• Stocks: Despite the two-day rally to end the week, July was the worst month for tech stocks since 2008. But some Big Tech companies have enjoyed a great stretch lately: This was Amazon’s best week in 10 years and Microsoft’s best in 25 years, as the two tech stocks pleased investors with strong earnings.
• Commodities: Oil climbed after Iran announced it successfully attacked two tankers that were transiting the Strait of Hormuz under US Navy escort, though US sources have yet to verify the claim. Meanwhile, gold wrapped up its best month since February.
• Bonds: Traders bailed out of 10-year Treasury bonds, pushing yields to their highest level in over a year as Japan struggles to stabilize the yen.

Earnings

Morning Brew Inc., Photos: Adobe Stock

Spiking oil prices are bad news for almost everyone—costly crude makes gas more expensive, raises inflation, and destabilizes the global economy. But that “almost” leaves out oil behemoths, who watched skyrocketing energy prices translate into a windfall last quarter.

Saying oil prices were volatile during the fighting around the Strait of Hormuz last quarter would be a massive understatement. Prices for Brent crude swung from $70 per barrel up to a high of $126 per barrel throughout the three months ending in June.

Here’s what that meant for the biggest crude companies on the market:

• ExxonMobil had a blockbuster Q2: The company’s profits came in at $14.5 billion, more than double what the energy giant posted in the same quarter last year. Yet shares of Exxon sank 1.02% today, since its earnings per share came in slightly below analyst expectations due to higher-than-expected refinery maintenance costs.
• Chevron’s net income surged to $12 billion, a roughly 400% jump compared to the same period last year. “We’re kind of firing on all cylinders, which is good, because the world needs it,” CEO Mike Wirth told CNBC. Shares of Chevron rose 2.25% today.
• Yesterday, Shell reported its best quarterly profit in four years: The oil company’s adjusted earnings came in at $9.84 billion for the quarter, handily beating estimates of $8.79 billion. Shares of Shell rose roughly 1.1% on Thursday, and another 1.66% today.

A slippery slope

These earnings reports come as we head into another bout of rising oil prices. Fighting has resumed in the Middle East, spooking investors who thought they were in the clear after the US and Iran agreed to a peace deal in mid-June.

“The situation is under stress and I’m afraid it’s going to continue,” Wirth told CNBC. “We’re running out of time. Every day that goes by, the situation gets more difficult.”

Zoom out: The energy crisis has been a major piece of the Federal Reserve’s puzzle. Late last year, the consensus view was that the central bank would lower interest rates at least 25 basis points in 2026. But now, we’re staring down the barrel of a potential rate hike, as Fed officials weigh slowing economic growth with the risk that the geopolitical conflict could spike inflation once again.

But even if that happens, oil companies will continue to reap the rewards.—LB

      

From The Crew

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Stocks

🟢 What’s up

• Amazon gained 15.32% as strong quarterly results outweighed another increase in AI spending.
• Replimune surged 107.02% after an FDA advisory panel backed its experimental skin cancer treatment.
• Construction company IES Holdings jumped 30.27% on stronger-than-expected quarterly results and plans for a two-for-one stock split.
• Jersey Mike’s rebounded 7.24% following its post-IPO selloff.
• Newell Brands climbed 8.95% after returning to quarterly sales growth for the first time in more than four years.

🔴 What’s down

• Apple sank 7.35% as weak guidance tied to supply constraints overshadowed stronger-than-expected quarterly results.
• Reddit fell 20.98% despite strong earnings as investors worried that AI chatbots and Google’s AI Overviews could reduce traffic.
• Roblox plunged 26.85% after forecasting slower revenue growth and weaker bookings while investing in AI and platform changes.
• Novo Nordisk slid 8.74% after a late-stage trial of its experimental cardiovascular drug failed to meet its primary endpoint.
• Diagnostics company Veracyte tanked 22.52% as investors shrugged off an earnings beat.
• Coinbase Global tumbled 10.59% after posting a wider-than-expected quarterly loss.

Something of the day

New York bets against prediction markets

Morning Brew Inc., Photo: Getty Images

Taylor Swift’s pregnancy status, presidential water-sipping, and Christ’s second coming are all fair game with prediction markets. But here’s the one wager no one can settle: Is it gambling or not?

New York’s answer: Yes it is, and you owe us money. The state is suing Kalshi for running an illegal, unlicensed gambling operation and dodging taxes on it, demanding that the platform halt operations and fork over an estimated $36 billion in fines, restitution, and forfeited profits.

“No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” Attorney General Letitia James said in a statement.

Kalshi, headquartered in New York City, upped the ante by calling the suit “political theater,” arguing that “states can’t just shut down a federally licensed exchange.” The Commodity Futures Trading Commission, which regulates Kalshi, backed the firm up, asking the judge to toss the case out of court.

Odds are, the prediction market backlash is just winding up.

So far, 17 states have contested the legality of prediction markets, and three shut down some or all operations. In Wisconsin, a judge ruled that the state can regulate prediction markets much like gambling. Minnesota was just days away from becoming the first state to ban prediction markets before a federal judge stepped in to block the law, at least for now.

Companies like Kalshi argue that their resemblance to gambling is only skin-deep, since there’s no “house” that always wins. Instead, they’re structured like futures contracts, where two parties trade directly on an outcome. Although this format was originally designed for interest rates and currency prices, Kalshi stretched it to cover more out-there fare like “tush push” bingo.

