Two Cool Inflation Prints. Chips Still Fell. Big Tech Held the Tape Together.

PPI fell 0.3% in June versus expectations of flat. Core PCE for June is now forecast below 0.2%, the coolest monthly reading in two years. July hike odds are effectively zero.

The Nasdaq and S&P both closed slightly higher. Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL) each gained around 3%, carrying the indices. Chips got crushed. The semiconductor ETF (SMH) fell roughly 4% even after ASML raised its full-year guidance for the second time. The morning rally gave way to an afternoon chip selloff that the rest of the market quietly absorbed.

The session was held together by megacap tech. Without those four names, the tape looked very different.

TQ Trade Implication

Two inflation beats shift the rate narrative away from July entirely. Own Big Tech into this setup. Reduce pure-play chip names until the ASML order book translates into earnings revisions, not just guidance raises. TSMC answers that tomorrow.

Warsh Said AI Price Increases Are Not Inflation. That Directly Contradicts Waller.

Warsh testified to the Senate and broke explicitly from colleagues on AI spending. He said he does not view a one-time price change as necessarily inflationary because a supply response will follow. His words: "Will it increase measured prices over the next 12 months? I suspect it will. Whether that's inflationary or not, that's up to the Federal Reserve."

This directly contradicts Waller, who said last week that core inflation has been rising and the Fed needs to consider tightening. Williams separately said the Fed's current stance is "well positioned" to bring inflation down without hiking.

Two senior Fed voices leaned dovish on the same day. Warsh drew the chairman-level line. The committee is visibly split and the July 29 meeting resolves it.

TQ Execution Bias

The Warsh-Waller split is the most important rate signal in weeks. If Warsh controls the July 29 narrative, no hike. Own duration heading into that meeting. Rebalance after the statement, not before.

PayPal Got a $53 Billion Buyout Offer. The Market Said It Is Worth More.

PayPal (PYPL) surged roughly 16%, its best single day since its 2015 spin-off, on reports that Stripe and private equity firm Advent offered $60.50 per share. The company is down 85% from its 2021 peak above $300. The offer implies a $53 billion valuation versus Tuesday's $42 billion market cap.

Michael Burry immediately said $60.50 is too low. He values PayPal at up to $115. The stock closed well below the offer price. That gap tells you the market is not confident the deal closes at the initial price. It is pricing in either a higher bid or regulatory complications.

PayPal's collapse from its peak is one of the clearest examples of AI disruption reaching fintech. Stripe and Advent are betting the core payments infrastructure is worth far more than a depressed stock implies. The market is betting they will have to pay more to win it.

TQ Execution Bias

Watch whether Stripe formally confirms the offer this week. Confirmation at or above $60.50 closes the deal gap. Silence means deal risk stays priced in and the premium fades.

Chips Fell on a Day ASML Posted a Record Quarter. That Disconnect Is the Signal.

ASML raised guidance twice in one year, posted record orders, and saw its stock give up its morning gains.

Micron (MU) fell 9%. AMD (AMD) dropped 6%. Intel (INTC) fell 7%. Sandisk (SNDK) dropped more than 11%.

SpaceX (SPCX) fell below its $135 IPO price for the first time, touching $132 intraday. The largest IPO in history is now down more than $800 billion from its peak market cap in under six weeks.

Both stories say the same thing. AI hardware demand is real and growing. AI hardware equity prices are being repriced separately from the demand. That is not a contradiction. It is the market telling you that the business and the stock are two different conversations.

TQ Edge Setup

TSMC reports tomorrow. If TSMC confirms accelerating orders matching ASML's book, chips today were rotation not re-rating. If TSMC guides cautiously, the selloff was pricing something fundamental. That distinction decides the second half chip trade.

• BlackRock (BLK) hit $15.3 trillion in assets, a record, on $192 billion in net new client inflows. Shares gained roughly 7%. Larry Fink called himself "very optimistic on global markets." At $15.3 trillion, BlackRock is the clearest single indicator of where institutional money is actually going. It is going everywhere.
• Elevance Health (ELV) fell roughly 9% after saying it will exit several Medicaid markets over the next 12 to 18 months. The managed care sector sold off broadly. Centene (CNC) and Molina (MOH) are next in the reporting queue with the same question to answer.
• Richemont surged roughly 7% on 20% quarterly sales growth, nearly double the estimate. Cartier and Van Cleef jewelry grew 24%. LVMH (LVMHF) and Hermes rose in sympathy. The luxury consumer stopped buying handbags. They never stopped buying Cartier.

PPI fell. Warsh separated himself from the hike camp.

PayPal got a bid the market thinks is too low. Chips sold off despite ASML's record quarter. SpaceX went below its IPO price.

Two inflation beats in two days give Warsh exactly what he needs to hold at July 29. September hike odds are still above 60%. That gap closes with TSMC, Netflix, and retail sales all landing tomorrow. Three separate reads on AI demand, consumer spending, and the capital markets cycle before the week ends. The tape held together today on megacap names. Tomorrow we find out if the fundamentals behind them hold too.