The US economy has entered a manufacturing boom phase that historically benefits stock markets, with the ISM Manufacturing PMI reaching 55.6 in July, significantly exceeding expectations of 54.0. According to the Institute for Supply Management, this marks the seventh consecutive month of expansion and represents the peak level in four years. The sustained manufacturing strength represents a sharp break from the pattern of 2022 to 2025, with the trend extending globally as Japan's manufacturing PMI climbed to 54.5, also marking seven consecutive months of expansion and the fastest factory output growth since 2014.
The AI boom is creating unprecedented demand for specialized manufacturing equipment and infrastructure, with companies like Coherent, Corning, and Lumentum experiencing significant growth from AI data center expansion. Coherent's fiscal Q3 2026 revenue rose 21% to $1.81 billion, with Data Centre and Communications revenue reaching approximately $1.36 billion, up from roughly $969 million a year earlier. Corning reported Q2 2026 Optical Communications revenue of $2.07 billion, up 32%, while Lumentum secured a $2 billion NVIDIA investment plus multibillion-dollar purchase commitments. The infrastructure requirements extend beyond chips to include power generation, cooling systems, networking equipment, and optical components that must operate for years or decades once installed.
Despite headline S&P 500 earnings-per-share growth of 45%, Goldman Sachs strategist Ioannis Blekos reveals that actual earnings growth is closer to 26% year-on-year when excluding mega-cap tech companies' appreciation of their own equity stakes. As reported by Goldman Sachs and Zerohedge, this accounting effect occurs when companies like Nvidia book paper gains on their own investment portfolios as profit. The analysis suggests that half of the S&P's record earnings growth is essentially Big Tech marking up its own stock portfolio, with the remaining 26% representing genuine operational earnings growth.
China imported more gold in June than what the world's ten biggest gold-mining countries combined can produce in a month, according to Bloomberg data. When spread across a full year, this pace would amount to roughly 60% of all the gold mined on Earth. The aggressive gold buying follows Beijing's pattern of moving aggressively to build reserves, similar to when China bought crude oil at record volumes right after the Iran conflict began, taking advantage of geopolitical uncertainty. The purchases raise questions about China's strategic intentions, whether moving away from the dollar, preparing for a more divided global financial system, or simply building broader reserves.
