Earnings Week Puts Markets on Edge

The Big Story: Microsoft and Mega-Cap Earnings

This week is one of the heaviest earnings weeks of the year. MSFT Microsoft reports Q4 fiscal 2026 results on Wednesday. Markets are watching closely. The cost to borrow Microsoft shares has doubled in a month — a sign that institutional players are quietly building hedges around a $2.8 trillion position. Short interest remains modest at just 1.2% of free float, but the rising borrow cost tells a more cautious story.

VRT Vertiv also looms large. The data centre power maker is up 79% year-to-date. Options have turned defensive ahead of its July 29 print. That earnings anxiety is spreading across the AI infrastructure trade.

Short Sellers and Beaten-Down Names

Bears remain heavily committed to several distressed names. WOLF Wolfspeed sits at 80% SI % FF despite a 162% three-month price surge. HTZ Hertz is at 75% — and borrow availability has hit zero, shutting out new short sellers entirely. CHWY Chewy rounds out the trio at 72%.

Macro Backdrop: Oil and Rates

Brent crude has broken back above $100 per barrel. The FT reports this is sparking a global bond sell-off as inflation expectations reset. Higher-for-longer rate fears could weigh on rate-sensitive sectors like REITs. VICI Properties already faces falling analyst targets alongside a key dividend test.

Europe: AI Costs Rise

Meta is paying up for AI infrastructure. The company faces higher borrowing costs in a new $12 billion data centre financing deal. BlackRock led the deal but met investor anxiety over rising AI exposure. Spanish-listed COXG Cox Infrastructure Group also drew attention — expensive to borrow but cheap on earnings, a combination that draws short-seller interest.