The economy refuses to pick a lane and semis are cheap until they aren't · Daily Briefing

In 30 seconds: A wave of US economic data releases covering wage growth, jobless claims, home sales, consumer credit, mortgage applications, and sentiment surveys paints a mixed but broadly resilient picture of the economy. Semiconductors and AI-linked stocks face intense scrutiny over valuations and momentum reversals, with analysts debating whether the sector's growth is cyclical or secular and noting that top H1 performers are sharply underperforming in Q3. Lyn Alden and critics debate Bitcoin Core's v30 update, which relaxed OP_RETURN filters, with Alden arguing the change fails to stop spam or UTXO bloat while breaking some monetary use cases, amid heated community backlash. NY Fed President John Williams and other commentators debate whether persistent inflation—partly driven by AI demand—could force the Fed to raise interest rates, with markets watching FOMC communication closely.

Initial jobless claims came in at 215,000, down from 217,000 the prior week, beating expectations and holding steady against recent readings. The state-level picture was uneven: initial jobless claims – California jumped by 8,500, initial jobless claims – Missouri rose 5,900, and initial jobless claims – New York added 4,900, while initial jobless claims – New Jersey fell 3,000, initial jobless claims – Connecticut dropped 2,600, and initial jobless claims – Oregon declined 1,800. Continuing claims stood at 1.814 million. The labor market, in other words, is doing the thing where it refuses to deteriorate in a way that would give anyone a clean narrative. Wages are cooperating with that stubbornness. The Wage Growth Tracker registered 3.6% year over year in June, with job stayers earning 3.4% and job switchers pulling 4.1%. Housing is doing its own contradictory dance. June existing home sales fell 2.4% month over month to a 4.09 million annualized pace, yet the median home price hit $440,600, an all-time high, up 1.8% year over year. Mortgage applications slipped 2.2% for the week ended July 3, with the 30-year mortgage rate at 6.58%. Fewer buyers, higher prices. Classic. Consumers, meanwhile, pulled back on plastic. Outstanding consumer revolving debt dropped $5.3 billion in May, the largest monthly decline since November 2024. The used vehicle index rose 2.1% year over year, driven mostly by strong EV growth. Large speculators remain bearish on the Russell 2000, with net futures positioning firmly in negative territory; the index closed at 2,992.54, up 1.22% on the day. Investor sentiment for the week ending July 8 split 36.3% bullish versus 37.2% bearish. Nobody is sure what to feel, which feels about right.

The semiconductor trade is doing that thing where everyone stares at the same number and sees completely different futures. The sector trades at roughly 20x earnings, which looks cheap until you remember that peak earnings can make valuations misleadingly low. When you are at the top of the cycle, the "E" in P/E is doing a lot of flattering work. Memory is the new GPU story, and those multiples need to be 2-3x higher than current 7-8x forward P/E. The near-term technicals are messy. Renaissance Macro Research notes that 87% of semi names were oversold as of yesterday, which it calls one of the most sensitive triggers it tracks. The caveat, delivered in the same breath: not a bottom. The rotation underneath all of this is violent. S&P 500 stocks that gained 250%+ in the first half — average July drop: 18%. These are nearly all tech.

Her argument runs roughly like this. Doesn't stop UTXO bloat, but that is somewhat beside the point if the bloat already resolved itself. The sharpest critique on offer is directed not at any particular code change but at the framing. What is actually opposed is the marketing that it's some existential problem and a solution. Siding with a contentious soft fork that still lets through the type of content that its proponents are so worried about is a questionable position. Which is a polite way of saying: if your proposed consensus change still permits the thing you find intolerable, you have not solved your problem.

The question everyone pretends not to be asking is whether the next move on rates is up, not down. The framing tells you where the conversation has drifted. The risks are now on the inflation side. But the conditional matters more: If core PCE is higher than two-tenths a month in the second half of this year, that would be a sign of inflation a bit more persistent. What makes this cycle strange is the inflation driver the NY Fed President says he is most focused on: among the drivers of inflation in the US, he's most focused on demand driven by artificial intelligence. Election-year volatility is back, with rising oil prices, inflation concerns, and higher bond yields raising the odds of a Fed rate hike. Markets should also pay attention to how the Fed talks, not just what it decides. Historically, less forward-looking FOMC statements have been associated with larger yield moves and smaller declines in post-meeting implied volatility.