• Iran: A deal between Iran and Oman to control the Strait of Hormuz is reportedly in its final stages, but a draft of the plan states that US and Israeli ships would not be allowed to transit the waterway, and ships belonging to countries that have attacked Iran would be barred until reparations were paid.
• Markets: Crude prices jumped on the news, but fears that the US wouldn’t allow such a restrictive plan to be put in place dampened investors’ spirits, curtailing the recent rally.
• Economy: Initial jobless claims fell below 200,000 for a third week in a row—the first time that’s happened since 1969.

Earnings

Morning Brew Inc, Photo: Adobe Stock

Investors are popping champagne today for Diageo, the largest maker of spirits in the world.

Shares of the parent company for brands like Guinness and Smirnoff rose 4.74% today to their highest level since February after new CEO Dave Lewis unveiled a dramatic turnaround plan that aims to save $1.2 billion in costs over the next three years.

The announcement is an aggressive move to combat what’s been a rut of weak growth for the company. Shares of Diageo are down 8.78% over the past year.

It’s also Lewis’s first major move since becoming CEO in January. Lewis’s reputation as a shrewd cost-cutter unafraid of upheavals earned him the nickname “Drastic Dave” during previous gigs at Tesco and Unilever. Investors were relieved that Lewis offered a concrete plan after months of question marks over how he’d revive the struggling drinks giant.

Diageo’s plan has a few components:

• Layoffs: Although Lewis didn’t specify how many, he said there would be a “very significant” impact on colleagues, according to Reuters.
• Diageo will also use good old fashioned supply chain reorganization and corporate restructuring.
• Instead of splitting the G, Diageo will in fact be doubling the G: The company is investing $1 billion to double Guinness production by 2031.

A generational hangover

Diageo isn’t the only beverage maker that’s struggled in an era where young people are drinking less than ever. Other companies, including Pernod Ricard and Brown-Forman, have noted dry spells as Gen Z eschews alcohol and inflation drives people toward cheaper drink options.

But Diageo still had a few bright spots worth toasting in its earnings report. The World Cup attracted customers and spiked sales of its ready-to-drink beverages by about 35%. Overall, for the fiscal year that just wrapped up on June 30, it reported organic net sales of $19.64 billion, down just 2% from last year, and forward-looking guidance wasn’t as bad as analysts feared.

Maybe Drastic Dave doesn’t have such a dangerous situation on his hands after all.—LB

      

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Stocks

🟢 What’s up

• Warner Bros. Discovery gained 1.66% as record streaming revenue underscored continued momentum at HBO Max.
• Chemical company Albemarle jumped 5.58% on an earnings beat as higher lithium prices continued to lift results.
• Air-taxi maker Joby Aviation climbed 5.65% after beating quarterly expectations and raising its 2026 revenue outlook.
• DoorDash advanced 2.89% on stronger-than-expected revenue despite higher costs weighing on profit. 

🔴 What’s down

• Etsy fell 4.14% following plans to cut about 220 jobs as part of a restructuring effort.
• Peloton Interactive slipped 15.57% despite posting its first annual profit, with investors focusing on a weaker sales outlook.
• Axon Enterprise dropped 14.28% as shrinking software margins and the lower cash flow guidance overshadowed a beat-and-raise quarter.
• Papa John’s declined 17.18% after the company said it’s not for sale and cut its dividend.
• Honeywell Aerospace lost 23.16% on weaker-than-expected quarterly results and lower 2026 guidance following its June spinoff.
• Zillow Group sank 7.4% after reporting a surprise quarterly loss, weak guidance, and plans to eliminate more than 500 jobs.
• Western Digital slid 13.03% despite strong quarterly results, as investors compared its performance unfavorably with rival Seagate.
• United Wholesale Mortgage plunged 34.25% after posting a $452 million net loss and suspending its dividend for the first time.

Stock of the day

SpaceX survives another day

Morning Brew Inc, Photo: SpaceX

All signs pointed to a terrible Thursday for SpaceX. Then, something funny happened: Shares climbed 6.14% this afternoon.

