Silver banana goes to…

In this issue of the peel:

• 📝 The Big Beautiful Bill passed in the Senate but is having some difficulty getting through the House.

• 📉 After a crazy first half of the year, markets started 2H lower, driven by tech stocks as investors take profits.

• 💸 Big banks are returning cash to shareholders via dividend hikes and buybacks after passing the Fed’s stress test.

Market Snapshot

Student Spotlight

A+ Equity Research Report 📊

Looking for a stellar example of what makes an equity research report stand out?

One of our WSO Academy students, Colin Baird-Taylor, put together an impressive deep dive on MercadoLibre, covering valuation, catalysts, and key risks with the kind of insight that turns good pitches into great ones. Check out the report here.

Find out more about WSO Academy here!

Banana Bits

• Trump’s July 9 tariff deadline is quickly approaching. Will he or won’t he stick to it? 

• Goldman just named a new Chairman of their Investment Banking division.

• Looks like Jeff Bezos is in need of some cash after his $45 million wedding. The former Amazon CEO sold $737 million worth of stock.

• Every major Wall Street bank is flush with cash after passing the Fed’s stress test.

• After a 25% gain since April, the S&P falls to begin the year as investors take profits.

• What’s included in the new proposed tax bill that just passed in the Senate?y B

The Daily Poll

Previous Poll:

Can CoreWeave challenge the big tech cloud players?

For sure: 18.4% // Maybe: 42.1% // Tough ask: 29% // Not happening: 10.5%

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Macro Monkey Says

The House Holds the Cards

President Trump's "One Big Beautiful Bill Act" (personally prefer the acronym OBBBA), a $3.3 trillion tax and spending package, has cleared the Senate with a narrow 51–50 vote, thanks to Vice President JD Vance casting the tie-breaking vote. The bill aims to extend the 2017 tax cuts, increase defense spending, and introduce significant changes to social programs like Medicaid and SNAP. 

And just to throw in a little “F you” to his former bestie turned enemy, Elon Musk, the bill will scrap the $7,500 tax credit for EVs and pretty much anything that would potentially help Tesla. The bill passed the Senate, but the House remains a hurdle, with divisions within the Republican Party over fiscal concerns and social program cuts.

The Senate's approval is a big step. Key provisions include extending individual tax rates from the 2017 Tax Cuts and Jobs Act, raising the state and local tax (SALT) deduction cap to $40,000 for five years, and introducing new tax breaks for tips and overtime pay. 

Additionally, the bill proposes increased spending on defense and border security, while scaling back many of the Inflation Reduction Act's clean-energy tax credits. The Congressional Budget Office estimates the bill would add approximately $2.8 trillion to the national debt over the next decade.

Despite the Senate's approval, the bill faces significant challenges in the House. Moderate Republicans express concerns over the projected increase in the national debt, with some estimating an addition of up to $5.2 trillion by 2034. 

Proposed cuts to Medicaid and SNAP have raised alarms among lawmakers representing swing districts, fearing backlash from constituents. For instance, Rep. Chip Roy of Texas criticized the bill for front-loading tax cuts without corresponding immediate spending reductions, labeling it fiscally irresponsible.

The stock market has responded with cautious optimism, with stocks rising slightly on the news, reflecting investor hope for tax relief and increased defense spending. 

However, there is still investor apprehension about the bill's potential impact on the federal deficit and social programs. Analysts suggest that while the bill's passage could stimulate certain sectors, ongoing debates in the House may lead to market volatility in the coming weeks.

The Takeaway?

While the Senate's approval of the OBBBA is a significant legislative achievement for President Trump, the path to final enactment remains uncertain. 

The House's resistance, particularly from fiscal conservatives and moderates, highlights the complexities of passing a huge bill. As negotiations continue, both lawmakers and investors will be closely monitoring developments, with potential implications for the economy and the stock market.

Career Corner

Question

How to be memorable at a networking event?

Answer

Try to find something personal to connect on. Networking does not equal just pitching yourself hard and only seeming to care about yourself. Networking also means connecting with everyone; don’t ignore those you don’t find relevant. The industry evolves as you work in it over time, with a changing skill set mix, and people end up in multiple roles.

