Morning News: August 15, 2025
Posted by Eddy Elfenbein on August 15th, 2025 at 7:04 am

A Trader’s Guide to the Alaska Talks Between Trump and Putin

Trump Has the Tools to Deliver an Alaska Surprise

China’s Economy Slows Sharply as Trade War Bites

China New-Home Prices Drop as Stimulus Fails to Halt Slide

Japan’s Economy Records Modest Growth Despite Trade Uncertainty

Tariffs Set to Hit Ireland, Where U.S. Drugmakers Play Tax Games

Swiss Economy Slows Sharply as Tariffs Weigh

Tariffs Are High. So Is the Stock Market.

Why Haven’t Tariffs Boosted Inflation? This Theory Is Gaining Traction

Why Hands-Off Investing Pays Off

The Auctioneer and the Treasury Chief: Billy Long’s Quick Fall at the I.R.S.

Pimco’s Warning on a Fannie-Freddie IPO: ‘Don’t Fix What Is Not Broken’

Goldman Offers Investors Stakes in Millennium for Just $1 Million

Warren Buffett’s Berkshire Further Pares Stake in Apple, Adds UnitedHealth Position

Credit Unions Are Living Large Off of U.S. Taxpayers

Nobody’s Buying Homes, Nobody’s Switching Jobs—and America’s Mobility Is Stalling

A Chaotic Gold Rush Is Helping Bolivia Prop Up Its Finances

Pro Bono or Pro Nono? Law Firms Split on Fulfilling Deals With Trump

Companies With No Detention Experience Want to Run Trump’s ICE Camps

PBS Slashes Budget by 21% After Federal Funding Cuts

SpaceX Gets Billions From the Government. It Gives Little to Nothing Back in Taxes.

The U.S. Is Discussing Taking a Stake in Intel

Meta’s Consumer AI App Has Persistent Flaws Months After Debut

AI Music Is Ubiquitous and Getting Harder to Spot

Uber Freight Is Stuck in a No-Win Situation

The Man Tasked With Nailing Ford’s Next Model T Moment

Rivian Says It Faces $100 Million Hole After Relaxation of Fuel Economy Rules

Jaguar and Aston Martin Must Find a Way to Share

Why Cheap Airline Seats Are Getting Harder to Find

How Urban Outfitters’ Nuuly Stole the Show From Rent the Runway

Be sure to follow me on Twitter.

Morning News: August 14, 2025
Posted by Eddy Elfenbein on August 14th, 2025 at 7:04 am

Eurozone Industrial Production Slumps More Than Expected as Tariff Effects Sting

Red Sea Shipping Diversions to Enter a Third Year, CEO Says

China Mulls Asking Firms Run by Central Government to Buy Homes

Chinese Imports Fell During Trump’s First Term. It’s Happening Again.

Blue States Hunt for Ways to Wring More Taxes From the Wealthy

Since the Rich Are Overtaxed, Americans Won’t Get to Escape Social Security

Where Is Bessent Pulling These Rate Models From?

Bessent Has Yet to Fully Divest Assets, Raising Concern at Ethics Agency

Fed Faces High Bar for Big Cuts Despite White House Pressure

Behind Wall Street’s Abrupt Flip on Crypto

Return to Office Split Deepens Banking’s Transatlantic Divide

Aviva’s Profit Jump Boosts Shares to Near 18-Year High

Swiss Re Backs Guidance After Profit Beats Views

Big Business Came Prepared for This White House

American Antitrust: Now More Extreme Than Europe

You Can Buy One of the C.I.A.’s Greatest Mysteries at an Auction House

As Trump Pushes International Students Away, Asian Schools Scoop Them Up

U.S. Steel Explosion Presents Challenge to Nippon’s Investment Plans

Trump Order Seeks to Cut Regulations for Space Industry

Brazil’s Eight-Year Campaign for Green Jet Fuel Hits the Trump Wall

Big Tech’s A.I. Boom Is Reordering the U.S. Power Grid

Nvidia’s Trump Tax of Little Worry to Investors Eyeing AI Riches

Deere Falls as Struggling Farmers Delay Machinery Rebound

Killing the Cure: Why Tariffs On Medicine Backfire

Costco Won’t Sell Abortion Pill as Religious Investors Declare Win

There’s Money to Be Made From ‘MAHA.’ Food Companies Want In.

