Here’s a preview of what we’ll cover this week: 

• Macro: Who is Bearing The Tariff Impact?; Labor Market Revisions Validate a Cooldown

• Markets: How is The Investor Sentiment?; Oracle’s Meteoric Surge; Consumer Discretionary Ideas Are In Play

• Digital Assets: Coinbase is Vulnerable

• Lumida Curations: AI Rebalances, Not Replaces; Tariffs Aren’t Crushing Giants; Private Markets for All

Recognition

Making Sense of the Senseless

Disturbing and tragic to see the assassination of Charlie Kirk.

What the country needs is more people looking to debate and engage one another — not more people retreating into their bubble chamber of choice.

In my 20s, I remember enjoying watching the show ‘CrossFire’. You could watch Live two sides of the political spectrum make points and counter-points and the merits of the argument. Then you could reason for youself.

The fact is, there is no political party that has all the answers. It’s a constant process of discovery and holding oneself accountable to engage in their civic duties as a publicly informed electorate.

A Wall of Worry

Markets like to climb a Wall of Worry. 

It’s amazing how we still have recession fears in a strong bull market. 

1) Earnings are growing. In Q2, ~81% of S&P 500 companies beat EPS estimates, above the 5-year average (~78%) and 10-year average (~75%).

2) Productivity is rising. S&P 500 weekly Forward profit margin rose to its record high at 13.9%. More output with existing workers is exactly the backdrop that supports margins without re-accelerating inflation.

3) Labor supply growth is slower.

Citi’s CEO Jane Fraser flagged a pickup in dealmaking and said a U.S. recession looks unlikely. I always pay close attention to what leading Consumer Bank CEOs say - especially Brian Moynihan - as they have a real-time look into the U.S. Consumer.

Combine the data with falling yields and credit spreads declining, the call for recession is nothing more than noise. 

At the outset of the week, we noted it was a good time to go buy stocks on the heels of a weak NFP report. Where we stand now, markets are a touch overbought and best to be patient. See our call here, and follow us to stay updated.

Macro

Who is Bearing The Tariff Impact?

Tariffs are showing up first upstream and getting absorbed downstream. 

The intermediate-demand data make the sequence clear: 

Prices are rising at the front of the chain, but the markup fades as they move toward finished goods and services.

Retailers and wholesalers are absorbing the cost increase by reducing their margins. Their margins plunged -18.9% annualized in August.

Three-quarters of August’s PPI drop came from margin compression at machinery & vehicle wholesalers. 

In other words, firms nearer the consumer are eating the tariff hit instead of passing the bulk of it through.

This is a negative for earnings for these firms. And small businesses are the primary source of job creation. There is some evidence that there is a lower pace of job growth from small businesses as a result of tariffs. However, it is a factor in lower job growth, and not the decisive factor according to our preliminary analysis.

At the same time, underlying inflation pressures have not vanished: 

Core PPI ex food, energy, and trade services still ran about +4.0% annualized. 

For consumers, this means tariffs are not yet fully visible at the checkout counter, and it may take until Q1 2026 to fully see the impact of tariffs fully wash thru.

For businesses, especially retailers and wholesalers, it means thinner margins and tougher choices ahead.

The pass-throughs are gradual and delayed, which is helping inflation stay between 2-3% range.

Labor Market Revisions Validate a Cooldown

The BLS’s preliminary benchmark reduced past year’s job growth by ~911,000, putting average payroll gains near ~71k/month (vs ~147k prior). 

This was the largest ever downward revision in numbers, and second-largest in terms of percentage. 

While the number looks bleak, there is a positive note to it.

Rather than a break in demand, this revision formalizes a cooler, but still tight, labor market.

Despite the actual fewer payroll gains, the unemployment rate stayed near ~4% throughout the year, which suggests fewer jobs creation is required to keep the unemployment rate stable.

The economy’s “breakeven” pace is closer to ~75k/month rather than 150K as was previously assumed.

This is in line with our thesis of how both demand and supply of labor are reducing in the economy. 

Openings & quits have normalized. 

The vacancies-to-unemployed ratio has retraced most of its pandemic overshoot and is now only modestly above 2019 levels. 

Initial claims disappointed this week, but they are range-bound at non-recessionary levels. 

Overall, the annual revision doesn’t signal a weak economy; it confirms a rebalanced labor market. 

Market

How is The Investor Sentiment?

The S&P 500 made two consecutive new highs on Wednesday and Thursday; however, investor sentiment is wobbling. 

Retail attitudes turned down again: 

AAII bulls slid to ~28% while bears jumped to ~49%, leaving the bull–bear spread deeply negative. 

Investor behavior mirrors the same mood. 

Schwab’s STAX, which shows what investors actually did with their accounts, rose in August to 43.7, a five-month high, but still remains in the 14-year low range.

Datacenter Theme: Oracle’s Surge

This week, Oracle (ORCL) surged over 40% to its all time high of $345, following the Q1’26 results.  

Oracle’s Q1 delivered $14.9B revenue (+12% y/y) with cloud at $7.2B (+27%) and OCI at ~$3.3B (+~55%). 

