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Market Snapshot

📉 Banana Bits

• The Fed held rates at 3.50-3.75% for a fifth straight meeting, but three policymakers dissented in favor of a hike, the first unified triple dissent since 2016 

• The Dow shed 1,153 points, its worst day since April 2025, while the Nasdaq officially fell into correction territory 

• Brent crude spiked 7.9% to $90.74 after Iran attempted a surprise attack on US forces and Trump threatened to hit back hard 

• SK Hynix grew profit 557% and still missed, nuking Korean chip stocks and dragging the KOSPI down nearly 6%

• After the bell, Microsoft beat with $4.81 EPS on $90B in revenue, while Meta grew revenue 28% but saw net income fall 14% as the AI bill comes due 

Market News

The Most Expensive "Nothing" in Recent Memory

The Fed held rates steady at 3.50-3.75% on Wednesday, and if you stopped reading there, you’d assume markets yawned. They did not. Three FOMC members, Cleveland's Beth Hammack, Minneapolis's Neel Kashkari, and Dallas's Lorie Logan, dissented in favor of a hike, the first time three policymakers have pulled in the same direction against the committee since September 2016. 

Chair Kevin Warsh, fielding questions at the presser, offered this gem: "I asked for a good family fight, and I got one." A cool quote but a terrible sedative. He also conceded that his decision to scrap forward guidance may itself be pushing Treasury yields higher. The bond market heard all of that and concluded the Fed might be falling behind on inflation, which is the one accusation a central bank cannot shrug off. 

The long end went and delivered the verdict. The 10-year yield jumped to roughly 4.70% and the 30-year jumped above 5.2%. When yields rip higher on a day you decline to hike, the market is gently informing you it no longer believes your inflation story. Rate-sensitive everything got repriced in about an hour. 

Equities took the hint and the stairs down. The Dow dropped 1,153.18 points to 51,594.14, its worst session since April 2025. The S&P 500 slid 1.5% to 7,316.15, and the Nasdaq fell 1.7% to 24,442.94, crossing into correction territory. The VIX popped 13% to nearly 21, waking up from a summer nap it clearly needed.

The Fed didn't even have the worst timing of the day. Iran launched an attempted surprise attack on US forces, ending a brief pause in hostilities, and Trump vowed to hit back hard. Brent surged 7.9% to $90.74 and WTI jumped 6.6% to $84.46. Oil at $90 is inflation fuel, which makes the hawks louder, which makes yields higher. You see the loop forming.

SK Hynix grew quarterly profit 557% and still missed estimates, torching chip stocks from Seoul to Santa Clara. After the close, Microsoft posted a clean beat with EPS of $4.81 on $90B in revenue, up 18%, while Meta grew revenue 28% to $60.8B but watched net income fall 14% as depreciation from its data center spree eats the income statement, with 2026 capex now guided to $130-145B.

Peel Take: The Fed managed to tighten without touching rates, which is either impressive or terrifying depending on your portfolio. Three dissents plus zero forward guidance means every CPI print between now and September is a ticking bomb, and markets price bombs at a discount. Meanwhile Meta just showed everyone what AI capex looks like once it hits the depreciation line, and the answer is: 28% revenue growth with shrinking profits.

What's Ripe

Garmin (GRMN) 16.23% 

• Q2 revenue hit $2.02B, up 11% and well above the $1.90B estimate, while adjusted EPS of $2.81 stomped the $2.25 consensus

• The fitness segment exploded 25% to $756.8M on demand for high-end wearables

• Management raised full-year guidance to $8.05B in revenue and $10.00 in EPS, making Garmin the top gainer in the S&P 500 on a day the index lost 1.5%

• Peel Take: On the day the market panicked about AI spending, the best performer in the S&P was a company selling $1,000 watches to guys training for their fourth marathon. Garmin doesn't need a hyperscaler narrative, it just needs people to keep monitoring their sleep scores. Cardio beat compute this week, and there's a lesson in there about boring businesses that print.

GE HealthCare (GEHC) 12.15% 

• Q2 adjusted EPS of $1.13 topped the $1.04 the Street wanted, with net income of $561M for the quarter

• Revenue of $5.3B also beat forecasts, and shares soared from the opening bell and never looked back

• Management guided full-year earnings to $4.80 to $5.00 per share, giving investors a rare thing on Wednesday: a forecast they actually believed

• Peel Take: While the AI complex was busy getting repriced, the company selling MRI machines just delivered a beat on both lines and a double-digit rip. Hospitals don't pause imaging budgets because the Fed had a spicy meeting, and that predictability suddenly commands a premium.

What's Rotten

Masco (MAS) 11.09%

• The Behr paint and Delta faucet parent missed on revenue, with sales falling 2.9% to $1.99B against a $2.08B consensus

• The headline EPS "beat" of $1.64 was flattered by roughly $95M in one-time tariff refunds, and traders treated the raised guidance accordingly

• All of it landed on the worst possible day, with the 30-year Treasury spiking above 5.2% and anything tied to housing getting marked down on sight

• Peel Take: The market can smell a low-quality beat from across the street. Strip out the tariff refund and you've got a home improvement company with shrinking sales staring down mortgage rates that just got uglier. Nobody pays a premium for a one-time government check, and revenue is the line that doesn't lie.

Micron (MU) 9.94%

• SK Hynix's miss lit the fuse, and Micron caught the full force of the memory sell-off as traders questioned whether AI memory demand is peaking

• The carnage spread across the complex, with Sandisk down 7.3%, KLA down 11%, and CoreWeave down 9.6%

• Chips led the Nasdaq into correction territory ahead of a gauntlet of remaining Big Tech earnings

• Peel Take: Let's be clear about how absurd the setup has become: SK Hynix grew profit 557% and got treated like it announced bankruptcy. That's not an earnings problem, that's an expectations problem, and Micron is the most convenient proxy for it on US exchanges. The AI memory story isn't over, but the era of beats being enough clearly is.

🧠 Technical Trip

Interview Q&A from Barclays

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🦈 Deal Dispatch

• Grant Thornton x CBIZ: Grant Thornton Advisors announced Wednesday it will acquire CBIZ in a $5 billion all-cash deal at $55.00 per share 

• IonQ x SkyWater: IonQ cleared its final regulatory hurdle on its $1.8B acquisition of SkyWater Technology 

• Jersey Mike's IPO: The sandwich chain priced Wednesday night and debuts on the NYSE today as JMKE 

• Reformation IPO: The Permira-backed, cult-favorite fashion brand also hits the NYSE today as REF, offering about 14.1 million shares at $15 to $17

• Tempus AI x Personalis: Tempus is scooping up genomics firm Personalis in a $1.5 billion deal 

Student Success Corner

Banana Brain Teaser

Previous

An investor buys a bond for $950. Over the next year, the bond pays $50 in interest and is then sold for $980. Approximately what was the investor’s total return for the year?

Answer: ~ 8.4%

Today

A company’s earnings per share increase by 20%, but its price-to-earnings multiple falls by 25%. Assuming nothing else changes, by approximately what percentage does the company’s share price change?

How Would You Rate Today's Peel?

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

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