Markets Brace for US CPI; AI Firms Crush Earnings | The Asia Trade 8/12/2026

Asian Market Outlook [00:00]

• Asian stocks are poised to follow Wall Street lower as traders avoid risky bets before the U.S. inflation print.
• Geopolitical instability in the Strait of Hormuz continues to support oil prices, which have maintained a four-day gain.

  Asian stocks poised to follow Wall Street lower as traders hold back risky bets ahead of key U.S. inflation data.

AI Infrastructure Surge [00:50]

• CoreWeave and Supermicro shares surged after reporting strong sales outlooks.
• AI demand is being described as robust rather than artificially inflated, supported by record backlogs.

  CoreWeave is not just a bellwether for the NeoClouds, these AI cloud suppliers. It really is a gauge of how overall AI computing demand is faring.

NVIDIA's Ecosystem Strategy [02:30]

• NVIDIA is leveraging a $500 billion financing coalition to ensure customers have access to capital for AI infrastructure.
• The company is also advancing open-source AI models to seed the market and drive demand for its hardware.

  What better way to reinforce the demand for NVIDIA's AI chips than to put out a bunch of open-source AI models that seed the market and increase the demand for its chips?

Inflation and Fed Policy [04:15]

• The upcoming CPI report is viewed as the most critical factor for near-term market direction.
• High core CPI numbers could force the Federal Reserve to consider an interest rate hike in September.

  If the core CPI numbers stay on the high side, then people will expect the pressure on the Federal Reserve to get even greater and possibly to see an interest rate increase in September.

Japan's Currency Dilemma [06:30]

• The yen is inching toward the 160 level, raising concerns about potential intervention.
• Economists are pulling forward expectations for a Bank of Japan rate hike to October.

  We're back up to those kind of levels and we're approaching a time when there are going to be three Bank of Japan speakers coming up in the next couple of weeks.

South Korean Economic Data [08:15]

• South Korea's adjusted jobless rate rose to 2.8% in July, missing expectations.
• Supply disruptions from the Iran war are weighing on the petrochemical and construction sectors.

  We will continue to follow these job numbers because, of course, we have seen the impact from the Iran war supply disruptions weighing on petrochemicals.

Geopolitical Tensions in the Middle East [09:15]

• Reports suggest the U.S. and Iran are negotiating over the Strait of Hormuz, though rhetoric remains hardened.
• U.S. military assets are actively enforcing a blockade on Iran-linked ships.

  It's hard to say, you know, that a deal is really close, despite the optimism out of Islamabad, you know, the status quo of sort of low level strikes seems to be more likely to continue.

U.S. Defense Arsenal Concerns [10:15]

• Bloomberg analysis highlights that U.S. stocks of critical air defense interceptors are dwindling.
• While offensive capabilities remain sufficient, the ability to protect forces in future conflicts is under scrutiny.

  The U.S. certainly has enough offensive weapons to continue striking targets in Iran. But what really starts to come into question is the ability to protect U.S. forces.

New Zealand Leadership Crisis [11:30]

• Prime Minister Christopher Luxon held an emergency caucus meeting to address declining polling and leadership speculation.
• The government is struggling with coalition tensions and economic headwinds ahead of the November election.

  When Chris Luxon won government back in 2023, the polling of the National Party was 38 percent. Now it's in the high 20s.

Commonwealth Bank Profitability [13:15]

• Australia's Commonwealth Bank reported a 7% increase in cash profit to $7.8 billion.
• Growth in business lending is offsetting a cooling housing market.

  Australia's largest lender also raised its dividend while noting that economic pressure from higher interest rates and inflation.

Airline Industry Headwinds [15:45]

• High fuel prices remain a major financial challenge for Asia-Pacific carriers.
• While top-line revenue is holding up, costs are squeezing margins for many airlines.

  This has set back many carriers, I think, in the last three to four months. Although what we're seeing now is, you know, prices have come off.

South Korea's Strategic Sovereign Fund [18:00]

• The government plans to deploy $700 million into a new sovereign wealth fund targeting AI and strategic industries.
• The fund aims to act as an anchor investor for global co-investment.

  We are actively pushing forward to establish a sovereign wealth fund, which we refer to as a strategic sovereign wealth fund to actively lead investments in high-tech strategic industries.

Taiwan vs. Korea Tech Divergence [20:30]

• Foreign funds are favoring Taiwan over Korea, citing greater stability in the AI supply chain.
• Korean equities are trading at record discounts, though investors remain cautious due to cyclical risks.

  You're seeing that investors are trying to bet more on these Taiwanese breadth that we're seeing. The foundry in TSMC, but along with the hardware supply chain.

AI Music Startups [22:30]

• Suno has gained over 1 million subscribers, but faces lawsuits from major record labels over copyright issues.
• The legal status of training AI models on copyrighted material remains an open question.

  It's just a really interesting story about this company that, you know, thinks that AI is going to change the music business, but is itself becoming, you know, a villain pretty quickly.

Tencent's AI Ambitions [28:30]

• Tencent's earnings will focus on the traction of its 'WorkBuddy' AI assistant.
• Investors are watching for signs that Tencent can monetize its massive AI investments.

  I think investors still expect a good quarter relatively good quarter for Tencent, which means the revenue is going to grow about 10% from a year earlier.

Prime Minister Luxon's Confidence Vote [31:30]

• Prime Minister Luxon confirmed he won a confidence vote among his party's lawmakers.
• He emphasized a focus on fixing the basics and building the future ahead of the November election.

  There was a confidence vote in my leadership this morning at our caucus meeting and I have the full support of our caucus and our caucus is united.