👉 Xi Comes to Washington

Together with Waldo

Welcome to your new week.

The Federal Reserve raised rates last Wednesday for the first time since 2023, the ten-year Treasury yield pushed above 5%, and the Bank of Japan followed two days later. This week delivers the first evidence of what that costs: the 30-year mortgage has already jumped to 6.95%, new home sales land Thursday, Costco and AutoZone report on the consumer, McDonald's tries to reset in Chicago, and Xi Jinping arrives at the White House.

Key Earnings Announcements:

Another quiet week — headlined by Autozone, Costco, Darden Restaurants, and General Mills.

Monday (9/21): Abivax

Tuesday (9/22): AutoZone, Aytu BioScience, KB Home, MillerKnoll, Thor Industries, Worthington Enterprises

Wednesday (9/23): Cintas, Cracker Barrel, General Mills, H.B. Fuller, NeoVolta, Paychex, Stitch Fix

Thursday (9/24): BlackBerry, Costco Wholesale, Darden Restaurants, Legacy Education, Scholastic, TD Synnex

Friday (9/25): No major US reports scheduled

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What We’re Watching:

1. AutoZone (AZO)

AutoZone (-15.8% YTD) reports fiscal Q4 earnings Tuesday before the open, closing out the year with a 16-week quarter. Shares finished Friday at $2,855.31, even as the underlying business has been accelerating. Wall Street is looking for roughly $55 in EPS on $6.7 billion of revenue, or about 13% earnings growth on 7% sales growth. The question is whether improving demand can finally outrun the margin and execution concerns weighing on the stock.

Last quarter was AutoZone’s strongest sales quarter in three years. Revenue rose 8.4% to $4.84 billion, domestic same-store sales increased 4.1%, and commercial sales jumped 10.4%. EPS reached $38.07 versus $35.36 a year ago. Gross margin slipped 57 basis points to 52.2%, largely because of a LIFO charge, while AutoZone opened another 82 stores and finished the quarter with 7,856 locations.

This quarter, watch domestic commercial growth, gross margin, and whether AutoZone can finish its aggressive expansion plan without sacrificing returns. International remains the weak spot: reported comps rose 16.6% last quarter, but just 1.6% in constant currency. Management still expects 355 to 365 new stores for the year after opening only 199 through the first three quarters, leaving a heavy Q4 buildout. If domestic momentum holds and margins stabilize while that expansion lands on schedule, the selloff becomes harder to explain. If comps soften while costs rise, investors have a clearer reason to stay cautious.

• Analysts expect $53.89 GAAP EPS on Revenue of $6.71 billion.

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

2. Costco (COST)

Costco (+2.7% YTD) reports fiscal Q4 earnings Thursday after the close, wrapping up a 16-week quarter. Shares finished Friday at $895.31, and despite another year of double-digit sales growth, the stock has barely moved. That is the tension heading into Thursday: Costco’s operating performance remains remarkably consistent, but at a premium valuation, consistency alone may no longer be enough.

Last quarter, total revenue rose 11.6% to $70.53 billion and EPS climbed 15% to $4.93. Comparable sales increased 9.8%, or 6.6% excluding gas and currency, while digitally enabled sales jumped 21.5%. Membership fee income grew 10.7% to $1.37 billion, paid memberships reached 82.9 million, and U.S. and Canada renewal rates improved to 92.2%.

We already know demand stayed strong into quarter-end. August sales rose 9.9%, while full-quarter net sales increased 11.3% to $93.9 billion and adjusted comparable sales grew 6.7%. That shifts Thursday’s focus away from the headline sales number and toward membership economics and margin. Watch whether renewal rates keep moving higher and whether gross margin rebounds from 11.04% last quarter. If both improve while comps stay near current levels, Costco gives investors another reason to pay up for reliability. If margins remain pressured, strong sales alone may not be enough to move the stock.

• Analysts expect $6.53 GAAP EPS on Revenue of $94.85 billion.

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

Investor Events / Global Affairs:

McDonald's Investor Day, Zuckerberg takes the Connect stage in Menlo Park, and Xi Jinping arrives at the White House.

• McDonald’s Investor Day

McDonald's hosts an Investor Day in Chicago on Wednesday at 9:30 a.m., where management has promised details on what it calls the next phase of growth. The timing is uncomfortable and that is exactly why it matters. Shares are down more than 16% this year and touched a second consecutive 52-week low at $248.48 on the very day the company raised its dividend for the 50th straight year, joining the Dividend Kings.

The problem is the United States. Second-quarter revenue rose 4% to $7.10 billion and missed, and while global comparable sales grew 1.3%, US comparable sales rose only 0.8% as domestic traffic fell 4.5%. BTIG notes the Under $3 Value Menu did not resonate, and that roughly 90% of consumers who cut their visit frequency had already bought a BOGO or used a digital offer. Jefferies has since cut its price target to $325 from $350.

Analysts want three things Wednesday: medium-term financial targets, clarity on the development pipeline, and a capital allocation framework for what Seaport describes as a next-generation remodel cycle that could lift capital spending from 2028. BTIG's Peter Saleh expects McDonald's to moderate the pace of limited-time offers and gradually shift focus toward higher-income consumers, closer to Walmart's playbook.

• Zuckerberg takes the Connect stage in Menlo Park

Meta Connect runs Wednesday and Thursday at Meta's Menlo Park campus and streams publicly. Mark Zuckerberg's keynote is Wednesday at 4 p.m. PT, with the Developer State of the Union Thursday at 10 a.m. PT. The agenda is AI, AI glasses, and virtual reality, in roughly that order of investor relevance.