The Chocolate Company Where Prices Change Every Three Months

The U.S. Alcohol Industry Is Reeling From Canada’s Booze Boycott

The Live Music Business Is Booming. Now Rap Is Getting a Piece, Too.

From Gucci to Rolex: The Rise and Fall of Luxury in Music

Tapestry Plummets With Tariff Costs Weighing on Profit Outlook

Be sure to follow me on Twitter.

Morning News: August 13, 2025
Posted by Eddy Elfenbein on August 13th, 2025 at 7:06 am

Bets on Outsize Fed Cut Gain Steam as CPI Data Backs Doves

Bessent Says Fed Rates Should Likely Be 150, 175 Basis Points Lower

Crypto Entrepreneur Who Caused 2022 Market Crash Pleads Guilty to Fraud

A Flash in the Pan: The Strange Story of Kodak’s Ill-Fated Crypto Venture

Morgan Stanley Sees Brazil Bond Sales Setting $30 Billion Record

Bessent Dismisses China Investing in US as Part of a Trade Deal

China’s New Yuan Loans Drop Unexpectedly

China Sees Backlash Over Mandatory Social Security Payments

The US-China Fight Over Panama’s Canal Has an Unexpected Winner

China to Hit Canadian Canola With Nearly 76% Tariff as Trade Row Escalates

Vietnam Wants to Be the Next Asian Tiger and It’s Overhauling Its Economy to Make It Happen

Trump Calls on Goldman to Replace Economist Over Tariff Stance

Trump’s Pick to Lead Labor Data Agency Adds to Fears of Political Interference

Trump Has Made Himself Commander in Chief of the Chip Industry

What to Know About Trump’s Deal With A.I. Chipmakers

Companies Are Pouring Billions Into A.I. It Has Yet to Pay Off.

Transatlantic Cooperation and the E.U.’s Digital War on U.S. Tech

Perplexity’s Bid for Google Chrome Is Mostly Mischief

GE Appliances Plans $3 Billion U.S. Investment to Help Blunt Tariffs

Billion-Dollar Pay Packages Are Disasters-In-Waiting

Saving Money on a Used Car Is Getting Harder

Americans Are Getting Priced Out of Homeownership at Record Rates

OPEC+ Reshaped the Calculus for Oil Markets and Spawned a Record Glut

Scrappy Gas Billionaires Win Major Arbitration Case Against Shell

The Push for Solar Is Carving a Path of Destruction

Pharmaceuticals, AI Make Growing Old Great Again

Gildan to Buy Underwear Maker Hanesbrands for $2.2 Billion

The South African Businessman Who Turned Le Creuset Into Commercial Gold

Be sure to follow me on Twitter

CWS Market Review – August 12, 2025
Posted by Eddy Elfenbein on August 12th, 2025 at 6:12 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Stocks Surge to All-Time High on Mild CPI Report

Last Friday, the stock market got a shock when the monthly jobs report came in lower than expected. The previous months’ data was also revised lower. President Trump was so angry that he fired the head of the Bureau of Labor Statistics.

On Friday, August 1, the stock market took a 1.6% hit. Since then, the market has changed its outlook for the Federal Reserve. Traders now expect a few rate cuts from the Fed before the end of the year. Investors liked that news and the market gradually made back most of what it lost. Last Friday, the S&P 500 closed within 1/200th of 1% of an all-time high.

This morning, the stock market got its next big test when the inflation report for July was released. The news showed a mostly benign report which gives a green light for the Fed to lower interest rates.

The stock market celebrated and closed at a new all-time high. In 18 weeks, the S&P 500 has added nearly 30%. But there’s an odd fact about this rally. It’s been almost entirely centered on riskier stocks. Conservative stocks have largely gone nowhere.

I’ll touch on that in a bit, but first, let’s take a closer look at this morning’s report. The CPI report said that consumer prices rose by 0.2% last month which matched Wall Street’s consensus. Over the last year, consumer prices have increased by 2.7% which is still above the Fed’s target rate for 2%. Today’s report is also noteworthy because it’s the first time we’ve seen the effect of the tariff policies.

