 | SharespectiveWall street, before your first coffee | Wed 12 Aug 2026 Issue 225 |
 The Hike QuestionPlus: On Holding posted its best gross margin on record and lost a fifth of its value in a day. |
Good morning. It's Wednesday, and the market is holding its breath. For most of the past two years the argument on Wall Street was about when the Federal Reserve would cut. On Tuesday, with July's inflation numbers a few hours away, futures traders had it at roughly a coin flip that the next move is up instead. Shares did very little all session and then closed slightly lower, which is what a market looks like when it has decided to wait.
Plenty happened underneath. A Swiss running-shoe company had the worst day of its listed life on a quarter that included record margins, Michele Bullock told Australians she would raise rates again if she had to, and CoreWeave reported after the bell. None of it changed what everybody is waiting for.
Market snapshot
| S&P 5007,728.20▼ 0.32% | | NASDAQ26,445.45▼ 0.60% | | NZX 5013,860.66▼ 0.20% |
| | ||||
| ASX 2009,250.60▲ 0.19% | | USD/NZD1.7007▲ 0.03% | | USD/AUD1.4160▼ 0.10% |
US levels are Tuesday's official 4pm New York close. The NZX 50 and ASX 200 are Tuesday's local closes, which happened hours before New York opened, and the currency levels were taken late in Tuesday's New York session.
| ECONOMY |
Wall Street has stopped arguing about rate cuts and started arguing about a hike
The S&P 500 slipped 0.32% to 7,728.20 and the Nasdaq Composite fell 0.60% to 26,445.45 in a session with no conviction in it. The 10-year Treasury yield eased to 4.68% after topping 4.71% on Monday, as oil steadied on signs the US and Iran are talking again. The number that mattered was in the futures market: traders were pricing roughly even odds that the Fed's next move in September is an increase, not a cut.
How the argument flipped. The federal funds rate has sat at 3.50% to 3.75% through four straight meetings. At Kevin Warsh's first gathering as chair in June, the committee dropped its language about further adjustments and nine of the 18 participants pencilled in a rate rise before the end of 2026. Inflation has been sticky since the Middle East conflict pushed energy costs up, and July's consumer price index lands Wednesday morning in New York.
Australia got its own version on Tuesday afternoon. The Reserve Bank of Australia held the cash rate at 4.35% for a second straight meeting, unanimously, and Governor Michele Bullock said the board remains concerned about the inflation outlook and will raise rates again if it needs to. The written statement kept an explicit increase on the table if the upside risks show up.
Closer to home the central banks that set the cost of a mortgage in this part of the world are now discussing hikes rather than cuts. New Zealand banks have already been repricing fixed home loans upwards for weeks, which is what happens when wholesale rates move before anyone announces anything. |
| CONSUMER |
On Holding had its worst day ever after a quarter that included record margins
Shares in the Swiss running-shoe maker closed at US$30.91 on Tuesday, down 20.29% and at a two-year low, in the biggest single-day fall since the company listed. The odd part is what was in the result. Earnings came in at CHF0.31 a share against the CHF0.29 expected, gross margin expanded 3.9 percentage points to 65.4%, and direct-to-consumer sales — the stuff sold through On's own shops and website, where the whole margin stays in-house — grew 34.3% in constant currency and beat expectations in every region.
What actually broke. Revenue was US$1.05 billion against the US$1.08 billion the market wanted, and management trimmed full-year sales growth guidance to the low-20% range from at least 23%. That sounds like a rounding error, and for a mature company it would be. On is not priced as a mature company. A business valued on its growth rate gets marked against that rate, so shaving two or three points off it changes the arithmetic on every year that follows, all at once.
The read-across was ugly for the rest of the sector, landing on top of existing worries about apparel and footwear demand. A company selling premium trainers straight to customers is meant to be the corner of retail insulated from a stretched consumer.
Boiled down nothing in the profit and loss statement got worse. What changed was the promise attached to it, and On had been priced almost entirely on the promise. |
| AI INFRASTRUCTURE |
CoreWeave's backlog grew again, and so did the bill for filling it
CoreWeave reported second-quarter revenue of US$2.58 billion after Tuesday's close, up 112% on a year earlier and just ahead of the US$2.56 billion expected, with an adjusted loss of US$1.03 a share against the US$1.20 forecast. The figure everyone had circled was the revenue backlog, which reached US$104 billion from US$99.4 billion at the end of March. The shares rose after hours.
What a backlog is and isn't. It is contracted future revenue — customers including Meta, Anthropic and quantitative trading firm Jane Street have signed up to pay for compute over years. It is not money in the bank, and CoreWeave has to build the thing first: data centres, grid connections and chips, all paid for well before the revenue arrives. The company now has 1.5 gigawatts of active power, adjusted EBITDA of US$1.51 billion for the quarter, and a net loss that widened to US$626 million.
