Morning Call Sheet: AI price wars collide with cooling inflation

• The AI market faces a 'race to the bottom' due to cheaper models (e.g., Grok 4.6) and potential Chinese competition, but significant spending continues to drive the sector.
• Analysts believe core inflation is cooling faster than official data suggests, potentially leading to a Fed pause in September and rate cuts by year-end or early next year.
• Geopolitical risks, including Iran, Russia-Ukraine, and North Korea, are acknowledged but generally not seen as escalating into full disruption, with economic pressure being the likely approach.

The discussion centers on the evolving AI market, highlighting potential price wars driven by cheaper models and Chinese competition, alongside a debate on cooling inflation and its implications for Fed policy. Guests generally anticipate disinflationary trends and potential Fed rate cuts, while downplaying immediate geopolitical risks, suggesting a cautiously optimistic market outlook.