👉 The Fed's First Hike Since 2023?

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Welcome to your new week.

Everything this week bends around Wednesday at 2 p.m., when the Federal Reserve is expected to raise interest rates for the first time since 2023. Retail sales land five and a half hours before the statement, Lennar reports that night, and by Friday the Bank of Japan will have announced its rate decision as well.

Key Earnings Announcements:

A thin calendar with Dave & Busters, Lennar, and Trip.com reporting

Monday (9/14): Children's Place, Coda Octopus, CoinShares, Dave & Buster's, Hain Celestial, High Tide, Kestra Medical, Radiant Logistics, RF Industries

Tuesday (9/15): Bioceres Crop Solutions, Evolution Petroleum, Forgent Power Solutions, Trip.com Group, Vera Bradley

Wednesday (9/16): Ispire Technology, Lennar, LuxExperience

Thursday (9/17): Innate Pharma

Friday (9/18): N/A

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What We’re Watching:

1. Lennar (LEN)

Lennar (-22.6% YTD) reports fiscal Q3 earnings Wednesday after the close, just hours after the Federal Reserve announces its rate decision. Shares closed Friday at $79.60, roughly 43% below their 52-week high and less than $3 above the low set earlier this month. With the 30-year mortgage rate back at 6.76%, this print is one of the cleanest reads this week on whether higher rates are finally breaking the housing consumer.

Last quarter, revenue fell 5.2% to $7.94 billion, while adjusted EPS came in at $1.31. Deliveries rose 2% to 20,519 homes, but new orders fell 4%, average selling prices dropped 5% to $371,000, and gross margin compressed to 15.6% from 17.8% a year earlier. The bright spot was incentives, which fell to 12.9% of selling prices from 14.1% the prior quarter — the first meaningful decline after three years of moving higher.

This quarter, management has guided to 20,500 to 21,500 deliveries and gross margin near 16%. The incentive line matters most. If Lennar can keep incentives falling without sacrificing orders, it would be the clearest sign yet that housing margins are finding a floor. If incentives move back higher as mortgage rates approach 7%, affordability is still winning. The September NAHB builder sentiment index also lands Wednesday morning, giving investors another read on housing just hours before Lennar reports.

• Analysts expect $1.29 GAAP EPS on Revenue of $8.37 billion.

• You can explore the most recent LEN investor release here and here.

2. Trip.com (TCOM)

Trip.com Group (-45.7% YTD) reports second-quarter results Tuesday after the close, with shares sitting at $39.02 — less than $1 above their 52-week low. The stock has been cut nearly in half even as revenue grew 17% last quarter, because management has warned that growth could slow to just 3% to 8% this quarter. Now there is a second question hanging over the stock: what does Trip.com’s earnings power look like after China forced changes to the way it does business?

Last quarter, revenue rose 17% to RMB 16.2 billion, with accommodation up 17%, transportation up 12%, and packaged tours up 19%. International remains the bright spot: gross bookings on Trip.com’s international platform grew roughly 65%, while inbound travel bookings into China jumped about 90%. The balance sheet also remains substantial, with RMB 104 billion, or roughly $15.1 billion, in cash and investments.

This quarter, the focus will be on revenue against that 3% to 8% growth guide and, more importantly, the outlook after July’s roughly $770 million antitrust penalty. Trip.com is ending certain exclusive distribution and pricing practices, and management has already warned that the transition could create fluctuations in financial performance. If international growth stays strong and management can show that margins stabilize as those changes take effect, the valuation starts to look difficult to ignore. If the second-half outlook stays vague and profitability resets lower, the discount has a reason to remain.

• Analysts expect -$0.20 GAAP EPS on Revenue of $2.32 billion.

• You can explore the most recent TCOM investor release here and here.

Investor Events / Global Affairs:

The Bank of Japan reaches for a 31-year high, $6 trillion of options expire on Friday, and Salesforce brings a financial framework to Dreamforce

• The Bank of Japan reaches for a 31-year high

The Bank of Japan's two-day meeting ends Friday in Tokyo, and markets have nearly fully priced a quarter-point increase that would take the policy rate to 1.25%, the highest since 1995. This would not be a surprise decision so much as a scheduled one. July's vote was 8-1, with board member Hajime Takata already dissenting in favor of exactly this move.

The bond market has front-run it. The two-year Japanese government bond yields 1.830%, the most since 1995, and the ten-year touched 3% for the first time since 1996. That matters well outside Japan, because rising domestic yields reduce the incentive for Japanese institutions to hold foreign bonds, and Japan is the largest foreign owner of US Treasuries. There is a currency layer as well: US Treasury Secretary Scott Bessent pressed Governor Kazuo Ueda on yen weakness at the end of August.

The Bank does not pre-announce its release time, so expect the statement Friday during Tokyo hours. Watch the vote split and Ueda's language on the pace from here, because he has already flagged that five hikes are now in the system and the cumulative effect is what the board is arguing about.

• $6 trillion of options expire on Friday

Friday is quarterly options expiration, and Citadel Securities counts roughly $6.2 trillion of notional value dated to September 18, with $9.6 trillion expiring across the first three weeks of the month, or about 35% of total US options exposure. Expirations that large tend to pin prices into Friday and then release them the following Monday.

