Hormuz Deal Elusive; Wall Street Sees Bond-Market Angst | The Asia Trade 8/10/2026

Strait of Hormuz Tensions [0:01:21]

• The final deal to reopen the Strait of Hormuz between Iran and Oman remains elusive.
• Iran has ruled out direct talks with the U.S., citing violations of a June memorandum of understanding.
• President Trump is banking on Iran’s 70% inflation rate to force them to the negotiating table.

• Tehran has ruled out direct talks with the U.S. But President Trump says Washington can wait for Iran's economic suffering to soften its stance.

U.S. Jobs Data and Fed Outlook [0:02:13]

• Nonfarm payrolls missed expectations, confirming underlying weakness in the U.S. economy.
• The unemployment rate is flattered by a falling participation rate; without this, it would be closer to 5%.
• Analysts expect the Fed to remain on hold for the foreseeable future due to labor market slack.

• The jobs numbers really confirmed what we had been talking about for quite some time, that the headline numbers were really masking a weak economy under the surface.

Middle East Diplomatic Tracks [0:04:47]

• Prime Minister Benjamin Netanyahu has rejected the U.S.-backed Gaza peace deal out of hand.
• Israel continues to occupy parts of Gaza, and Hamas has not disarmed as required by the proposal.
• Trump’s attempt to dictate international policy without congressional or polling support is facing pushback.

• Netanyahu, who faces reelection in October, simply says he's rejected this deal out of hand.

China's AI Ambitions [0:07:35]

• China is leveraging capital markets to support AI leaders, moving away from traditional bank-loan models.
• The country is transitioning from solar and battery dominance to a focus on AI tech manufacturing.
• Global frontier labs are concerned about the competitive threat posed by Chinese AI models.

• This is a new era of China tech. We've gone from China, solar, wind, battery, wherever China enters in, essentially drives profits in that industry to zero.

RBA and Australian Macro Outlook [0:10:45]

• Westpac expects the Reserve Bank of Australia to hold rates for the rest of 2026.
• A sharp contraction in house prices is expected in Sydney and Melbourne throughout 2026.
• Consumer sentiment remains weak despite household buffers being relatively healthy.

• The combination of higher rates as well as the tax changes we saw this year have led to a much sharper contraction in house prices.

Critical Minerals and Sunrise Energy [0:14:15]

• The U.S. government announced a $3 billion investment in critical minerals to reduce reliance on China.
• Sunrise Energy Metals received a $400 million loan to expand its scandium mine in Fifield.
• The U.S. aims to be at the front of the queue for scandium production starting in late 2028.

• The White House over the weekend, our time described Sunrise as the world's first primary Scandium mine.

Resolution Copper Mine [0:15:33]

• The Resolution copper mine in Arizona is being fast-tracked to production by the mid-2030s.
• Once operational, it could satisfy approximately 25% of U.S. copper demand.
• The project has overcome a decade of legal battles to secure its development path.

• There's already been announced an investment of 500 million US dollars. The legal battles that have beset that mine for a decade or more now seem to be of overcome.

U.S. Defense Production [0:16:15]

• The Pentagon is pressing major defense firms to accelerate production of key weapons systems.
• Companies must submit plans by late August to increase capacity and shorten delivery timelines.
• President Trump denies that U.S. munitions stockpiles are running low despite recent operations.

• The Pentagon is pressing major defense firms to speed up production of key weapons and missile defense systems.

South Korean Market Volatility [0:19:15]

• The KOSPI experienced a 40% drawdown from its peak, flushing out significant leverage.
• Volatility gauges are at two-month lows, yet foreign investors remain hesitant to return.
• SK Hynix is a focal point for potential share buybacks to stabilize the market.

• South Korea has been one of the most, if not the most volatile market in the world. It was more volatile than Bitcoin by some measures.

Apple and CXMT Chips [0:23:02]

• Apple is reportedly testing Chinese memory chips from CXMT for products sold in China.
• Apple requires White House approval to bypass Pentagon blacklisting of the chip maker.
• Using off-the-shelf chips would require Apple to redesign parts of its hardware.

• Apple is reportedly testing memory chips from China's CXMT across its product guidelines.

Japan's Fiscal Policy [0:30:10]

• Japan is considering an expansionary fiscal policy to boost domestic demand and productivity.
• The government is weighing a two-year food sales tax cut to offset inflationary pressures.
• Japan’s current account balance unexpectedly shifted to a $92.3 billion deficit in June.

• The beauty of this consumption tax hike is that the right now Japan's inflation is very much stabilized.

AI Narrative Complexity [0:37:30]

• Investors are seeing a widening gap between AI hype and actual improvements in corporate profitability.
• Hyperscaler capital expenditure growth is expected to slow from 70% to 30% next year.
• The market is reaching an inflection point where earnings delivery is critical for valuation.

• We see this gap between the hype and result widening.

Energy Sector Opportunities [0:39:10]

• U.S. strategic petroleum reserves are at their lowest level since 1983, leaving little buffer for shocks.
• Analysts recommend energy stocks to diversify portfolios against ongoing supply constraints.
• The nuclear standoff and regional tensions ensure energy markets remain fragile.

• The world is hard to sustain another supply shock. And therefore, we think for investors, it's really good to have some energy stocks in your portfolio.

DeepX and Physical AI [0:46:15]

• DeepX is focusing on low-power AI chips for physical devices like robots and drones.
• The company aims to provide generative AI capabilities without the need for data center fees.
• DeepX is targeting mass production for fully AI-enabled humanoid robotics this year.

• We are working on the battery-powered, I mean, devices, AI capability. So the most important thing is, you know, power consumption.

Yen Intervention Dynamics [0:51:30]

• Hedge funds have halved their speculative short bets on the yen following intervention efforts.
• The goal of the intervention is to prevent one-way speculation, not to set a specific exchange rate.
• Success depends on continued BOJ follow-through and the mechanics of the currency implementation.

• The goals of the intervention were to prevent one way speculation on the yen and to some extent that has succeeded.

Retail Investor Behavior [0:54:15]

• David Kelly warns of a bipolar market where retail investors either chase extreme risk or huddle in cash.
• Social media influence is preventing many investors from maintaining balanced, long-term portfolios.
• Education is needed to shift the focus from "beating the market" to long-term business investment.

• We've got two types. We've got those who are just way too risk-taking, you know, investing in Bitcoin or whatever. And then you've got a lot of people just huddling cash.