’s leadership. The Seoul rebound, the pre-market pop across SK Hynix, Micron, SanDisk and Western Digital, and the jump in equipment names like Applied Materials and Teradyne all point to Monday having been a positioning flush. IBM’s warning that clients are diverting capex to secure scarce memory is an unexpected fundamental prop under the memory names even as it hits software. TSMC on Thursday remains the real reality check on capex.

Financials: The banks open earnings season on a strong note, with JPMorgan blowing past estimates and Wells Fargo also ahead, and Goldman, Bank of America and Citigroup on deck. This is the first broad, non AI read on the economy, and so far it is reinforcing the soft landing case. Net interest margin and credit quality commentary matter more than headline EPS with the long end near its highs.

Energy: Crude reclaimed its war premium overnight, WTI near 80 and Brent in the mid 80s, on Trump’s 20 percent Hormuz fee and a reimposed naval blockade. Energy equities should catch a bid, but the more important signal is the inflation impulse the move feeds into future CPI prints, which is the main threat to the dovish story the June data just told.

Software: The read through from IBM is negative. If enterprises are pulling spend forward into supply constrained hardware and memory at the expense of software deals, the software group faces a demand shift, not just a timing slip, and today’s 22 percent IBM drop may not be an isolated event heading into the rest of the season.

Geopolitical Tracker

US-Iran: Escalating and the dominant offset to the cool CPI. President Trump moved to levy a 20 percent fee on all cargo transiting the Strait of Hormuz and the US Navy is reimposing its blockade on Iranian shipping, following Monday’s fourth strike round, and Iran’s Revolutionary Guard hit at least two UAE tankers in the Strait, killing one mariner. Oil jumped, and the disruption keeps a live inflation tail open even after a soft June print.

Ukraine-Russia: Still the loose supply counterweight. Record Russian crude exports remain one reason the global oil balance stays long on paper even with Hormuz contested, which caps how far the current spike can run absent a physical closure of the Strait.

Taiwan Strait: Back off the boil this morning. With Seoul rebounding and the memory rout reversing rather than spreading, the Taiwan supply chain pressure that flared Monday has eased, though TSMC’s print Thursday keeps the region on the screen.

Quick Take: June CPI Scorecard

Our Take: A genuinely dovish print that reopens the cut conversation and rebuts Monday’s hike panic. The catch is it reflects June’s oil crash while July’s Hormuz spike is already reversing that tailwind, so treat it as real but with a short shelf life.

Quick Take: Bank Earnings Kickoff

Our Take: A JPMorgan blowout alongside a cool CPI is a powerful one two punch for the soft landing case. The tell to watch is net interest margin and any crack in credit, which will say more about the broad economy than JPMorgan’s headline.

Notable Earnings

The scheme relevant print of the morning is a negative one that reads bullish underneath, IBM, which warned on preliminary Q2 numbers and fell 22 percent. Revenue of about 17.2 billion dollars missed the 17.85 billion expected and adjusted EPS of 2.93 dollars came in below the 3.02 dollar estimate, and CEO Arvind Krishna pinned the shortfall on clients pulling capital spending forward into servers, storage and memory to secure supply constrained infrastructure before prices rise, which caused large software deals to slip. That is a demand shift away from software and toward hardware, and it is the clearest third party confirmation yet that the memory shortage is real and that buyers are scrambling to lock up supply. For the memory names the last few weeks of June that hurt IBM are the same weeks that underpin SK Hynix, Micron, SanDisk and Western Digital, all of which bounced this morning. The bank prints, JPMorgan’s blowout and Wells Fargo’s beat, sit outside the AI scheme but matter as the cleanest read on whether the economy under a narrow index is steady, and so far the answer is yes.

Our quick take is that the two prints tell one story from opposite ends. IBM’s miss is not a demand problem, it is a supply scarcity so acute it is bending enterprise budgets, which is precisely the dynamic that keeps the memory thesis intact even after Monday’s crash. The banks say the macro floor is holding. The real verdict still comes later in the week, with ASML on Wednesday as the sole EUV supplier and TSMC on Thursday as the foundry at the center of the build, and after this morning both need to show accelerating orders and capex to convert a relief bounce into a durable move rather than a dead cat.

Key Events Ahead

Tuesday pre-market, July 14, 2026, written around the CPI release with futures wavering. The 48 hour test the market feared resolved mostly in the bulls’ favor on the data. June CPI fell 0.4 percent on the month, the biggest drop since April 2020, cutting the annual rate to 3.5 percent versus 3.8 percent expected and 4.2 percent in May, with core easing to 2.6 percent, the softest inflation news of the year. Memory snapped back from Monday’s Black Monday as Seoul rebounded, Samsung rose almost 6 percent and SK Hynix 4.5 percent, and US names jumped pre-market with SK Hynix up about 7 percent and Micron, SanDisk and Western Digital higher. JPMorgan opened bank season with a blowout, EPS $6.14 versus $5.85, and Wells Fargo also beat, while Goldman, Bank of America and Citigroup follow before the bell. The two offsets are IBM, which warned on preliminary Q2 results and fell 22 percent as CEO Arvind Krishna said clients diverted capex into servers, storage and memory to secure scarce supply — a miss that quietly confirms the memory scarcity thesis — and oil, which jumped about 3 to 4 percent (WTI ~$80, Brent mid-$80s) as President Trump moved to levy a 20 percent fee on Hormuz cargo and the US Navy reimposed its blockade. Gold steadied near $4,010, bitcoin firmed toward $63,000, the 2-year fell toward 4.18 percent on the print while the 30-year held above 5 percent, and the dollar eased. Asia rebounded and Europe opened flat to slightly lower. It all lands the same morning new Fed Chair Kevin Warsh takes the stand for the first time, telling the House the Fed is at a hinge point in history; his tone, more than the CPI itself, decides whether this relief bounce runs or fades. For internal use only. Not investment advice.