Latest CPI Report Is a Huge Relief for Investors, Says Santos of JPM Asset Management

• Soft CPI report is a 'huge relief' for investors, curbing Fed rate hike bets and potentially keeping the Fed on hold for the remainder of the year.
• AI infrastructure spending is driving 'extraordinary' earnings growth (100% for semiconductors, 40% for hardware/power), but also creating volatility and impacting software companies.
• Bank earnings are robust, with good capital markets performance, picking up loan growth, and low defaults/delinquencies.

The latest CPI report is a significant relief for investors, likely keeping the Fed on hold for the rest of the year. While AI infrastructure spending is boosting semiconductor and hardware earnings, it's squeezing software companies, leading to volatility. Bank earnings are strong, driven by capital markets and loan growth, but investors should remain selective in equities due to potential AI-driven market tantrums.