If we look at the core rate, which doesn’t count food or energy prices, then the CPI rose by 0.3% last month. That was also in line with forecasts. It was also the largest increase since January. Over the last year, core CPI is up by 3.1%.

Shelter costs, which are a large part of CPI, rose by 0.2% in July while food prices were flat and energy prices fell by 1.1%.

Tariffs did appear to show up in several categories.

For instance, household furnishings and supplies showed a 0.7% increase after rising 1% in June. However, apparel prices were up just 0.1% and core commodity prices increased just 0.2%. Canned fruits and vegetables, which generally are imported and also sensitive to tariffs, were flat.

Twelve-month headline inflation has increased over the last three months, but not by much (2.3% to 2.7%). Overall inflation has been well-behaved. I suspect that, post Covid, the resting rate of inflation is probably close to 3%. By that, I mean that all things being equal, the inflation rate will mostly hover around 3%. Before Covid, that rate was around 2%.

Here’s a look at the Fed funds rate (in red) along with the core rate of inflation (in blue). In simple terms, the blue line ain’t moving up so the red line is coming down.

Inflation at 3% is higher than the Fed said it wants, but I don’t view it as a major problem and I certainly don’t think it’s worth damaging the labor market for an extra 1%.

The futures market sees an active Fed for the rest of this year, and it’s hard to disagree. Traders now see a 94% chance of the Fed cutting rates next month. Remember, there are already two votes at the Fed for lower rates.

After September, traders see a 64% chance of another cut in October. In December, traders narrowly see a third rate cut. If that’s correct, it will bring the target range for the Fed funds rate to 3.5% to 3.75%.

Tuesday’s trading was unique because investors poured into riskier assets and ignored safer assets. For example, the S&P 500 High Beta ETF (SPHB) increased by 3% on Tuesday. Meanwhile, S&P 500 Low Vol ETF (SPLV) was mostly flat. That’s an unusually large spread.

This is part of a larger trend that started in April. High Beta stocks have demolished Low Vol stocks. I don’t know how much longer this trend can last.

Interestingly, many travel-related stocks were very strong today. Delta Air Lines (DAL) and United Airlines (UAL) were some of the best performers in the S&P 500 today. Southwest Airlines (LUV) and Expedia (EXPE) both had very good days today.

Also today, Perplexity offered to buy Google’s Chrome browser for $34.5 billion. Last year, the Justice Department suggested that Google divest itself of Chrome. Technically, Chrome is worth more than Perplexity, but they should have little trouble raising the money to close the deal.

Hawkins: Up 180-Fold Since 1992

Fourteen months ago, I told you in this newsletter about little Hawkins Inc. (HWKN) of Roseville, Minnesota. Hawkins is one of those small- to mid-cap industrial stocks that I love. The company describes itself as “a leading specialty chemical and ingredients company.”

Snoresville, right? No, Hawkins isn’t the most exciting business, but it’s an important one, and it’s something people need. Hawkins “formulates, distributes, blends, and manufactures products for its Industrial, Water Treatment, and Health & Nutrition customers.”

Since I told you about Hawkins last year, the stock has more than doubled.

Hawkins has been around since 1938. The company has 64 facilities across 28 states. Hawkins has about 1,100 employees and last year, it generated revenue of $974 million.

Now for the best part. Since 1992, Hawkins is up by more than 180-fold. The S&P 500 looks like a flat line in comparison. Hawkins has also raised its dividend fairly consistently for nearly 40 years. In fact, it just raised it again by 6%.

Hawkins used to have a practice of announcing 10% or 15% stock dividends each year. These tended to be in line with the stock’s long-term performance. As a result, the nominal share price didn’t move much. That might you lead you to believe that the stock hasn’t done well, but it’s been a huge winner. Despite all its success, still only three Wall Street analysts bother following Hawkins.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Morning News: August 12, 2025
Posted by Eddy Elfenbein on August 12th, 2025 at 7:04 am

Global Markets Rise Ahead of U.S. Inflation Data

US-China Tariff Truce Extended as Xi, Lula Speak on Trade Unity

Gaming Out the Price of a Trump Trade Deal With China

Greg Mankiw’s Solutions Are the Path To Much More Federal Debt

In Economics, the Unseen Is Much More Important Than the Seen

Trump, Seeking Friendlier Economic Data, Names New Statistics Chief

Bond Traders’ High Hopes for September Rate Cut Hinge on CPI

Can This New ‘Elite’ Travel Card Compete With Amex and Chase?

