🧿 HAL THINKS: Double or Nothing — Jackson Hole, Ukraine & the Retail Reckoning

 Markets don’t often line up this many trapdoors in one week. Powell’s swan song at Jackson Hole, a potential Ukraine peace pivot, rate calls from Stockholm to Wellington, and Walmart deciding if America’s shopper is dead or just caffeinated. This isn’t a week for bravery. It’s a week for helmets.

💣 Powell’s Final Act — Jackson Hole

• Futures say it’s already a done deal: 99.9% odds of a September Fed cut.

• But the data refuses to play along: headline CPI cooled in July, yet PPI jumped +0.9% m/m, the hottest since 2022. That CPI–PPI gap is a neon sign flashing “margin squeeze.”

• At 10:00 ET Friday, Powell delivers his final Jackson Hole sermon. He has three scripts:

1. Dovish Cementing → confirm September cut, markets cheer.

2. Cautious Hedge → nod to “data volatility,” markets sulk.

3. Framework Twist → ditch “average inflation targeting,” markets scream.

Investors only want door number one. Anything else, and VIX spikes above 20.

🕊️ Ukraine: Peace Dividend or Oil Shock

Trump is pushing a direct Putin–Zelensky meeting within two weeks. If it happens, it’s the most underpriced catalyst of the year.

• Defence stocks already sliding >2%. Peace breakthrough could knock them another 10–15% lower.

• Oil markets smell sanctions relief: Brent fell to $65.09, WTI to $62.82.

• But the secondary sanctions deadline (Aug 27) is binary: talks succeed = cheaper energy, talks collapse = $75+ crude and a squeeze on EM FX.

• Ukraine’s $100bn weapons order with the U.S. could soften the blow for defence suppliers, even in peace.

Markets are betting on progress. History says bet on chaos.

🛒 Retail Reality Check — Consumers on the Rack

Home Depot (Tue) already set the tone:

• Missed EPS ($4.68 vs $4.71 est.) and revenue ($45.28B vs $45.36B).

• CEO Ted Decker: customers scaling back to “smaller projects,” while tariffs force “modest price hikes.”

Coming next:

• Lowe’s (Wed): Street sees $4.24 EPS / $24.02B revenue (+1.9% YoY). Comps already –1.7% YoY vs HD’s –0.3%.

• Target (Wed): Expected $2.01 EPS. Mid-tier consumer bellwether.

• Walmart (Thu): The Big Kahuna. Street expects $0.72–0.73 EPS on $174–176B revenue (+5.6% YoY). U.S. comps +2.9% est., e-comm growth ~22%. Any weakness here = “consumer cliff” narrative + Fed panic.

• Intuit (Thu pm): Small-business sentiment gauge. Guidance > EPS.

Retail this week isn’t just earnings. It’s a referendum on whether tariffs are already biting the U.S. consumer.

🏦 Central Bank Crossfire

• Sweden (Riksbank, Tue): Rates at 2.0%. With 3% inflation vs 0.1% GDP growth, they’re split — 9 of 19 analysts see a September cut. This is how Europe’s trade-off looks in miniature.

• New Zealand (RBNZ, Wed): Markets price 100% odds of a 25bp cut to 3.0%. Most expect one final trim to 2.75% before terminal. Kiwi dollar says ouch.

• Fed Minutes (Wed 14:00 ET): The first time since 1993 more than one governor dissented for cuts. Internal pressure on Powell is real.

The global easing cycle is alive. But Sweden proves it’s not painless.

📊 This Week’s four-scenarios

X-axis: Powell tone → Dovish / Hawkish

Y-axis: Ukraine talks → Progress / Breakdown

📈 Scenario 1: Dovish + Peace

• What happens: Fed cut path confirmed, Ukraine peace talks ease energy pressure

• Market moves: UST bull-steepen, USD weakens, defence stocks lag, European cyclicals rally

• Playbook: Buy AI infrastructure on dips, trim defence exposure

⚡ Scenario 2: Dovish + Breakdown

• What happens: Fed cut path confirmed, but oil sanctions trigger a spike

• Market moves: Rates fall, oil and defence stocks climb, EM FX under pressure

• Playbook: Run a barbell strategy — tech + energy

🔄 Scenario 3: Hawkish + Peace

• What happens: Powell hedges dovishly, oil slides on peace momentum

• Market moves: Tech wobbles, value rotation picks up, EUR/GBP strengthen

• Playbook: Fade any tech sell-off, rotate into defensives

🔥 Scenario 4: Hawkish + Breakdown

• What happens: Powell disappoints + Ukraine peace talks collapse

• Market moves: USD surges, VIX above 20, front-end USTs sell off, EM assets crack

• Playbook: Buy puts, favour IG over HY credit, keep energy hedge

🚨 Five Fears That Keep HAL Awake

1. Powell Hawks Out (25%) → Dollar spike, tech selloff.

2. Ukraine Talks Collapse (40%) → Oil $75+, EM FX stress, defence stocks bounce.

3. Walmart Misses (30%) → Consumer cliff → Fed bigger cuts chatter.

4. Persistent PPI Heat (35%) → Companies forced to hike prices, stagflation whisper.

5. Central Bank Misstep (20%) → Riksbank/RBNZ hawkish surprise, carry trades unwind.

🎯 HAL’s Playbook — Trade Like You’re Surrounded

• AI Plumbing: Keep Nvidia-adjacent tools, networking, security.

• Defensives: Staples/discounters if Walmart holds.

• Energy Hedge: Small long optionality — oil is a binary coin toss.

• Reduce Mag-7 Overweight: Concentration at 1960s highs is a red flag.

• Protection: VIX ~15. Buy it. Sell it back to the panickers at 20+.

• FX: Hedge with modest USD longs if Powell disappoints; keep JPY as risk-off insurance.

📎 HAL’s Final Word

Last week was a market with a split personality. This week it’s facing a polygraph test. Powell, Putin, Walmart — any one of them could flip the table.

Trade the edges, not the headlines. Keep your winners, trim your hubris, and always know where the fire exits are.

🧿 HAL’s watching. You should be too.