Jackson Hole and Harvey — What you need to know in markets on Friday

Myles Udland
Markets Reporter

The week’s main event will finally arrive on Friday, as Federal Reserve chair Janet Yellen will speak before the latest economic symposium hosted by the Kansas City Fed in Jackson Hole, Wyoming.

The topic of Yellen’s speech is expected to be financial stability, often called the “third mandate” of the Fed, and baseline expectations are that Yellen will not use this opportunity to signal any plans about Fed policy in the coming months.

A topic of discussion in the run-up to Yellen’s speech this week has also been the possibility that this is Yellen’s final speech as Fed chair at the annual symposium, as her term expires in February and President Donald Trump has not yet made clear if he intends to nominate Yellen to a second term.

Were Trump to decline to nominate Yellen to a second term, she would be just the third Fed chair since 1934 to serve one term at the top of the central bank.

Federal Reserve Chair Janet Yellen.

Elsewhere on the calendar on Friday, we’ll get the July report on durable goods orders in the morning, which are expected to drop sharply from the prior month. The earnings calendar will be open as no major companies are expected to report results.

Markets will also keep an eye on the Gulf of Mexico, where Hurricane Harvey now appears set to be the first major hurricane — that is, a storm of category 3 intensity or higher — since Wilma hit Florida in October 2005.

As of 2:45 p.m. ET on Thursday afternoon the National Hurricane Center was forecasting winds of 125 mph as Harvey approaches the Texas coast, with landfall expected Friday evening. Rainfall amounts in excess of 20 inches are expected along some areas of the Texas coast.

Amazon’d

And so it begins.

On Monday, Amazon (AMZN) will close its deal to buy Whole Foods (WFM) and thus begin a new era of selling food for the online retail giant.

In a release on Thursday, Amazon said that among the initial changes expected at Whole Foods are lower prices on what it calls “grocery staples” at Whole Foods including — “Whole Trade bananas, organic avocados, organic large brown eggs, organic responsibly-farmed salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85% lean ground beef, creamy and crunchy almond butter, organic Gala and Fuji apples, organic rotisserie chicken, 365 Everyday Value organic butter” among others.

Amazon Prime will also become Whole Foods’ rewards program and Amazon Lockers will be available in some stores.

Jeff Bezos failed at selling America smartphones. Maybe he will be better at selling America organic groceries.

In response to this news, grocery stocks sold off.

Among the notable losers were Kroger (KR), down 6%, Supervalu (SVU), down 7%, Target (TGT), down 4%, Costco (COST), down 3%, and CVS (CVS), down almost 3%.

Of course, some might note that investors in these stocks knew a deal was coming, so why sell these stocks? And, indeed, these stocks had already declined after the deal was initially announced.

But what this action shows is that the main thing motivating the Amazon trade right now is fear — fear that Amazon’s plans will target a company or an industry in an even more punishing way than previously thought.

Perhaps investors didn’t think the Amazon deal would close for months. Perhaps some did not expect Amazon to cut prices to quickly. Perhaps Amazon integrating Whole Foods into its Prime service so quickly came as a surprise.

Either way, though, investors have been more quick to run from Amazon than towards it of late. George Pearkes, a strategist at Bespoke Investment Group, noted on Twitter on Thursday that a comparison of the firm’s “Death by Amazon” and “Amazon Survivor” baskets against Amazon yields a negative return.

That is, investors have been quicker to take away from those companies that might lose to Amazon than to reward Amazon for any gains.

Which shows to us that the main fear among investors right now, particularly those in any sort of consumer-facing space, is to avoid being Amazon’d. Even if you already knew it was coming.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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