Proflex Market Update - Wk 31​
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AI Capex Soars | Bitcoin's Stress Test | Fed Tone Critical

Markets made yet another new all-time highs last week, with the S&P 500 pushing above 6,395.
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Markets are bracing for a high-stakes week. Microsoft, Meta, Apple, and Amazon all report just as the Fed meets and key tariff deadlines hit—setting up a perfect storm for volatility and sharp sector moves.
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On the trade front, The US reached a deal with the EU—defaulting auto tariffs at 15%—which is being seen as a constructive outcome.
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Meanwhile, the US-China standoff has been extended for another 90 days, effectively making uncertainty the new normal.
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But with no escalation, the status quo offers near-term relief. For now, the trade narrative shifts from risk to clarity.

Earnings season kicks into high gear with Alphabet's impressive AI-driven Capex signals.
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Meanwhile, Bitcoin demonstrated remarkable resilience absorbing a $9 billion sell-off, challenging narratives of fragility.
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All eyes now turn to the Fed's forward guidance and crucial macro data (PCE Yields) that could redefine the market's trajectory.

Insights from Proflex Macro Discussions

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One of the most overlooked insights this week: the sheer scale of AI-related capital expenditures is just beginning.
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The Street might be fixated on current profit margins, but the true play is the multi-year infrastructure build-out.
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As Jensen Huang famously quipped, "We are going to see trillions in AI spend this cycle."
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This signals to be a fundamental shift. The Morgan Stanley Capex chart shared in our Whatsapp Investor Community suggests we're in the very early innings of this capital supercycle, akin to the internet boom's foundational build.

This means traditional valuation metrics are insufficient. Investors fixated on immediate returns risk missing the generational opportunity embedded in this trillions-dollar capital deployment.

Key Drivers This Week
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💻 AI & Earnings: The Capex Catalyst

Google's Q2 2025 earnings delivered a powerful message: the AI investment cycle is accelerating. Alphabet reported robust results, primarily driven by a significant increase in AI-related Capex, spending almost $15 billion on servers in Q2 alone.
This intensifies their AI push, even as cloud services remain in tight supply.

This week's earnings from tech giants will be a critical inflection point. Investors will closely watch:

• Microsoft (MSFT), Meta (META), Amazon (AMZN): For similar AI Capex trends and forward guidance on infrastructure spending. Any slowdown here would challenge the current AI narrative.
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• Apple (AAPL): For signals on how it's navigating tariffs & trade restrictions impacting supply chains, and whether resilient consumer demand can offset macro headwinds.

🧭 FOMC Watch: Powell's Tightrope Walk

The upcoming Federal Reserve meeting is set to be a quiet affair on the policy front, with no rate cut expected. The market's laser focus will instead be on Chair Powell's tone and his forward guidance for the rest of the year.
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This meeting carries special weight amidst political pressure. Donald Trump continues to publicly pressure Powell for rate cuts, adding a layer of political intrigue to monetary policy.
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Any perceived softening or hawkish stance could significantly impact bond yields and equity sentiment.
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💥 Key Macro Watch: PCE & Trade Uncertainty

Two crucial macro data points could dictate market moves this week:

• Thursday's PCE inflation data: This is the Fed's preferred inflation gauge. A higher-than-expected print would likely move bond yields higher and challenge easing narratives. A softer print could ignite fresh rate cut hopes.
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• US-China trade tensions: The extension of trade tensions by 90 more days confirms that uncertainty is now the baseline. This prolonged geopolitical friction will continue to be a drag on global trade, supply chains, and corporate earnings for multinational firms.
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💰 Bitcoin: The $9 Billion Stress Test

The cryptocurrency market just weathered a significant stress test that few expected it to pass with such resilience.
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​Galaxy Digital executed an unprecedented sell-off of 80,000 BTC in a single day, amounting to roughly $9 billion in value. Initial reports indicated a 1.7% to 6% drop, briefly pushing Bitcoin to a two-week low.

However, despite the massive liquidation event, Bitcoin price recovered quickly.
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This reflects strong demand absorption from institutional buyers and an underlying market strength that absorbed the pressure with surprising ease.

👉 Want to learn how to invest in BTC with hedged upside exposure and controlled risk?

🧭 Proflex Playbook – Liquidity is Here, Earnings Are Next

We are at a critical inflection point. The market has absorbed significant shocks this past week, yet the underlying currents of AI-driven Capex and Bitcoin's resilience suggest a powerful narrative remains intact.
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Our stance remains rooted in positioning for the long-term structural shifts while staying tactical amidst near-term volatility.

Our stance stays anchored in the data:

✅ Stay Long Hard Assets — Bitcoin, gold, and silver have front-run policy
✅ Trade Equities Tactically — Let earnings decide who earns the premium
✅ Hedge for Volatility — Tariffs + Fed + FX = high optionality zone
✅ Monitor Fed Tone Closely — Be prepared for bond market volatility driven by Powell's guidance, not policy action.
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If you're an All-Access or Managed Portfolio subscriber, our positioning has already shifted ahead of this moment—scaling up asymmetric hard asset plays while hedging for earnings volatility and geopolitical tail risks.

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Until next week,

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— The Proflex Team
​ Trusted Macro Insights. Calm Investing. Tactical Trades.

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