Stop Letting Middlemen Pickpocket Your Bank Account

The Era of Big Raises for Low-Paid Workers Is Over

U.S. Small Businesses Brush Off Tariff Fears

When Will Voters Blame Trump for This Economy?

Bessent on Tariffs, Deficits and Embracing Trump’s Economic Plan

Car Companies Are Paying the Tariffs. For Now.

Ford’s Answer to Cheap Chinese EVs Starts With a $30,000 Electric Pickup

Ford’s New $30,000 EV Pickup Cuts Against Washington

China Creates World’s No. 1 Shipbuilder, Driven by Rivalry With U.S.

US Premiums for Gold Retreat Following Trump’s No-Tariff Vow

Rare-Earth Deals Show the US Can Break China’s Grip

Sugar Set for Longest Run of Gains in Five Months on Brazil Crop

Danske Bank Cuts Fossil-Fuel Exposure From Its Investments

China Urges Firms to Avoid Nvidia H20 Chips After Trump Ends Ban

America’s New AI Plan Is Great. There’s Just One Problem.

Larry Ellison Wants to Do Good, Do Research and Make a Profit

Spirit Airlines Issues Going Concern as It Faces Cash Crunch

Bain Considers Late 2025 IPO of Bob’s Discount Furniture

Pastor Sees Boycott of Target Stores as New Civil Rights Fight

Swiss Sneaker Brand On Lifts Targets on Europe, Asia Demand

White House Cage Fight Is ‘Going to Happen,’ Says UFC Boss

Be sure to follow me on Twitter.

Morning News: August 11, 2025
Posted by Eddy Elfenbein on August 11th, 2025 at 7:08 am

The Dollar Still Rules, But US Policy Is Making It Less Special

Forgotten US Global Bond Funds Face ‘Show-Me-the-Money’ Moment

Hedge Fund Schonfeld’s Millennial Boss Drags It Back From the Brink

The Death of Diversification: Why Buffett Was Right All Along

Is Dow Inc. Doxing the Shareholders Who Ask the Wrong Questions?

Trump’s 401(k) Order Offers Retirement Savers Crypto, Private Assets, But Also Higher Fees and More Risk

Inflation Up or Down? What About Jobs? The Agency That Should Know Is on the Rocks

What Happens When Politicians Meddle With Economic Data: Argentina’s Example

The U.S. Marches Toward State Capitalism With American Characteristics

On Economic Policy, the White House Is Its Own Worst Enemy

Supercharging ICE Threatens to Be a Costly Mistake

The Economy Is Starting to Pay for Trump’s Chaos

US Consumers to Bear Brunt of Tariff Hit, Goldman Economists Say

Small Businesses Brace for the Punishing Side Effects of Trump’s Tariffs

Small US Firms Paying Trump Tariffs Face $202 Billion Annual Hit

How to Offset Trump’s Aluminum Tariffs: Recycle Your Beer Can

Orsted Shares Tumble After Halting of U.S. Wind Project Sale; $9.4 Billion Rights Issue Proposal

Lab-Grown Diamonds Are Testing the Power of Markets

Lithium Market Soars as CATL Shuts One of World’s Biggest Mines

Rare-Earth Magnet Maker Raises $65 Million in Push to Counter China

China’s Automakers Are Taking a Shortcut to European Markets

Builder China South City Ordered to Liquidate by Hong Kong Court

U.S. Government to Take Cut of Nvidia and AMD A.I. Chip Sales to China

An AI Replay of the Browser Wars, Bankrolled by Google

Rumble Mulls $1.17 Billion All-Stock Deal For Northern Data

Goodbye, $165,000 Tech Jobs. Student Coders Seek Work at Chipotle.

AOL Will End Its Dial-Up Internet Service (Yes, It’s Still Operating)

Activist Investor to Push Avantor to Make Changes or Sell Itself

Inside Target, Frustrated Employees and the Search for a New CEO

Can AriZona’s 99-Cent Iced Tea Survive Trump’s Tariffs?

