Good morning,

Markets are closed for Labor Day, but the headlines aren’t taking a day off.

Modi is huddling with Putin and Xi, reviving a three-way alliance that last met in 2024. It’s a quiet revolt against Trump’s latest tariff crusade targeting India.

Back home, Trump may be lining up another “Intel-style” equity deal... this time with nuclear energy companies eyeing billions in federal support.

Meanwhile, economists warn we’re tiptoeing into “stagflation-lite,” a milder version of the 1970s mess that combines sluggish growth with stubbornly high prices.

Unlike the 1970s, analysts think this phase will be shorter and less severe, but the symptoms are the same...

... inflation above target, GDP growth below trend, and a Fed caught in the political crossfire.

Let’s dive in.

Quote of the day 

Five things to know before opening bell

🇮🇳 Modi meets Putin and Xi

Indian Prime Minister Narendra Modi is in Tianjin today, sitting down with Vladimir Putin and Xi Jinping. The trio last gathered in 2024, and this year’s meeting signals a quiet revolt against Trump's trade policies.

⚛️ Nuclear gets the White House look

After the government’s $8 billion Intel stake, nuclear may be next in line. Compass Point’s Whitney Stanco points to Energy Department moves and $3.4 billion in Biden-era funding requests as reasons nuclear fuel producers could get a Trump-style equity deal. Centrus Energy (LEU) is already up 180% on the speculation.

📉 Jobs week on fast-forward

A four-day trading week, but no shortage of data. The big one lands Friday: the BLS jobs report, with economists bracing for just 75,000 gains and unemployment ticking to 4.3%. That would mark a fourth straight month of sub-100k hiring, the longest weak streak since 2020. Job openings due midweek are also expected near four-year lows.

✈️ Spirit crashes back into bankruptcy
Spirit Airlines (FLYY) filed for bankruptcy again, less than a year after its last trip through court. Rising costs and weak demand forced another restructuring plan that includes network cuts, fleet reductions, and layoffs. FLYY stock tumbled after hours Friday and is now down more than 86% year-to-date.

📊 PCE keeps pressure on the Fed

Friday’s inflation print hit expectations: headline PCE up 2.6%, core at a hotter 2.9%. Both remain well above the Fed’s 2% target. A September rate cut is still on the table, but analysts say any more aggressive move will be hard to justify with inflation on the upswing.

🧱 Trump’s tariffs just hit a wall

After months of threats, extensions, and finger-pointing, Trump’s tariff machine ran headfirst into a federal appeals court.

On Friday, the U.S. Federal Circuit Court of Appeals ruled that the president can’t use emergency powers to impose trade duties… a decision that could wipe out nearly 80% of tariff revenue currently in place.

⚖️ What the ruling says

• It upholds a lower court ruling from May
• It doesn’t stop tariffs from being collected yet
• It targets “emergency tariffs,” not sector-specific ones

Off the hook (for now) are steel, aluminum, and other Section 232 duties, which are targeted tariffs Trump imposed on supposedly national security grounds.

The rest of the sweeping “reciprocal” tariffs slapped on dozens of countries are hanging by a legal thread.

📢 Trump: ALL CAPS, no retreat

As expected, Trump didn’t take it quietly. He called the judges “Highly Partisan” and promised the Supreme Court would keep his trade policy intact… all while shouting on Truth Social that “ALL TARIFFS ARE STILL IN EFFECT.”

But if this ruling sticks, it could mean a $100 billion refund of previously collected tariffs and zero new revenue moving forward.

🔁 What’s next? Double down on Section 232

If the emergency powers are off the table, Trump’s next move may be to lean harder on sector-specific tariffs that are more likely to survive court challenges.

“Such tariffs are more likely to survive a legal challenge and continue into the next presidential administration,” said Reed Smith partner Mike Lowell.

💳 BNPL comes to groceries

Markets closed the week in the red, but Affirm (AFRM) stood out with a rally that followed monster earnings.

📊 By the numbers:

• EPS: $0.20 vs $0.11 expected

• Operating income: $58.1M vs a $73.5M loss last year

• GMV: $9.64B, up 43% YoY and above estimates

• Stock: +17% on the day, now up 50% YTD

Affirm CEO Max Levchin credited “consistent execution” and pointed to expansion plans across merchant partnerships and direct-to-consumer channels.

🥡 From splurges to groceries

But the BNPL growth story has a dark side, and it’s spelled out clearly in a new Motley Fool survey. What used to be a way to split up big purchases is now helping Americans cover basic expenses.

For the first time, BNPL use for groceries ticked higher than last year. And the debt isn’t always easy to manage:

• 2 in 5 users later regretted using BNPL

• 1 in 4 have missed at least one payment, up from 18% in 2023

⚠️ A necessity, not a trend anymore

BNPL isn’t just a novel fintech trend anymore. For more and more Americans, it’s a last-resort way out of the pinch. And if BNPL use is rising — especially for necessities — it’s a canary in the coal mine that something’s off.

Affirm may be thriving, but the message under the surface is clear: this growth isn’t coming from a strong economy.

🐢 Wall Street’s worst fear just got a new name... 

When market vets hear stagflation, they think bell bottoms, gas lines, and the economic mess of the 1970s.

And while today’s conditions aren’t a repeat just yet, more analysts are warning we could be tiptoeing into a softer version of that same trap.

Call it "stagflation-lite."

Friday’s PCE report didn’t help. Inflation remains well above 2%, and if this week’s jobs data doesn’t meet expectations (quite pessimistic at this point), the case for stagflation gets stronger.

☁️ Not 1970s bad, just bad enough

The good news is that most forecasters agree this isn’t a full rerun of the ‘70s and more like a lighter remix.

“Investors must come to grips with inflation above the Fed’s target amid a backdrop of slower growth, setting things up for stagflation-lite,” said Jeffrey Roach, chief economist at LPL Financial.

“Eventually, stagflation-lite will give way, either because inflation soars or because economic growth returns,” added Chengjun Chris Wu, senior portfolio manager at Federated Hermes.

“Full-blown stagflation is rare and likely to stay that way.”

Economists at RBC, including Frances Donald and Carrie Freestone, think the trend will likely continue “with slowing and below-trend growth coupled with uncomfortable and rising price pressures into year-end.”

📊 What “stagflation-lite” would look like

Mark Zandi, chief economist at Moody’s Analytics, expects:

• 3.5% to be the upper bound for PCE inflation — far below the double-digit peaks of the ‘70s

• 1% GDP growth, which would narrowly avoid a technical recession

Not exactly a boom, but not disco-era doom either.

🎯 And then there’s the Fed

Stagflation brings one of the Fed’s most painful dilemmas: prioritize the labor market or stable prices? That's on top of all the political drama.

With President Trump pulling the strings to bring the Fed under his sway, and Jerome Powell’s term ending in May, Zandi warns the real wildcard isn’t just policy… It’s independence.

“A reasonable question is whether the Fed will remain sufficiently independent after Powell’s term is up,” Zandi said.