General Market News

The Pentagon is in discussions to provide approximately $5 billion in lending to AI cloud-computing startup Fluidstack, according to a Wall Street Journal report. The potential loan aims to strengthen the U.S. data-center supply chain amid growing demand for AI infrastructure. Reuters has not independently verified the report.

• The proposed $5 billion loan would represent a significant government investment in private AI infrastructure
• The deal targets bolstering domestic data-center capacity, a strategic priority as AI computing demands surge
• Fluidstack is an AI cloud-computing startup that would receive Pentagon backing to expand operations

US stocks declined sharply on Thursday, with the Dow falling 400 points as oil prices surged above $100 per barrel due to US-Iran war disruptions. Rising energy costs fueled inflation concerns and increased expectations for a Federal Reserve rate hike next week, pushing Treasury yields to their highest level since October 2023.

• WTI crude closed at $102.95, up 7.1%, and has gained 52.9% since the Iran war began in late February and 78.47% year-to-date
• The 10-year Treasury yield climbed above 4.945%, its highest since October 2023, while Fed funds futures priced in a 74% probability of a rate increase at next week's meeting
• High-beta chip stocks fell sharply with Nvidia and Micron both dropping 5%, while the S&P 500 now trades nearly 3% below its August 13 record high

The S&P 500 Equal Weight Index has outperformed the traditional market-cap-weighted S&P 500 in 2024, up 15.4% year-to-date, as investors diversify beyond megacap tech stocks. Stronger-than-expected economic and earnings growth is driving opportunities across multiple sectors including energy, financial services, and healthcare, while AI adoption continues expanding beyond its initial tech-focused winners.

• Equal-weighted S&P 500 is outpacing the cap-weighted index as earnings growth (not multiple expansion) drives market gains despite high interest rates
• AI technology cycle is broadening beyond hyperscalers and chipmakers to businesses across industries using AI for productivity gains
• Main market risks identified are persistent inflation and restrictively high long-term bond yields that could overwhelm corporate earnings strength

The Bureau of Labor Statistics will release the August consumer price index report Friday morning, the final inflation data before the Federal Reserve's interest rate decision next week. Economists expect headline inflation to rise 0.4% monthly (3.4% annually) while core inflation is forecast at 0.2% monthly (2.4% annually). The report could determine whether the Fed holds rates steady or implements a quarter-point hike.

• Markets are pricing in over 73% probability of a quarter-point rate hike at the September FOMC meeting, according to CME Group futures prices
• The CPI data is crucial because a majority of the Fed's preferred PCE inflation gauge components are derived from CPI measurements
• September's surge in energy prices is expected to tip the balance toward a rate hike, though the final CPI report could still influence the decision

The Iran war has cost American households an estimated $860 more in energy expenses this year, totaling over $115 billion in additional costs across the U.S., according to Moody's Analytics chief economist Mark Zandi. The conflict has disrupted oil flows through the Strait of Hormuz, causing sustained price increases for gasoline, diesel, and jet fuel that disproportionately impact lower- and middle-income families.

• Total additional energy costs reached approximately $115 billion across U.S. households, averaging $860 per household due to elevated prices for gasoline (over $4/gallon), diesel, and jet fuel
• Lower- and middle-income Americans are struggling the most as their after-inflation incomes have stalled or declined, while wealthier households with stock portfolios and low-rate mortgages can better absorb the costs
• Oil prices are unlikely to return to pre-war levels in the foreseeable future due to ongoing supply constraints at the Strait of Hormuz, insurance premiums, and the time needed to replenish strategic petroleum reserves

Elon Musk's Boring Co. raised $3 billion at a $23 billion valuation, with funding led by the United Arab Emirates where it plans to build over 93 miles of tunnels. Despite announcing around a dozen city projects since its 2017 creation, the company's only operational loop remains in Las Vegas, and several proposed projects have been abandoned or faced community opposition.

