“The labor market is actually still quite solid.” “The labor market’s solid, historically low unemployment.” “In the labor market, conditions have remained solid.”

Last Wednesday, at his press conference following the Federal Reserve’s decision to hold interest rates steady, the central bank’s chairman, Jerome Powell, used the word “solid” to describe the US job market at least a half-dozen times. For much of the year, the labor market’s perceived resilience amid inflation, still above the Fed’s desired target, and tariffs, which threaten more inflation, have bolstered the Fed’s position that it can hold off on lowering interest rates to continue waging its battle on higher prices.

Jumbo Redux

First, there’s what happened in July. The economy added just 73,000 jobs, according to the Labor Department, well below the expectations of economists surveyed (a Bloomberg poll found experts anticipating 109,000). The unemployment rate ticked up to 4.2% from 4.1% in June.

Second, and arguably more important, is what actually happened in May and June. The Labor Department issued a startling revision to previous job figures: Officials now estimate employment increased by just 33,000 jobs combined over the two months, 258,000 less than before. The department acknowledged the colossal downgrade was “larger than normal.” The data effectively calls into question the Fed’s contention, central to its wait-and-see approach, that the labor market has chugged along admirably.

The Fed’s balancing act is admittedly tricky. Its preferred inflation gauge, the core PCE price index, rose 2.8% year-over-year in June, well over its 2% target. And the two key data points the Fed is trying to influence act like magnetic opposites when it comes to monetary policy: higher rates can tame inflation, but they also make it more expensive for businesses to borrow money, leading to less hiring. The verdict rendered by investors Friday is that the Fed will have to drop its defensive posture against inflation:

• As of Friday, investors are betting on an 87.5% chance that the Fed’s main monetary policy committee cuts rates at its next meeting in mid-September, according to the CME Fedwatch. The day before the Labor Department’s massive job number revisions dropped, the likelihood of a rate cut was seen as just 37.7%.
• President Donald Trump’s tariff policies won’t make life any easier. The core PCE data released last week showed tariffs have already started to push up consumer prices. And that data was gathered before he announced a slew of new tariffs on countries ranging from 10% to 41% on Thursday (the S&P 500 fell 1.6% and the Nasdaq 2.2% on Friday as markets registered their immediate concern over the weak job numbers and new import taxes).

The Fed has been cautious about cutting rates too early, given that previous cuts in the aftermath of the pandemic led to sustained and persistent inflation, with their desired target still out of reach. And then there was last year, when Fed officials decided not to cut rates at their July policy meeting, only for a weak jobs report to drop days later; they proceeded to vote for a half-percentage point “jumbo” rate cut in September.

History Repeating: One of the two Fed officials who dissented from the decision to hold rates steady last week, Trump appointee Christopher Waller, warned his colleagues to avoid a repeat of last year: “We should not wait until the labor market deteriorates before we cut the policy rate.” Trump has pushed hard for a rate cut himself, but a weakening jobs market isn’t the impetus he wanted. After the revised jobs numbers were announced, he posted on Truth Social that that they were “RIGGED in order to make the Republicans, and ME, look bad” and fired the head of the Bureau of Labor Statistics.

Sure, Superman can save Metropolis. But how about a lumbering legacy media company?

The iconic comic book character has been warmly received at the box office this summer, part of an industry-wide trend of strong theater ticket sales. But is the rising box office tide enough to lift Warner Bros’ boat?

It’s a Bird, It’s a Plane, It’s a … Corporate Restructuring

Warner Bros. Discovery entered the year stuck in media conglomerate mud, with its eponymous film studio in especially bad shape. After two of its biggest releases of the year flopped (that’d be the sci-fi political allegory Mickey-17 and gangster tale The Alto Knights), studio heads Pam Abdy and Mike De Luca were reportedly in the hot seat. But ever since, the studio has been on one of the hottest streaks in Hollywood history, with five consecutive movies debuting at the top of the US box office — just as the company announced plans to split into two publicly traded entities, a move that has delighted Wall Street.

Still, the split is predicated on the idea that the company’s streaming service and content studios can soar once unshackled from sinking cable properties and the bulk of a giant debt load. If this summer is any indication, there’s some truth to the idea — at least, if the company can still find fresh spins on familiar propositions:

• The hot streak kicked off in April with video game adaptation Minecraft, which has now grossed nearly $1 billion worldwide, followed by vampire flick Sinners, the highest-grossing non-sequel or remake film since 2010’s Inception; horror sequel Final Destination Bloodlines, Brad Pitt’s F1 flick (a collaboration with Apple TV+), and finally Superman, which has now grossed over half a billion dollars worldwide.
• Through March, Warner Bros. ranked last in domestic box office share among major box office studios, according to The Numbers. As of Friday, it’s sitting in the top spot, having earned over $1.3 billion at the domestic box office so far, more than its total domestic gross in 2024.

Investors like what they’re seeing: WBD’s share price is up over 20% year-to-date, and up nearly 30% since formally announcing its break-up plan in June. CEO David Zaslav seems to like what he sees, too, recently telling The New York Times that “All of us are really, really proud” of Abdy and De Luca, the executives once in his crosshairs.

Turnaround Story: In fact, the entire industry is witnessing a summer rebound. Through April, the domestic box office was down roughly 13% year-over-year. But through June, it’s up 18% year-over-year, according to Comscore data seen by CNN. And that was before big hits like Superman, Jurassic World Rebirth, and Fantastic Four: First Steps hit theaters. But the biggest global hit of the year? That’d be Chinese animated film Ne Zha II, already closing in on a $2 billion global box office haul (indie studio A24 will be distributing the film in the US later this month).

Can anything slow Palantir down?

The AI-powered, data-crunching defense tech company enters its earnings call today as the year’s hottest stock on the S&P 500 — and comes just after the company on Friday inked a new $10 billion contract with the US Army. Which all begs the question: Does the US defense industry have a new top dog?

Data Dump

Palantir’s 105% share price rise this year is impressive, but its 865% rise since the start of last year is impossible to ignore. While investors began pouring into the stock in earnest after last November’s election ushered in political allies of Palantir co-founder (and human species skeptic) Peter Thiel, its success is equally indicative of the shifting terms of warfare in an increasingly digital world. While Palantir’s shares have surged, traditional weapons-makers like Lockheed Martin and Boeing have been cast in the unfortunate role of the Pentagon’s “inflation shock absorber.”

In fact, according to a recent Barron’s analysis, shares of so-called prime defense contractors — a list that typically includes Lockheed, Boeing, General Dynamics, Raytheon and Northrop Grumman — have been trading lower this year than they did when Congress passed the Pentagon purse-threatening Budget Control Act in response to the debt ceiling crisis in 2011.

As the old guard wanes, Silicon Valley is ready to step into the fray. So far this year, Palantir is the clear leader of the pack:

• In March, Palantir delivered its first two AI-powered Tactical Intelligence Targeting Access Node (TITAN) systems to the US Army, as part of a $178 million contract it won a year earlier; that marked the first time a software company had ever served as a primary contractor for a significant hardware program. Palantir also touts that it came in on time and on budget, a rarity in the defense contracting world.
• Then in May, the Pentagon announced it’d be boosting an existing $480 million contract with Palantir for a separate AI-powered targeting system by an additional $795 million.

Consolidation Nation: The deal announced Friday is practically an admission from the Pentagon that Palantir has become an ubiquitous contractor. The $10 billion contract actually rolls up the roughly 75 contracts the company has with the US Pentagon into one gigantic, decade-long agreement, creating a “comprehensive framework for the Army’s future software and data needs,” according to a press release.