On the Right Note: July 2026

On the Right Note is Raison's regular analytical digest covering our structured notes portfolio. Each issue goes beyond the numbers — we break down the market context, explain how protective mechanisms work, and track strategy performance on real observation dates. The digest helps note holders better understand their assets and gives prospective investors a clear picture of how protection features work in practice.

July: Semiconductor Correction Amid a Strong Earnings Season

In July 2026, key indices held near their highs, though a notable correction unfolded within the semiconductor sector.

Between July 1 and July 31, 2026, observation dates passed for 8 notes:

• 8 notes remained active.
• Memory Effect was triggered on 3 active notes.

Market Overview

July was shaped by several crosscurrents.

• Semiconductor correction. Within otherwise strong indices (China aside), chipmakers and related equipment stocks saw a notable correction — driven by news of China's growing capabilities in the sector and concerns over the payback period on AI capital spending.
• Strong earnings season. 86% of S&P 500 companies beat profit estimates, and 77% beat revenue estimates.
• Middle East tensions. A fresh bout of instability pushed oil prices and inflation expectations higher again. Despite this and the new Fed chair's hawkish rhetoric, the rate held at 3.50–3.75%.
• The end of the SaaSpocalypse. Software companies posted moderate growth, successfully integrating AI into their products and development while maintaining high gross margins.

Key indicators (as of end of July 2026):

• S&P 500: July −0.13%, year to date +9.41%
• Nasdaq Composite: July −3.20%, year to date +9.17%
• Russell 2000: July −3.08%, year to date +18.11%
• STOXX Europe 600: July +1.3%, year to date around +9.7%
• CSI 300: July around −7.9%, year to date −0.90%
• VIX (volatility index): 15.99 at month-end

Impact on Structured Notes

The month had no material impact on structured notes overall. Coupon products tied to US equities held steady, as the absence of major market moves let underlying assets keep a comfortable buffer above protective barriers.

Notes in Detail

From market trends to the actual numbers. Below are the note cards for all observation dates that fell in July, grouped into categories: Active — notes continuing to run, Autocalled — closed early, and those where the Memory Effect was triggered.

Each card includes:

• Basket composition: the underlying assets we are tracking.
• Coupon status: whether the payment was confirmed for this period.
• Actual income: how much the investor earned per $100,000 invested.

Active Notes

Memory Effect

On three notes, some underlying assets were below the coupon barrier on the observation date. Under the note terms, coupons are not lost: they are recorded and will be paid once the underlying assets recover.

Why the Memory Effect Was Triggered

SMCI and ENPH remained below the coupon barrier on the observation date — a familiar situation from previous issues of the digest.

July brought a notably more positive update on SMCI: the company expects revenue near the low end of its own guidance, but sharply raised its gross margin outlook — from 8.2–8.4% to 15–17% — while new orders topped $60 billion. This confirms resilient demand for AI servers and partly eases concerns about the quality of that growth, though final conclusions should wait for the full earnings report — a large capital raise still carries dilution risk.

News on ENPH was mixed: quarterly revenue and margins improved, European sales grew, and cash flow stayed positive. At the same time, US demand keeps declining and revenue remains well below last year's levels. New inverters, batteries, and AI data-center solutions support the long-term thesis but have yet to offset weakness in the core residential solar segment.

Li Auto remains the main source of pressure on the note. In July the stock partly recovered after the launch of the updated L6, but a fundamental turnaround is not yet confirmed: deliveries are holding at around 30,000 vehicles a month, and July's volume was essentially unchanged year over year — for comparison, competitor NIO reported a 71% jump in July deliveries. The main risk for Li Auto is not liquidity but the sharp drop in margins and the loss of its former edge in the premium hybrid SUV segment. A durable recovery would need both higher deliveries and vehicle margin returning to at least double digits.

Doximity (DOCS) issued more cautious 2026 guidance. Pressure on the stock was previously attributed to a temporary pause in pharma clients' marketing budgets, but the new guidance points to a more serious slowdown: for FY2027 the company expects revenue growth of just 3–5% alongside declining adjusted EBITDA, as weak demand from pharma clients combines with heavier investment in AI Search.

The core business remains strong, though: FY2026 revenue grew 13%, free cash flow rose 19%, and the platform is used by more than 85% of US physicians. The first AI Search contracts are signed, though management does not expect a meaningful revenue contribution this year.

The current situation across all three notes illustrates how the Memory Effect works: even under pressure on individual sectors, coupon income is not lost but preserved until recovery. Each underlying asset has concrete fundamental reasons to expect a return above barrier levels within the notes' lifespan.

Results and Outlook

July confirmed the effectiveness of Raison's protective strategies: capital-preservation and coupon-memory mechanisms let the portfolio deliver steady returns despite localized volatility in individual sectors. Observation dates passed for 8 notes during the month, of which 5 coupons were paid, and there were no autocalls.

Even amid temporary corrections in individual stocks, the Memory Effect protects investor returns by preserving coupons until the market recovers. We continue structuring products around current macro trends, balancing high yield with the quality of protection.

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