The rebalance sits on top of it. Bloom Energy, Everpure and Illumina join the S&P 500 and Molson Coors, The Trade Desk and Builders FirstSource come out, with the changes effective before Monday's open. Index funds have to buy the adds and sell the deletes at Friday's close, which is why the closing auction is routinely the highest-volume minute of the quarter.

The positioning backdrop is what makes this one worth watching rather than just noting. Corporate pension plans are about 112% funded, the best since 2001, which creates a mechanical incentive to sell equities and buy long bonds to lock the surplus in. At the same time, demand for S&P 500 downside protection sits in the bottom percentile of the year. Cheap hedges plus a large expiration plus a Fed decision two days earlier is the kind of combination that has produced sharp air pockets before.

• Salesforce brings a financial framework to Dreamforce

Dreamforce runs Tuesday through Thursday at Moscone Center, with Marc Benioff's keynote Tuesday at 1 p.m. ET under the theme "Agentic Enterprise." The session investors should calendar is Wednesday at 4 p.m. ET, when Salesforce holds an investor and analyst meeting at the St. Regis. Investor relations says plainly that the sessions may cover how new products "may support or update the Company's financial framework, projections, and long-term opportunities."

The number to test is Agentforce. Last quarter Salesforce reported revenue of $11.3 billion, up 11%, current remaining performance obligations of $33.5 billion, up 14%, and Agentforce annual recurring revenue above $1.5 billion, up 240% year over year. Combined with Data 360, that figure runs near $3.9 billion. Full-year guidance stands at $46.1 billion to $46.4 billion, and a $25 billion accelerated buyback settles next month.

The tension is arithmetic. Total revenue grows 11% while the AI line grows in triple digits, which means the AI products are still too small to move the company. An updated framework on Wednesday afternoon would say management believes that changes in fiscal 2028. Saying nothing about the framework would say the opposite just as clearly.

Major Economic Events:

The Fed decides Wednesday afternoon, and retail sales land just before.

Monday (9/14): No major US releases; Canada August CPI at 8:30 a.m. ET, Treasury bill auctions

Tuesday (9/15): Empire State manufacturing survey for September at 8:30 a.m. ET, 20-year bond auction at 1:00 p.m. ET, FOMC meeting begins

Wednesday (9/16): August retail sales and import prices at 8:30 a.m. ET, NAHB housing market index and business inventories at 10:00 a.m. ET, FOMC decision and projections at 2:00 p.m. ET, Chair Warsh press conference at 2:30 p.m. ET, Treasury international capital data at 4:00 p.m. ET

Thursday (9/17): August housing starts and building permits at 8:30 a.m. ET, initial jobless claims, Philadelphia Fed manufacturing index, pending home sales at 10:00 a.m. ET, Bank of England rate decision at 7:00 a.m. ET

Friday (9/18): August industrial production and capacity utilization, Conference Board leading economic index, Bank of Japan rate decision in Tokyo

What We’re Watching:

1. Retail Sales

Wednesday at 8:30 a.m. ET the Census Bureau reports August retail sales, five and a half hours before the Federal Reserve announces its decision. Economists surveyed by The Wall Street Journal expect a 0.8% monthly gain and 0.6% excluding autos. July fell 0.6%, the first decline in nine months, to a $763.6 billion annual rate.

The July detail read worse than the headline. The control group that feeds into GDP fell 0.4%, nonstore sales dropped 2.2%, and inflation-adjusted volumes fell 0.7%. Sales were still up 5.0% from a year earlier, but average hourly earnings are growing 3.1% against CPI at 3.4%, which means real wages are going backwards even as the nominal totals look fine.

This is the last exhibit for anyone at the Fed who wants to wait. A rebound to 0.8% tells the committee the consumer absorbed higher prices and can absorb higher rates. A second straight decline hands the holdouts the only fresh evidence on their side, hours before they have to vote. Watch the control group rather than the headline, and watch autos, where one strong month can paper over weakness everywhere else.

Economists expect the following:

• Retail sales: +0.8% month over month expected vs. -0.6% prior

• Retail sales excluding autos: +0.6% month over month expected

2. Federal Reserve Rate Decision

The Federal Open Market Committee meets Tuesday and Wednesday and announces at 2 p.m. Wednesday, alongside a new Summary of Economic Projections and dot plot, with Chair Kevin Warsh taking questions at 2:30. The target range is 3.50% to 3.75% and has not moved since December. As of Friday's close, markets put the odds of a quarter-point increase at roughly 85% to 90%.

August's data built the case. Headline CPI held at 3.4% while core rose 0.3% month over month, a tenth hotter than expected, producer prices accelerated to 5.4% annually, and payrolls printed 162,000 against a consensus near 53,000. The July meeting was already a 9-3 hold, with Beth Hammack, Neel Kashkari and Lorie Logan dissenting in favor of an increase. Three dissents in one direction is usually the last stop before a majority.

The genuine split is between markets and economists. In a Reuters poll conducted September 4-9, 65 of 93 economists still expected a hold. Because the blackout period began September 5, Governor Christopher Waller's September 3 remarks are the last official word anyone has to work with. Watch the 2026 median dot, which stood at 3.8% in June, since a move to 4.1% or higher would signal that Wednesday is not a one-off. The two-year Treasury already sits at a two-year high and the ten-year is near 5%.

Economists expect the following:

• Federal funds target range: 3.75% to 4.00% expected

• Market-implied odds of a 25-basis point increase: roughly 85% to 90%

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