Market Monitor News August 13 BMO - Airlines Rip Higher as CPI Keeps Cut Hopes Alive

If you felt a tailwind today, it wasn’t just the breeze, it was airline stocks taking off after a CPI report that keeps September rate‑cut hopes very much alive. Let me unpack what moved and why it matters for your positioning.

Market Overview — Records on the Back of “Good Enough” Inflation

Wall Street closed at fresh record highs on Tuesday, with the S&P 500 and Nasdaq both in the green as July headline CPI stayed at 2.7% y/y while core CPI ticked up to 3.1% y/y.

The “not worse than feared” print reinforced the consensus for a September Fed cut, which has been the market’s base case for weeks. Index moves were broad‑based and constructive, with cyclical leadership re‑emerging.

I’m mindful that core is sticky, but the path of least resistance remains lower rates into autumn unless growth cracks first.

Macro Pulse — CPI, the Fed, and a (Still) Dovish Bias

The BLS reported a modest 0.2% m/m rise in headline CPI and 0.3% m/m for core. Services, airfares included, did the heavy lifting, while goods remain tame and tariff pass‑through looks muted (for now).

Markets have translated this into higher odds of a policy cut next month; that’s supportive for duration‑sensitive equities and the long‑duration “quality growth” cohort. Keep an eye on shelter and medical services in upcoming prints; that’s where further disinflation needs to come from.

In FX and commodities, the euro firmed toward $1.168 post‑CPI as rate differentials nudged the dollar lower, while WTI crude hovered near $63, a level that continues to ease margin pressure for transport and select industrial users.

Sector Moves — Airlines Lead on Pricing Power

The standout was airlines after CPI showed airfares +4% m/m, the first solid uptick in months, signaling recovering pricing power into late summer.

United Airlines (UAL | +10.23%), American Airlines (AAL | +12.09%), and Delta Air Lines (DAL | +9.23%) all ripped higher as investors recalibrated revenue per available seat mile (RASM) assumptions. Lower oil adds extra octane. Near term, capacity discipline plus firmer fares is a nice combo; risks remain labor and any oil whiplash.

United even got a separate nod: Fitch upgraded the carrier earlier this year, and that improving credit backdrop doesn’t hurt sentiment on big up‑days like this.

Earnings & Single‑Stock Stories — Where the Volatility Lived

On Holding (ONON | +8.95%), the Swiss performance brand delivered a bullish Q2: +32% sales to CHF 749.2M, a hefty DTC surge, and raised full‑year guidance.

Management is unapologetically leaning into premium pricing, with U.S. tariff assumptions baked into the outlook. Execution remains stellar; shares responded accordingly.

Intel (INTC | +5.62%) — A diplomatic post‑meeting glow: after days of political drama, President Trump called his sit‑down with CEO Lip‑Bu Tan “very interesting,” and the stock caught a bid.

This is more optics than fundamentals, but it relieves near‑term headline risk around leadership uncertainty.

Mercury Systems (MRCY | +26.95%) — Defense electronics jumped after a strong beat (Q4 EPS $0.47; Rev ~$273M) and upbeat bookings/backlog commentary.

The setup - visibility plus operating discipline - fits the market’s appetite for quality defense exposure beyond prime contractors.

AST SpaceMobile (ASTS | +8.36%) — Space‑to‑cell momentum: management reaffirmed it’s fully funded to deploy 45–60 satellites by 2026, with intermittent U.S. service targeted by late 2025. High execution risk, yes, but the optionality is huge if timelines hold.

Fluence Energy (FLNC | −19.37%) — Energy‑storage rollout delays at new U.S. sites weighed on revenue expectations through 2026; when growth is priced in, timing slips bite hard.

Quick Tape Stats & Context

Inflation: Headline 2.7% y/y, Core 3.1% y/y (July). The mix supports a cut, but core’s stickiness says “gradual.”

FX & Oil: EUR/USD ~1.168 on softer USD; WTI ~$63, a quiet but material tailwind for transports/industrials.

Airfares: +4% m/m in July; that’s the spark behind today’s airline surge.

As always, I’m watching the balance between soft‑landing optimism and earnings revisions. Today favored the former.

Stay nimble, stay curious and don’t chase takeoffs without an exit plan.

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Kristoff - ChartMill

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