Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of more than 16,000 subscribers striving to be better investors with an edge in the market.

Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

Market Talk

Tech and mega caps once again are pulling markets higher this week with the S&P 500 and Nasdaq making new record highs.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

Powell says Fed has made ‘quite a bit of progress’ on inflation but needs more confidence before cutting

Federal Reserve Chair Jerome Powell expressed cautious optimism about inflation progress over the past year but indicated that more improvement is needed before considering interest rate cuts.

Speaking at a forum with European Central Bank President Christine Lagarde and Brazil central bank Governor Roberto Campos Neto, Powell noted that while inflation is easing, it hasn't yet reached the Fed's 2% goal, which is not expected until 2026.

The Fed's preferred inflation gauge showed a 2.6% increase in May, down from around 4% a year ago. Powell emphasized the risks of cutting rates too soon versus too late, acknowledging a better balance this year as inflation decreases and the economy remains strong.

Market expectations for rate cuts have shifted, now anticipating two reductions by year-end, but the Fed's June meeting suggested only one cut.

Powell refrained from specifying when the Fed might cut rates, including whether it would happen in September.

Tesla stock rises after better-than-expected deliveries report

Tesla shares have surged by 23% this week after the company reported second-quarter vehicle production and deliveries that exceeded analyst expectations.

Tesla delivered 443,956 vehicles and produced 410,831 in the second quarter, surpassing the expected 439,000 deliveries. This follows an 8.5% decline in first-quarter deliveries, the first annual drop since 2020.

Meanwhile, Chinese EV rivals Zeekr and Nio reported record deliveries in June.

The EV sector's growth in China has come under scrutiny due to increased tariffs imposed by the EU and the U.S. on Chinese EVs, citing unfair subsidies. Tesla, with its Shanghai gigafactory, may receive an adjusted duty rate from the EU following a review.

Southwest Airlines adopts ‘poison pill’ to fend off activist Elliott Management

Southwest Airlines has implemented a "poison pill" strategy in response to activist investor Elliott Management's efforts to replace CEO Bob Jordan and Chairman Gary Kelly.

This plan will activate if any investor, including Elliott, acquires 12.5% or more of the company, allowing other shareholders to buy new shares at a 50% discount, thereby diluting the investor's stake.

Elliott currently holds an 11% stake in Southwest and has filed for antitrust clearance to potentially increase this stake. Southwest's move aims to limit Elliott's influence, a common tactic against activist investors.

Despite this, Southwest remains open to discussions with Elliott for value creation.

📚 EDGE-UCATION: What is a “poison pill”?

A "poison pill" in business is a defensive strategy used by a company's board of directors to prevent or discourage hostile takeover attempts. Officially known as a shareholder rights plan, a poison pill allows existing shareholders to purchase additional shares at a discount if any one shareholder acquires a certain percentage of the company's stock, typically triggering when the threshold is crossed.

The purpose of a poison pill is to dilute the ownership interest of the acquiring party, making the takeover more expensive and less attractive. This strategy can give the company more time to find alternative solutions, negotiate better terms, or persuade shareholders that the takeover is not in their best interest.

There are different types of poison pills, including:

1. Flip-in: Allows existing shareholders (except the acquirer) to buy more shares at a discount.

2. Flip-over: Allows shareholders to purchase the acquirer's shares at a discount after the merger.

3. Dead-hand provision: Limits the ability of a new board to redeem or terminate the poison pill.

Overall, a poison pill is designed to protect the company and its shareholders from hostile takeovers that the board believes are not beneficial.

In Other News

Introducing a new section: we'll be curating a selection of news headlines we think you'll find interesting. If a topic catches your eye, click the provided links to read more about it.

• FDA approves Eli Lilly Alzheimer’s drug, expanding treatment options in the U.S.

• Bezos to Sell $5 Billion of Amazon as Shares Hit Record High

• Kamala Harris' Odds of Winning Democratic Nomination Surge on Polymarket

• Skydance and National Amusements near Paramount deal as special committee reviews terms

• US weekly jobless claims rise as labor market gradually slows

• Ford sales edge 1% higher in the second quarter, led by trucks

• Constellation Brands' Stock Rises as Beer Segment Drives Q1 Profit Boom

• Chewy shares fall as the boost from Roaring Kitty’s new stake diminishes

• Yen slides to fresh lows, market 'challenges' Japan authorities to act

• Oil prices steady after large draw from US crude inventories

• Hurricane Beryl bears down on Jamaica as death toll rises to at least seven

The Second Half

With the holiday on Thursday, there’s only one day left in the trading week. But Friday does have the potential for fireworks.

Earnings Reports

There are no earnings reports to watch in the second half of the week.

Economic Reports

Here is the calendar of events scheduled for the remainder of the week:

Friday’s labor reports, specifically the nonfarm payrolls data, will be a major catalyst for how markets end the week. We will be watching this one closely and sharing our takeaways live on the Discord.

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.