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Weekly Newsletter
🏦 Fed Hikes Rates For The First Time Since 2023
📈 Analysts Raise Q3 EPS Estimates For The 2nd Quarter
🎙️ Key Points From FOMC Press Conference
📊 Earnings Tracker — Q2 Season Ends
💡 Key Takeaways From This Week’s Earnings
🇯🇵 Yen Carry Trade Unwinding Risks Escalate
QUOTE OF THE WEEK:
“Whether they do or they don't, if we are going to get regulated or not, I don't think it will matter. I think we have enough intelligence today that so many people, so many enterprises are still just trying to catch up and unlock all of the use cases that currently exist. So we have a long, long time for enterprises to adopt this before it matters that we've launched a new model, and another new model, and another one. So I don't think it matters today.” - Impact3 co-founder, Kyle Reidhead
KEY US ECONOMIC EVENTS NEXT WEEK:
MARKET CLOSE:
WEEKLY MARKET WRAP:
Good Afternoon. Overall positive week, driven by Wednesday's Fed hike. The FOMC raised rates 25 basis points to 3.75%-4.00% in a unanimous 12-0 vote, the first hike since July 2023. Nasdaq led at +0.72%.
The dot plot showed 16 of 18 officials expect at least one more hike this year, with the median rate held at 4.1% through the end of 2027 and no cuts penciled in. AI safety was the other big story — OpenAI disclosed six new incidents of agents going rogue on Tuesday and formalized a new disclosure process, pressing the debate on AI regulation forward. YTD, the Nasdaq is up 14.11%, the S&P 11.77%, and the Dow 7.53%.
Analysts Raised Q3 EPS Estimates for the Second Straight Quarter — Highly Unusual
Per FactSet, analysts increased their Q3 2026 bottom-up EPS estimate by 1.6% between June 30 and August 31 — the second straight quarter of upward revisions, breaking the typical pattern (analysts have cut estimates during the quarter by an average of 2.2% over the last five years). The CY 2026 estimate was raised even more sharply, up 6.1% to $361.38 from $340.49, with seven of eleven sectors seeing upgrades. Positive guidance is also running well above trend — 70 S&P 500 companies have issued positive Q3 EPS guidance vs. a 10-year average of 41 — suggesting companies are reinforcing the analyst upgrades.For the week:
CNN's Fear & Greed Index now stands at 29 (Fear) out of 100, down 4 points from last week. Details here
The top five trending stocks on Reddit are Micron, SPY, NVIDIA, SanDisk, and AMD. Read More
Liquidity:
Banking Reserves + ON RRP: Banking reserves remain at approximately $2.9 trillion. ON RRP balance remains immaterial.
Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) is $0.
Here is a summary of this week’s key economic releases:
Target Rate Probabilities for October 28th FOMC Meeting:
CURATED INSIGHTS & ANALYSIS:
Key Points from FOMC Press Conference:
The Fed raised rates 25 bps to 3¾–4%, with the Committee unanimously backing the move.
Three things changed since July: the economy strengthened, inflation didn't improve enough, and geopolitical risks shifted.
The Chair said broad financial conditions were difficult to describe as restrictive; the hike “removed a dose of accommodation.”
Inflation remains too high, with August PCE estimated near 3.6% and core PCE around 3.2%.
The Fed’s test is whether underlying inflation is moving clearly toward 2% and fast enough; it did not meet that test.
Labor conditions remain strong, with unemployment around 4.1% and the economy operating broadly near full employment.
The Fed is focused on preventing tariff, energy, and other supply shocks from broadening into persistent inflation.
The median SEP puts the policy rate at 4.1% at year-end and unchanged next year.
The Chair gave no guidance on further hikes, keeping the new data- and trend-focused approach.
Bottom line: stronger growth, sticky inflation, and limited labor-market risk gave the Fed room to tighten.
Earnings Tracker:
Q2 is now effectively closed, with 498 of 500 S&P 500 constituents reported. The median constituent grew GAAP net income 14.2% year over year with 69% of reporters improving, while S&P 500 Growth led on both measures at 27.1% and 84%. The Russell 3000's median of 17.3% again sat above the S&P's, with the weakest participation of the three at 64%—a stronger middle carried by fewer companies.
Key takeaways from this week’s earnings:
The AI buildout is now competing with homebuilders for labor
Lennar said labor availability has become an issue in about 20% of its divisions, and named two causes: immigration enforcement and data-center construction. It has offset the cost so far through scale, but said the pressure is building. The same trades that frame houses also build data halls, and Lennar said some of its partners have suddenly had no crews available. A homebuilder is now listing the AI buildout among its cost pressures.
The Fed raised rates, and housing felt it before the decision was announced
The Fed lifted its benchmark to 3.75–4.00% on Wednesday, its first increase since 2023. Lennar said the 30-year mortgage rate had already moved from about 6.4% to about 7% during its quarter, with the 10-year near 5%. Management said rate cuts are not in its business plan and that mortgage buydown costs are rising as rates climb. The relief housing was counting on has reversed.
Energy prices are now setting mortgage rates
Lennar named energy as the current driver of inflation and inflation as the driver of rates, tracing its own margin pressure back to the Iran conflict and oil above $100. Its buyers pay more at the pump and for electricity, which reduces their willingness to commit to a mortgage even when their desire to own is unchanged. Delta and RH made the same connection through fuel and freight in the past two months.
Resale homes are back in the market after years on the sidelines
Lennar said active listings nationally are above historic levels, and particularly high in Texas and Florida, its two largest markets. Resale sellers who were locked in by low mortgage rates are now cutting prices and competing directly for Lennar’s buyers. Management said the resale market had been on the sidelines for years because of the rate gap, and that the need to move has now outlasted it.
Value retail keeps taking traffic while affordable housing loses it
Dollarama’s transactions grew 3.7%, and it raised full-year comparable sales guidance. Lennar said almost 50% of visitors cannot immediately qualify for a mortgage and described the affordable end of housing as far more sensitive than the high end. Two companies serving the same lower-income household reported opposite results in the same week: one saw spending on small items rise, while the other couldn’t get them approved for large ones.
FRONT PAGES:
AI Slowdown Debate Splits Industry as Fallout Lands
Fallout from Dario Amodei's Sept 12 essay "We Must Pace the Frontier" dominated the AI-sector tape this week. Sam Altman told Fortune on Sept 13 that a 2026 OpenAI IPO would be "ill-advised" — formally ruling out this year's window. Elon Musk backed Amodei with three words ("Dario is right") on X. Demis Hassabis and Satya Nadella followed on Sept 14, with Nadella publishing Microsoft's MAI Code of Conduct and a separate superintelligence principle. Jack Dorsey published a counter-essay Sept 15, "Open the Frontier," rejecting incumbent-negotiated capability limits in favor of open weights. Monday Sept 14 saw AI chip stocks selling off on interpretation of the pact as a de-facto pause. Over 20 lawmakers called for tighter AI regulation within 72 hours of the essay.Nvidia in Talks to Anchor Anthropic IPO at ~$2T Valuation
Reuters reported Sept 13 that Nvidia is in discussions to serve as anchor investor in Anthropic's IPO with a commitment of up to $10B. Anthropic is targeting a raise of up to $100B at a valuation of approximately $2T — which would make it one of the largest IPOs in history. Anthropic's annualized revenue run rate has moved from ~$9B at end-2025 to more than $65B by mid-2026, with a public target of $200B by 2028. Anthropic already sat at $965B post the May 2026 round. Nvidia has now committed ~$70B in AI ecosystem equity investments (BofA's Vivek Arya tally), including $30B in OpenAI, up to $10B in Anthropic, and $5B in Safe Superintelligence. Circular financing critique intensifies as Nvidia becomes supplier, financier, and equity holder in the same customers.Yen Carry Trade Unwind Risk Escalates as BoJ Hits 30-Year Rate High
BoJ raised its policy rate to 0.75% on Sept 18 — the highest in 30 years — with Governor Ueda signaling further hikes remain data-dependent. This marks the first week in this cycle when the Fed and BoJ both raised rates. Morgan Stanley estimates roughly $500B in outstanding yen carry positions now at risk of unwinding, with global hedge funds having built record bearish yen positions into the decision. 10Y JGB yield hit 2.015%, highest since August 1999. USDJPY volatility remains elevated after the yen already jumped 2%+ on Sept 4 on an early unwind wave. Wellington's read of the 2024 unwind: Japanese hedge funds force-sold their most appreciated positions, which were US momentum stocks. The same pool has funded much of the AI-long positioning this cycle. Any disorderly move would hit US equities and Treasuries directly.CLARITY Act Fails Senate Cloture 49-50
The Senate rejected cloture on the CLARITY Act (H.R. 3633) on Tuesday, Sept. 15, by a 49-50 vote, short of the 60 needed to open floor debate. Kills the years-long push for comprehensive US crypto market-structure legislation for 2026 and likely the current Congress. Seven Democrats who had negotiated the text (Gillibrand, Warner, Booker, Warnock, Gallego, Alsobrooks, Cortez Masto) all voted no — sunk by ethics language on officials' crypto holdings targeting Trump's $1.4B in crypto income, not the market-structure framework itself. Regulators moved within 48 hours: SEC issued a five-year Innovation Exemption for onchain trading of tokenized stocks on Sept 17, and the CFTC issued a no-action position for software developers the same day. SEC's Regulation Crypto Assets proposal (comments due Oct 20) is now the live rulemaking track.
EARNINGS UPDATE:
Lennar. EPS $1.23 versus $1.28 and revenue $8.0B versus $8.3B, both misses. Deliveries of 20,840 homes hit guidance, but the average price fell to $372,000 and gross margin was 15.8%. Management said the 30-year mortgage rate is back near 7% and that almost half of visitors cannot immediately qualify. Shares fell about 5% over the two days after the report.
Dollarama. EPS C$1.29 versus C$1.25, up 11%; sales C$2.03B, up 17.6% and in line. Canadian comparable sales grew 5.4%, with transactions up 3.7% and basket size up 1.7%. Full-year comparable sales guidance was raised to 4.0–4.5% from 3.0–4.0%. Shares rose about 5%. Value retail continues to gain traffic on both sides of the border.
EARNINGS PREVIEW:
Date | Symbol | Name | Time |
22-Sep | AZO | AutoZone Inc | Before Open |
23-Sep | CTAS | Cintas Corporation | Before Open |
23-Sep | PAYX | Paychex Inc | Before Open |
23-Sep | GIS | General Mills Inc | Before Open |
24-Sep | DRI | Darden Restaurants | Before Open |
24-Sep | COST | Costco Wholesale | After Close |
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This newsletter's content is for informational and educational purposes only and should not be considered trading or investment recommendations. All the opinions in this newsletter are personal and do not belong to any organization.
