📈 Bulls Are Back

Good afternoon! Wizz Air is shaking up European travel with a new offer that might just be a game-changer for frequent flyers. The budget airline has launched a €499 ($550) annual “all you can fly” pass, giving travelers the freedom to hop on unlimited flights across its international destinations, from the beaches of Athens to the streets of Paris. But there's a catch—this introductory price is only available until Friday, after which it’ll rise to €599.

The pass lets you book one-way or roundtrip flights up to three days before departure, with an added flat fee of €9.99 per booking. Wizz Air plans to release just 10,000 of these golden tickets, with seats subject to availability. This bold move mirrors similar subscription offerings by U.S. airlines but is a fresh concept in Europe. It comes at a crucial time for Wizz Air, as the airline battles declining profits and low customer satisfaction. Despite the challenges, Wizz Air is betting that this new travel pass will give its bottom line—and its passengers—a much-needed lift.

MARKETS

• All three major U.S. stock indexes finished higher on Friday, capping off their best week of the year. After last week’s market jitters, traders regained their confidence, pushing the indexes to their biggest weekly gains so far in 2024.

• Despite some fluctuations between gains and losses during the session, the market ultimately ended on a high note. This week’s economic data, including disappointing housing construction numbers and a dip in consumer sentiment for August, kept investors on their toes. However, Thursday's rally, driven by positive consumer and labor data, helped ease recession concerns and boosted investor sentiment.

STOCKS
Winners & Losers

What’s up 📈

• H&R Block ($HRB) surged 12.11% after providing optimistic full-year revenue and earnings guidance that surpassed analysts' expectations. Revenue, adjusted EBITDA, and EPS also exceeded Wall Street estimates for the quarter.

• JD.com ($JD) jumped 8.48% after JPMorgan Chase upgraded the stock to "overweight" from "neutral" and raised the price target to $36 per share.

• Atlassian ($TEAM) climbed 5.03%.

• Alibaba ($BABA) increased 4.58% after its Q1 earnings beat estimates and revenues rose.

• Coinbase ($COIN) gained 4.15%.

• Baidu ($BIDU) edged up 3.23%.

• Dexcom ($DXCM) rose 3.16%.

What’s down 📉

• Repligen Corporation ($RGEN) tumbled 9.26% after offering a takeover bid to Maravai LifeSciences

• Astera Labs ($ALAB) dropped 5.52% after Evercore and JPMorgan lowered their price targets for the chipmaker.

• Tencent Music Entertainment ($TME) slipped 4.01%.

• Rivian ($RIVN) declined 4.00% on news that the company has suspended production of vans destined for Amazon.

• Celsius Holdings ($CELH) decreased 3.41%.

MARKETS
Best Week of 2024 — The Bulls Are Back

Wall Street just threw itself a little party, with the S&P 500 ($SPX) wrapping up its best week of the year. The market rallied 6.8% over the past seven days, which is basically the stock market equivalent of hitting all green lights on your morning commute. Traders are optimistic, riding high on a wave of economic data that’s showing the U.S. economy still has some fight left.

Dip Buyers to the Rescue

The market was in a bit of a funk, down for four straight weeks as fears swirled that the Fed was taking its sweet time cutting rates. But this week, the narrative shifted. Inflation’s cooling, consumers are still spending, and jobless claims just hit a low not seen since July. That was all the dip buyers needed to come out of hibernation and start snapping up stocks again. It’s like they couldn’t resist the 2024 discount sale.

The S&P 500 climbed to around 5,554, with most stocks joining the rally. Meanwhile, Wall Street’s “fear gauge,” the VIX, dropped below 15, suggesting investors are feeling pretty confident—or at least a lot less scared—about what’s coming next. Even the 10-year Treasury yield eased up a bit, falling to 3.88%. The dollar didn’t fare as well, posting its third straight week of losses, which is the kind of streak that makes currency traders break out in a sweat.

Eyes on Jackson Hole

But let’s not get too comfortable. Jerome Powell’s big speech at Jackson Hole is just around the corner, and everyone’s waiting to see if the Fed will deliver the rate cuts the market’s been hoping for. The betting money is on a 25-basis-point cut in September, but don’t be surprised if Powell plays it close to the vest. The Fed’s been pretty clear that it’s watching the data like a hawk, and with the labor market still a bit unpredictable, there’s no guarantee we’ll get exactly what we want.

The Bigger Picture

So what’s the takeaway? This week’s rally has traders feeling more optimistic, but it’s not time to throw caution to the wind. The U.S. economy might be dodging a recession for now, but with elections looming and global tensions simmering, there’s plenty of uncertainty to keep things interesting. The recent selloff hit only a small slice of the market, which could mean that this bull run still has legs. But if the economy stumbles, we could see another recalibration that brings valuations back down to earth.

