🛼 Let the good times roll

Friday was a romp for stocks after Fed Chair Jay Powell’s speech at the Jackson Hole Economic Symposium, which signaled he’s considering “adjusting policy.” 

Putting it all together: the Fed is saying for one half of its mandate (inflation), the problem looks to be short-term in nature, while the job market is in a more precarious position. This scenario has taken shape at a time when the Fed chief judges the policy rate to be modestly restrictive — that is, putting downward pressure on economic and job growth as well as inflation, which offers some scope to reduce rates.

That kicked off a bonanza: 

• Stocks that cater to people spending disposable income popped immediately. Shares of US airlines took off Friday morning, with American, Delta, and United all up 6% or more. Cruise stocks and travel-booking sites rose on the speech as well.

• Crypto got in on the action, too, led by ethereum, which was up by double digits following the comments. All major cryptos were in the green on the news.

• Meme stocks also took off. A basket of meme stocks compiled by UBS was on fire on Friday, led by Opendoor Technologies, which finished the day up 39%. Head of EMJ Capital Eric Jackson, who’s been spearheading retail enthusiasm for the stock, told us that the outlook for rate cuts would be “nice to have in the back pocket with the other constellation of pluses in favor of Opendoor.”

Anyway, the market was certainly digging what Powell was dropping in Jackson Hole. 

The Takeaway

The implied odds of an interest rate reduction at the central bank’s September meeting surged to 90% from 72% heading into the speech. More than 50 basis points of easing are now priced in through year-end.

Read more.

• Walmart vs. Target: Last week, both Walmart and Target reported disappointing earnings, but for very different reasons. Walmart posted its first profit miss since May 2022, but same-store sales grew almost 5% and it raised revenue growth guidance. Meanwhile, Target told almost the opposite story: earnings came in above expectations, but same-store sales fell 1.9% and profit dropped by almost 20%. Target has always been the David to Walmart’s Goliath, and unfortunately for the former, it’s never looked smaller compared to the retail giant, as this stark chart shows. 

• Can Nvidia sell ships to China or not? It’s been a long will-they-or-won’t-they saga rivaling Rachel and Ross’ “Friends” romance for Nvidia’s chips and China. Markets Editor Luke Kawa has a longer breakdown of the story here, but in short: after an intense lobbying campaign, Nvidia thought it would be able to sell its tailor-made AI chips to China by mid-July. But the chip designer got those export licenses only after striking a novel deal to send 15% of that revenue to the US government. Then Nvidia reportedly halted production of those chips, putting the plan “on a break” after China told local companies to stop buying the H20s.

George Arison, CEO of Grindr, told Sherwood News the company is leaning hard into AI both internally and externally with features like Wingman. It’s also building “a half dozen or so” other businesses. And Arison shared a surprising choice for another company he thinks stands out for doing something really interesting.

Read the entire in-depth interview.