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THE HEADLINES

 

POW-WOW

As market participants and at least one sitting US President wait patiently for Jay Powell’s remarks from Jackson Hole on Friday, the Fed opened the kimono on its July meeting.

The Fed minutes showed that the 25 basis point rate cut was a “recalibration” or “midcycle adjustment” vs. the start of an aggressive monetary easing policy. You know, the aggressive monetary easing policy the market is expecting.

It’s probably worth noting that this information is nearly a month old at this point … but if the median age of the Federal Reserve Board of Governors is any indication, they likely aren’t too keen on change (… or allowing kids on their lawn).

Anything else?

Also in the minutes was evidence that at least a few members of the Federal Reserve Board of Governors were proponents of a 50 basis point rate cut … and two of Jay’s direct reports entered “no vote” as they were in favor of no rate cut at all.

Still, there was no indication of WTF the Fed plans on doing in September. But if the Board’s concerns (“… economic deceleration, risk management concerns and too low inflation” and “trade uncertainty”) remain there’s a pretty, pretty, pretty good chance that we see a rate cut.

There’s your sign

If Jerry Interest Rates was wondering if his policy shift was too little too late, he may have gotten his sign soon after the minutes dropped …

For the second time in a week, the 2-year yield rose above the 10-year yield … a phenomenon more commonly known as a yield curve inversion. But you already knew that.

In case you drowned out the memories of Finance 101 with White Claws and “CBD” oil, a yield curve inversion, especially the “2-10” variety is a strong recession warning.

 

ON TARGET

Everybody: “Brick and mortar retail is dying!”
Target: “Hold my beer …”

What retail-apocalypse? Target announced a Fab Five-like Q2 … shocking the world with results far better than expectations … *covers mic* wait, they didn’t win?

The Minneapolis based retail giant announced that quarterly profits jumped 17% from the year prior and total sales increased by 3.6% to $18.42B. News of the results sent Targets stock soaring more than 20% to $103 during Wednesday’s trading session, absolutely crushing the stonks previous high.

Omnipresent

Back in 2017, the struggling seller of useless sh*t outlined a plan to integrate its in-store and online experiences. It’s safe to say it delivered. Target implemented a variety of options for customers to get their products including online order fulfillment, same-day pickup, and even same-day delivery via its partner Shipt.

Digital sales rose 34% vs. last year and the aforementioned same day services made up three-quarters of total online sales.

And since the fulfillment switched largely from distribution centers to the stores themselves, costs fell by 40% for regular orders and 90% for same-day orders, according to CEO Brian Cornell. And nothing makes an investor go from six to midnight quite like a mammoth reduction in expenses.

Big leagues

It looks like the big boys are here to stay as Walmart also announced an earnings beat last week. A tip of the cap goes out to the big box retailers for transforming their business to compete with Amazon … for now.

 

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IN OTHER NEWS

• For the first time in history, a country has sold 30-year bonds with a negative interest rate (read: investors are paying the German government to borrow their money). Considering the ultra-low interest rate environment this isn’t totally surprising … nor is the lack of interest in the instrument. You see, Deutschland offered up €2B of the debt and only sold €869M worth of bonds … presumably to idiots who didn’t realize those suckers in America still pay interest on 30-year debt.

 

• Goldman Sachs is going all Silicon Valley on us by initiating a hiring spree focused mainly on coders. GS plans to hire more than 100 engineers for trading floor tech roles and wants to go after its rivals in the tech and finance industries to do so. The move comes as more and more Wall Street firms look to bolster their tech offerings to cut manpower and meet growing client demands. When they start, they all get Apple Cards, but still won’t be allowed to say things like “deal sleds.”

 

• JPMorgan is kicking Chase Pay to the curb faster than its founder booked tickets for his rivals on the Titanic. On Wednesday, the company let users know that they’d no longer be able to use the app to pay in stores as early as next year. Users will still be able to use the service online, but a recent study showed that approximately 3 online merchants actually accept it.

 

• “Not!” – POTUS doing his best Borat impression. President Trump backtracked on his previous comments that he was considering rolling back capital-gains taxes to bolster the US economy, saying, “We don’t need it. We have a strong economy.” He has not backtracked, however, on his feelings towards Fed chair Jay Powell, who Trump is pressuring to cut interest rates. DJT even went as far as to refer to Powell as “a golfer who can’t putt.” Do you take drugs, Donny?

 

• Deutsche Bank is turning to micromanagement. Division leads must now submit any hiring request to be approved by CEO Christian Sewing, CFO James von Moltke or Deputy CEO Karl von Rohr. To cut down on spam mail and annoying “reply-all” people, the trio has asked that only “critical” roles be submitted. So stop sending through US equities sales and trading candidates.

 

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