Macrosynthesis

TLDR

• U.S. Central Bank Says It's Cutting Time
• Real Estate Stocks Outperform
• Open Jobs, Wage Growth Falling to Pre-COVID Levels
• Gold and Silver Prices Shine
• Tailwinds For Homebuilder Stocks Here
• Big Winners: CAVA (+20%), PTON (+41%), BBAI (+27%)
• COKE Stock Up 300% in 5 Years

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The Time Has Come, Says Fed Chair About Interest Rate Cuts

Remember the time when money was nearly free? The era of the crypto phenomenon when tech stocks surged, and the average stock experienced double-digit movements? That review memory is starting to come back into focus.  On Friday, at the Jackson Hole Symposium, the hottest finance ticket in North America hosted its main event, which was Jerome Powell. As soon as he was under the spotlight, the words "the time has come" rolled off his tongue, and the market went wild. This was the signal many had been waiting for: indication that interest rates would come down in a month. Federal Reserve Chair Jerome Powell suggested it’s time for the Fed to reduce interest rates, focusing on cooling inflation and the labor market although he did not specify the size of the potential September cut.

Powell noted the cooling labor market and slowing inflation, noting labor conditions are now less tight than they were in 2019. Markets interpreted Powell's remarks as a relief from a growth-dampening restrictive interest rate, sparking a rally. The Nasdaq and the S&P 500 surged, rising 1.18% and 1.15%, respectively.

Just as Powell stated that inflation has been tamed but that he is hoping to avoid further cooling in the labor market, the European Central Bank and the Bank of England, indicated that concerns have shifted from inflation to employment. They signaled readiness to reduce interest rates, focusing on economic growth and labor market stability, with potential rate cuts aligned to support cooling labor markets and avoiding excessive unemployment increases.

Real Estate Outperforms Other Sectors Last Week

Over the past week, the S&P 500 sectors showed mostly positive performance, with Real Estate leading the gains at +3.6%. The Materials sector also performed well, rising by 2.3%, followed closely by Consumer Discretionary with a 2.1% increase. Industrials and Healthcare sectors saw solid growth, up 1.8% and 1.7% respectively. Consumer Staples and Financials both gained 1.6%, while Utilities and Telecom each rose by 1.2%. Information Technology saw a modest increase of 1.1%. The only sector that declined was Energy, which fell by 0.5%, contrasting with the broader upward trend. Among the industries, the top performers were Homebuilders (+8%), Clean Energy (+5%) and Regional Banks (+5%). Commodities also rallied, with prices of gold and silver increasing by about 3% for the month.

The Housing Market Is About to Get Interesting

In July 2024, US building permits fell 3.3% to an annual rate of 1.406 million. Permits for buildings with five or more units declined 10.7% to 416K, while single-family authorizations rose slightly by 0.2% to 941K. New single-family home sales jumped 10.6% to 739,000, surpassing expectations. Kamala Harris's plan to create 3 million new housing units over four years could help stabilize prices, which might otherwise rise further if building permits continue to decline and demand increases, especially in a lower interest rate environment.

Homebuilder stocks were on fire last week, with shares of PulteGroup (PHM) - a stock with 5 bullish AI alerts since 2022 - leading the way in its 9% surge last week. PHM is up 140% since January 2022. The group may have received an extra boost following VP Harris' announcement that she support tax incentives for homebuilders to build more homes faster as well as a $25K incentive for first-time homebuyers.

Nvidia In Focus Next Week

Next week, Nvidia and Dell will both announce earnings results for the second quarter and everyone is watching Nvidia to determine if the AI spending boom continues or is in decline. Likewise, Dell is a major beneficiary of AI spending on data centers with their computers holding Nvidia processing chips. Anything less than an amazing report by either company could tip the markets into a risk-off, sell-off mode as asset managers rebalance portfolio holdings and risk.

Key U.S. economic reports include durable goods orders on Monday, the S&P Case-Shiller home price index and consumer confidence on Tuesday, and initial jobless claims, GDP revision, and pending home sales on Thursday. Personal income, spending, and PCE inflation data will be released on Friday, alongside multiple Federal Reserve speeches.

