Your portfolio may have felt like it was on a roller coaster this summer, but underneath the stock market’s zigzags, the US economy has been doing better than many feared.

The Bureau of Economic Analysis released the personal consumption expenditures index (PCE) this morning, which is the Fed’s primary gauge of inflation.

• Inflation was up 2.5% annually in July, plateauing since June and coming in slightly below analyst expectations. The Fed’s goal is to get inflation under 2%.
• Prices rose 0.2% month over month in July, in line with expectations.
• Core inflation, which excludes food and energy costs, increased 0.2% month over month and 2.6% year over year, also meeting expectations.

The data confirms what many investors already suspected: We’ve likely made enough progress on tamping down inflation for the Federal Reserve to begin cutting rates in September.

Fed Chair Jerome Powell said as much at the central banking symposium in Jackson Hole earlier this month, but also emphasized that the Fed was going to continue to keep a sharp eye on the numbers—which so far have all been screaming “cut!”

How low can the Fed go?

Now, the main question on investors' minds is how much the Federal Reserve will slash rates in September.

While the softening labor market has caused some economists to call for a hefty 50 basis point rate cut, data showing consumers are still spending suggests the central bank will implement a more conservative 25 basis point cut.

And to further complicate things, the upcoming presidential election could throw a wrench in Powell’s calculations.

“The current debate regarding whether Powell is late to begin normalizing could soon be complicated by the timing of the Presidential election,” wrote Ian Lyngen, Head of US Rates Strategy at BMO Capital Markets in a note today. “While further softening in the employment data might argue for a 50 basis point initial cut, Powell would need to weigh such a move in the context of appearing to favor the Democrats.”

All eyes will be on the jobs report out next Friday, Sept. 6. “Ideally for the Committee, the unemployment rate shifts lower and there is solid payroll growth, ensuring that a 25 bp cut will be the prudent approach,” added Lyngen.—LB

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“It's been a difficult few weeks.”

Talk about an understatement.

Intel CEO Patrick Gelsinger struck a confident tone at the Deutsche Bank's 2024 Technology Conference on Thursday. But only a few weeks ago, Intel shares sank 26% in a single day after announcing a terrible earnings report, with the company cutting 15,000 jobs and suspending its dividend in an attempt to stem its financial bleeding.

Gelsinger has been running the company since 2021, back when Intel was pulling in three times Nvidia’s annual revenue. But the tables have turned dramatically over the last few years, with Intel largely missing the AI boat and struggling to remain relevant in a quickly evolving tech industry.

Now, rumor has it that Intel is considering splitting its business into two parts in order to survive. Shareholders cheered, sending the stock up tk% today, but shares are still down an abysmal tk% in 2024.

🟢 What’s up

• Dell Technologies rose tk% after beating analyst estimates on both the top and bottom lines thanks to strong AI demand.
• Marvell Technology popped tk% after beating analyst estimates on both the top and bottom lines thanks to, believe it or not, strong AI demand.
• MongoDB gained tk% after beating analyst estimates on both the top and bottom lines thanks to, you’re never going to guess, strong AI demand.

What’s down

• After accidentally announcing earnings earlier than it intended, Gap fell tk%, despite earnings actually looking pretty good.
• Super Micro Computer sank another tk% as the fallout from short seller Hindenburg Research’s latest report continues.
• Elastic NV plummeted tk% after the software maker announced a weak quarterly report and forecast worse quarters ahead.
• Alnylam Pharmaceuticals stumbled tk% in spite of announcing positive Phase 3 trial results for its new heart disease drug. Shareholders don’t think the new drug is as groundbreaking as it could’ve been compared to offerings from competitors like BridgeBio, which popped tk% on the news.

Lululemon Athletica sank TK% after the exercise apparel company failed to “Breezethrough” a botched product launch last quarter. The brand beat expectations on earnings per share by about 8%, but revenue came in at $2.37 billion versus analyst expectations of $2.41 billion—its first revenue miss in over two years. Sales slipped after the brand was forced to pull its anticipated “Breezethrough” workout pants after customers rejected the design en masse. The company also cut its full-year guidance range to between $10.38 billion and $10.28 billion, down from the prior range of $10.7 billion and $10.8 billion.

Ulta Beauty fell TK% after the cosmetics retailer reported falling sales and slashed its full-year guidance. The company fell short of analyst forecasts on both earnings and revenue, reporting earnings of $5.30 per share versus $5.46 expected, and revenue of $2.55 billion versus $2.61 billion expected. Comparable store sales dropped 1.2%, a major disappointment compared to the 8% jump during the same quarter last year. CEO Dave Kimbell pointed to heightened competition in the beauty market as a key factor that drove the poor performance.

CrowdStrike jumped TK% after surprisingly strong second-quarter earnings on the heels of a disastrous global cybersecurity software outage that did about $5.4 billion in damage. The firm beat earnings estimates and increased revenue by 32% year over year in Q2. But management trimmed its full-year profitability outlook due to the July 19 failure that caused millions of Microsoft computers to crash after a bungled software update. CrowdStrike has a number of expenses related to the outage, including giving discounts to keep customers on board and a slew of lawsuits.—LB

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• Researchers have discovered that investing is a lot like golf: deeply frustrating.
• Remember NFTs? This is an excellent history of OpenSea, the largest NFT marketplace, and all the chaos within its walls.
• Never say never: Bill Ackman is back for a second attempt at an IPO of Pershing Square USA.
• Nvidia shares are bouncing after a disappointing earnings report, and Wall Street is all in.
• Congratulations Oregon drivers! Gas prices in your state are dropping faster than anywhere in the country ahead of Labor Day weekend.
• Rate cuts are coming, and these three top bond fund managers have some advice for staying ahead of the curve.

Markets are closed in the US for Labor Day next Monday, and the shorter work week brings just a few economic reports.

On Tuesday, we’ll get the final US manufacturing PMI, on Wednesday we’ll learn about job openings as well as factory orders, and on Thursday we get both the ADP employment report and the weekly initial jobless claims numbers.

But the big one is Friday’s employment report—the very same report that tanked markets earlier this month. The labor market is a key element in the Federal Reserve’s interest rate equation, and another poor reading could mean a smaller rate cut when the Fed meets later next month.

Earnings take a chill pill as the calendar turns, with the pace of major announcements slowing dramatically. We’ll still get a few big names, including:

Wednesday: Dick’s Sporting Goods, Dollar Tree, and Hormel Foods.

Thursday: Nio, DocuSign, and publicly traded bowling company Bowlero.

Friday: Genesco and Big Lots.

Jim Cramer is a, let’s say, divisive figure for investors.

On the one hand, he’s undeniably popular—his show Mad Money has topped the charts on CNBC for nearly two decades. On the other hand, the investment advice he screams out every night has been hit or miss.

Often the butt of investing memes across the internet, derision for Cramer’s investment acumen reached a peak in March 2023, when Tuttle Capital Management launched the Inverse Cramer Tracker ETF (SJIM). The ETF invested in the opposite of everything Cramer recommended on his show, and while it made for entertaining watching, it was closed down less than a year later.

Rather than rely on the internet to tell him how to feel about the Mad Money host, our very own reporter extraordinaire Dan Toomey recently sat down with “Jim Cramer” to learn more about the man behind the memes. The two discussed everything from Cramer calling Elizabeth Holmes “the next Steve Jobs” to Cramer calling Sam Bankman-Fried “the next JP Morgan.”

The long weekend is upon us here in the States, so kick back, watch Dan interview “Jim,” and enjoy your well-earned time off.—The Brew Markets Team