Hawkish Fed, really?! Jun '25 SEP (before 75bps of cuts) vs Jun '26, for 2026 👇 Real GDP growth: 1.6 -> 2.3 Core PCE: 2.4 -> 3.4 UE Rate: 4.5 -> 4.1 Median FFR: 3.6 -> 4.1 Nominal GDP growth: 4.0 -> 6.0 Real FFR: 1.2 -> 0.4 Long-run rate: 3.0 -> 3.2 Actual FFR: 4.4 -> 3.9

🦔US retail sales fell 0.6% in July, the biggest drop in over a year and well below the small gain economists expected. The control group, which strips out volatile categories and feeds into GDP calculations, fell 0.4% when forecasters had it rising 0.3%. Online sales dropped 2.2% after Amazon pulled Prime Day into June. Consumer sentiment fell again this month. Gas is at $4.08 a gallon, up 92 cents from a year ago. Credit card debt has passed a trillion dollars, up 60% in five years. My Take Yesterday I wrote about the two legs holding this economy up, a housing market losing steam and an AI buildout funded with debt. Today the consumer, which is about 70% of GDP, just showed up limping. The tax refunds that propped up spring spending are gone, gas costs a dollar more than last year, and credit card balances are at records with delinquencies climbing. People are tapped, and this data confirms it. I don't think one bad month is a recession call, and some of the drop is just Prime Day shifting into June. But stack this next to last week's weak jobs numbers, the housing freeze, and consumer sentiment falling again, and the picture gets harder to wave off. The economy has been running on the willingness of American households to keep spending through inflation and rising debt. At some point that willingness hits a wall, and I think we're closer to it than the stock market is pricing in. Hedgie🤗

US stocks rose (SPX +0.5%, NDX +0.6%) as oil eased (brent crude -2.6% to $105) ahead of today’s August CPI, seen as the key signal for a possible Fed hike next week (odds now 70%). Core CPI is expected +0.2% vs headline +0.4% on higher gasoline prices. 10 year treasury yields slipped to 4.94%. Oracle jumped 6.6% on a beat and raised guidance; most chip stocks were higher. Despite higher inflation risks, I am skeptical of a Fed rate hike next week, unless today’s Aug CPI comes in above expectations. Strong 2026 S&P earnings growth of +32% y/y is fueling the current bull market but an inverted equity risk premium and a more restrictive Fed could lead to short-term equity weakness.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ Going forward my daily pre-market summary will only be available to Subscribers. Thanks for your continued interest and support.

Premarket movers: Mag 7 stocks are mostly higher: Meta shares are up 0.6% after Citi opened a 90-day upside catalyst watch on the Facebook parent, seeing a positive roadmap ahead, especially on AI-related products (Alphabet +0.02%, Amazon +0.2%, Apple +0.1%, Microsoft -0.3%, Nvidia +0.4%, Tesla +0.1%) Cryptocurrency-linked stocks are soft a day after the Clarity Act’s failure in a procedural vote sent them tumbling. Alvotech (ALVO) rises 7% as Barclays double upgrades the biotech company to overweight ahead of the FDA’s upcoming decision. Intel (INTC) is up 3% after Reuters reported that SK Hynix is in talks with the chipmaker about a deal that ​would see it manufacture memory chips in the US for the first time. JB Hunt (JBHT) slides 11% after the trucking company flagged rising costs and issued a rare earnings warning at a Morgan Stanley conference. Rocket Pharmaceuticals (RCKT) rises 4% after Needham upgraded the drug developer to buy, citing the FDA’s alignment to continue its rare-disease trial. SimilarWeb Ltd. (SMWB) gains 4% after Needham upgraded the web services firm to buy, citing recent meetings with the company’s management team.

US consumers are pulling back on spending: US retail sales dropped -0.6% in July, the largest monthly decrease since May 2025, missing expectations of a +0.1% increase. The biggest drop came from non-store retailers, including Amazon, $AMZN, where sales fell -2.2%, the 2nd-largest decline since July 2021. At the same time, motor vehicle and parts dealer sales fell -1.8%. As a result, retail sales excluding auto fell -0.3%, below the expected +0.2% increase. Meanwhile, control-group sales, which feed into the GDP calculation, plunged -0.4%, the largest monthly decline since January 2025. The measure excludes food services, auto dealers, building materials stores, and gas stations. Americans are becoming more cautious with their spending.