Dear Trader,
What does the Fed do next week?
Diesel crossed $6 a gallon for the first time ever.
Oracle put up a 121% cloud number and the stock still sits down 20% on the year.
And this morning's CPI matched the headline forecast at 3.4%, but core ran hotter than expected.
That's the number Warsh and company will read.
Hans hosts today with Tim Colby as his guest. They'll walk through all three and sort out what this week means for the Fed's decision, and what that decision means for your positions.
Then stick around: Andrew's running a pop-up session right after the show on a specific opportunity the September meeting sets up, and the cleanest way to trade it. If you've got the time, you want to be in the room for that one.
This link adds State of the Market to your calendar.
The Daily News Breakdown
SIREN: Stock futures wobbled Friday morning ahead of a CPI print that could lock in a Fed rate hike next week. The Dow, S&P 500 and Nasdaq have dropped four days running and sit on pace to close the week red, so a little premarket green off Oracle's earnings doesn't fix much. Economists expect August CPI at 3.4% year over year, same as July, with a 0.4% monthly jump.
Traders now price a 72% chance the Fed hikes next week, up from a coin flip last week. Brent above $106 and diesel at a record $6 did most of that work. If today's number comes in hot, 72% starts looking conservative.
SNEAKER: Oracle (ORCL) popped 5% premarket after cloud infrastructure revenue jumped 121% to $7.4 billion. Total revenue climbed 30% to $19.3 billion, adjusted EPS hit $1.92 against $1.75 expected, and the company booked another $30 billion in AI cloud contracts. The backlog now sits at $664 billion.
Oracle's own words: demand for AI training and inference "continues to grow faster than supply." The sneaky part: this stock lost more than half its value from the record high a year ago because of the debt it took on to build all those data centers. Even after a 30% rally off the July low, it still sits down 20% on the year. A 5% pop off that base counts as a start.
SIGN: Diesel hit $6.05 a gallon Friday, a record, up from $5.32 a month ago and $3.70 a year ago. Crude only explains part of it. Gulf exports have recovered to about two-thirds of prewar levels per Goldman, but refineries worldwide run near 100% and product inventories sit at multiyear lows.
Iranian and Houthi strikes hit Gulf refineries. Ukrainian drones keep hitting Russian ones, and Moscow extended its diesel export ban through September. More crude won't help if nobody can refine it.
Diesel runs trucks, generators and Northeast furnaces, so this feeds straight into CPI. The ECB hiked a quarter point Thursday and cited energy. Markets give the Fed a 70% shot at doing the same next week.