Good morning investors! The market continues to rally supported by positive earnings reports.
Today we cover:
Inflation goes higher
Adobe reports
More news
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📊 Economy and News
US Inflation Hits 7-Month High, Jobless Claims Surge
US consumer prices rose 0.4% in August, the largest increase since January, driven by higher housing and food costs.
The Consumer Price Index (CPI) climbed 2.9% year-over-year, the highest since January, fueled by President Trump’s tariffs and increased travel demand.
Food prices jumped 0.5%, with supermarket costs up 0.6%, and specific items like tomatoes (4.5%), beef (2.7%), and coffee (3.6%) saw sharp rises. Gasoline prices increased 1.9%.
Core CPI, excluding food and energy, rose 0.3%, with tariff-impacted goods like vehicles and apparel costing more. Service costs also climbed, with airline fares up 5.9% and hotel prices up 2.3%. Economists noted that tariffs and labor shortages, exacerbated by immigration policies, contributed to price hikes.
Medical care costs rose 4.2% in August, now at the highest level in three years.
Large employers are projecting a 9% increase in overall health care spending for 2026, and a 12% increase when it comes to drug spending, fueled by high-priced cancer drugs and GLP-1s for weight loss.
There’s been a surge in workers using flexible spending and health savings accounts to buy GLP-1s in the cash-pay market.
Meanwhile, initial jobless claims surged 27,000 to 263,000 for the week ending September 6, the highest since October 2021, potentially distorted by Labor Day and Texas flooding. The labor market shows signs of weakening, with nonfarm payrolls possibly overstated by 911,000 jobs through March.
Despite rising inflation, the Federal Reserve is expected to cut rates by a quarter-point next Wednesday, with two more cuts anticipated this year.
Global hits:
Turkey’s central bank cuts rates for second time as inflation slows.
New Zealand home price outlook dims as a weak economy and job losses blunt RBNZ easing.
U.S. will split profits with Tokyo from Japan-funded projects until $550 billion is recouped.
Mexico’s new tariffs on Asian imports aim to counter U.S. trade pressures.
Check this: U.S. August budget deficit falls 9% as tariffs boost customs receipts.
Trump’s administration on Thursday asked a federal appeals court to allow Trump to remove Federal Reserve Governor Lisa Cook from office for now after a judge said he likely lacked cause to do so.
Good to know: The 30-year fixed-rate mortgage (FRM) averaged 6.35%, marking the largest weekly drop in the past year.
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📈 Stocks
S&P 500 6,587.47 (+0.85%)
DJIA 46,108 (+1.36%)
NASDAQ 22,043.07 (+0.72%)
BRENT CRUDE 66.37 (-1.66%)
* Prices as of Sep 12th, 12:20 AM UTC
Adobe Stock Rises After Strong Q3 Earnings
Adobe reported fiscal Q3 earnings of $5.31 per share and $5.99 billion in revenue, surpassing analyst expectations of $5.18 per share and $5.91 billion.
Revenue grew 11% year-over-year, with net income at $1.77 billion, up from $1.68 billion.
For Q4, Adobe projects earnings of $5.35-$5.40 per share and revenue of $6.08-$6.13 billion, aligning with or exceeding estimates.
Digital media revenue is expected to hit $4.51-$4.56 billion, above the $4.51 billion forecast. Despite a 21% stock decline in 2025, shares rose about 2% in after-hours trading.
Do you expect Adobe to bounce back?
Reminder: The MSCI All Country World Index has been reaching record highs. The Index tracks the performance of over 2,500 stocks from both developed and emerging markets. Despite new highs, CNBC’s Jim Cramer is still bullish, telling investors the market is set to keep roaring.
Surprising: United CEO says he expects struggling Spirit Airlines to go out of business. Elsewhere, Uber sued by DOJ for alleged discrimination against disabled riders.
Opendoor jumped over 70% reaching a three-year high after the company named Shopify exec Kaz Nejatian as its new CEO. On the other hand, Microsoft and OpenAI reached a non-binding deal to allow OpenAI to restructure.
Lastly, Paramount Skydance has plans to buy up Warner Bros Discovery but an official offer is yet to be made.
💵 Personal Finance
Taxes for Americans Living Abroad: What You Need to Know
In 2022, about 4.4 million U.S. citizens lived abroad, yet most still need to file U.S. federal income tax returns if their income exceeds a certain threshold. The U.S. and Eritrea are the only countries taxing based on citizenship, not residency, which can complicate finances for expats.
Find an Expert: Experts recommend hiring an accountant experienced in U.S. and foreign tax systems. “It’s not something every tax preparer does,” says H. Jude Boudreaux, a senior financial planner. Arielle Tucker, a CPA and podcast host, advises choosing someone familiar with U.S. documents and who has American clients.
Avoid Double Taxation: To avoid double taxation, expats can use the Foreign Earned Income Exclusion, which allows excluding up to $130,000 of earned income in 2025, if you meet IRS criteria (e.g., living abroad for 330 days or a full tax year). This applies only to earned income, not investments. Self-employed expats may still owe U.S. Social Security and Medicare taxes, though totalization agreements with some countries can help.
Alternatively, the Foreign Tax Credit reduces U.S. taxes by the amount paid to a foreign government, ideal for high-tax countries. It carries forward, unlike the exclusion, but isn’t applicable in low-tax or no-tax countries.
Filing Deadlines: U.S. taxes are due April 15, with expats getting an automatic extension to June 15 and an option to extend to October 15. File foreign taxes first to calculate deductions accurately, but note that extensions apply to filing, not payment, to avoid interest penalties.
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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.