🎙️Powell at the Podium

Good afternoon! Two major Canadian railroads—Canadian National (CN) and Canadian Pacific Kansas City Southern (CPKC)—just brought their operations to a screeching halt by locking out 9,000 workers. The move comes as a labor dispute with the Teamsters Union escalates, and the impact is poised to hit the US hard, disrupting key industries like agriculture, energy, and automotive.

With so much cross-border freight now sidelined, the economic fallout could be swift and severe. While US and Canadian business leaders are urging action, this dispute could quickly snowball into billion-dollar losses if it drags on.

MARKETS

• Stocks took a hit on Thursday, with tech leading the charge downhill as all eyes turned to Fed Chair Jerome Powell's much-anticipated speech on Friday. The major indexes spent most of the day in negative territory and closed firmly in the red. Bond yields rose, and Wall Street traders speculated that Powell might dampen expectations for aggressive interest-rate cuts.

• The S&P 500 retreated after a recent recovery rally, with market participants anxiously awaiting Powell's remarks at the Jackson Hole Economic Symposium for clues on future rate policy. While traders anticipate a rate cut next month, there is uncertainty over whether it will be a quarter or half a percentage point reduction.

STOCKS
Winners & Losers

What’s up 📈

• Peloton Interactive ($PTON) skyrocketed 35.42% after beating analysts' revenue and EPS expectations, marking its first sales growth in over two years as the company continues its turnaround efforts.

• Zoom Video Communications ($ZM) surged 12.97% after the company reported a "beat and raise" quarter.

• Lucid Group ($LCID) gained 7.54%.

• Gap ($GPS) jumped 4.38% and is officially changing its stock ticker symbol to "GAP" from "GPS."

• Franklin Resources ($BEN) increased 4.55%.

• Deutsche Bank ($DB) rose 3.38% as the bank announced it expects an earnings boost from settlements in a long-standing legal case related to its acquisition of Postbank.

• CenterPoint Energy ($CNP) climbed 3.06%.

What’s down 📉

• Advanced Auto Parts ($AAP) dropped 17.47% after reporting second-quarter earnings results. The company lowered its full-year revenue guidance, which is never a good sign, and its full-year earnings forecast also missed analysts' expectations.

• Snowflake ($SNOW) took a 14.7% nosedive today after the cloud computing giant reported a slowdown in product revenue growth.

• Williams-Sonoma ($WSM) fell 9.28% after the high-end home furnishings company missed top-line estimates and posted declining comparable sales in its second-quarter report.

• Moderna ($MRNA) declined 6.47% even after the FDA approved updated COVID-19 vaccines from Pfizer and Moderna.

• Intel ($INTC) slid 6.12% as concerns mounted about the future of its new chip fabrication plant in Germany.

• Tesla ($TSLA) dropped 5.65% after the National Transportation Safety Board opened a safety investigation into an accident involving one of Tesla’s electric-powered trucks.

• Wolfspeed ($WOLF) declined 5.03% after reporting a loss in Q4 earnings, with revenues down year-over-year.

• Nvidia ($NVDA) decreased 3.70%.

FEDERAL RESERVE
Powell at the Podium — What to Expect from the Fed Chair’s Jackson Hole Speech

Fed Chair Jerome Powell is stepping up to the mic at Jackson Hole, Wyoming, tomorrow at 10 a.m. ET. And while the setting might be picturesque, don’t get your hopes up for any earth-shattering news. Here’s what you can expect from Powell’s highly anticipated speech—and why it might be more of a snoozer than a showstopper.

Rate Cuts Are Coming... Just Not Yet

Let’s get one thing straight: Wall Street’s already convinced that rate cuts are on the horizon. The smart money says the Fed’s going to start trimming rates in September and keep snipping away well into 2025. The real mystery is whether Powell will go for a cautious quarter-point cut or something bolder, like half a point. Most bets are on the former—unless the economy suddenly hits a rough patch in the next few weeks.

So, what’s Powell’s role in all this? He’s there to confirm the market’s expectations without spooking anyone. The theme of this year’s conference, “Reassessing the Effectiveness and Transmission of Monetary Policy,” is pretty much code for, “We’re playing it safe and sticking to the data.” Translation: Powell’s speech will likely be more of a recap than a revelation.

Same Script, Different Year

This isn’t Powell’s first rodeo at Jackson Hole. Back in 2020, he used this same stage to roll out a new strategy that let inflation run hotter than usual, all in the name of promoting a more inclusive job market. Flash forward to now, and Powell’s likely to acknowledge the Fed’s progress in cooling down inflation while keeping an eye on a labor market that’s starting to show some cracks.