The queue is lengthening faster than the company can serve it. CoreWeave said the US$104 billion figure excludes more than US$25 billion of fresh commitments signed in early July.
Our take demand looks settled for now, so the interesting question is financing. Every dollar of that backlog has to be funded years ahead of collection, and the terms CoreWeave gets will decide more than the size of the order book does. |
Newsworthy numbers
| | |
| US$9.1 billion the value of a 20-year lease Riot Platforms signed for 191 megawatts of capacity at its Rockdale, Texas campus, running through to June 2048. The tenant is Anthropic, and the landlord used to be a bitcoin miner. | | A$630,000 what the Association of Superannuation Funds of Australia reckons a single Australian needs at retirement to live comfortably, under its 2026 standard. |
| | ||
| | |
| 40,000 years the age of two mammoth-ivory bird carvings from Hohle Fels cave in southern Germany. Each is thumbnail-sized and weighs under 1.3 grams; one was spotted by a palaeontologist sifting lab sediment for animal fossils. | | 2640 the year a performance of John Cage's organ work in Halberstadt, Germany is scheduled to finish. It began in 2001, which makes it the only concert where the interval is measured in years. |
Worth a read
| |
| 01 | What happens to your KiwiSaver if you die? — It goes into your estate, and without a will the statutory formula takes over: a surviving spouse gets the personal effects, $155,000 and a third of the rest. |
| |
| 02 | Kiwibank follows its Australian-owned rivals higher on fixed mortgage rates — The last of the majors moves, so the cycle of fixed-rate rises is now complete. Term deposit rates went up too, without leading the pack. |
| |
| 03 | The superannuation balance that separates comfort from compromise — A couple needs A$730,000 for the comfortable standard, against A$120,000 for the modest one. The gap between those two numbers is the whole argument about Australian retirement policy. |
| |
| 04 | Move over pickleball, padel is the latest obsession — The glass-walled racquet sport is doing to pickleball what pickleball did to tennis clubs, and the court economics are very different. |
| |
| 05 | The startup silencing your microwave's annoying beep — Somebody looked at the most disliked sound in the kitchen and found a business in it. |
| |
| 06 | The IATA expects a US$98 billion jump in fuel costs to halve airline profits this year — Revenue up, profit down by half. Useful context for anyone pricing a long-haul fare out of Auckland or Sydney. |
| |
| 07 | For 15,000 years, humans and dogs have been changing each other — Domestication turns out to run both ways, with changes on the human side of the ledger too. |
| |
| 08 | Voyager 2 was running out of power, and NASA just bought it more time — Engineers reconfigured hardware on a spacecraft launched in 1977 and 20 billion kilometres away. Try that with a five-year-old laptop. |
| |
| 09 | Speaking for the dead — A veteran New York Times obituary writer on the craft of summing up a life in a few hundred words, and on how much of it is written well before anyone dies. |
| |
| 10 | Why did the Romans bury this marble statue facedown? — A 2,500-year-old sculpture unearthed at Sardis in western Turkey. It survived because someone snapped it in half and used it as paving. |
Wrapping up
July's US consumer price index is out at 8.30am Wednesday in New York, which is 12.30am Thursday New Zealand time, with consensus at 3.4% headline and 2.5% core. Producer prices follow on Thursday and retail sales plus the preliminary University of Michigan sentiment reading on Friday. In New Zealand, the RBNZ's quarterly survey of business inflation expectations is due Thursday with a 2.7% consensus, and the BusinessNZ manufacturing PMI lands Friday.
Cisco reports after Wednesday's US close, with analysts looking for US$1.17 a share on revenue of US$16.83 billion — the line to read is orders tied to AI networking gear. Applied Materials follows after Thursday's close on a consensus of US$3.36 a share. Locally, Commonwealth Bank's full-year result is out Wednesday morning, consensus cash profit near A$10.9 billion, with the net interest margin the number that sets the tone for the whole ASX financials complex. Telstra's full-year lands Thursday, alongside speeches from Bullock and assistant governor Christopher Kent.
One US dollar bought NZ$1.7007 and A$1.4160 late in Tuesday's New York session, leaving the kiwi flat and the Australian dollar a touch firmer. The Aussie held its ground because the RBA's statement kept a rate rise on the table, while the kiwi is stuck waiting on the same US inflation print as everyone else.
See you tomorrow.
General information and commentary only. This is not financial advice, and it does not take account of your objectives, financial situation or needs. It reflects the author's own reading of publicly available information at the time of writing and may be wrong. Do your own research and speak to a licensed financial adviser before making any investment decision.