Fed Keeps Hawkish Narrative Following Jackson Hole Symposium

Last Friday, Fed officials met at the annual economic symposium in Jackson Hole, Wyoming. Fed Chairman, Jerome Powell, spoke at the event to share his thoughts on the current state of the economy and provide subtle hints on future guidance for interest rate strategy. The market was hoping for a revision in the Fed’s inflation target from 2% to 3%. However, Powell clearly stated that the Fed would do whatever required (even softening the labor market) to get inflation back to the 2% target. He also mentioned holding rates at elevated levels until inflation slowed closer to the 2% target, implying a “higher-for-longer” mindset. 

Charles Schwab Layoffs

Charles Schwab (NYSE: SCHW) plans to cut jobs and close or downsize some corporate offices as the company seeks to streamline its operations to prepare for post-integration of TD Ameritrade, it said Monday, August 11th, in an SEC filing. The firm expects to realize at least $500M of incremental annual run-rate cost savings through such actions. To achieve this, SCHW expects to incur exit and related costs, mostly related to employee compensation and benefits and facility exit costs, of $400M-$500M. Most of the expenses associated with position eliminations will be incurred in the second half of 2023, and real estate-related costs will be incurred this year and next.

NVDA Earnings Recap July 2023

Nvidia’s shares climbed by 6% in after-hours trading as the company exceeded expectations for its fiscal second quarter and provided a positive outlook for the current period. In the quarter ending on July 30, Nvidia achieved adjusted earnings of $2.70 per share, surpassing the estimated $2.09 per share, and generated revenue of $13.51 billion, higher than the expected $11.22 billion. The company’s projected fiscal third-quarter revenue of approximately $16 billion, compared to the estimated $12.61 billion, implies a 170% growth from the same period last year. Net income significantly rose to $6.19 billion, or $2.48 per share, from $656 million, or 26 cents, in the previous year. The company’s strong performance was driven by its data center business, particularly AI chips, which reported $10.32 billion in revenue, a 171% increase year over year. Despite potential chip export restrictions, Nvidia remains confident in its demand and financial outlook.