Welcome to Yahoo Finance's flagship show, The Morning Brief. I'm Julie Hyman. Let's get to the three things you need to know today.First up, US stock futures little changed ahead of Federal Reserve Chair Jerome Pal's Jackson Hole speech. Investors showing caution ahead of the remarks with the S&P 500 down five days in a row. Investors largely expect Pal to indicate the policy makers will start cutting interest rates next month, but it's not a sure bet.Cleveland Fed President Beth Hammock telling Yahoo Finan ...

Market Overview & Sentiment - Over 90% of S&P 500 stocks are higher, hitting an all-time high, a situation historically followed by extended bull markets [2][3] - The market is reacting positively to perceived dovish signals from the Federal Reserve [4] - A global bull market is underway, with various indices hitting all-time highs, favoring diversified equity holders [9][10] Investment Strategy & Sector Preferences - The firm favors financials, industrials, and technology sectors [6][7] - The firm is underweight small caps relative to large caps, but acknowledges potential upside if small caps show relative strength [7][8][9] - The firm is underweight bonds relative to stocks, anticipating a potentially dovish Fed and future leadership [12] Interest Rate & Bond Market - Historically, after a pause of 5 months to a year between interest rate cuts, the S&P 500 is higher one year later 10 out of 11 times, with a 14% median return [5] - The two-year Treasury yield has dropped significantly, reflecting market expectations of rate cuts [11]

Fed's Policy Stance and Market Expectations - The market anticipates a rate cut, with odds of a September cut at 89% [15] - The Fed is perceived as giving a "dim green light" to a rate cut, though the word "may" introduces uncertainty [5][24] - The market's excitement stems from a perceived pivot away from inflation concerns towards the labor market [22] - The Fed may cut rates despite stagflation, a situation where inflation and unemployment are both high [29] Inflation and Tariffs - The Fed believes it can control inflation and prevent tariff price increases from becoming broader inflation [1] - Tariff-driven inflation is considered a "one-time event," but it creates a pricing umbrella for other producers to raise prices [19][27][28] - Some companies, like The Home Depot, Pepsi, and Walmart, are starting to talk about increasing prices [20] Labor Market Dynamics - Labor demand has softened, but labor supply has also softened due to factors like reduced immigration and deportations [12][28] - The "break-even rate" of unemployment, the level needed to keep the unemployment rate steady, is a key consideration for the Fed [9][12] - Payroll growth and inflation reports are important data points for the Fed's decision-making [9] Economic Reports and Data - September's economic data, including the jobs report, PPI, and CPI, will be consequential for the Fed's decision [2][6][17][18] - The market will adjust over time if the data leans against a rate cut [3] - The discussion needs to focus on the right level of payroll growth, considering the shrinking labor force [7][8]

Economic Outlook - Downside risks to employment are rising [1] - Tariff effects on consumer prices are clearly visible [1] - Tariff impact on inflation is expected to be short lived [1] Monetary Policy - A rate cut is anticipated next month [1]

MATT: IT IS 5:00 A. M. IN NEW YORK CITY, I AM MATT MILLER IN FOR DANI BURGER.EQUITY FUTURES WAIVER TO WRAP UP A WEEK THAT WAS ENTIRELY IN THE RED. MAYBE WE WILL SEE SOME GREEN TODAY AS MARKETS AWAIT FED CHAIR POWELL'S SPEECH AT THE JACKSON HOLE SYMPOSIUM. WE WILL BRING YOU THAT LIVE THAT SPECIAL COVERAGE ALL MORNING.NVIDIA IS SAID TO HAVE ASKED ITS SUPPLIERS TO HALT PRODUCTION ON ITS H20 CHIPS. WE WILL TAKE YOU THROUGH THAT STORY. LOOK AT FUTURES.WE ARE IN THE GREEN TODAY. THIS IS EVERY SINGLE DAY THIS WEEK ...

Market Expectations & Potential Scenarios - The market anticipates a hawkish speech from Powell at the Jackson Hole Summit, leading to market declines [1] - The probability of a September rate cut has decreased to 71% due to these expectations [1] - If Powell hints at a rate cut, a significant short squeeze is expected [1] - If Powell sounds hawkish, the market impact may be limited as it has already been priced in [1] Economic Indicators & Analysis - The unemployment rate has risen to 42%, initial jobless claims are increasing, and jobs data are being revised downwards [1] - Bankruptcies have reached their highest level since 2020 [1] - Inflation remains below 3% [1] Cryptocurrency Market Outlook - BTC and altcoins could rally higher in the coming weeks, regardless of Powell's speech [1]

🚨CMC News: Bitcoin Surges After Fed Minutes Reveal Rate Cut Push.🔗 https://t.co/cMWshQT3UT https://t.co/cGkxwwEKxM ...

Market Outlook - The market anticipates rate cuts, but strong PMI data suggests an accelerating economy, causing a selloff [1][2] - The market's multiple expansion is tapped out, earnings growth will be the key driver of returns [5] - The Fed's navigation is uncertain due to mixed economic signals, making future rate cuts beyond September uncertain [9][10] Sector Preferences - Technology and communication services are favored due to earnings growth, balance sheets, and profit margins, despite rich valuations [3][4] - Industrials are also attractive due to the onshoring capex boom [4] - Quality stocks with strong balance sheets, high ROE, and good profit margins are preferred amidst volatility [3] US vs Rest of the World - US earnings power is superior, with the S&P 500 tracking over 10% earnings growth, compared to approximately 3% outside the US [6][7] - Europe's market rally is primarily driven by multiple expansion and valuation rerating, which is starting to exhaust [7] Fixed Income - Disinflationary forces, including rising housing inventory (up 15%), declining housing prices, contained oil prices, lower commodity prices, and slowing wage growth, support potential Fed rate cuts [12] - Tariffs are the primary inflationary pressure [13]

Market Sentiment - Market experienced a dump due to the decreased probability of a September rate cut [1] - The odds of a September rate cut dropped from 90% to 57% [1] - The market anticipates increased clarity from Fed Powell's policy speech at Jackson Hole [1] - Industry expects rate cuts and Quantitative Easing (QE) are forthcoming [1] - Industry forecasts a "giga bullish" Q4 [1]

Jobless Claims from the Labor Bureau came in HIGHER than expected.Actual: 235K🔻Estimate: 226KPrevious: 224KHowever, despite a tiny bump in positive price action for crypto + equities, it is still not adding to confidence in a September Rate CutLikelihood of a September Cut has now shifted UNDER 80% from FedWatch, after being over 90% just last week.&& all the way down to 64% on Polymarket!?All eyes continue to be on what Powell will say tomorrow at Jackson Hole.After the Hawkish Fed Minutes from July, many ...