• The UAE-led funding round will support Boring Co.'s plan to build over 150 kilometers of tunnels in the region, including the Dubai Loop announced in February 2024
• The company has faced environmental and safety concerns, accumulating hundreds of violations in Las Vegas and additional workplace safety issues in Texas operations
• Multiple projects have failed to materialize, including abandoned efforts in Los Angeles, Chicago, and Washington D.C., while Nashville's Music City Loop sparked controversy with a survey showing most residents opposed the project

Global bond markets sold off sharply as oil prices surged above $107 per barrel due to escalating Middle East tensions, raising inflation concerns and borrowing costs across major economies. UK 10-year bond yields hit 5.37%, the highest since 2007, while US 10-year yields reached 4.92%. The crisis comes amid concerns about government debt levels and puts pressure on central banks to maintain higher interest rates for longer.

• Oil prices jumped 6% above $107 amid fears that conflict along Yemen's Red Sea coast could disrupt Saudi crude exports, with unleaded petrol in the UK already up 6p per litre since early September
• UK Chancellor John Healey faces reduced fiscal headroom with just seven weeks until his October 28 budget, as higher borrowing costs will increase debt servicing and investment project expenses
• ECB President Christine Lagarde warned inflation will remain 'well above target for an extended period' due to Middle East conflict, while the US Treasury's $6bn bond buyback failed to calm markets

A key volatility metric tracking the spread between big tech stocks and the broader market is reversing from record highs reached this summer, signaling that bond market dynamics and macroeconomic factors may now be overtaking AI optimism as the primary driver of U.S. stocks. The VIX has jumped to its highest level since April relative to VIXEQ as the 10-year Treasury yield approaches 5 percent.

• The spread between tech volatility (VIXEQ) and broader market volatility (VIX) hit record highs this summer but is now reversing as traders sell broad equity exposure
• The 10-year Treasury yield is approaching a three-year high of 5 percent, with crude oil back above $100 and energy stocks up 43 percent year-to-date, now the best-performing sector
• Implied volatility in AI-related stocks like Micron and Palantir has collapsed significantly (from 112 to 58 and 122 to 56 respectively) as earnings season ends and bullish options flows slow

The Federal Reserve's September interest rate decision is scheduled for Wednesday, September 16, 2026, at 2 p.m. ET, marking the key event for financial markets in the week ahead. Additional economic data including retail sales, housing reports, and jobless claims will also be released throughout the week. The FOMC meeting begins Tuesday, September 15, with projections accompanying the rate decision.

• The Fed's interest rate decision and economic projections will be announced Wednesday, September 16 at 2 p.m. ET, following a meeting that begins Tuesday
• Key economic data releases include retail sales and import prices on Wednesday, weekly jobless claims and housing starts on Thursday, and industrial production on Friday
• Additional reports scheduled include the Empire State Manufacturing survey, NAHB housing market index, Philadelphia Fed Business Outlook survey, and pending home sales

Better Markets, a nonprofit advocating for Wall Street reforms, sued the Federal Reserve and Vice Chair Michelle Bowman on September 10, alleging they violated federal rulemaking procedures during the overhaul of bank capital regulations. The lawsuit claims Bowman held improper private communications with Wall Street banks during an open public consultation, breaching the Administrative Procedure Act which prohibits agency officials from discussing live rulemakings with interested parties.

• The suit alleges Bowman privately told Wall Street leaders to support revised capital plans and stop seeking additional carve-outs, constituting unauthorized ex parte communications during an active rulemaking process
• Litigation against the Fed over rulemakings is extremely rare; the last similar cases were in 2024 when banks sued over stress tests, marking the first such suits in recent memory
• The lawsuit represents pushback against the Trump administration's broader effort to scale back financial regulatory safeguards that reform advocates consider essential for system stability

The average 30-year fixed mortgage rate climbed to 7.07% on Thursday, marking the first time it exceeded 7% since May 2025. Rates have been rising since the start of the Iran war, driven by surging oil prices and increasing 10-year Treasury yields, significantly impacting homebuyer affordability.

• Mortgage rates increased from a low of 5.99% just before the Iran war started, representing a rise of over 100 basis points in recent months
• A buyer purchasing a $430,000 home with 20% down now faces monthly payments $244 higher than at the end of February due to the rate increase
• Rising rates coincide with homebuilder stocks moving lower as sales fall and home prices rise despite higher inventory supply

Fanatics launched its unified Sports & Casino app ahead of the 2024 NFL season, combining sportsbook, casino, and prediction markets into a single platform. The app features FanCash loyalty currency redeemable across Fanatics' ecosystem and geo-aware functionality that tailors experiences based on user location. Fanatics has become the third-largest and fastest-growing sportsbook in the U.S., driven by innovative customer protections like 'Fair Play' injury insurance.

