CNBC Daily Open: A flat PPI doesn't mean the U.S. is unscathed from tariffs

June's flat US Producer Price Index was noted, though the article highlighted that this excludes imports, suggesting tariff impacts on consumer prices (CPI) are still evolving. Corporate news included Couche-Tard's withdrawal of its $47 billion bid for Seven & i, causing a 9% stock drop, and TSMC's nearly 61% Q2 profit surge driven by robust AI chip demand despite tariff concerns. Separately, Ether significantly outperformed Bitcoin, while Meta and Google are aggressively expanding subsea cable infrastructure to meet rising bandwidth and AI workload demands.

Analysis

A divergence in U.S. inflation indicators highlights underlying economic complexities, as the flat June Producer Price Index (PPI), which excludes imports, contrasts with rising consumer prices in tariff-sensitive categories like apparel, which saw a 0.4% increase. This suggests that the full impact of trade tariffs on the consumer is still unfolding and remains a key variable to monitor. In corporate news, the M&A landscape saw a significant development with Alimentation Couche-Tard withdrawing its $47 billion bid for Seven & i Holdings, citing a "lack of good faith engagement" and triggering a 9% drop in Seven & i's shares. In the technology sector, the powerful demand for artificial intelligence continues to drive performance, evidenced by TSMC's nearly 61% surge in second-quarter profit, which surpassed estimates despite stated headwinds from potential U.S. tariffs. This AI-driven demand is also prompting strategic infrastructure investments, with Meta and Alphabet independently financing globe-spanning subsea cables to support future bandwidth and AI workloads. Within digital assets, Ether is demonstrating notable relative strength, having risen over 130% since its April low, more than doubling Bitcoin's 60% gain in the same period, and exhibiting a technical pattern that implies further upside.

Key Decisions for Investors

• Investors in Seven & i Holdings should reassess the company's standalone valuation now that the $47 billion acquisition premium from Couche-Tard is off the table.
• While TSMC's 61% profit surge demonstrates powerful short-term momentum from AI demand, portfolio managers should closely monitor US-Taiwan trade relations as the mentioned tariffs represent a significant geopolitical headwind to the firm's outlook.
• Given Ether's significant outperformance against Bitcoin and its recent technical breakout, investors may consider evaluating relative value trades or increasing exposure to ETH, while remaining cautious of the uncertain U.S. regulatory environment for digital assets.
• The substantial, independent investments by Meta and Alphabet in subsea cable infrastructure reinforce a long-term bullish thesis on their roles as primary beneficiaries of escalating AI workload and data demands.