Revisions Wreck the Rally

Markets got sent into a tailspin after terrible July jobs data combined with steep revisions for May and June.

August 04, 2025

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🎯 In this issue:

  • Banana Bits: Finance headlines that actually matter

  • Market Summary: What the heck happened in the market on Friday

  • What’s Ripe / Rotten: The tastiest and most disgusting stocks 

  • Technical Trip: Interview Q&A from D.E. Shaw

  • Lesson from the Library: Investment Banking Interview course sneak peek

  • Deal Dispatch: M&A, IPOs, and other transactions 

Market Snapshot

📉 Banana Bits

Former Zillow exec targets $1.3T market

The wealthiest companies tend to target the biggest markets. For example, NVIDIA skyrocketed nearly 200% higher in the last year with the $214B AI market’s tailwind.

That’s why investors are so excited about Pacaso.

Created by a former Zillow exec, Pacaso brings co-ownership to a $1.3 trillion real estate market. And by handing keys to 2,000+ happy homeowners, they’ve made $110M+ in gross profit to date. They even reserved the Nasdaq ticker PCSO.

No wonder the same VCs behind Uber, Venmo, and eBay also invested in Pacaso. And for just $2.90/share, you can join them as an early-stage Pacaso investor today.

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.

Crazy Week for the Market 

Let’s face it. Last week was a sh*t show by all metrics. 

First, on Wednesday (Fed Day), Jay Powell left rates unchanged, which was a surprise to no one. But for the first time, we saw a growing number of dissenters, highlighting that there are some cracks forming internally at the Fed’s decision table. 

The very next day, PCE came in showing inflation increased from last month. This is the Fed’s preferred inflation data because it represents a broader and more accurate picture of US consumer spending behavior versus CPI. 

Ok, so far so good. I get it. Inflation is still pretty sticky, so if the Fed wants to wait a bit before lowering interest rates, that seems logical. Then the major blow came in on Friday with the Jobs report. 

 

  • +73k jobs were added in July versus >+100k expected (the additions were almost entirely in the healthcare sector) 

However, the big kick in the nuts was the massive downward revisions for June and May.

  • June revised downward from +147k to +14k jobs added

  • May revised downward from +144k to +19k jobs added

 

To be clear, revisions aren’t out of the ordinary; they happen after each report. But the BLS taking a combined 258k jobs and saying “whoops, actually these don’t exist, our bad” is crazy. 

Most importantly, it kind of shatters the entire thesis that the economy was doing well, which was keeping equities propped up. Now, it’s forcing investors to consider whether the economy was as healthy as we thought all along. 

The second part of all this is that it puts the Fed in a position where it probably has to cut rates in September. Traders went from pricing in a ~20% chance of a rate cut to almost 80% within the span of a week. That’s a faster change of mind than your date actually deciding she’s not that interested in you after meeting you for the first time.

Anyway, the problem is if the Fed cuts, that’s going to spike inflation even more than the already high 2.7% we’re currently sitting at. Combine that with a fresh set of tariffs announced right before the weekend…. We should all be thanking our lucky stars that the market didn’t drop more than 2% on Friday! 

What's Ripe

Workiva (WK) 32.1%

  • The enterprise software company’s earnings report was extremely well received. Revenue of $215mn was up 21% YoY.

  • The outperformance was primarily driven by subscription revenue and building solutions that continue to resonate with the customer base.

Reddit (RDDT) 17.5%  

  • All tech stocks are bowing down to Reddit after the company reported revenue growth of 78%, the fastest in 3 years.

  • The $500mn reported revenue beat consensus estimates of $425mn, driven by a boost in AI licensing deals.

What's Rotten

Coinbase (COIN) 16.7%

  • Despite crushing earnings ($5.14 EPS vs $1.49), the stock was down 16% on lower trading volumes.

  • Investors are choosing to ignore the bear for now and focusing on the company’s long-term viability in the cr*pto game.

Amazon (AMZN) 8.3%

  • Amazon’s stock got sniped despite a mostly good earnings report, with AWS growing revenue by 17.5%.  Investors were disappointed by the company’s cloud segment performance.

  • Operating Income guidance came in lower due to macro headwinds and some softness in the cloud division.

🧠 Technical Trip

Interview Q&A from D.E. Shaw

Question

Answer

E = 10 × 31 = 310 ≈ 3.33

👉 Want 1-on-1 recruiting help from DE Shaw bankers & 2,000+ top mentors? Apply to WSO Academy

📚 Lesson from the Library

Investment Banking Course Sneak Peek 

Check out a snippet from our  Investment Banking interview Course 

 

🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

Banana Brain Teaser

Previous

Of 30 applicants for a job, 14 had at least 4 years of experience, 18 had degrees, and 3 had less than 4 years of experience and did not have a degree. How ,amu of the applicants had at least 4 years of experience and a degree?

Answer: 5

Today

During a certain season, a team won 80% of its first 100 games and 50% of its remaining games. If the team won 70% o its games for the entire season, what was the total number of games that the team played?

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Individuals who cannot master their emotions are ill-suited to profit from the investment process.

Benjamin Graham

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Happy Investing,
Chris, Vyom, Ankit, Colin, & Patrick