• Over 50% of new customers cite FanCash as a primary reason for staying with Fanatics, with the loyalty currency redeemable in 20 different ways including game tickets, betting, and merchandise
• Fanatics introduced 'Fair Play Max' protections including First Half and Second Half Injury Protection at no charge, plus Forward Progress Protection for rushing prop bets affected by late-game kneels
• The company became the first betting platform to ban credit cards, offer universal self-exclusion across products, and join the ProhiBet Bad Actor Program to combat athlete harassment

Cooper Companies reported fiscal Q3 2026 adjusted EPS of $3.50, beating estimates by 1.2%, but revenues of $1.066 billion missed expectations by 3.0% due to U.S. channel inventory reductions. The stock declined, weighed by CooperVision's flat revenue growth and ongoing destocking pressures, though CooperSurgical grew 2% with strength in fertility products and services.

• CooperVision revenues were flat year-over-year at $717 million, pressured by proactive U.S. channel inventory cuts, though MiSight myopia control lenses delivered 20% organic growth and MyDay products posted double-digit gains
• CooperSurgical revenues rose 2% to $349.2 million (3% organic growth), driven by fertility segment growth of 5% organically, supported by genomics, new clinic wins, and adoption of the Witness laboratory platform
• Q4 fiscal 2026 guidance calls for revenues of $1.057-$1.080 billion (0-2% organic growth) with adjusted EPS of $1.05-$1.09, as U.S. inventory reductions are expected to continue before normalizing in fiscal 2027

ASE Technology is experiencing strong demand for its leading-edge advanced packaging (LEAP) services driven by AI growth, with LEAP revenues tracking above its $3.5 billion 2026 target and management aiming to double revenues in 2027. The company is adding $2 billion in 2026 CapEx to expand capacity across 13 greenfield and 8 brownfield projects. This growth has already lifted ATM gross margin to 27.3% in Q2 2026, with management targeting above 30% by Q4 2026.

• ATM revenues rose 36% year-over-year to TWD 126.1 billion in Q2 2026, with gross margin expanding to 27.3% from 21.9% a year earlier due to higher LEAP volumes
• ASE is adding $2 billion in 2026 CapEx and managing 21 total facility projects (13 greenfield, 8 brownfield) to provide capacity through 2028 and into 2029
• The Zacks Consensus Estimate indicates revenue growth of 27.9% in 2026 and 22.5% in 2027, though execution risks remain around equipment installation and project timelines
• ASE trades at a forward P/E of 23.31X versus the industry average of 13.95X and faces competition from Amkor Technology and Intel in advanced packaging

Market odds of a Federal Reserve rate hike jumped to 61% on Polymarket after August Producer Price Index data showed wholesale inflation rising 5.4% year-over-year, exceeding the 5.3% estimate. The hotter-than-expected inflation data has shifted trader expectations ahead of the Fed's September 16 meeting under Chair Kevin Warsh, reversing what was previously seen as a likely hold on rates.

• August PPI rose 5.4% year-over-year versus 5.3% consensus, driven by a 4.2% increase in energy prices and 24.1% spike in diesel fuel, with core measures also showing persistent pressure at 4.7% annually
• Polymarket probability for a 25 basis point hike surged from 54% to 61% post-PPI release, with over $111 million in total trading volume on the September decision event
• Treasury yields reflect hawkish sentiment with the 2-year at 4.43% and 10-year at 4.83%, both above the current Fed funds rate upper bound of 3.75%, while upcoming CPI data could further shift hike probabilities

U.S. retail diesel prices hit a record $5.97 per gallon in the week ending September 7, representing an 11.6% monthly increase and a 70% surge from January's $3.46. The spike, driven by geopolitical tensions involving Iran and refinery outages tied to Ukraine conflicts, is expected to trigger widespread inflation as diesel fuels most freight transportation, affecting grocery, retail, and construction costs heading into the fall peak-demand season.