For now, it’s a waiting game. Investors are holding their breath, hoping that Powell’s speech will confirm that the Fed’s ready to ease up on the brakes. But as always, the market’s next move will depend on what the data says—and right now, it’s saying, “proceed with cautious optimism.”

NEWS
Market Movements

• Texas Instruments ($TXN) is set to receive $1.6 billion in CHIPS Act grants and $3 billion in loans, the Biden administration announced Friday, marking the latest major award from a program designed to boost American semiconductor manufacturing.

• Rivian Automotive Inc. ($RIVN) has paused production of the electric commercial van it makes for Amazon due to a parts shortage, in the latest supply chain snafu for the EV maker.

• Mastercard Inc. ($MA) is cutting 3% of staff worldwide, according to a spokesperson for the payments network.

• Fox Corp. ($FOX), Warner Bros. Discovery Inc. ($WBD), and Walt Disney Co. ($DIS) were blocked by a judge from launching their streaming sports service called VENU one week before its rollout, taking a blow from their smaller rival FuboTV Inc. ($FUBO).

• T-Mobile ($TMUS) has been fined a record $60 million over data security violations.

• Stellantis ($STLA) shareholders are suing the company, claiming the automaker misled them about rising inventories and other issues.

• Buy now, pay later company Klarna is launching a checking account-like offering to better compete with banks. It’s their latest move to grab market share as it preps for an expected US IPO.

• Google ($GOOGL) has launched Imagen 3, its upgraded AI image generator, in the U.S., offering enhanced detail and lighting, as well as restrictions on sensitive subjects.

AIRLINES
Southwest Airlines vs. Elliott Management: Proxy Battle Takes Off

Elliott Takes Aim: The Battle for Southwest Airlines

Southwest Airlines ($LUV) is entering stormy skies as Elliott Investment Management launches a proxy fight that could drastically reshape the airline’s leadership. The activist investor, known for shaking up underperforming companies, has nominated 10 candidates to replace the majority of Southwest’s 15-member board, including former CEOs from Virgin America, WestJet, and Air Canada. This aggressive move is Elliott’s response to what it sees as Southwest’s failure to adapt to a rapidly changing industry.

Elliott’s Grievances: Old Playbook, New World

Elliott’s frustrations are rooted in Southwest’s reluctance to evolve its business model. While competitors like Delta and United have rolled out new strategies—such as bare-bones economy fares and baggage fees—Southwest has clung to its traditional approach, eschewing these profit-generating tactics. Elliott argues that this has left Southwest trailing behind, with its stock down 12% this year as the broader market has climbed 14%. The hedge fund, holding an 8% stake in Southwest, believes the airline’s current leadership—namely CEO Bob Jordan and Chairman Gary Kelly—hasn’t done enough to modernize the company and deliver for shareholders.

Southwest’s Counter: Standing by Its Team

Southwest isn’t backing down without a fight. The airline has publicly defended its leadership team, asserting that CEO Bob Jordan and his crew are well-equipped to navigate these challenges. To demonstrate its commitment to change, Southwest recently announced some of the most significant shifts in its business model in over 50 years, including moving to assigned seating and introducing premium options like extra legroom. However, Elliott remains unimpressed, dismissing these efforts as too little, too late.

The Stakes: A High-Flying Showdown

This proxy fight is about more than just boardroom politics—it’s a battle over Southwest’s future direction. With a rough year behind it, marked by slowing growth and operational setbacks, Southwest is at a crossroads. Elliott’s push for a board overhaul could lead to major strategic shifts, especially if shareholders side with the activist and opt for new leadership. The outcome of this fight will determine whether Southwest can regain its altitude in the fiercely competitive airline industry or continue to lose ground to its more adaptable rivals.

Calendar
On The Horizon

This week gave us a snapshot of where things stand with consumer spending, the job market, and the ongoing inflation battle. But don’t close your books just yet—next week promises a fresh set of economic updates. On Monday, we’ll get leading economic indicators, followed by the Fed’s July meeting minutes on Wednesday, and initial jobless claims on Thursday.

Meanwhile, the economic elite will gather in Jackson Hole for their annual powwow. All eyes will be on Jerome Powell as he takes the stage, likely dropping hints about potential rate cuts in September.

Earnings:

As the week wraps up, so does earnings season. While the list of quarterly reports is thinning out, there are still a few highlights to watch next week:

• Tuesday: Lowe’s ($LOW) and Medtronic ($MDT)

• Wednesday: Target ($TGT), TJX ($TJX), Analog Devices ($ADI), Macy’s ($M), Snowflake ($SNOW), and Zoom ($ZM)

• Thursday: Intuit ($INTU), Ross Stores ($ROST), Cava ($CAVA), and Baidu ($BIDU)