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⚖️ Google Is Back In The Hot Seat

+ CPI Tomorrow — Inflation Data Holds the Key

Good afternoon! DirecTV is in a bit of a pickle with Disney, and their solution? Pay customers to subscribe to competitors. Yep, you read that right. As Disney pulls ABC, ESPN, and other networks from DirecTV’s lineup—right before Monday Night Football—DirecTV has partnered with Sling and Fubo to keep its customers happy. DirecTV is offering credits and discounts, including a free week of Fubo and $30 off the first month or a $30 credit toward Sling’s ESPN package. It’s a wild move, but anything to keep customers tuned in.

The drama doesn’t stop there. DirecTV filed a complaint with the FCC, accusing Disney of unfair negotiation tactics, claiming they’re forcing anticompetitive bundling. Over 11 million subscribers are caught in the crossfire, missing out just as the NFL season kicks off and the presidential debates loom. Meanwhile, DirecTV is still moving ahead with price hikes in October, ranging from $2 to $10 depending on the service. Negotiations are ongoing, but don’t expect your bill to stay the same.

MARKETS

*Stock data as of market close*

  • Tech stocks came to the rescue on Tuesday, with the Nasdaq climbing 0.84%, giving Wall Street a much-needed breather in September’s wild ride. The S&P 500 notched its second win in a row, gaining 0.45%, while the Dow couldn’t shake off the bank blues, slipping 0.23%. All eyes are now on the upcoming inflation report, which could be the key to unlocking the Federal Reserve’s next move on interest rates.

  • Meanwhile, markets stayed wobbly as investors navigated economic and political twists. Tech soared, but bank stocks lagged after a slew of cautious comments from top execs. With oil prices dropping to their lowest since 2021, the market is holding its breath for Wednesday’s inflation data and tonight’s showdown between Kamala Harris and Donald Trump, which could shake up expectations for both the election and the Fed’s rate decision.

STOCKS
Winners & Losers

What’s up 📈

  • Oracle ($ORCL) jumped 11.44% after exceeding fiscal first-quarter earnings expectations on both the top and bottom lines. The company also announced a strategic partnership with Amazon Web Services to bring its database services to AWS.

  • Boot Barn ($BOOT) rose 9.94% after announcing preliminary same-store sales growth of 4% in the fiscal second quarter, ahead of a presentation at the Piper Sandler Growth Frontiers Conference.

  • Broadcom ($AVGO) gained 5.25% following Apple's launch of new mobile and wearable hardware. A report from KeyBanc highlighted Broadcom as a potential winner from Apple's iPhone 16 components.

  • Tesla ($TSLA) increased 4.58%, boosted by a new Buy rating from Deutsche Bank, with a price target of $295.

  • Aurora Innovation ($AUR) surged 13.25%.

    Marathon Digital ($MARA) climbed 9.03%.

    Chewy ($CHWY) rose 6.03%.

What’s down 📉

  • Ally Financial ($ALLY) dropped 17.62% after CFO Russell Hutchinson revealed increased credit challenges, especially with auto loans, during the third quarter at an industry conference.

  • Hewlett Packard Enterprise ($HPE) fell 8.52% after announcing plans to sell $1.35 billion in Series C mandatory convertible preferred stock, with proceeds to fund its acquisition of Juniper Networks.

  • JPMorgan Chase ($JPM) declined 5.19% following a warning from COO Daniel Pinto at an industry conference that market expectations for net interest income in 2025 are too high.

  • ExxonMobil ($XOM) dropped 3.64% after backing out of a race to buy oil assets in Namibia, coupled with falling crude oil prices due to supply and demand concerns.

  • Goldman Sachs ($GS) fell 4.39% alongside other banks, affected by JPMorgan's cautious comments.

  • General Motors ($GM) slid 5.44%.

    Ford ($F) declined 3.19%.

BIG TECH
Google Back in the Hot Seat — The Antitrust Saga Continues

The Justice Department is back for round two with Google, and this time it’s all about ad-tech. Weeks after a judge ruled the tech behemoth was illegally dominating search, another trial kicks off, this time in Virginia, targeting Google’s stronghold on digital advertising technology. The lawsuit claims Google has an unlawful monopoly over tools that buy and sell digital ads—tools that are essential for keeping online publishers afloat.

The Case: Google’s Ad-Tech Monopoly?

The trial, expected to last several weeks, aims to determine whether Google’s control of both the buy-side and sell-side of the ad-tech ecosystem is crushing competition. The Justice Department, backed by 17 states, argues that Google’s practices have locked out rivals, with advertisers and publishers feeling forced to use its tools. They’re demanding Google shed its Ad Manager, which generated $368 million in profits from $7.4 billion in revenue in 2020 alone.