• West Texas Intermediate crude reached $91.48 per barrel on September 1, up 9% in one week, with analysts projecting a possible rise to $120 oil and Americans already absorbing roughly $100 billion in added fuel costs
• Headline Personal Consumption Expenditures inflation ran at 3.7% year-over-year in July, with the energy component surging 15.3%, while retail sales fell 0.6% to $763.6 billion as consumers cut back on goods spending
• Global daily diesel consumption is rising by 2 million barrels as U.S. harvest season, heating-oil buying, and holiday freight cycles converge through November, compounding supply shocks from refinery outages

The liquid alternatives category faces a persistent lifecycle problem, with approximately 2,100 funds going extinct over the past 20 years as investors adopt them post-crisis then abandon them during recoveries. Swan Global Investments argues their Defined Risk Strategy (DRS), a hedged equity approach using actively managed put options, solves this problem by maintaining equity participation in bull markets while managing downside risk, making it suitable for permanent allocation rather than tactical deployment.

• The liquid alternatives universe currently spans 12 Morningstar categories with $627.58 billion in AUM across 1,536 active funds, but approximately 2,100 alternative funds have shut down over the last 20 years due to the crisis-adoption, recovery-abandonment cycle.
• A 20% allocation to Swan's DRS in a traditional 60/40 portfolio historically produced higher returns, lower volatility, and better Sharpe ratio compared to the same allocation to Morningstar Multistrategy liquid alt category average over a 28-year period since July 1997.
• Swan's DRS uses actively managed long-dated put options (covering 85-90% equity ETF positions) that are sold before expiration and re-hedged during market selloffs, year-end periods, or after run-ups, successfully weathering major crises including the Dot-Com Bust, 2008 Financial Crisis, and 2022 inflation bear market.

Friday's upcoming CPI report has become critical for Fed policy, with rate-hike odds rising to 63% following a hotter-than-expected PPI report showing producer prices up 0.4% monthly and 5.4% annually. The August jobs report added 162,000 positions, giving the Fed less reason to worry about economic weakness while inflation remains above the 2% target.

• Producer prices accelerated to 5.4% year-over-year in August from 4.8%, with energy prices jumping 4.2% monthly, raising concerns about persistent inflationary pressure
• Economists expect headline CPI to rise 0.4% monthly (3.4% annually) and core CPI to increase 0.2% (2.4% annually), both still above the Fed's 2% target
• A core CPI reading of 0.3% or higher could strengthen the case for a 25-basis-point rate hike at the Sept. 15-16 Fed meeting, while 0.1% could support holding rates at the current 3.50%-3.75% range

Market expectations for a Federal Reserve interest rate hike next week surged to 70% following an August wholesale price increase and oil prices exceeding $100 per barrel. The Producer Price Index rose 0.4% in August, pushing annual PPI to 5.4%, while ongoing conflict with Iran has intensified inflation concerns. Markets now see a nearly 60% chance of a second rate increase in December.

• The Producer Price Index increased 0.4% in August with annual PPI reaching 5.4%, slightly above forecasts, while crude oil prices jumped past $100 per barrel due to Iran conflict concerns
• Market pricing shows 70% odds of a rate hike at next week's Fed meeting and close to 60% probability of another increase in December, reflecting stubborn inflation dynamics
• The final inflation data before the Fed meeting arrives Friday with the Consumer Price Index release, expected to show 3.4% headline inflation and 2.4% core inflation annually

Legendary video game creator Hideo Kojima announced a partnership with Microsoft's Xbox for his upcoming game 'Physint' after Sony's PlayStation unexpectedly canceled the project in mid-June 2026. Kojima, whose 'Metal Gear' franchise has been central to PlayStation's success since the 1990s, spent three months searching for a new partner before finalizing the Xbox deal.

• Sony canceled development of Kojima's 'Physint' project in mid-June 2026 without providing a specific reason, only stating it was a 'difficult decision' after careful consideration
• Kojima Productions spent three months searching for a new partner before securing the Xbox partnership, with development continuing on the 'genre-defining action-espionage title'
• No release date was announced, and it remains unclear whether 'Physint' will be exclusive to Xbox or available on multiple platforms