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Powell Fuels Market Surge
Fed Chair Powell signaled a possible September rate cut at Jackson Hole.
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🎯 In this issue:
Banana Bits: Finance headlines that actually matter
Market Recap: Powell’s rate cut hint sent stocks soaring
What’s Ripe / Rotten: The tastiest and most disgusting stocks
Technical Trip: Interview Q&A from Goldman Sachs
Deal Dispatch: M&A, IPOs, and other transactions
Market Snapshot
📉 Banana Bits
Fed Chair Powell signaled a possible September rate cut at Jackson Hole.
Wall Street traders led a surge in stocks and bonds from the Fed Chair’s dovish tone.
Cr*ptos also led a surge, with Ethereum reaching 2021 bull market highs.
Hedge funds slash oil bullish bets to 17-year low amid surplus fears.
Hedge funds are betting against the European car industry amid looming tariffs.
Google shares rose 3% on Friday on a report that Apple will use Gemini for revamping Siri.
Meta Strikes $10 billion, 6-year AI Infrastructure Deal With Google Cloud.
A threat to U.S chip players? Deepseek hints that the latest model may be supported by homegrown Chips.
Another threat to the Fed: Trump threatened to fire Fed Governor Lisa Cook.
Canada drops most of its retaliatory tariffs on U.S. autos, steel, and aluminum, which are not spared.
Zoom Communication rose 15% on Friday trading following a Q2 earnings beat and positive outlook.
Walmart and other retailers had had enough; now it’s the consumer’s turn.
From Italy to a Nasdaq Reservation
How do you follow record-setting success? Get stronger. Take Pacaso. Their real estate co-ownership tech set records in Paris and London in 2024. No surprise. Coldwell Banker says 40% of wealthy Americans plan to buy abroad within a year. So adding 10+ new international destinations, including three in Italy, is big. They even reserved the Nasdaq ticker PCSO.
Paid advertisement for Pacaso’s Regulation A offering. Read the offering circular at invest.pacaso.com. Reserving a ticker symbol is not a guarantee that the company will go public. Listing on the NASDAQ is subject to approvals.
Market Recap
Fed Shifts Toward Jobs
Markets just shrugged off their worries and hit their Fomo pedal when Fed Chairman Jerome Powell announced shifts in his hawkish stance, calling for a possible rate cut in the September Fed meeting.
This led to the Dow Jones Industrial Average surging 1.89% hitting an all-time record, while the S&P 500 led a 1.5% increase. Banks also led a rally, with the KBW index jumping 3.22%. The rally isn’t just confined to large caps; the Russell 2000 surged 4%.
Meanwhile, treasuries led a rally with 2-year yields sinking 10 basis points, leading to a dollar gauge of Bloomberg sliding 1%.
The Fed appears to be set for a September rate cut, but the real concern isn’t whether it’s 25 or 50 basis points—it’s the shift in focus from inflation to the weakening job market.
With unemployment edging higher, job growth slowing, and jobless claims rising, it could mean that the Fed’s 2% inflation target might be a thing of the past. Whether this new stance proves effective is uncertain, but shielding the economy from a deteriorating labor market and the drag of post-tariff effects could be the right move.
What's Ripe
Ubiquiti (UI) 30.6%
Ubiquiti announced an increase in quarterly dividends from 60 cents to 80 cents a share.
The board also approved a $500 million share buyback driven by revenue growth.
Zoom Communications (ZOOM) 12.7%
Zoom announced a second-quarter adjusted earnings per share of $1.53, beating analysts’ estimates of $1.38.
Revenue rose 4.7% to $1.22 billion and raised its fiscal year outlook.
What's Rotten
Intuit (INTU) 5.0%
INTU posted earnings per share of $2.75 on a 20% YoY increase in revenue to $3.83 billion.
Despite solid earnings, the company gave a weaker outlook, given by a drag from its other subsidiaries, such as Mailchimp and TurboTax.
Lowering EPS range to $1.19-$1.26 and revenue growth of 14%-15% from an initial EPS of $1.31 and a revenue growth of 16.2%.
Workday (WDAY) 2.8%
WDAY posted adjusted EPS of $2.21, beating analysts’ estimate of $2.11 on a revenue of $2.17 billion, a YoY increase of 14%.
Stock still stumbled 2.77% as it issued third-quarter guidance of $2.235 billion, just shy of analysts’ expectation of $2.237 billion.
🧠 Technical Trip
Interview Q&A from Goldman Sachs
👉 Want 1-on-1 recruiting help from Goldman Sachs bankers & 2,000+ top mentors? Apply to WSO Academy
🦈 Deal Dispatch
M&A, IPOs, And Other Notable Transactions
Coca-Cola is exploring a potential sale of Costa Coffee, which it bought for over $5 billion in 2018.
The U.S is snapping up a 10% stake in Intel for $8.9 billion, a $4 discount from its latest share price.
Loss-making cybersecurity firm Netskope files an IPO, following a surge in IPO activity.
E-commerce firm Pattern Group Inc. filed for an IPO, potentially raising $400 million.
Cenovus to Acquire MEG Energy in $5 Billion Oil Sands Merger.
Ventas to Acquire Long Island Senior Housing Portfolio for $600 Million.
China’s Dongfeng Plans to List EV Unit, leaving other divisions private.
OnlyFans boss raked in $701 million after dividend distribution hits record.
Banana Brain Teaser
Previous
During a trip, Francine traveled x% of the total distance at an average speed of 40 miles per hour and the rest of the distance at an average speed of 60 miles an hour. In terms of x, what was Francine’s average speed for the entire trip?
Answer: 12,000/(x + 200)
Today
In the first week of the year, Nancy saved $1. In each of the next 51 weeks, she saved $1 more than she had saved in the previous week. What was the total amount that Nancy saved during the 52 weeks?
In investing, what is comfortable is rarely profitable.
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Happy Investing,
Chris, Vyom, Ankit, Colin, & Patrick