But if you’re expecting any major policy shifts, don’t hold your breath. Powell’s message will probably be something like, “We’ve made progress, but we’re not out of the woods yet.” In other words, he’ll hint that rate cuts are coming but won’t commit to specifics. After all, the Fed’s been preaching “data dependency” for months now, and that tune isn’t changing anytime soon.

So, while the backdrop at Jackson Hole will be as dramatic as ever, Powell’s speech? Not so much. Expect cautious optimism, a lot of “we’re watching the numbers,” and a gentle pat on the back for a job (mostly) well done. The markets might not get the fireworks they were hoping for, but hey, steady and predictable isn’t the worst thing in the world.

NEWS
Market Movements

• Cava Group ($CAVA) raised its full-year outlook after posting second-quarter results that beat expectations, signaling strong consumer demand for fast-casual dining.

• Starboard Value urged Autodesk Inc. ($ADSK)’s board to evaluate whether Chief Executive Officer Andrew Anagnost is the right person to lead the company following recent accounting issues.

• Uber ($UBER) plans to start offering self-driving Cruise cars to customers on its ride-hailing platform next year.

• Starbucks ($SBUX)’s new CEO, Brian Niccol, faces criticism for commuting nearly 1,000 miles from California to Seattle on a corporate jet.

• Meta ($META) and Snap ($SNAP) will showcase their latest AR glasses next month.

• Perplexity AI plans to start running ads in the fourth quarter as AI-assisted search gains popularity.

• McDonald’s ($MCD) Instagram appears to have been hacked to promote a digital currency scam.

• Instagram is testing a vertical profile grid instead of its traditional square format.

• Beyoncé teamed up with LVMH ($LVMH) to launch a whiskey line.

• Chick-Fil-A is launching its own streaming service

EARNINGS
Peloton’s Power Move — Biggest Rally Ever as Turnaround Takes Shape

Peloton ($PTON) just hit a major milestone—its biggest stock rally ever. After reporting earnings that blew past Wall Street’s expectations, shares of the at-home fitness giant surged 35%, closing at $4.55. Not too shabby for a company that’s been riding an emotional rollercoaster since the pandemic boom.

Beating the Odds (and Estimates)

Peloton posted revenue of $644 million for the quarter ending June 30, a modest but meaningful uptick from last year and well above the $630 million analysts were bracing for. The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $70.3 million, flipping the script on last year’s $34.7 million loss and easily surpassing the $53.2 million analysts had forecasted.

So what’s behind the glow-up? Cost-cutting, baby. Peloton’s been trimming the fat—slashing expenses, cutting its workforce by 15%, and eking out $15 million in cost savings last quarter alone. The company is finally seeing green, not red, with a free cash flow of $26 million.

The Ride Ahead: Smooth or Bumpy?

But let’s not get ahead of ourselves. Peloton’s forecast for the current quarter is a bit of a reality check. The company is predicting revenue between $560 million and $580 million—down about 4% from last year and lower than analysts’ expectations of $602 million. The subscriber base is also expected to shrink, with a 3% drop in users still sweating it out on Peloton hardware and a steeper 26% decline in paid app users.

And then there’s the search for a new CEO. With Barry McCarthy stepping down in May, Peloton’s leadership has been in a bit of limbo. Interim co-CEOs Karen Boone and Chris Bruzzo are holding down the fort while the hunt for a new leader is “top of mind for all stakeholders,” according to the company.

Despite the ups and downs, Peloton’s made it clear they’re in this for the long haul. The company acknowledges the road to recovery is still winding, especially with an unpredictable economy and the lingering question of whether people will stick with home workouts now that gyms are back in full swing.

So, while Peloton’s stock might be on a high right now, the real test will be whether they can keep the momentum going—or if this rally is just a quick burst of adrenaline.

Calendar
On The Horizon

Tomorrow

This week’s headline event isn’t about the usual economic reports—Jerome Powell’s speech at Jackson Hole is stealing the spotlight.

Powell has been pretty guarded about his plans for monetary policy, so it’s unlikely he’ll drop any big hints about rate cuts before the Fed’s next meeting. But with the recent revision of 818K Jobs in nonfarm payroll data, investors are hungry for insights on the job market—something Powell might need to address if he wants to avoid triggering a market slide.

On the earnings front, we’re nearing the end of the season. With Friday around the corner, expect a quiet day with no major companies stepping up to the mic.