Be sure to follow me on Twitter.

Morning News: August 8, 2025
Posted by Eddy Elfenbein on August 8th, 2025 at 7:01 am

Israel to Seize Gaza City, Stopping Short of Full Takeover

Can Russia’s Economy Withstand Trump’s Pressure?

China Defends Buying Russian Oil After Trump’s Tariff Threat

Congo Peace May Herald $700 Million Power Deal With US Company

A Mile Underground, America’s Largest Untapped Copper Mine Inches Toward Reality

Taiwan Strained by 20% Tariffs, No Trade Deal and Political Uncertainty

Japan Says Trump to Correct ‘Extremely Regrettable’ Error in Tariff Order

Gold Hit By Surprise US Tariffs, Unleashing New Turmoil

Why a Product’s Country of Origin Matters in Trump’s Trade War

US Trade Shifts From Bretton Woods to the ‘Turnberry System’

It’s Only a Matter of Time Until Americans Pay for Trump’s Tariffs

You Don’t Enhance Free Speech By Giving Politicians Control of It

Trump’s Surprise Fed Pick Buys Him Time on Chair Selection

JPMorgan Says Treasury Curve Can Steepen on Miran Fed Pick

Sahm: The BLS Can’t Be Replaced by the Private Sector

SpongeBob on the Syllabus of Class Examining the Shackles of Work

Follow the Money: The Inevitable Rise of Crypto and Blockchain

Playing by the Rules Costs Wall Street an Extra 51 Million Hours a Year

Wall Street and AI Startups Are Fighting Over Entry-Level Quants

Don’t Turn Chip Controls Into Bargaining Chips

Trump Reminds CEOs Who the Ultimate Boss Is

Intel CEO Dogged by Decades of China Chip Bets, Board Work

Intel’s Chief Holds Firm After Trump Demands His Resignation

SoftBank Buys Foxconn’s Ohio Plant to Jumpstart Stargate AI Push

Silver Lake Invests $400 Million to Tackle Data-Center Power Bottleneck

The AI Building Boom Is Bound to Bust

E.P.A. to Stop Updating Popular Database After Lead Scientist Criticized Trump

Truck Companies Sour on California’s Strict Clean Air Rules

What If Everything We Think About Obesity Is Wrong?

Irish Whiskey Makers Crumble Under Trump’s Trade Tariffs

Nicotine Is Hot, Beer Is Not. What Vice Stocks Say About America’s Guilty Pleasures.

Be sure to follow me on Twitter.

Morning News: August 7, 2025
Posted by Eddy Elfenbein on August 7th, 2025 at 7:04 am

A Defiant Israel Eyes a Full Gaza Takeover Despite Global Isolation

Bank of England Cuts Rates to Two-Year Low After Rare Re-Vote

China’s Exports Surged Again in July, but Not to America

German Exports to U.S. Fall for Third-Straight Month as Industry Slumps

Trump’s Tariffs Take Effect in Fresh Test for Global Economy

Trump Doubles Tariff on India to 50%, Sparking Outrage in Delhi

Southeast Asia Looks for Clarity From U.S. on ‘Rules of Origin’

‘Next Era of Dollarization’ Is Visible From Bolivia to Indonesia

US Would Be Wise Not to Count Its Winnings on Trade Just Yet

Dollar Falls to 10-Day Low as Tariffs Take Effect

This Isn’t How You Deal With Free Riders

Stablecoins, Digitized Bank Deposits, and Future Banking Risk?