This isn’t the first time Google has been hit with monopoly claims. A federal judge recently ruled that Google illegally maintained dominance in search, but this case could potentially cut deeper. If Google loses, it might have to sell off key parts of its advertising business, which is crucial to Alphabet’s overall revenue—78% of its $307 billion annual earnings come from advertising.

Google’s Defense: The Market Has Changed

In response, Google claims the Justice Department is stuck in the past, focusing on outdated desktop advertising models while consumer attention has shifted to mobile apps, social media, and streaming platforms like TikTok and Peacock. Google’s legal team insists that the ad-tech space is more competitive than ever, with alternatives like Microsoft and Amazon gaining ground.

But the trial has already hit some bumps for Google. The company is facing scrutiny for allegedly deleting internal chat messages relevant to the case, something the judge criticized as "not the way a responsible corporate entity should function." This issue could factor into how the court weighs the credibility of witnesses.

What’s Next for Google?

The trial, held without a jury, could significantly alter Google’s ad-tech empire. A government win would likely mean divesting parts of Google’s ad business, untangling years of acquisitions. With Google’s advertising technology so deeply embedded in the digital landscape, this case could reshape the industry for advertisers and publishers alike. And with antitrust regulators in both the U.S. and Europe breathing down its neck, Google’s struggles are far from over.

This is just the beginning of a legal battle that could send shockwaves through Big Tech.

NEWS
Market Movements

ECONOMY
CPI Tomorrow — Inflation Data Holds the Key

This week, the Federal Reserve is set to get its final look at inflation numbers before its next policy meeting on September 18. With interest rate cuts all but certain, the key question now is: how big will the cut be? The answer hinges on two upcoming inflation reports—the Consumer Price Index (CPI) and the Producer Price Index (PPI). These reports are expected to clarify the Fed’s next move, especially after Friday’s jobs report provided little guidance.

CPI & PPI: The Deciding Factors

On Wednesday, the Bureau of Labor Statistics will release August’s CPI report, followed by the PPI on Thursday. Economists are predicting a 0.2% monthly increase for both headline and core CPI, bringing annual inflation rates to 2.6% and 3.2%, respectively. The PPI is expected to mirror these figures. While the Fed’s preferred inflation measure is the Personal Consumption Expenditures (PCE) index, this week’s CPI and PPI readings will still play a crucial role in determining the size of the upcoming rate cut.

The debate is now centered on whether the Fed will opt for a modest 25-basis-point cut or go bigger with a 50-basis-point reduction. Futures markets currently favor a quarter-point cut, with odds hovering around 71%. However, a stronger-than-expected inflation reading could push the Fed toward a more aggressive move. Economists like Dean Baker, co-founder of the Center for Economic and Policy Research, believe inflation data should be favorable for at least a small cut.

Shifting Focus: From Inflation to Jobs

While inflation has been the Fed's main concern for months, the focus is now turning toward the labor market. Hiring has slowed significantly, with nonfarm payroll gains averaging just 135,000 per month since April, down from 255,000 in the prior five months. Job openings have also declined, raising fears that the labor market is weakening. This shift has increased expectations that the Fed will begin cutting rates sooner rather than later, starting with a baby step at the next meeting.

What’s Next?

After this week’s inflation reports, all eyes will be on the Fed’s September 18 meeting. If the data shows more progress in curbing inflation, the central bank may lean toward a larger rate cut. But even if the Fed starts small, markets expect more cuts to follow, with a possible half-point reduction in November and another in December. As the Fed navigates these murky waters, the balance between taming inflation and supporting a cooling labor market will guide its next moves.

Calendar
On The Horizon

Tomorrow

Inflation’s about to take center stage again. Tomorrow, we get the August Consumer Price Index (CPI) report—aka, the data that shows how much more (or less) expensive life has gotten over the past year. While the Fed has plenty of tools to gauge inflation, CPI is the star of the show—especially core CPI, which leaves out the drama of volatile food and energy prices.

Economists are penciling in a 0.2% rise for August, same as July’s bump. If that holds, it would push annual inflation down from 2.9% to 2.6%. Core inflation is also expected to clock in at 3.2% year-over-year. If these numbers land as predicted, the Fed will probably have the green light to trim rates by 25 basis points at next week’s meeting.

Earnings:

  • Manchester United ($MANU)

  • Vera Bradley ($VRA)

Before Market Open:

  • Manchester United ($MANU) is having a rough season—both on the field and in the stock market. The team’s struggles have been mirrored by its stock performance, making for a rare double dose of disappointment. But things may be looking up. While the players are still working on their comeback, the stock is starting to show some promise. Profits are elusive, but rising revenue and the potential for new ownership could mean better days for shareholders. The outlook? A consensus estimate of -$0.17 EPS and $188.52 million in revenue.

NEWS
The Daily Rundown

RESOURCES
The Federal Reserve Resource

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