August 13th Market Overview

Happy Wednesday

Money's flowing out of expensive tech and into names that actually benefit from cheaper capital today, which makes sense given Bessent's aggressive Fed commentary. The VIX hitting 2025 lows has me thinking we're getting a bit too comfortable with all the awkward macro stuff going on but all we can do is go with the flow.

Let's dig in...

Market Summary

Rate Cut Certainty Builds
Treasury Secretary Bessent called for 50 basis point September cut and 150-175 basis points total, arguing the Fed could have started cutting in June and July with better jobs data.

Small Cap Rotation Drives Records 
S&P 500 and Nasdaq hit fresh intraday highs while Russell 2000 led all indices as investors shifted into smaller companies ahead of rate cuts.

Cava Consumer Warning 
The restaurant chain missed revenue expectations and cut guidance after CEO Brett Schulman said consumers face “a lot of fog and uncertainty.”

Market Overview

U.S. Stock Indexes, Past Three Sessions

Stock Spotlight

Paramount Skydance $PSKY ( ▼ 1.6% ) posted its best day since March 2020 with no clear catalyst. Goldman Sachs flagged the stock in a “low quality rotation” screen.

Cava $CAVA ( ▼ 0.16% ) missed Q2 revenue at $280.6 million versus $285.6 million consensus. The company cut full-year same-store sales guidance from 6-8% to 4-6%.

Bullish $BLSH ( ▼ 8.87% ) opened at $95 after pricing its IPO at $37. The crypto exchange is led by former NYSE President Tom Farley.

Advanced Micro Devices $AMD ( ▼ 0.77% ) led tech gains as Chinese stocks rallied on rate cut expectations.

Big Name Updates

Amazon $AMZN ( ▲ 0.2% ) announced same-day grocery delivery expansion to 1,000 cities, targeting 2,300 by year-end. Grocery stocks declined on the news.

Walmart, Kroger, Instacart all fell on Amazon’s grocery expansion.

Nvidia $NVDA ( ▲ 0.87% ) declined as China authorities discourage H20 chip purchases pending cybersecurity reviews.

Cisco Systems $CSCO ( ▲ 1.13% ) reports earnings after the bell, trading near 2000 highs.

Other Notable Company News

CoreWeave $CRWV ( ▼ 3.17% ) beat Q2 revenue at $1.21 billion but posted a wider loss. Revenue growth remains capacity constrained.

Capri Holdings $CPRI ( ▼ 2.1% ) gained after JPMorgan upgraded to overweight on Michael Kors turnaround prospects.

Hanesbrands $HBI ( ▲ 0.31% ) agreed to Gildan Activewear’s $6 per share acquisition, valuing the company at $4.4 billion.

Sector Watch

Bond Market

The 10-year Treasury yield fell to 4.241% as Bessent’s aggressive easing commentary pushed yields lower across the curve.

Policy Watch

Bessent called for aggressive Fed easing - 50 basis points in September and 150-175 total. He argued the Fed should have started cutting in June and July with better jobs data.

The Nvidia revenue-sharing model could expand beyond chips. Bessent called the 15% revenue cut from AI sales a "beta test" for broader trade arrangements.

Key Trump Moves:

• Extended China tariff deadlines to November 9

• Fired BLS head McEntarfer, nominated Heritage Foundation's E.J. Antoni as replacement

• Met with Intel CEO in "very interesting" session with Lutnick and Bessent

• Criticized Goldman Sachs economist over market predictions

Upcoming Catalysts:

• Jackson Hole symposium August 21-23 focuses on "Labor Markets in Transition"

• Trump-Putin summit Friday could ease geopolitical tensions

• Rick Rieder among 11 candidates to replace Powell as Fed Chair in May
  

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What to Watch

Jackson Hole Symposium (August 21-23)
The Fed’s annual gathering carries extra weight this year with the theme “Labor Markets in Transition.” Barclays warns that aggressive rate cut repricing could set up a post-Jackson Hole selloff if Powell signals less certainty about easing than markets expect.

Thursday’s Producer Price Index
Wholesale inflation data will provide another piece of the economic puzzle ahead of September’s Fed meeting. Any surprise to the upside could temper aggressive rate cut expectations.

Retail Earnings Next Week
Deere $DE and Applied Materials $AMAT report Thursday, but the real test comes next week with major retail names. Consumer discretionary performance will be crucial given Cava’s warning about consumer uncertainty.

Thanks for reading 🙂

- John

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