Trump to Sign Order Easing Path for Private Assets in 401(k)s

Youth Is Losing to Experience in This Job Market

The BLS Isn’t Alone in Facing Data Challenges; U.K. Has Them Too

Taxation Is Easily the Least Harmful Aspect of Government Spending

US Offers to ‘Simplify’ Harvard Case Over Foreign Student Ban

Japan’s Auto Giants Are Expecting Pain Despite Trump Trade Deal

Auto Industry Takes $12 Billion Hit From Trade War

Trump’s Latest Attacks Stun Wind and Solar Industries

Space Company Firefly Poised for Wall Street Debut

The Real Nuclear Moonshot Is Here on Earth

Apple C.E.O. Gifts Trump Gold

Siemens Beats Market Views With Order Momentum in Mobility

Artificial Intelligence, and the Future of the Magnificent 7

Elon Musk Takes on Sam Altman, This Time Over the Chessboard

Foodpanda Aims to Double Pakistan Business in Three Years

Lilly Obesity Pill Cut Weight by Just 11% in Study; Shares Drop

How Ozempic’s Maker Lost Its Shine After Creating a Wonder Drug

It Was a Promising Addiction Treatment. Many Patients Never Got It.

Disney’s Thriving Parks Are Buying It Time to Figure Out Streaming

Be sure to follow me on Twitter.

Morning News: August 6, 2025
Posted by Eddy Elfenbein on August 6th, 2025 at 7:06 am

America’s Ultimatum to Russia Is About to Pass. Now What?

Ukraine Appoints Head of Economy Watchdog After Anti-Graft Protests

German Factory Orders Dip as Sluggish International Demand Weighs

Germany Gets No Bidders in Zero-Subsidy Offshore Wind Auction

Shale Oil Drillers Tap the Brakes on Production Until Prices Gain Speed

In Hawaii, New Tourism Tax Aims to Offset Costs of Climate Change

US Is Still Critically Reliant on China, ECB Finds

China Is a Nation of Savers. Many Are Drowning in Debt.

India’s Central Bank Stands Pat as Tariff Pressures Linger

The Tariff Effect: Billions in Revenue but No Economic Earthquake

Trump Ramps Up Tariff Blitz With India, Pharma, Chips in Sights

Does Japan Want American Cars? Trump’s Push to Open Foreign Markets Faces Test

Detroit Rediscovers Its Love for Giant Gas Guzzlers

Why the B.L.S. Regularly Revises Jobs Data

Trump Airs Personal Financial Grievances Ahead of ‘Debanking’ Crackdown

Goldman Trader Says Buoyant Stocks Are Ignoring Recession Risks

The New Economics of People in a World of Closing Doors

When Top Lawyers Earn $30 Million, Who Pays?

Revenge of the Girlbosses

The Texas Gerrymandering Fight Could Ignite a National Fire

OpenAI in Talks for Share Sale at $500 Billion Valuation

How Palantir Won Over Washington—and Pushed Its Stock Up 600%

Disney, McDonald’s and the State of the U.S. Economy

Disney Tops Profit Estimates, Led by Parks Division, Streaming

Disney Paying $1.6 Billion for WWE Rights

The NFL Is Taking a 10% Stake in Disney’s ESPN

McDonald’s Returns to Sales Growth With Toys, Budget Meals

Uber Boosts Buybacks by $20 Billion After Upbeat Forecast

How One Company Maintained a Monopoly on U.S. Fire Retardant

Shopify Rallies on Revenue Beat, Strong Third-Quarter Outlook

Aldi’s Passionate, Cultlike Following Fuels Its Rapid Expansion Plans

Be sure to follow me on Twitter.

CWS Market Review – August 5, 2025
Posted by Eddy Elfenbein on August 5th, 2025 at 10:01 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

The Weak July Jobs Report

The stock market got a big shock on Friday when the Labor Department said that only 73,000 new jobs were created last month. That was below expectations for a gain of 100,000 jobs, and as expectations go, that’s quite modest.

But what really hit Wall Street were the revisions to the old data. The numbers for May and June were revised lower by a combined 258,000. That means that the economy created only 19,000 jobs in May and 14,000 in June.

Here’s a look at the original jobs report compared with the revisions.

The unemployment rate increased by 0.1% to 4.2% for July. I like to look at the decimals, and the unemployment rate came very close to rounding up to 4.3%. We now have the highest unemployment rate since October 2021.

This was a very unusual jobs report. For example, health care and social assistance combined for 94% of the job growth.

The jobs report is the cause for a major change in outlook because these new numbers indicate that the jobs market isn’t nearly as strong as we thought. It was only last Wednesday that the Federal Reserve said in its policy statement that the “unemployment rate remains low, and labor market conditions remain solid.”

Maybe not.

