Silver banana goes to…

In this issue of the peel:

• 💥 Markets reel as the U.S. and Israel strike Iranian nuclear sites, pushing oil up and inflation concerns back on the table.

• 🚖 Tesla revs up robotaxi hype again, but regulators and real-world roadblocks may stall Musk’s autonomous ambitions.

• 🛒 Kroger’s stock jumps after beating earnings and luring in budget-conscious shoppers looking for grocery savings over dining out.

Market Snapshot

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Banana Bits

• Tesla’s robotaxi push raises fresh questions about regulation, tech readiness, and whether Elon’s vision matches road reality.

• Home Depot makes a $5B move for SRS Distribution, triggering a battle for dominance in building supplies.

• U.S. and EU inch closer to a trade détente, tackling “non-tariff irritants” like standards and regulatory alignment.

• ECB reveals a twist: A third of the EU’s U.S. trade surplus is actually driven by American firms in Europe.

• Oil jumps again after another tense week in the Middle East, with Brent topping $77 as risk premiums spike.

• Dollar strengthens amid global turmoil, reminding markets why the greenback remains king in times of conflict.

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Macro Monkey Says

Missiles Fly, Prices Follow

This weekend, markets were given a rude geopolitical wake-up call. Israel and the U.S. reportedly conducted strikes on multiple Iranian nuclear sites, prompting an immediate wave of market volatility and sending traders scrambling for safe havens. 

The Strait of Hormuz, which handles around 20% of global oil flows, is now once again the global economy’s soft underbelly. Iran responded with threats to block the strait, while oil prices soared 11% to $77 per barrel, the biggest jump in months. Meanwhile, gold hit an all-time high because when missiles fly, metal shines.

The ripple effect is more than just sticker shock at the gas pump. Economists warn that a $10–$15 spike in crude prices could add around 0.5 percentage points to headline inflation, potentially pushing central banks, particularly the Federal Reserve, into a “watch and wait” mode when it comes to rate cuts. 

Investors had been hoping for a September pivot; now, with inflationary pressures renewed, that timeline is looking murkier.

Bond yields remained relatively flat, with the 10-year U.S. Treasury holding near 4.37%, signaling caution without panic—for now. But expect continued volatility in energy stocks, shipping routes, and emerging market currencies, all of which are tethered to the fate of regional tensions.

As one strategist dryly put it: “This isn’t a typical oil supply story. It’s a global game of chess with a barrel of crude on every square.” With so much uncertainty, central bankers may now find themselves navigating a new oil-fueled obstacle course just as disinflation hopes were solidifying. 

The three nuclear sites targeted by the U.S.

The Takeaway?

The Israel–Iran flare-up has rekindled energy market fears, with oil surging 11% and gold hitting record highs. A $10–$15 oil spike could boost inflation by 0.5%, jeopardizing the Fed’s near-term rate cut plans. 

Treasury yields held steady around 4.4%, but volatility looms in energy, shipping, and FX markets. With the Strait of Hormuz in focus and inflation reignited, global markets are bracing for a geopolitical premium that could muddy monetary policy and risk appetite.

What's Ripe

Kroger Co (KR) 9.8% 

• Kroger’s stock surged nearly 10% on Friday following strong Q1 earnings, with adjusted EPS of $1.49 beating consensus, and same-store sales climbing 3.2%, outpacing estimates. 

• Investors cheered Kroger’s raised outlook for identical-store sales and its repositioning towards value-conscious shoppers who are trading down from restaurants to grocery stores. 

Rocket Lab USA Inc (RKLB) 7.9% 

• Rocket Lab’s shares jumped as analysts praised its consistent launch cadence and growing contract backlog. Rocket Lab has now secured vital government and commercial launch agreements, including a significant national security contract. 

• With scalable production and recurring mission wins, the stock rallied on strong sentiment around steady revenue growth and better margin potential. 

What's Rotten

Accenture Plc (ACN) 6.9%

• Accenture dropped nearly 7% after reporting a second consecutive quarterly decline in new bookings—a key metric tied to future revenue—despite beating revenue and earnings estimates and announcing an AI-focused restructuring. 

• Investors were spooked by macro headwinds like reduced U.S. government IT spending and a 6% drop in bookings, which overshadowed upbeat sales growth and delayed recovery signals. 

Astera Labs Inc (ALAB) 6.5%

• Astera Labs, a semiconductor player in data-center connectivity, slid 6.5% after a broader sector sell-off in tech hardware and a modest guidance miss. Despite showing strong demand trends for AI infrastructure, the company’s forecast lacked confirmation of sustained momentum, triggering a pullback. 

• Concerns around supply chains and macro uncertainty in China further weighed on the stock.

Thought Banana

Sweet Crude, Bitter Consequences?

China’s shadowy oil romance with Iran is facing its first real breakup scare. 

For the past two years, over 90% of Iran’s oil exports—about 1.7 million barrels per day—have been quietly shipped to China, mostly to independent refiners known as “teapots.” These teapots have been cashing in, buying Iranian crude at steep discounts—around $2 per barrel cheaper than global benchmarks—because Iranian oil is technically off-limits under U.S. sanctions.

But the party may be coming to an abrupt halt. With the latest Israel-Iran skirmishes escalating, analysts warn that any disruption to Kharg Island, the hub for Iran’s oil exports, could effectively block those flows. 

If that happens, teapot refineries will need to shop on the open market—and that means paying premium prices for Middle Eastern alternatives like Saudi or UAE oil. Spoiler: they’re not as generous with discounts.

What’s more, Iran’s reliance on renminbi payments for its oil exports—due to U.S. dollar sanctions—means Tehran is becoming economically tethered to Beijing. In other words, Iran gets Chinese cash, and in return, must spend most of it on Chinese goods. That might be good for trade flows, but bad for sovereignty—and it underscores just how entangled geopolitics and energy have become.

The Takeaway?

China’s independent refiners rely on cheap, sanctioned Iranian crude, buying over 90% of Iran’s 1.7mn barrels per day (bpd) exports at a discount of around $2. But rising Israel-Iran tensions threaten Iran’s oil hub at Kharg Island. 

Disruption would force China’s teapots into pricier, mainstream oil markets. With Tehran paid in renminbi and increasingly dependent on Chinese imports, geopolitical risk could unravel this delicate arrangement, hike refining costs, and realign regional oil flows, leaving China without its favorite discount banana.

The Big Question: Will rising tensions cut off China’s access to cheap Iranian oil, and spike global prices in the process?

Banana Brain Teaser

Previous

If [x] is the greatest integer less than or equal to x, what is the value of [-1.6] + [3.4] + [2.7]?

Answer: 3

Today

If n = (33)^ 43 + (43)^ 33, what is the units digit of n?

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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