Market Snapshot

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📉 Banana Bits

• UBS now expects two Fed rate hikes in 2026 after August’s stronger-than-expected jobs report.

• The yen surged to a seven-month high Monday as investors increased bets on BOJ tightening.

• Asian chipmakers rallied Monday as Samsung and SK Hynix helped lift South Korea’s market.

• Fannie Mae and Freddie Mac expanded VantageScore access intensifying competition in mortgage credit scoring.

• Global bond markets face another inflation test with U.S. CPI and the ECB decision ahead.

Market News

Strong Jobs, Rising Oil

Wall Street ended Friday lower after a stronger-than-expected jobs report increased expectations of a Federal Reserve rate hike. The S&P 500 fell 0.38% to 7,718.60, the Dow lost 0.51%, and the Nasdaq declined 0.29%. The U.S. economy added 162,000 jobs in August, nearly three times the 56,000 consensus, while unemployment held at 4.1%. Treasury yields rose, and markets finished the day pricing roughly a 58% chance of a September hike.

U.S. stock and bond markets were closed on Monday for Labor Day, but trading continued overseas. Asian markets rallied Monday, with South Korea’s Kospi gaining 4.6% and Japan’s Nikkei rising 2.1%, while Europe’s STOXX 600 finished essentially flat. Those gains reversed Tuesday as higher oil prices and renewed geopolitical concerns weighed on sentiment. The Nikkei fell 1.70%, while the Kospi declined 0.58%. The reversal highlights how quickly energy and inflation concerns have returned to the forefront of global markets.

The pressure from energy markets continued Tuesday morning. Brent crude climbed to around $99 a barrel, while WTI traded near $94. Renewed threats to Gulf energy supplies have raised concerns that higher fuel costs could keep inflation elevated. Meanwhile, the yen strengthened to a seven-month high as investors increased bets on further Bank of Japan rate hikes, adding another source of volatility to global markets.

Investors now turn to Thursday’s U.S. producer-price report and Friday’s consumer-price report ahead of the Fed’s September 15-16 meeting. Recent market moves have reflected concerns over persistent inflation, with elevated oil prices and higher Treasury yields adding pressure to equities. The upcoming data will provide a clearer picture of August inflation and help shape expectations for the Fed’s next policy decision.

Peel Take: Friday’s jobs report reinforced the economy’s resilience, but it also reduced the case for near-term monetary easing. With oil approaching $100 and Treasury yields under pressure, inflation is once again the central risk for markets. This week’s data will be important in determining whether the Fed can remain on hold or needs to tighten policy further.

What's Ripe

Sandisk Corporation (SNDK) 11.90% 

• Sandisk rose 11.90% on Friday to $1,740.00, making it the S&P 500’s top performer as memory and AI-related hardware stocks rallied despite the broader market decline. Seagate, Western Digital, and Micron also gained approximately 6%.

• The move was part of a broader rebound in memory and storage stocks following recent sector weakness. Continued AI infrastructure spending and strong earnings across the industry have supported investor interest, although no single new Sandisk announcement fully explains Friday’s gain.

• Peel Take: Memory and storage stocks continued to attract investors even as higher Treasury yields pressured the broader market. The sector benefits from expanding data-center investment, but its performance remains sensitive to memory pricing, supply conditions, and the sustainability of future demand.

Micron Technology (MU) 6.10% 

• Micron gained 6.10% to close at $1,016.59, its highest closing level since mid-August. The stock participated in the broader memory rebound as investors continued to favor companies exposed to AI-driven demand for high-bandwidth memory.

• The company is expanding HBM capacity to meet demand, while the broader sector continues to benefit from tight supply conditions and large data-center investment programs. Micron’s next major company-specific catalyst is its fiscal fourth-quarter earnings report, scheduled for September 30.

• Peel Take: Micron’s strength reflects the market’s continued confidence in AI memory demand, but investors are also pricing in substantial future growth. The next earnings report will be important for assessing whether capacity expansion, pricing, and margins can sustain those expectations.

What's Rotten

Lululemon Athletica (LULU) 17.38%

• Lululemon fell 17.38% to $100.61 after reporting second-quarter revenue of $2.42 billion, down 4% year over year and below the roughly $2.46 billion expected by analysts. The company cut its annual outlook for the second time this year.

• Fiscal 2026 revenue guidance was reduced to $10.35B–$10.50B, from $11.0B–$11.15B, while EPS guidance fell to $9.48–$9.73 from $10.95–$11.15. Americas revenue declined 8%, highlighting ongoing difficulties with product assortment, competition, and customer demand. Incoming CEO Heidi O’Neill takes over today.

• Peel Take: Lululemon’s results suggest its challenges extend beyond a difficult consumer backdrop. Repeated guidance cuts and declining sales in its largest market have raised questions about product assortment and execution. Investors will be watching whether the new CEO can restore demand and stabilize growth, which will be important for rebuilding confidence in the company’s outlook.

Fair Isaac (FICO) 16.68%

• Fair Isaac dropped 16.68% to $932.26 after the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to allow all lenders to use VantageScore, expanding access to a rival credit-scoring model.

• The directive increases competitive pressure on FICO’s longstanding position in mortgage credit scoring. FHFA Director Bill Pulte also criticized pricing practices across the credit-reporting industry, contributing to declines in Equifax and TransUnion.

• Peel Take: FICO’s selloff reflects a direct challenge to a valuable part of its business model. Greater acceptance of competing scores could pressure pricing and market share, but the ultimate financial impact will depend on lender adoption and how the policy is implemented. The announcement creates a meaningful competitive risk; it does not establish that FICO’s existing business disappears overnight.

🧠 Technical Trip

Interview Q&A from JPMorgan

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• EverBank and WaFd agreed to a $3.9 billion reverse merger that will create a regional bank with roughly $75 billion in assets, with closing expected in early 2027.

• Nigeria approved Dangote Refinery’s approximately $1.6 billion IPO with 4.1 billion shares offered and the order book expected to open September 14.

• Intesa Sanpaolo outlined the benefits of its €35.7 billion Monte dei Paschi offer ahead of a September 10 shareholder vote, targeting full financial benefits by 2029.

Student Success Corner

Banana Brain Teaser

Previous

A company has $120 million of revenue, a 40% gross margin, and $18 million of operating expenses. What is the company’s operating income?

Answer: $30 million

Today

A company has $150 million of revenue and $90 million of cost of goods sold. If inventory increases by $5 million and accounts payable increases by $3 million, what is the net change in working capital from these two items?

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Happy Investing,
Chris, Elie, Mitchell, Fernanda, Nick, & Patrick

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