💰 5 Fact Friday: Rates, Retail, and Red Days

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ECONOMY
1. Will He, Or Won’t He? 🤷

It’s the most anticipated Fed speech of the year, and likely Jerome Powell’s last at Jackson Hole. With rate cut bets peaking and the economy giving mixed signals, markets are on edge. One hint from Powell this morning could move trillions.

Why speculation is running wild:

• Weak jobs data lit the spark. Downward revisions to May and June’s payrolls and a disappointing July jobs report rattled confidence. Suddenly, the story flipped from “too strong to cut” to “too risky not to.”

• Odds are sliding, but still high. Markets are second-guessing, putting rate cut odds at 76%—down from 92% just one week ago.

Here’s what we’re listening for:

• Will he acknoweldge the softer labor market, and open the door for easing?

• Or will he stick to the “wait and see” script, pointing to sticky inflation and Trump’s latest round of tariffs?

Goldman’s David Mericle expects a soft signal toward cutting. Evercore’s Krishna Guha thinks Powell will play it safe and avoid any real hint of direction.

What I’m betting on:
I’m taking the contrarian view. I don’t expect Powell to shift his (excessively?) patient strategy due to one bad report. Especially not with Trump hammering him daily.

He’ll likely stay non-committal, emphasize the Fed’s independence, and say they’re still watching the data. If that’s the tone, stocks could slide further. After all, 76% odds mean plenty of folks are set up for disappointment.

Stay tuned. Powell takes the stage at 10am EST from Wyoming. It could be his most market-moving speech in years.

MARKETS
2. AI Stocks Hit Pause After A White-Hot Rally 🛑

After months of “up and to the right,” AI stocks finally took a breather. The pullback was sharp enough to drag the S&P 500 to its first 5-day losing streak since January.

It wasn’t a crash, but it was a collective “maybe let’s cool off a bit.”

Here’s what triggered the slide:

• Sam Altman chimed in. The OpenAI CEO warned that investors had become “overexcited” about AI.
  
  But even Altman believes in the long game. “There will be periods of irrational exuberance,” he said last week. “But on the whole, the value for society will be huge.”
  

• Palantir got smoked. The stock fell 12% this week, clocking six straight red days through Wednesday. Citron Research argued Palantir would still be overvalued even if it dropped 75%—based on a comparison to OpenAI.
  

  And while that analysis holds water, let’s be honest: shorting something with this much momentum and retail fanfare is dangerous. As the saying goes, “Markets can remain irrational longer than you can remain solvent.”
  

• MIT killed the mood. A new study found that 95% of companies using generative AI are seeing zero ROI.
  

  But that stat isn’t the whole story. MIT researchers blamed the lack of results on “brittle workflows, lack of contextual learning, and misalignment with day-to-day operations.” That’s exactly the problem most AI startups are racing to solve.
  
  Plus, power laws apply here. Even if just 5% of companies extract real value, there’s still an avalanche of opportunity. Consider this: the top 5% of S&P 500 companies make up 51% of the index’s total market value. In other words, a select few winners often drive the bulk of the returns.

• GPT-5 didn’t help. OpenAI’s latest release landed with more of a whisper than a bang. Users called it slower, safer, and surprisingly mid—fueling talk that the innovation curve might be flattening.
  
  Or, maybe it’s just OpenAI stalling out. Meta has poached major talent, and competitors are closing the gap fast.

Why it matters:
This isn’t the end of AI. It’s the end of this leg of the hype cycle.

A cooldown makes sense after this monster rally. AI winners like $PLTR ( ▲ 0.11% ), $AMD ( ▼ 0.9% ), and $NVDA ( ▼ 0.24% ) are still up 111%, 109%, and 86% from their April lows.

The tech is transformative. But that doesn’t mean it won’t be overhyped, overbought, or sometimes, just plain underwhelming.

FAST FACTS
3. The Many Ways To Cash In On Culture ⚽

American money dominates the Premier League: U.S. investors now own 49% of England’s top-tier soccer teams, more than 2x any other nationality. [Read]

AI hits the NFL sidelines: Microsoft and the league extended their partnership, equipping all 32 teams with AI Copilot tablets to speed up play calling and player evaluations. [Read]

Pop Mart rides Labubu doll craze: Shares of the Chinese company have tripled this year as sales of the ugly-cute dolls surged 200%, with Gen Z snapping up millions of blind boxes worldwide. [Read]

Google mocks Apple with AI-first Pixel 10: At its New York launch, Google touted Magic Cue and other AI tools while jabbing at Siri’s repeated failures. [Read]

Ashton Kutcher joins Soho House board: The star is part of a $2.7B take-private deal that hands shareholders $9 per share after a rocky run since the 2021 IPO. [Read]

Yes, “Nepo babies” earn more: New research finds family ties open doors to better jobs, but not necessarily in the industries you’d expect. [Read]

The ‘SPAC King’ is back: Chamath Palihapitiya is rolling out a fresh $250M blank-check firm. He was quick to remind investors “no crying in the casino” as he hunts deals in AI, crypto, and defense. [Read]

MARKETS
4. Discount Darlings Rise While Target Trips 🛒

Earnings this week gave investors a window into how Americans are spending—and what that means for the broader economy. The picture? Growth is still here, but it’s running in low gear.

With consumer spending powering ~70% of U.S. GDP, every retail earnings call doubles as a vibe check on Main Street.

• Walmart stays the safe bet. The retailer posted 4.6% revenue growth and a 25% e-commerce surge, lifting full-year guidance. Prices were only 1% higher this quarter, as two-thirds of Walmart’s goods are sourced domestically. Still, management warned more pricing pressure is coming once the cheaper, pre-tariff inventory runs out.
  

• Discount chains thrive. TJX, parent of T.J. Maxx and Marshalls, raised its full-year outlook. Plus, Ross Stores beat expectations on strong back-to-school traffic. In a jittery economy, “off-price” has become the on-trend way to shop.
  

• Target stalls out. Traffic slipped and same-store sales fell 1.9%. With longtime CEO Brian Cornell stepping down, Target is stuck in the shrinking middle market—not cheap enough to win budget shoppers, not premium enough to lure the splashy spenders.
  

• Home Depot & Lowe’s see hesitation. Both chains reported modest growth but noted consumers are delaying big-ticket projects. Instead, they’re leaning harder on “Pro” contractors, who tend to be less price-sensitive.

Why it matters: Retail isn’t just about receipts—it’s a proxy for household confidence. Right now, the message is clear: Americans are still spending, but they’re choosier, thriftier, and shifting toward value every chance they get.

STOCKS
5. Guess That Stock 🕵️‍♂️

This week’s pick has been at the center of tech turmoil, political pressure, and massive missed opportunities.

Can you guess the stock?

1. Once the undisputed king of PC chips, this company has slipped far behind Nvidia and AMD in the AI boom. Its market cap is now just 2.5% of Nvidia’s.

2. Earlier this month, President Trump demanded the CEO resign over alleged ties to China. Days later, after meeting Tan, he reversed course and called his story “amazing.”

3. Since then, SoftBank has invested $2B to support infrastructure buildout. In addition, the U.S. government may take a 10% equity stake in exchange for $10.9B in CHIPS Act funding.

4. Shares have spiked 19% this month, and the stock now trades at nearly 60x forward earnings—its richest valuation since 2002.

5. Investors are betting the company could become an international bargaining chip in trade deals, positioning it to benefit from Trump’s reshoring initiative.

Got a guess? Tap here for the answer → 

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