Geopolitics took center stage Thursday. A drone strike near Egypt's Suez Canal raised immediate questions about energy transit security, while Saudi Arabia announced a multinational maritime defense coalition — a clear signal that Gulf states are formalizing security architecture independent of traditional U.S. guarantees. Iran's foreign minister pressed European counterparts over the use of their bases for U.S. operations, and Washington layered fresh sanctions on networks supporting Mahan Air. The Bank of England held rates steady, explicitly citing the inflation risk of a potential Iran conflict. Oil didn't spike on the headlines, but the risk premium is visibly being repriced.
On the domestic side, the Q2 GDP print came in softer on the headline — imports subtracted 0.8 percentage points from growth — but final sales to domestic purchasers rose at a 3.2% clip. The consumer isn't cracking. The Fed's preferred inflation gauge, the PCE price index, ticked up 0.2% month-over-month, keeping the annual rate at 2.6%. Not low enough to declare victory, not hot enough to force a hike. The market's pricing for a September cut held around 65%.
Earnings season kept delivering. Microsoft posted a quarter that even Jim Cramer called "surprisingly good" — Azure growth re-accelerated to 31% constant currency, and the commercial bookings number (a leading indicator for future revenue) jumped 17%. The stock has been range-bound for months; this was the kind of print that could finally break it out. Starbucks also drew Cramer's attention — he sees a breakout forming as CEO Laxman Narasimhan's operational reset gains traction. Same-store sales inflected positive in the U.S. for the first time in three quarters.
Portfolio Recap
Three trades closed yesterday. One winner, two losers. That's the math of a systematic approach — you take the small losses as the cost of staying in the game for the larger wins.
Garmin delivered the headline: +30.3% over 50 days. The wearables cycle turned out to be more durable than the skeptics priced in, and the marine/aviation segments provided a floor the market kept ignoring. This is what a winner looks like when the system lets it run.
CME Group gave back -3.7% over 41 days. Exchange volumes normalized after the volatility spike earlier in the quarter, and the position hit its trailing stop. The risk overlay did its job — the loss was contained, capital preserved.
PPL Corp. was a quick -0.9% over 3 days. Utility exposure got caught in a rates backup mid-week. Three days, less than 1% — the definition of a controlled exit.
Net result across the three: +8.6% average return, 31-day average hold. The portfolio sits with 88 open positions across 257 qualified names. The win rate on this batch was 33%, but the profit factor tells the real story — the winner was 8x the size of the combined losses.
Signals on Radar
Two tickers registered signal activity in the last session: EWQ (the iShares MSCI France ETF) and MSFT. Direction isn't something we broadcast — but both are worth watching. European equities have been quietly outperforming on a risk-adjusted basis since Q2 earnings started, and France's weighting toward luxury and industrials makes EWQ a proxy for global capex sentiment. Microsoft, meanwhile, just handed the market a quarter that answers the "AI monetization" question with actual revenue, not slides.
What to Watch
MSFT (Microsoft) — Azure growth re-accelerated to 31% CC, commercial bookings +17%. The AI capex debate has shifted from "are they spending enough?" to "is the revenue showing up?" — and this quarter says yes. Watch for guidance on FY27 capex intensity and any commentary on GPU supply constraints easing. The stock's 200-day moving average has acted as resistance since April; a weekly close above it changes the technical conversation.
SBUX (Starbucks) — U.S. same-store sales turned positive (+1%) for the first time in three quarters. China comps still negative (-14%) but the rate of decline slowed. Narasimhan's "back to basics" operational fixes — mobile order sequencing, labor deployment, food innovation — are showing up in throughput data. Next catalyst: September 16 investor day. If they reaffirm the 3-year algorithm (mid-single-digit comps, high-single-digit EPS), the multiple rerating has room to run.
EWQ (iShares MSCI France ETF) — French equities have outperformed the Stoxx 600 by ~400 bps since April earnings. The index is heavy LVMH, Schneider, Airbus, TotalEnergies — names levered to global capex, luxury normalization, and energy transition. Political noise (Barnier government stability, budget negotiations) has been a persistent overhang; any clarity there could unlock the valuation discount vs. German peers.
XOM / CVX (Exxon, Chevron) — Not in our signal set today, but the Suez drone strike and Saudi maritime coalition announcement make energy infrastructure worth monitoring. Both reported last week — Exxon beat on upstream volumes, Chevron guided Permian growth above consensus. If geopolitical risk premium sustains, the integrated majors offer yield + optionality that pure-play E&Ps don't.
JPM / BAC (JPMorgan, Bank of America) — Bank of England's explicit "Iran war inflation" framing is a reminder that central banks are now war-gaming supply shocks. For U.S. banks, the question is net interest margin resilience if the Fed cuts but long-end yields stay sticky on fiscal/inflation concerns. Q2 earnings showed deposit costs peaking; Q3 will test whether loan growth can offset margin compression.
Past performance does not guarantee future results. Daloop is a research tool, not investment advice.
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