Bottom line? With so many players at the table and few folding, don’t bet on a resolution anytime soon.—JD

Wall Street drama

Morning Brew Inc., Photos: Fabrice COFFRINI / AFP via Getty Images, Adobe Stock

Warren Buffett once joked, “My partner Charlie says there are only three ways a smart person can go broke: liquor, ladies, and leverage.” This week, 24-year-old Leopold Aschenbrenner learned that lesson the hard way.

Aschenbrenner has been nothing short of a prodigy. He enrolled at Columbia University at 15, graduated as valedictorian, and later joined OpenAI as a researcher before being fired over allegations that he improperly shared confidential information in 2024.

Shortly after, he launched his hedge fund Situational Awareness, despite having no professional investing experience. The fund took its name from his viral essay arguing that AI would spark one of the biggest investment booms in history—and that he wanted to build a fund to capture it.

The strategy worked. At its peak earlier this month, Situational Awareness reportedly managed roughly $45 billion in assets and had generated returns of more than 2,000% since launch.

Then it all came tumbling down. The fund was reportedly running leverage of up to 400% in its massive bets on AI, leaving it highly exposed when tech stocks began selling off. As losses mounted and margin calls rolled in, Aschenbrenner was forced into a fire sale, dumping stakes in companies like SK Hynix, Bloom Energy, and CoreWeave. Much of the portfolio ultimately landed in the hands of Ken Griffin’s Citadel.

The plot thickens

Now comes the interesting part: Whether it was on purpose or not, Griffin helped create the very conditions that made Situational Awareness’s collapse inevitable.

On July 24, Aschenbrenner sent a letter to investors seeking fresh capital and offering to sell pieces of his portfolio—a sign that the fund was under pressure as tech stocks sank. Three days later, Citadel Securities shocked markets by reversing its recent position and calling for a Fed rate hike, arguing that it would bolster Kevin Warsh’s independence and inflation-fighting credibility. The thought of a surprise hike spurred on a sharper downturn in tech stocks, further undermining Situational Awareness’s...situation.

By the way, all of this unfolded as Aschenbrenner prepares to marry Anthropic’s chief of staff, Avital Balwit, this weekend. Nobody wants to get margin-called while walking down the aisle, so Aschenbrenner held an emergency overnight auction to unload his portfolio—and wouldn’t you know it, Griffin was there to pick up the pieces, acquiring billions of dollars’ worth of AI stocks for pennies on the dollar.

Conveniently, many of the same AI names Aschenbrenner sold to Griffin rallied the very next day as momentum stocks logged their biggest one-day gain since December 2000, after the Fed did not, in fact, decide to hike interest rates.

The road ahead

It’s not over for Situational Awareness just yet. In a letter to investors, Aschenbrenner said the fund is still up roughly 80% this year, even after the historic blowup. He still manages about $10 billion in assets and continues to hold several private investments, including Anthropic.

“My core promise to you is that we will not waste the opportunity to learn from these events,” Aschenbrenner wrote.

Let’s just hope Situational Awareness is a little more situationally aware from now on.—SY

      

News

• Elon Musk is considering spinning off Tesla’s China business ahead of a potential SpaceX merger.
• This is why more companies are deciding to delay an IPO and stay private longer.
• Here’s why three Fed officials disagreed with their peers and wanted to raise interest rates.
• Nuclear company Westinghouse filed for IPO—and with so much demand for energy from AI companies, analysts think it could be a blockbuster debut.
• Fintech brokerage Clear Street is giving investors exposure to some of tech’s favorite startups before they go public.

Calendar

Monday: Palantir, Vertex Pharmaceuticals, Tyson Foods, Marriott International, ON Semiconductor, Snap, Whirlpool, and TKO Group Holdings kick off a new week of earnings. It’s pretty quiet on the economic front for now, with just construction spending and manufacturing PMI.

Tuesday: SpaceX, AMD, Caterpillar, HSBC, Merck, Toyota, Arista Networks, Amgen, McDonald’s, Gilead Sciences, Booking.com, Pfizer, BP, Spotify, Cummins, Marathon Petroleum, and Apollo Global keep the earnings reports rolling. A week of labor market news begins with the JOLTS reading, and there’s also the US June trade balance to watch.

Wednesday: The labor market lowdown continues with the ADP private payrolls report, and we’ve also got the services PMI reading. Meanwhile, we’ve got earnings from Eli Lilly, Novo Nordisk, Sandisk, Western Digital, Disney, Shopify, Uber, AppLovin, CVS Health, MercadoLibre, DoorDash, Occidental Petroleum, eBay, Block, Kraft Heinz, and Figma.

Thursday: Earnings from Siemens, SoftBank, ConocoPhillips, Constellation Energy, Cloudflare, Datadog, Airbnb, Warner Bros. Discovery, Nintendo, Cheniere Energy, Diageo, Celsius Holdings, Lyft, DraftKings, and D-Wave Quantum should keep things interesting. As for the labor market data deluge, keep an eye out for weekly initial jobless claims.

Friday: The week concludes with reports from Oklo, Vistra, Take-Two Interactive Software, Under Armour, and Wendy’s. But the big highlight of the day will be the monthly US jobs report for July, not to mention the consumer credit reading for June.

recs

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