The financial context has changed sharply since last year's event. Second-quarter revenue grew 28% to $60.80 billion, but net income fell 14% to $15.85 billion and operating margin dropped to 31% from 43%, because Meta is spending AI money at a scale nobody else is matching. Full-year capital expenditure guidance was narrowed to $130 billion to $145 billion. Reality Labs, the division that builds the hardware on stage this week, generated $431 million of revenue against a $4.62 billion operating loss in a single quarter.

That gap is the reason to watch. Glasses are the first Meta hardware category with genuine consumer traction, and a credible path from demos to unit economics would reframe Reality Labs from a subsidy into a business. Watch for pricing, availability dates, and any developer revenue mechanics, since those are the details that turn a keynote into a forecast.

• Xi Jinping to Visit White House

Xi Jinping is scheduled to land at Joint Base Andrews on Wednesday, where President Trump is preparing to greet him personally, the first time he has met a foreign leader at the airport this term. The summit itself is Thursday at the White House, followed by a state dinner that Nvidia chief executive Jensen Huang is expected to attend. It is Xi's first visit to Washington since 2015 and the leaders' third meeting in under a year.

The deliverable everyone is watching is the trade truce struck in Busan last October, which expires in November. Extending it for another year would keep China's rare-earth export controls suspended and the tariff-escalation pause intact, leaving Beijing's aggregate US tariff burden near 20%. Negotiators are also discussing tariff reductions covering roughly $30 billion of goods on each side, including China's duty on American liquefied natural gas.

Everything else is harder. The agenda includes Nvidia H200 licensing and the 25% revenue-sharing arrangement, semiconductor export controls, fentanyl precursors, agricultural and Boeing purchases, and Taiwan, where a pending $14 billion US arms package has drawn Chinese warnings. Washington has confirmed the meeting; Beijing has not formally done so. Treat this as a management summit rather than a breakthrough.

Major Economic Events:

Flash PMIs Wednesday and new home sales Thursday are the first real data since the Fed hiked, and eight Fed speakers fill in the gaps.

Monday (9/21): Chicago Fed national activity index at 8:30 a.m. ET, Chicago Fed President Austan Goolsbee speaks in London at 6:30 a.m. ET, Treasury bill auctions, China loan prime rate decision, Japanese markets closed

Tuesday (9/22): Richmond Fed manufacturing and services surveys at 10:00 a.m. ET, New York Fed President John Williams at 10:05 a.m. ET, Vice Chair Philip Jefferson at 10:20 a.m. ET, Richmond Fed President Tom Barkin at 1:00 p.m. ET, 2-year note auction at 1:00 p.m. ET

Wednesday (9/23): MBA mortgage applications at 7:00 a.m. ET, S&P Global flash PMIs at 9:45 a.m. ET, Governor Michael Barr on housing at 10:05 a.m. ET, EIA petroleum status report at 10:30 a.m. ET, 5-year note auction at 1:00 p.m. ET

Thursday (9/24): initial jobless claims, second-quarter current account and final building permits at 8:30 a.m. ET, August new home sales at 10:00 a.m. ET, Kansas City Fed manufacturing survey at 11:00 a.m. ET, 7-year note auction at 1:00 p.m. ET

Friday (9/25): August durable goods orders at 8:30 a.m. ET, final September University of Michigan consumer sentiment at 10:00 a.m. ET, New York Fed President John Williams speaks at 5:15 a.m. ET

What We’re Watching:

1. New Home Sales

The Census Bureau reports August new single-family home sales Thursday at 10:00 a.m. ET, and consensus sits at 610,000 units at a seasonally adjusted annual rate against 607,000 in July. July was ugly: sales fell 10.5% month over month to the lowest level since January. This is the first housing demand print since the Fed raised rates, and the mortgage market has already reacted, with the 30-year average jumping to 6.95% for the week ending September 17 from 6.76%.

The rest of the housing picture is no better. The July median new home price fell 2.7% from a year earlier to $393,800, existing home sales slid 2.0% in August to a 3.98 million annual rate, and the National Association of Home Builders says single-family construction is heading for a second consecutive annual decline in 2026.

Look past the headline to the mix. In July, 53% of new homes sold for less than $400,000, up from 50% a year earlier, as builders leaned on rate buydowns, price cuts and smaller floor plans to move inventory. If that share keeps climbing while the median keeps falling, builders are buying volume with margin, and a modest August rebound would say very little about underlying demand.

Economists expect the following:

• New home sales: 610,000 annual rate expected vs. 607,000 prior

• July month-over-month change: -10.5%, the lowest level since January

2.  Flash PMIs

S&P Global publishes its flash September purchasing managers' indexes Wednesday at 9:45 a.m. ET, and the bar is high. August's composite output index hit 56.0, the strongest reading since April 2022, led by services at 56.5 while manufacturing eased to 53.9. Consensus looks for a modest cooling to 55.2 on the composite, 56.0 in services and 53.6 in manufacturing.

August's internals explained why the survey drew so much attention. Services hiring was the best in 19 months, while goods production was the weakest in 13. Input cost growth stayed elevated but eased, and selling-price pressures faded, which is the combination policymakers want to see: strong activity without a fresh inflation impulse.

That is what makes Wednesday the most important half-hour of the week. The Fed hiked last week on a unanimous 12-0 vote and its projections point to one more increase this year, so the question is no longer whether policy tightens but how much the economy can absorb. A composite holding above 55 with cooling prices paid supports the soft-landing-with-tighter-money case. A hot prices-paid reading, or a services number that rolls over hard, hands each side of the further-tightening debate exactly the evidence it wants. Flash PMIs for the euro area, Germany, France and the UK land the same morning.

Economists expect the following:

• Composite output: 55.2 expected vs. 56.0 prior

• Services: 56.0 expected vs. 56.5 prior

• Manufacturing: 53.6 expected vs. 53.9 prior

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