With about 911.5 million shares unlocking today, many figured we’d witness a serious selloff. After all, the new shares available for trading today dwarf the 638.9 million shares issued at IPO, and the deluge of potential sellers seemed like a disaster in the making.

One possible reason investors aren’t abandoning ship: They’re suddenly confident that they can get more bang for their buck if they sit tight. On Tuesday evening, SpaceX reported that revenue increased 92% year over year, while EBIT outpaced analysts’s estimates as strong growth across all three business segments impressed Wall Street. In fact, yesterday afternoon Goldman Sachs upped its price target on the stock from $205 to $220 (91.4% higher than where shares trade today).

It’s not just the pros who are bullish—retail traders have poured into the stock. Vanda Research reports that investors have been net buyers every day since SpaceX debuted, even when shares stumbled 13.6% yesterday.

That selloff was mostly due to its capital expenditures soaring from $2.8 billion in Q2 2025 to $18.4 billion last quarter. Rising expenses, coupled with several more rounds of insider lock-ups ending (including on August 21, September 10 and 25, and several more through the end of the year) could create some serious volatility in the coming months.

But for today, at least, SpaceX is flying high once again.—MR

Funds

Morning Brew Inc, Photo: Getty Images

Situational Awareness found itself in quite the situation last week when the hedge fund imploded. Yesterday, Bank of America CEO Brian Moynihan said the near collapse of the fund should serve as a wake-up call for markets awash in leverage. The comments suggest Wall Street’s biggest lenders are beginning to take a harder look at how much risk they’re willing to finance.

The risk reset

Situational Awareness may have grabbed headlines, but it wasn’t the only hedge fund that got caught in the recent tech stock selloff.

According to analytics firm PivotalPath, technology-, media- and telecommunications-focused equity hedge funds posted an “unprecedented” 10% loss in July, while multistrategy funds fell 2.3%—their fourth-worst month on record. Those figures don’t even include Situational Awareness’ 67% plunge, suggesting plenty of other funds quietly endured the same tech unwind.

The AI rally reversed its course last month as concerns over massive AI spending, coupled with a surprise Citadel note predicting a Fed rate hike, sent tech stocks tumbling. In fact, the Philadelphia Semiconductor Index plunged 21% in July, marking its worst month since 2008.

As a result, hedge funds have begun to dial back leverage and trim volatile tech bets. That could leave another group of investors to take the reins of the AI trade—and create even more volatility.

“If this assessment proves correct and the capacity of hedge funds to hold tech exposures is structurally reduced, the tech trade would become over the longer-term even more dependent on retail investors and thus more susceptible to the swings emanating from leveraged ETFs, retail option buying and retail margin accounts,” JPMorgan strategists recently wrote.

Back in the game

For Situational Awareness, its risk management apparently starts with a new nine-figure bet. After watching its assets shrink from roughly $45 billion to $10 billion in a matter of days, the fund has already committed another $400 million to an undisclosed private company, just weeks after investing $100 million in the same business.

Hey, if at first you don’t succeed, try, try again.—SY

      

News

• President Trump has been ringing up Fed Chair Kevin Warsh, reigniting fears about the White House’s influence on the central bank.
• The FDA approved the first mRNA flu vaccine from Moderna.
• Kellogg said it will remove artificial cereal dyes by the end of this year.
• A tried and true investment strategy for retirees is being called into question.
• The “godfather of AI” warns AI agents will be increasingly harder to control.

Calendar

Economic reports: The labor market data deluge concludes with the US jobs report for July. Economists expect the unemployment rate to remain steady at 4.2% as the low-hire, low-fire environment continues to keep the jobs market at a standstill.

Earnings announcements: Oklo, Vistra, Take-Two Interactive Software, Under Armour, and Wendy’s wrap up another big week of earnings.

recs

🤖 The US government is planning to restrict the import of Chinese optical transceivers, which could make these five stocks the big winners of the next AI bottleneck.

⚽ FIFA President Gianni Infantino came within inches of destroying the soccer empire he spent a decade building. Here’s how he regained control of the world’s most popular sport.

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💰 Forget the Caymans: Take a look at how Malta evolved from the smallest country in the EU to an enormous tax haven for global corporations.

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