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Uranium

+3.19%  (1D Chg)

+1.48% (1W Chg)

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Steel

+4.03% (1W Chg)

-5.93% (1M Chg)

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Silver

+2.73% (1W Chg)

+23.57% (YoY Chg)

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Orange Juice

+11.83% (1W Chg)

+20.62% (1M Chg)

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Company News

LevelFields AI Alert Highlights This Week

In the latest events on LevelFields, BigBear.ai Holdings (BBAI) and Telos Corporation (TLS) both surged significantly, with BBAI up 27.07% and TLS up 25.26%, following announcements of billion-dollar contracts. Fabrinet (FN) saw a 15.74% increase, while Palo Alto Networks (PANW) rose by 7.18%, both benefiting from stock buyback announcements. Purple Innovation (PRPL) and GoPro (GPRO) experienced gains of 7.83% and 5.65%, respectively, despite mass layoffs. Meanwhile, Coca-Cola Consolidated (COKE) saw a modest gain of 4.21% following a 400% dividend increase and a stock buyback.

CAVA Sell Tons of Falafel, Shares Surge 20%

CAVA Group, Inc. shares surged nearly 20% after reporting strong second-quarter earnings. The company posted adjusted earnings per share of $0.17, surpassing the expected $0.10, and revenue increased 35.2% year-over-year to $231.4 million. Same store sales grew 14.4% and CAVA also raised its full-year 2024 guidance for adjusted EBITDA.

Workday Jumps on Strong Earnings

Workday, Inc. reported strong fiscal 2025 Q2 results, with total revenues rising 16.7% year-over-year to $2.085 billion, driven by a 17.2% increase in subscription revenues. The company achieved an operating income of $111 million, up from $36 million in the previous year. Workday's 12-month subscription revenue backlog reached $6.80 billion, a 16.1% increase. As a result WDAY jumped over 12%.

Why Snowflake Stock Shares Melted Down

Snowflake shares dropped over -14% following its fiscal Q2 2025 earnings release, despite exceeding revenue estimates with $869 million. Product revenue, the bulk of sales, rose 30% year-over-year to $829 million, marking a slowdown from prior growth rates. Analysts from Morgan Stanley and Barclays noted the decelerating product revenue growth, highlighting it as a potential concern for investors as the company is yet to make a profit.

Peloton Shares Up Huge On Return to Growth

Peloton shares surged up to 41% after reporting its first sales increase in nine quarters, with fourth-quarter revenue reaching $643.6 million, surpassing analyst expectations. This growth signals the effectiveness of Peloton's restructuring efforts, which include expanding its subscriber base and reducing costs. Despite the positive results, interim co-CEO Karen Boone expressed concerns about expanding the subscriber base further in fiscal 2025.

Right on Target: Why target Shares Rose Last Week

Target shares surged after the retailer reported second-quarter earnings that exceeded expectations, with revenue of $25.42 billion, up 2.6% year-over-year. Comparable store sales grew 2%, and digital sales rose 8.7%. Net income increased by 40% to $1.19 billion. Target raised its full-year earnings per share forecast, citing strong second-quarter results, improved discretionary sales trends, and reduced shrink (theft).

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COKE Stock Up 300% in 5 Years. Here's Why...

Shares of COKE - not Coca Cola, but the bottling company that places Coca Cola into Cans and ships it out - have been surging. The stock is up nearly 100% this year alone. The reason is quite simple: in 5 years they have gone from a net profit of $11 million to over $400 million. They've also taken their earnings per share from $1.21 to $43.50 through a combination of profit improvements and massive stock buybacks. And all the while they have been increasing their dividends by triple digits.

How could you use AI to find this great stock earlier?

There were a variety of signals, including the AI stock alert sent out in December 2022, and the AI stock alert sent out August 20, 2024 right before a +9% multi-day move upward in the stock.  

If you're wondering what the best ways to use our AI alerts are, this is one of them. Let LevelFields' AI alerts identify a stock, then look at the history of similar events and AI stock alerts.  Multiple bullish events are indicators of future bullish stock prices moves.

Disclosure: we bought this stock ourselves following the AI stock alert on August 20th for the reasons stated above.

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Upcoming Earnings:

Monday: HEICO (HEI)
Tuesday: American Woodmark (AMWD), Bank of Nova Scotia (BNS), Hain Celestial (HAIN), Nordstrom (JWN), PVH (PVH)
Wednesday: Nvidia (NVDA), Salesforce (CRM), Abercrombie & Fitch (ANF), J.M. Smucker (SJM), Chewy (CHWY)
Thursday: Best Buy (BBY), Dollar General (DG), Ulta Beauty (ULTA), Marvell Technology (MRVL), Lululemon Athletica (LULU)
Friday: BRP Inc. (DOOO), JinkoSolar (JKS)