CPI Will Make or Break It

Many of Wall Street’s largest firms are warning clients to be prepared for a stock pullback, with high valuations clashing with contradictory economic data.

August 05, 2025

Silver banana goes to…


🎯 In this issue:

  • Banana Bits: Finance headlines that actually matter

  • Market Summary: Monday Market Recap

  • What’s Ripe / Rotten: The tastiest and most disgusting stocks 

  • Technical Trip: Interview Q&A from PJT

  • Lesson from the Library: Investment Banking Interview course sneak peek

  • Deal Dispatch: M&A, IPOs, and other transactions 

Market Snapshot

📉 Banana Bits

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Market Recap 

Inflation’s Not Done Yet

Yesterday, investors bought the dip and the markets surged accordingly, off of hopes that the Fed would cut rates in their next FOMC meeting in mid-September. Betting (and pricing in) a fed cut could be a risky bet considering the already high inflation (about 2.7%). 

While the weak jobs report does increase the chances of a cut, whether or not the Fed cuts will probably be more dependent upon the CPI data coming out in about one week (as well as the following month), as the Fed aims to keep inflation low, and cutting rates could exacerbate inflation. 

The current issue is that inflation is considerably (while not extremely) above its target of 2%, and a premature cut could do significant economic damage.

Many large Wall Street firms are also warning of a short-term drop in equities within the financial markets, with Evercore, Deutsche Bank, and Morgan Stanley all warning of near-term drops. 

 

This prediction comes as a result of the rally from April’s lows to setting new highs within the S&P and the NASDAQ. 

For example, Mike Wilson, a strategist at Morgan Stanley, expects up to a 10% correction during Q3, while some Evercore analysts are even projecting a 15% correction. 

This prediction is a combination of weak jobs data, higher-than-expected inflation, and bullish investor behavior. 

What's Ripe

IDEXX Laboratories (IDXX) 27.5%  

  • The stock of the veterinary diagnostics company skyrocketed today after they beat earnings, with their EPS coming in at $3.63, above the estimated $3.30.

  • Idexx’s revenue also rose 11% YoY, coming in above analyst estimates, in addition to raised guidance for the year. 

American Eagle (AEO) 23.7%  

  • American Eagle’s stock soared today after Donald Trump praised American Eagle after finding out that Sydney Sweeney (who was recently featured in an American Eagle advertisement) is a registered Republican. 

  • The popular clothing brand’s stock is up over 34% in the last month. I guess this is what value investing means now. 

What's Rotten

TG Therapeutics Inc. (TGTX) 18.0% 

  • TG Therapeutics' stock price plunged today after they missed earnings with an expected EPS of $0.25, but an actual EPS of $0.17. 

  • The biopharmaceutical company also saw an increase in operating expenses, which was a significant driver in their lowered EPS. 

Krystal Biotech Inc. (KRYS) 14.0%  

  • Krystal’s stock got slammed yesterday after mixed sentiments after earnings. While the company beat estimates driven by strong performance in their gene therapy drug, there were investor concerns due to high valuation metrics. 

🧠 Technical Trip

Interview Q&A from PJT

📚 Lesson from the Library

Investment Banking Course Sneak Peek 

Check out a snippet from our Investment Banking interview Course

Banana Brain Teaser

Previous

During a certain season, a team won 80% of its first 100 games and 50% of its remaining games. If the team won 70% o its games for the entire season, what was the total number of games that the team played?

Answer: 150

Today

7 pieces of rope have an average length of 68cms and a median length of 84cms. If the length of he longest piece of rope is 14cms more than 4 times the length of the shortest piece of rope, what is the maximum possible length, in cms, of the longest piece of rope?

Send your guesses to [email protected]

❝

In investing, what is comfortable is rarely profitable.

Robert Arnott

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Happy Investing,
Chris, Vyom, Ankit, Colin, & Patrick