Crude oil sits near $83, at $82.92, creeping higher again. The inverse link between crude oil futures and E-mini Nasdaq futures holds like last week: oil up, stock futures unchanged to slightly lower before the open.
U.S.-Iran Tensions
Today the 60-day memorandum of understanding between the U.S. and Iran officially expires, though it had little effect anyway. The Strait of Hormuz is shut down, with a naval blockade in place. On Fox News, President Trump said back-channel talks continue and warned Oman not to get involved in the Strait. A breaking headline says Iran and Oman are finalizing a deal to reopen shipping in the Strait. This is not easing uncertainty about U.S.-Iran relations. One senior Iranian official said all Iranian entities are ready to escalate tensions in the Hormuz Strait and the region if diplomacy fails. Trump is not rushing and keeps negotiating.
Retail Earnings Week
The second half of earnings season shifts focus from large-cap tech and hyperscalers to retail. Many retailers act as proxies: Home Depot (HD) and Lowe's (LOW) stand in for housing. Home Depot (HD) reports Tuesday, Lowe's (LOW) Wednesday. Also Wednesday, Target (TGT) and TJX Companies (TJX). Thursday brings Walmart (WMT), the highest-profile release of the week because it gives so much data on the U.S. consumer. Deere & Company (DE) and Ross Stores (ROST) also report, but the main focus stays on Walmart (WMT) and retail overall.
Last week's Bank of America consumer checkpoint and retail sales both came in below June, but posted solid year-over-year numbers. The year-over-year growth faced tough comparisons against last year's Amazon (AMZN) Prime Day and World Cup event spending, and those tough comps will carry into future months too. This week's earnings will show whether that strength held.
The Consumer
The market watches what consumers say, and University of Michigan consumer sentiment came in lower last week. But what people say and what they do differ. Someone may say they worry about the economy, then go buy a new car. The data shows the U.S. consumer is still very strong year-over-year - not as strong as during Prime Day or World Cup spending, but strong. When employed, the U.S. consumer can be trusted to spend. Cava (CAVA) reported traffic up and customers willing to spend. Some caution exists, but no store or restaurant reports customers refusing to spend a penny. At some point inflation frustration could push people to spend less simply because they refuse to pay the higher prices, but so far there is no screaming worry about consumers.
Housing Data
This week lacks top-tier economic data but is heavy on housing, which both the Fed and the Trump administration watch closely. Today brings NAHB housing data, Tuesday housing starts and permits, Wednesday mortgage applications. Last week, despite 30-year mortgage rates at 6.77% (they were once below 6%), mortgage applications improved slightly over the prior week. To lower mortgage rates you must lower interest rates, which helps the consumer, small business, and especially housing. The goal is mortgage rates under 6%, not 6.77%. Kevin Warsh is watching this closely.
Fed Odds
The CME FedWatch tool shows a 32.6% chance for a September move, down from over 50% a couple of weeks ago and the 40s after last week's data - CPI, PPI, and jobs numbers. Weaker Michigan sentiment pulled the odds back, leaving the Fed in a spot between raising and standing pat.
Micron
Micron (MU) remains Bank of America's (BAC) top pick. SanDisk's (SNDK) durable growth outlook suggests memory may be entering a structurally stronger phase, potentially lifting Micron (MU) to $200 to $250 in full-year 2030 earnings per share - a big number. SanDisk (SNDK) rallied late last week. Micron (MU) is up pre-market.
Apple
Two Apple (AAPL) stories. Rothschild & Company Redburn upgraded Apple (AAPL) to buy from neutral, price target $400 up from $260. The firm sees iPhone sales growing 12% annually, up to 14% above consensus, through fiscal 2030. Apple (AAPL) has sold off from a high near $344 to just over $300, and is up pre-market. Separately, Commerce Secretary Howard Lutnick said the White House does not want Apple (AAPL) buying memory chips from China, and the Trump administration is against it. After touring an Apple (AAPL) manufacturing plant in Houston, Lutnick said there must be other solutions to the memory issue, and it is not good for great American companies to use Chinese memory.
Berkshire and Housing Bets
Berkshire Hathaway (BRK) added to its position in Lennar (LEN), betting on housing, on top of more Mag 7 names including Alphabet/Google (GOOGL) added last week. Toll Brothers (TOL) also reports this week.