The futures market responded immediately, and it looks like a September rate hike is back on the table. The odds of a Fed rate cut in September soared to 89%. Before the jobs report, the odds were around 40%. There’s even talk now of the Fed cutting by 1% before the end of the year.

The S&P 500 lost 1.60% on Friday. That was the biggest lost for the index since late May. During the month of July, Friday’s loss was more than double the next worst daily loss.

The quiet upwards market that we’ve been enjoying this summer may no longer be with us:

There were few signs of strength in the July jobs count, with gains coming primarily from health care, a sector that has continued to show strength in the post-Covid recovery. The group added 55,000 jobs, easily leading the way. Social assistance also contributed 18,000 jobs. The two sectors combined for some 94% of the job growth.

Retail added nearly 16,000 jobs and the financial sector was up 15,000.

However, federal government employment continued to decline, down 12,000 for the month and 84,000 since its January peak, before Elon Musk’s Department of Government Efficiency began paring down the jobs rolls. Professional and business services lost 14,000.

Is the economy slowing, or it coming to a crashing halt? We don’t have the data yet to say.

There were some good bits in the jobs report. For example, average hourly earnings rose by 0.3% last month which matched estimates. Over the past year, average hourly earnings are up 3.9%. That’s not bad, but I want to see it go higher. Over the last year, average hourly earnings increased by 3.9%.

The labor force participation rate edged down to 62.2% That’s the lowest since November 2022. The broader U-6 rate, which counts “discouraged workers,” rose to 7.9%.

President Trump was not happy with the jobs report, especially the revisions. He fired Erika McEntarfer, the head of the Bureau of Labor Statistics.

The president has demanded lower interest rates from the Fed, and he may soon get his wish. On top of that, Adriana Kugler just announced her retirement from the Federal Reserve Board. That gives the president an opportunity to appoint a new member.

Folks on Wall Street are now talking about the Fed lowering rates by 1% before the end of the year. If that’s correct, that would be a big boost for value and defensive stocks. I’ll give you an example. On Friday, as the market was falling, shares of American Water Works (AWK), one of our Buy List stocks, gained nearly 4%.

IDEXX Labs (IDXX) Soars 27% on Earnings Beat

In last week’s issue, I listed some stocks that I’m considering for next year’s Buy List. One of them, IDEXX Laboratories (IDXX), gave us a nice surprise on Monday. The company beat earnings, raised guidance and soared by more than 27% in Monday’s trading.

I wish I could take credit for predicting this, but I was as surprised by the big move as the market was. I merely said I was looking at the stock.

IDEXX is an interesting company, and it had a few industry segments. For example, IDEXX provides diagnostic solutions for pets. It also develops diagnostic tests to detect diseases in livestock and poultry. The company also does water testing so it can spot E. coli. IDEXX has more than 10,000 employees and it serves over 175 countries.

IDEXX mostly stays out of the headlines although it has faced anti-trust lawsuits. This is common among companies with strong positions in their market. IDEXX usually runs its gross margin near 60% and its operating margin around 30%. I also really like the recurring revenue model.

For its Q2, IDEXX had reported earnings of $3.63 per share. That was 33 cents per share better than Wall Street’s consensus, and 49% better than last year’s result. Quarterly sales rose 11% to $1.11 billion which beat estimates of $1.07 billion.

CEO Jay Mazelsky said, “We saw exceptional momentum with IDEXX InVue Dx™ placements, exceeding expectations as veterinarians adopted this slide-free technology to streamline workflows and gain faster, more accurate clinical insights. This growth builds on the successful launch of IDEXX Cancer Dx™ in North America. Our focus on helping veterinarians gain deeper diagnostic insights to inform patient care continues to drive customer loyalty and sets a solid foundation for sustained long-term growth.”

IDEXX raised its full-year guidance to a range of $12.40 to $12.76 per share. The previous guidance was $11.93 to $12.43 per share.

IDEXX also raised its 2025 sales guidance from the $4.10 billion to $4.21 billion range up to $4.21 billion to $4.28 billion.

I can’t say that IDEXX is a bargain at these prices, but it’s an innovative company that’s not well-known and it has very sound finances. Over the last 34 years, its total return has exceeded 67,000%.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy