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Weekly Newsletter
📊 Q2 Earnings Preview
🤖 Broadcom's Anthropic Opportunity
📈 Q2 Records Best Quarter Since 2020
💡 Key Takeaways From This Week's Earnings
🏦 Weak Jobs Report Lowers Rate Hike Odds
QUOTE OF THE WEEK:
“The demand for AI consumption is still infinite. We do not have enough compute in the world to satisfy the demands of both the consumer side and the enterprise side. So demand is not a constraint. The question becomes: how quickly can we adopt the demand? I think the conversation will shift over the next 6 to 12 months on not how smart the model is, how intelligent the model is, but how quickly can we deploy the models? How can we take context, memory, and tribal knowledge and embed that in the enterprise context so we can all see the value from the leaps and bounds that models are showing.” - Nikesh Arora, CEO, Palo Alto Networks
KEY US ECONOMIC EVENTS NEXT WEEK:
MARKET CLOSE:
WEEKLY MARKET WRAP:
Good Afternoon. Positive week for major indices except Dow. It was the first week of the earnings season kick-off, and almost all major companies reported beating expectations. ISM services PMI was the only major macro data released this week, and it was almost in line with expectations, coming in at 54, indicating growth in the services sector. Next week, many major banks will report earnings, providing insights into how US consumers are doing.
Below are the key things to note this week:Apple - Broadcom Partnership:
Last week, I talked about Broadcom’s Anthropic advantage. This week, Apple and Broadcom extended their custom-chip partnership through 2031 in a deal Bloomberg values at over $30B, covering ASIC silicon across multiple product generations plus co-development of Apple's Baltra AI server chip — a scaled-up M5 Ultra due as early as 2027. The kicker: Broadcom is now the shared custom-silicon vendor for both Apple's Baltra and OpenAI's Jalapeño — right as the two are litigating each other.
Circle Banking License:Circle won the banking license this week, which is great news for the company. Now, Circle will be able to park its cash with the Fed rather than private banks. This avoids the issue faced during the SVB collapse, when it had $ 3 billion+ deposited with SVB.
One of the flaws in the GENIUS Act, as I discussed in my blog earlier, is that it allows stablecoin issuers to deposit funds with private banks and treat those deposits as HQLA, which is risky. With Circle able to deposit with the Fed, it's safer. Also, this will subject it to all banking regulations and oversight. Overall, a good development for the stablecoin industry.
For the week:
CNN's Fear & Greed Index now stands at 49 (Neutral) out of 100, up 17 points from last week. Details here
The top five trending stocks on Reddit are SPY, Micron, SpaceX, Microsoft, and NVIDIA. Read More
Liquidity:
Banking Reserves + ON RRP: Banking reserves remain at approximately $3.1 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 July 29th FOMC Meeting:
CURATED INSIGHTS & ANALYSIS:
Key points from the FOMC meeting:
The Fed held rates steady at 3½–3¾% with a unanimous 12–0 vote.
The Committee removed the prior easing-bias language and replaced it with a shorter, cleaner statement.
Inflation moved higher, with April PCE at 3.8% and May PCE estimated at 4.1%; core PCE rose to 3.3% in April and an estimated 3.4% in May.
Price pressures were attributed to tariffs, energy shocks, Strait of Hormuz disruptions, and AI-related demand.
Inflation pressures became more broad-based, with increases across transportation, airfares, petrochemicals, agricultural inputs, and technology-linked categories.
Longer-term inflation expectations remained anchored, but participants stressed the need to protect that anchor after five years of above-target inflation.
Labor market conditions remained stable, with unemployment at 4.3% and payroll gains roughly matching labor force growth.
The labor market is no longer the main source of inflation pressure; wage growth remained consistent with inflation moving back toward 2%.
Real GDP continued to expand at a solid pace, while PDFP picked up and grew faster than GDP, signaling strong underlying demand.
AI remained a major growth driver, supporting data centers, high-tech equipment, software, corporate earnings, equity prices, and credit issuance.
Participants noted that AI is boosting demand now, while the productivity and supply-side benefits may take longer to materialize.
Financial conditions stayed supportive, with the S&P 500 up nearly 6%, tighter credit spreads, and rising Treasury yields.
Private credit remained under pressure, with slower BDC inflows and accelerating redemption requests.
Money markets remained stable; reserves stayed ample, and ON RRP usage helped firm the floor when repo rates softened.
A few participants saw a case for raising rates, but all supported holding steady at this meeting.
Policy debate is now two-sided: if inflation fades, rates can stay flat or eventually fall; if inflation persists, policy firming may be needed.
The main message is a regime shift: less guidance, stronger language on inflation credibility, and no preset path for rates.
Key takeaways from this week’s earnings:
The oil shock has moved into the earnings
Delta paid a record $4.4 billion for fuel, nearly $2 billion more than a year ago, and net income fell 25% despite record revenue. PepsiCo pointed to high pump prices keeping shoppers out of stores. The Hormuz spike is no longer a macro headline. It is now an operating line.
A beat is still not enough
Levi beat and raised guidance for the second straight quarter. Delta set a revenue record and raised its dividend. AZZ set a sales record and raised its outlook. All three fell. Strong results are becoming the starting point, not the catalyst.
Consumer demand is holding. American demand is not.
Levi’s Asia revenue rose 12%. PriceSmart’s comparable sales rose 10.7%. PepsiCo’s international business offset softer North American results. That divergence suggests the pressure is domestic, tied to gas prices and tighter budgets, rather than a broad consumer slowdown.
Delta’s premium mix is the number to watch
Premium seat revenue exceeded main cabin revenue for the first time, at $6.92 billion. That points to a widening split between a high-end consumer still paying up and a middle tier trading down.
The banks are the real test
This week measured demand. Next week measures credit. The large banks report amid a hawkish Fed and elevated oil prices, and their provisions and lending commentary will say more about the consumer.
FRONT PAGES:
SK Hynix Prices Largest Foreign US IPO Ever: SK Hynix raised $26.5B on Nasdaq Friday, pricing 17.79M ADRs at $149 and opening at $170 — the biggest first-time listing by a foreign company in US history. CEO Kwak Noh-Jung said memory shortages persist beyond 2030. Micron rose 4.5% Thursday on the read-through; Meta closed the week +15%, the top Mag7 name. Read
Circle Wins OCC Trust Bank Charter: Circle received full OCC approval Friday to operate First National Digital Currency Bank, branded Circle National Trust. The charter lets Circle directly custody digital assets and eventually manage USDC's $73B reserves. Circle is the second crypto firm to earn full approval after BitGo; Ripple, Paxos, and Fidelity still hold conditional approvals. Lands 8 days before the GENIUS Act's July 18 rulemaking deadline. Read
Trump Calls Iran Ceasefire "Over": Trump declared the ceasefire ended from the NATO summit on Wednesday and issued fresh threats to Tehran. Iran rejected new talks; Hormuz shipping slowed on renewed drone attacks. WTI ended the week near $73, up ~5%. Trump softened Friday, saying "talks will continue," which capped the crude spike. Read
Micron Raises US Investment to $250B: Micron committed $250B to US manufacturing through 2035, up from $200B in June and $170B originally, and added a $3B, 10-year silicon-wafer supply deal with GlobalWafers in Texas. Separately, Meta will begin producing its own AI chip in September, targeting 14 gigawatts of compute by 2027. Read
Long Bond Yields Push Higher; BofA Cuts Gold Forecast: 10Y yield rose 9 bps on the week to 4.568%, highest since May 22; 30Y also +9 bps to 5.071%. BofA cut its 2026 average gold forecast Wednesday by 14% to $4,360, keeping the $6,000 long-term target. Gold ended the week at $4,113. Read
EARNINGS UPDATE:
PepsiCo. Core EPS $2.20 versus $2.21, a penny short; revenue $24.18B, up 6.4% and a beat. Organic revenue rose 2.4%, with global food volume up 3% and beverages up 2%. But North America was softer than management expected, and the company now sees a more gradual recovery there. Full-year guidance was affirmed. Shares fell about 3%. International is carrying this company. The U.S. snack business still is not fixed.
Delta Air Lines. Adjusted EPS $1.56 versus $1.48; adjusted revenue a record $17.7B, up 14% and a beat. Premium seat revenue topped main cabin for the first time ever, at $6.92B. Delta raised its dividend 15% and reaffirmed full-year EPS of $6.50–7.50. But fuel expense hit a record $4.4B, nearly $2B more than last year, and net income fell 25%. Shares slipped about 2%. Demand is excellent. Fuel is eating the margin.
Levi Strauss. Adjusted EPS $0.28 versus $0.24, up 27%; revenue $1.56B, up 8%, and a beat. Gross margin expanded to 62.7%, direct-to-consumer rose 8%, women’s grew 11%, and Asia was up 12%. Levi raised full-year revenue and EPS guidance for a second straight quarter and lifted the dividend 14%. Shares still fell about 2%. Seven straight beats, and the market shrugged.
PriceSmart. Diluted EPS $1.28 versus roughly $1.21, up from $1.14; total revenue $1.48B, up 12.5% and a beat. Comparable merchandise sales rose 10.7%, and the company announced its first club in Chile, plus an eleventh in Costa Rica. Shares dipped on the print and then rallied about 4% on Friday. Latin American warehouse retail keeps quietly compounding.
AZZ. Adjusted EPS $1.85 versus $1.80, up 3.9%; sales a record $448.5M, up 6.3%, and a beat. Metal Coatings led with 12.3% growth on infrastructure demand; adjusted EBITDA margin was 22.2%. AZZ raised fiscal 2027 guidance and lifted the dividend 20%. Shares dipped, then jumped about 4% Friday. Boring industrials with real pricing power still work.
EARNINGS PREVIEW:
Date | Symbol | Name | Time |
14-Jul | JPM | JPMorgan Chase | Before Open |
14-Jul | BAC | Bank of America | Before Open |
14-Jul | GS | Goldman Sachs | Before Open |
14-Jul | WFC | Wells Fargo & Co | Before Open |
14-Jul | C | Citigroup Inc | Before Open |
15-Jul | ASML | ASML Holding NV | Before Open |
15-Jul | JNJ | Johnson & Johnson | Before Open |
15-Jul | MS | Morgan Stanley | Before Open |
16-Jul | TSM | Taiwan Semiconductor | Before Open |
16-Jul | UNH | UnitedHealth Group | Before Open |
16-Jul | GE | GE Aerospace | Before Open |
16-Jul | NFLX | Netflix Inc | 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.
