Good morning!

Corporate earnings continued to impress last week, defying a backdrop of choppy economic data and tariff uncertainty. The upbeat results are nudging stocks higher, sparking institutional upgrades and fresh buying—even as valuations stretch. Here's what's happening this week ...

• July’s inflation numbers are just in, and they’re a mixed bag. Core inflation (which strips out food and energy) rose 0.3% month-over-month—the biggest jump in six months—pushing the annual rate to 3.1%. That’s slightly hotter than expected and suggests that goods prices are climbing again, even as services inflation had been cooling off. On the bright side, headline inflation held at 2.7% year-over-year, thanks to cheaper gas and a slowdown in food prices. Despite the uptick in core inflation, markets are still betting the Fed will cut rates in September—odds jumped to 90% after the report. Some of the price pressure may be tied to Trump’s tariffs, with categories like footwear and furniture seeing sharp increases. But for now, it’s not enough to spook the Fed. *

• A stronger-than-expected second quarter earnings season takes a breather this week, with fewer big-name companies reporting. This morning, reports are due from Sea Limited, CoreWeave, Cardinal Health, and Tencent Music, followed Wednesday by the one notable company this week, Cisco Systems. Thursday numbers are due from Applied Materials, Deere & Company, NetEase, and JD.com, followed by a relatively quiet Friday. **

• Luxury retailer Saks is under scrutiny as multiple vendors allege the company has failed to meet promised payment deadlines, reigniting concerns about its financial stability. Following its $2.7 billion acquisition of Neiman Marcus Group in late 2024, Saks aimed to strengthen its market position but instead saw a 16% revenue drop and a 38% increase in net losses in Q1 2025. Despite securing $350 million in new financing and pledging to repay vendors in installments starting in July, brands like Sunday Riley report non-payment and threaten legal action. With some suppliers halting shipments, Saks’ liquidity and reputation face growing challenges. ***

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