The headline: remaining performance obligations (backlog) jumped 359% to ~$455B after four multi-billion-dollar contracts. 

Most prominent, Oracle has inked a $300 Billion contract with OpenAi, of which around $70 Billion is to be realized in FY 2026.

The surge in backlog is a clear sign that AI hyperscalers are pre-buying capacity on long contracts. 

Safra Catz (CEO): “I expect we will sign additional multibillion-dollar customers and that RPO will likely grow to exceed $0.5 trillion” 

“We expect OCI revenue to grow ~77% to ~$18B this fiscal year, then $32B, $73B, $114B, and $144B over the next several years.”

Larry Ellison (CTO): “We will deliver another 37 data centers to our three hyperscaler partners… MultiCloud database revenue from Amazon, Google, and Microsoft grew 1,529% in Q1.”

Safra Catz: “Given our RPO growth, I now expect fiscal year ’26 CapEx will be around $35 billion. As a reminder, the vast majority of our CapEx investments are for revenue-generating equipment that is going into the data centers and not [for] land or buildings.”

“As we bring more capacity online, we will convert the large RPO backlog into accelerating revenue and profit growth.”

Larry Ellison highlighted that while the AI training market is massive and growing fast, a more  significant tailwind for datacenters is the AI inference market. 

“Training AI models is a gigantic multitrillion-dollar market… But… the market for AI inferencing… will be much, much larger than the AI training market.”

Oracle’s surge is not isolated.

The datacenter theme is growing.

CoreWeave’s contracted backlog reached ~$30B and has roughly doubled YTD, highlighting that AI infrastructure providers across the stack are booking multi-year visibility. 

Customers are reserving capacity ahead of supply, extending revenue runways for the entire ecosystem.

We have been writing about the datacenter theme frequently, and the backlog growth kept us optimistic about it.

The returns have started reflecting the theme’s potential.

As Jensen Huang said about AI Capex, “This is just the beginning”.

We Got Coreweave at $7Bn Valuation

One of Lumida’s first private deals was an allocation in CoreWeave.

At the time, we facilitated an investment for eligible clients at an approximate $7 billion valuation, sourced through our network (special thanks to Andrew S., a long-time friend and reader).

CoreWeave was a classic “East Coast” deal – priced efficiently, with institutional capital from Magnetar on the cap table rather than a traditional Silicon Valley venture structure.

Less than two years later, CoreWeave went public and its market capitalization is now trading at approximately $60 billion, with the stock trading approximately 3x higher since its IPO. 

Investors who entered at the $7 billion valuation enjoyed gains up to a $58 Bn market cap where the price stands today.

Lumida sources deals from its extensive and deeply connected network. 

Our investment philosophy centers on identifying undervalued assets that often go unnoticed by the broader market.

We offer qualified investors opportunities typically reserved for institutional investors.

We recently invested in Canva and Kraken. Note: We can only share deals after we have invested in the deal per SEC regulations. So, best sign up here.

Important: The figures above are approximate, based on public sources, and reflect gross valuations only. Actual returns may be significantly lower after fees, expenses, carried interest, and taxes. Past performance is not indicative of future results. Private investments are speculative, illiquid, and involve a high degree of risk, including possible loss of principal.

Consumer Discretionary Ideas Are In Play

We flagged consumer discretionary in July. The sector was priced for recession. It had the second largest decline amongst US sectors in April.

Now, it is paying back our trust. 

Over the last month, XLY is up 6.4%, beating S&P which rose 3.4%.

The macro backdrop has improved: Real incomes are up, rate anxiety has faded from peak levels, and consumer credit is signaling improving confidence. 

That cocktail pushes money toward under-owned, and earnings-torque names in XLY.

Our picks were DAL, UAL, NCLH, and SKYW amongst others. These premium service providers were beaten due to inflation fear. 

They have bounced back, and continue to post impressive gains. 

These stocks are up between 30-40% in the last 6M. (Look at NCLH’s CAGR- watch our analysis here)

Digital Assets

Coinbase is Vulnerable

Coinbase looks vulnerable in many areas: competition, weak service, pricing and more.

Note: We were big Coinbase bulls in 2023 and 2024, and admire the quality of the management team.

At the same time, market structure is maturing:

1. Spot crypto ETFs give institutions and advisors a regulated, low-friction on-ramp.

2. CME futures provide deep hedging/liquidity. 

3. Similarly, regulated rivals are re-engaging, targeting Coinbase’s moat. 

Moreover, retail effective costs (fees + spread) on Coinbase often screen well above 1%, while competitors push lower take rates and all-in costs. 

Coinbase can offset with Advanced tiers and Coinbase One, but fee compression is structural as spreads narrow and liquidity deepens elsewhere.

Lumida Curations

AI Rebalances, Not Replaces

AI redeploys talent from support to sales, boosting margins, cash flow, and accountability with sharper KPIs.

Tariffs Aren’t Crushing Giants

Japanese automakers are absorbing the levies while Apple and Micron boost U.S. investment, amid 3.3% GDP growth and record S&P highs.

Stay tuned, stay informed, and as always, stay ahead.

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