Head Mentor, WSO Academy

Check out WSO Academy!

What's Ripe

Snap Inc. (SNAP) 7.6%

• Despite investors rotating out of tech, Snap outperformed all major tech peers. The rally was driven by optimism surrounding Snap's upcoming product innovations like the launch of AI-powered smart glasses, "Specs," in 2026, and strategic partnerships aimed at enhancing advertising capabilities. Also, Wells Fargo raised its price target for Snap to $11.00, which implies about 17% upside for the stock.

MGM Resorts International (MGM) 7.3% 

• Casino stocks are in investors’ good graces at the moment, and it's all thanks to Macau. The tiny country off the coast of Hong Kong has been labeled with monikers such as the “Gambling Capital of Asia” and the “Monte Carlo of the East.” 

• The region saw a 19% YoY increase in gaming revenue, totaling $2.6 billion. Macau's resurgence in tourism arrivals and improved hotel occupancy rates is boosting MGM’s profit.

What's Rotten

Tesla (TSLA) 5.3%

• Tesla’s stock took a hit as the feud between Trump and Musk continues. President Trump’s tax bill, if passed, would create cuts to electric vehicle incentives, like the $7,500 tax write-off for EVs currently in place, along with scrapping literally anything that would help Tesla. 

• Trump is also threatening to revoke government contracts and even cheekily talked about potential deportation for Musk. 

Warner Bros. Discovery (WBD) 4.5%

• Warner Bros. Discovery shares took a hit after Advance/Newhouse sold a significant portion of its stake, around a billion dollars’ worth. Investors became a little uneasy since the sale reduced their ownership stake below 5%, sparking concerns about what this could mean for the company’s future. However, the company said it was all part of a bigger plan, so we’ll see how it plays out.

Thought Banana

Big Banks Take on the Fed

Every year, the Federal Reserve puts the largest U.S. banks through a series of hypothetical economic disasters to see how they would fare. Things like a potential 33% drop in home prices or a 10% unemployment spike to see if they can still keep the lights on and the ATMs running. 

These are known as the stress tests, officially called the Comprehensive Capital Analysis and Review (CCAR). They were introduced after the 2008 financial crisis to make sure banks don’t go belly-up during the next big downturn. 

Think of it like a fire drill for banks. The Fed wants to know if banks have enough capital to survive a financial storm without needing a taxpayer bailout. If a bank can’t handle the test, it might be told to hold onto more cash and not hand out dividends or buy back shares. This helps prevent risky behavior that could hurt the economy.

How did banks do this year? In 2025, all 22 major banks passed the Fed’s stress test. On average, they had a Common Equity Tier 1 (CET1) capital ratio of 11.6%, well above the 4.5% minimum. Basically, they could absorb big losses and still keep operating. 

Since they passed, banks are now allowed to reward investors by returning cash to them via dividends and stock buybacks. JPM, for example, is raising its dividend by 7% and buying back up to $50 billion in stock. Goldman is raising its dividend by 33% and launching a $20 billion buyback program. Other banks like Bank of America, Wells Fargo, and Citigroup are also increasing dividends. 

These moves are a sign that banks are healthy and regulators are easing up a bit. The Fed is even considering averaging stress test results over two years to make things more predictable. 

The Takeaway?

Banks are in a good place right now—strong enough to handle a financial storm and still share the wealth with investors. If you're holding bank stocks, this is a good sign. But remember, the economy can change fast, so it’s always smart to keep an eye on things.

The Big Question: Does surviving the Fed’s stress test mean banks are safe—or just skilled at jumping through regulatory hoops?

Banana Brain Teaser

Previous

Right triangle PQR is to be constructed in the xy-plane so that the right angle is at P and PR is parallel to the x-axis. The x and y coordinates of P, Q, and R are to be integers that satisfy the inequalities -4≤x≤5 and 6≤x≤16. How many different triangles with these properties could be constructed?

Answer: 9,900

Today

Seed mixture X is 40% ryegrass and 60% bluegrass by weight; seed mixture Y is 25% ryegrass and 75% fescue. If a mixture of X and Y contains 30% ryegrass, what % of the weight of the mixture is X?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

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

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