We knew that all eyes would be on Federal Reserve Chair Jerome Powell’s headline speech at Jackson Hole this morning, but what we didn’t know was how blunt Powell would be in outlining the Fed’s policy going forward.

The Fed head was more explicit today than he has been in the past, stating that the Federal Reserve will indeed lower rates—a foregone conclusion that still lifted markets when Powell confirmed it himself. Powell pointed to the weakening labor market as the biggest indicator that the Fed needed to Uno reverse its monetary policy ASAP.

What Powell said: “The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

What investors heard: Yay!!!! Rates are coming down, invest and rejoice!!

The only questions left are what size September’s cut will be, and how quickly the Fed will bring down rates in the months ahead. The Fed will be keeping a close eye on labor market data, specifically the August jobs data that will be released September 6, to determine the depth of rate cuts. But Powell left open the possibility that cuts could be steep.

“The fact that the chair made mention that the ‘direction of travel is clear’ suggests to us that not only are multiple 25 basis points (bps) rate cuts being anticipated at this point, but that the door was open to moving 50 bps,” wrote BlackRock’s BlackRock's Chief Investment Officer of Global Fixed Income Rick Rieder in a note today.

But don’t get too excited—rates aren’t going to decline as quickly as they rose over the past two years.

“From a consumer perspective, it’s important to note that lower interest rates will be a gradual process,” wrote Senior Industry Analyst at Bankrate Ted Rossman in a note today. “The trip down is likely to be much slower than the series of interest rate hikes which quickly pushed the federal funds rate higher by 5.25 percentage points.”

How should you prepare? The good times are expected to keep rolling for equities, according to analysts. So stay invested, and lock in high longer-term yields while you still can.—LB

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The Morning Brew X account (the second best account on the platform after Brew Markets, just fyi), nailed the vibe in markets today.

The CBOE Volatility Index, or VIX, is a shorthand measure of investor sentiment, particularly fear. The VIX skyrocketed earlier this month after a worse-than-expected jobs report tanked markets, rising 64.9% on August 5, its second-largest single-day increase ever.

Yet an impressive turnaround followed shortly thereafter. Stocks recovered, investors took a deep breath, and the VIX has slowly but steadily fallen in the last few weeks, taking a deeper dive south today.

To be clear, the VIX—and therefore market volatility—is still up this year, and likely will remain so for the rest of 2024. Geopolitical conflict, a contentious election, and concerns that the AI bubble has burst will continue to dog investors this year. But after Jerome Powell’s speech today, it seems like at least one investing question mark has been answered.

🟢 What’s up

• Cava Group sizzled 19.60% after announcing impressive earnings after the successful launch of grilled steak.
• Workday soared 12.49% after management revealed much higher forecasts for upcoming revenue growth than anyone expected.
• Ross Stores rose 1.76% on a solid beat-and-raise earnings announcement.
• Peloton Interactive kept climbing another 6.37% after its hugely successful quarter.
• Warby Parker popped 11.99% after JMP Securities analysts upgraded the stock and boosted its price target to $20.

What’s down

• Intuit stumbled 6.83% despite beating earnings estimates. Shareholders didn’t like to hear management’s dour forecast for the upcoming quarter.
• Las Vegas Sands fell 1.17% after UBS analysts downgraded the stock from Buy to Neutral and cut their price target from $70 to $49.
• Bill Holdings sank 6.68% after the financial software maker reported better-than-expected earnings, but Goldman Sachs analysts downgraded the stock from Buy to Neutral anyway.

After months of the housing market struggling from high prices and lack of available inventory, new data this week shows that there’s still strong demand among buyers. Declining mortgage rates have been a boon for homebuilders and consumers alike, as new home sales reached their highest levels since May 2023 and beat estimates for the month of July. Mortgage rates reached their lowest level since April 2023 this month after data showed the labor market was cooling.

“In our view, while housing demand is challenged, the US housing market has a supply problem, not a demand problem,” wrote Morgan Stanley strategist James Egan in a note today. “Significant improvements in affordability should help demand and therefore lead to higher sales volumes.”

The numbers speak for themselves:

• Sales of freshly constructed homes rose to 739,0000 in July, up 10.6% from 668,000 in June, the Commerce Department said today. Analysts expected the number to be more like 620,000.
• However, prices are still high. The median sales price of a new home in July jumped to $429,800, up from $416,700 last month.
• Broadly, sales of new homes are up 5.6% year-over-year.
• Closed sales of previously owned homes jumped 1.3% in July, the first gain in five months, according to the National Association of Realtors, which reported July data on Thursday.
• Real estate brokerage Redfin found that requests for home tours from their agents rose 4% over the last week, they said yesterday.

“Assuming 6.5% mortgage rates, affordability has improved ~12% from 4Q23, a quantum of improvement that has only happened a few times in the last 40 years,” wrote Egan.

Maybe that means now is the time to circle back to your bookmarked Zillow pages (but no, you probably still can’t afford that $29 million fairy tale castle in Woodstock, Connecticut).—LB

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• How much money do you need to be financially comfortable in the biggest cities in the US?
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• It’s not just your imagination: ATM fees have reached a new all-time high.

There are a few smaller economic reports on deck for next week, including durable goods orders on Monday, the consumer confidence index on Tuesday, and the advance goods trade balance on Thursday.

But Friday brings out the big guns, with the latest Personal Consumption Expenditures report. This is the last PCE reading before the Fed’s September meeting, when it is widely expected to cut interest rates, and as such this report will play a large role in determining if that rate cut is 25 basis points or 50 basis points.

As for earnings, things are slowing down but there are still a few announcements worth watching—particularly on Wednesday, when all eyes will be on Nvidia.

Tuesday: Bank of Montreal, Box, PVH, and Nordstrom.

Wednesday: Nvidia, Salesforce, CrowdStrike, HP, Chewy, Bath & Body Works, and the J.M. Smucker Company.

Thursday: Dollar General, Brown-Forman, Dell, Lululemon, Best Buy, Burlington Stores, Birkenstock, Campbell Soup Company, Marvell Technology, and Ulta Beauty.