10 Things You Need to Know: The Fed Heads to Jackson Hole
We just closed out another exciting week which saw:
- Conflicting inflation reports with a cool CPI and hot PPI
- CoreWeave (CRWV) report a wider loss than expected, crushing the stock
- Circle (CRCL) report a loss in its first post-IPO earnings report
- Warren Buffett bet big on a major U.S. healthcare provider
- A face-to-face meeting between President Trump and Russian President Putin
And MORE! So it's time for the 10 things you need to know right now.
Starting with…
1. Traders Pare Rate Cut Bets – Fed Heads to Wyoming
A 50 basis point rate cut was creeping up in conversation after the cooler-than-expected CPI report on Tuesday. But Thursday's hot PPI put an end to that talk.
Traders are still overwhelmingly betting the Fed's first rate cut of the year will come at the September 17 meeting :
The PPI signaled more tariff-related pain may be ahead for consumers as companies pass down rising costs to buyers.
Fundstrat's Tom Lee shook off the hot PPI on Thursday saying, “I don’t think that one data point is enough to change a thesis around the trajectory of inflation. Our base case remains that this is going to ultimately be viewed as transitory by the market.”
We'll get a clearer picture on the Fed's outlook as the annual Jackson Hole Symposium begins on Thursday.
This year's theme is “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.”
Fed Chair Jerome Powell's speech is slated for Friday, August 23.
Coincidentally, the Fed cut rates for the first time in 4 years at its September 2024 meeting. And that was a 50 basis point cut.
2. Next Week's Earnings Are All About Retail
The retail sector is in focus for next week's slate of earnings.
Here's the schedule:
- Tuesday AM: $HD
- Wednesday AM: $TJX $LOW $TGT
- Thursday AM: $WMT $BABA
- Friday AM: $BJ
Analysts are loving Walmart (WMT) right now:
That may just be the name to watch in this group next week.
Friday's retail sales report showed U.S. consumers are still spending.
July retail sales rose 0.5% monthly, while retail sales excluding autos rose 0.3%. Both were in line with expectations.
3. Ethereum Inches Toward New All-Time High
Ethereum crossed $4,700 early Thursday morning before pulling back and stalling.
The previous all-time high is $4,868. Is a new record mark ahead?
Tom Lee remains extremely bullish. In a note on Wednesday he wrote, “We have stated multiple times we believe Ethereum is the biggest macro trade over the next 10-15 years.”
While Ethereum gets closer to its record high, Bitcoin notched a new one this week.
Bitcoin rose to a high of $124,496 overnight on Wednesday before getting hit by the hotter-than-expected PPI Thursday morning.
4. Is The Next Big Crypto Play Bullish?
New crypto exchange Bullish (BLSH) debuted on the NYSE Thursday at $90 per share, 143% higher than its IPO price of $37.
The company is led by former New York Stock Exchange President Tom Farley and backed by Peter Thiel.
Thiel also bet big on BMNR – buying a 9% stake in the company back in July – and we all know how that's worked out since then.
Here's what the Bullish CEO had to say about their future:
“The last leg of growth in crypto, the last 10 years, was basically all retail and … the institutional wave has begun. It’s here, and it’s a question of how big it will be. Based on the reception we’ve gotten thus far as part of our IPO, it feels like institutional investors feel like this could be the moment.”
5. Housing Market Updates Ahead
It's going to be a busy week for those focused on the housing market.
We'll kick things off Monday with the National Association of Homebuilders August sentiment index at 10:00am ET. Will the recent cooling of rates have builders feeling better about the future?
The market will also get a look at how building is going with July Housing Starts and Building Permits out at 8:30am ET and then existing home sales on Thursday at 10:00am ET.
In addition to all that data, homebuilder Toll Brothers (TOL) reports earnings after the market close on Tuesday, the first of the largest builders in the U.S. to report Q3 results.
Of note, Berkshire Hathaway appears to believe in the future for homebuilders as they added Lennar (LEN) and D.R. Horton (DHI) to their portfolio this week.
Speaking of…
6. Warren Buffett Bets Big on UNH
Warren Buffett triggered a huge rally in UnitedHealth Group (UNH) on Friday after Berkshire Hathaway (BRK.A) revealed a $1.6 billion stake in the company in a regulatory filing Thursday.
As of Thursday's close, UNH was down nearly 122% from the April high:
UNH is the largest private health insurer in the U.S. and has been under fire in the face of public scrutiny over the rising costs of health care.
The company is even facing a DOJ investigation into its Medicare billing practices.
So why would Berkshire buy the stock now? Buffett has a history of bargain investing and this appears to be the latest move in that direction.
UNH is now the 18th largest position in the Berkshire portfolio.
Other names added this week include Nucor (NUE), Lamar Advertising (LAMR), and Allegion (ALLE).
7. The Week Could Be Light
Although we are getting data on the housing market and some key retail earnings, there aren't any big market-moving numbers set to be released next week.
Take a look at the full calendar:
But one earnings name could be one to pay attention to…
8. Keep An Eye On PANW Earnings
Palo Alto Networks (PANW) reports earnings after the market close on Monday.
Software stocks have been beat up lately on fears of AI disrupting the space.
The market expectations are:
- $2.50 billion in revenue, +9.31% from last quarter
- $0.89 EPS, +10/7% from last quarter
And the overall consensus from analysts is positive on this name:
PANW is down over 20% from its most recent post-earnings high of $210.39 on July 29.
This earnings season, it's been all about where a stock is trading into the print, so this may be one to watch!
9. Is INTC the Next MP?
Intel (INTC) shares rallied on Friday after Bloomberg reported the U.S. government is considering an investment in the chipmaker.
It was Intel's best week in more than 25 years.
Analysts say such an investment would revive the struggling chipmaker and reduce U.S. reliance on foreign companies like Taiwan Semiconductor (TSM).
How the deal could be structured is still up in the air.
But the most recent stock the U.S. government invested in has seen a huge surge.
MP Materials (MP) announced a $400 million investment from the Defense Department in July.
Since then, the stock has rallied over 170%!
10. JR Romero Is Dumpster Diving in This Market
JR Romero says “garbage stocks” are working in this market.
Watch below to hear why riskier names are giving him the best reward:
Want to trade with JR for a week?
He's opening up his Momentum Express VTF® for free August 25-29. It's bound to a be a big week with Nvidia (NVDA) on the earnings calendar!