Today
Equity futures are flip flopping this morning as escalating U.S.-Iran hostilities pushed Brent to $95 a barrel, reinforcing inflation concerns and maintaining upward pressure on global bond yields. The U.S. 10-year Treasury yield climbed to 4.81% and the 30-year traded around 5.28%, near a 19-year high, with markets now assigning a nearly 70% chance of a Fed hike in September. Despite higher yields, equities have remained relatively resilient because the bond selloff has been orderly and corporate fundamentals remain strong, but stretched valuations could leave stocks vulnerable if yields continue to climb. Investors are now awaiting this morning’s Bank of Canada rate announcement with the central bank expected to hold its policy rate at 2.25% for a seventh consecutive meeting. Renewed U.S.-Canada trade tensions has created competing risks of weaker growth and higher inflation, with the trade dispute now clouding an otherwise improving domestic backdrop. Q2 GDP grew at a 3.3% annualized pace, and the economy added more than 180,000 jobs from May through July, although economists are now lowering business-investment forecasts because of renewed uncertainty.
Retailers in the U.S. are taking different approaches to billions of dollars in tariff refunds received after the Supreme Court struck down Trump’s emergency tariffs, complicating comparisons of their underlying earnings performance. Walmart, Home Depot, and TJX have mostly directed refunds toward lowering merchandise costs and supporting consumer prices, while Lowe’s used its roughly $80 million refund to boost profitability, and Target received a $994 million pretax benefit that significantly lifted Q2 earnings. Kohl’s took a mixed approach, putting $100 million into gross margin while planning to invest the remaining amount. The one-time payments have inflated current earnings and margins, making year-over-year results look stronger while creating tougher comparisons next year, meaning analysts may need to sharpen their pencils to adjust reported results to assess underlying performance.
Odd one out. China was the only G20 member to reject a statement criticizing economies that rely on trade surpluses and cheap exports at this year’s summit. The statement highlights growing concern over China’s export-driven growth model and industrial policies, with the other 19 members agreeing that countries with large external surpluses should remove policies that suppress domestic consumption and contribute to global imbalances. China also objected to language used around disruptions in the Strait of Hormuz and IMF oversight of global imbalances, adding to the list of tensions Beijing has with major economies. This comes as the U.S. is pressuring China (who happen to be Iran’s largest oil customer) to help resolve the U.S.-Iran conflict while simultaneously threatening secondary sanctions against Tehran’s trading partners. The disagreements add another layer of uncertainty ahead of Xi Jinping’s planned U.S. visit later this month.
Pundits expect Democrats to win the House in November, with some estimates pointing to a roughly 5–20 seat House majority and 51–52 Senate seats. Weak economic conditions, elevated inflation and gas prices, declining Trump approval, dissatisfaction with the Iran war, and a strong Democratic turnout are major factors favouring Dems, although Republican advantages from redistricting and strong funding could limit the gains. A Democratic Congress would likely produce substantial gridlock in 2027, pushing Trump toward executive authority over tariffs, regulation, immigration, and foreign policy although Dems will likely use other methods to constrain his agenda. For investors, strategists still see defense, industrials, grid infrastructure, and critical materials retaining bipartisan support, while fuels and Big Tech may face greater congressional scrutiny.
Getting its shine back? Gold-mining stocks posted their strongest August in decades as geopolitical tensions and renewed concerns about currency debasement drove investors back toward precious metals. The NYSE Arca Gold Miners Index rallied 33% during the month, more than triple gold’s 10% gain, while Newmont rose 35% and Agnico Eagle jumped 40%, reflecting miners’ leveraged exposure to higher bullion prices. The rally was fueled by central-bank gold purchases, concerns about elevated AI-stock valuations , and U.S. Treasury efforts to lower long-term borrowing costs, which revived the debasement trade and strengthened demand for gold. Fundamentals have also improved, with Newmont, Barrick, and Agnico reporting at least 47% year-over-year earnings growth in Q2 alongside stronger free cash flow and lower spending. After such sharp gains, however, analysts are signaling greater caution, as sticky inflation or a more hawkish Fed could keep yields elevated and pressure gold (see below in commodities).
Research suggests CEOs can significantly influence company performance, but their impact varies depending on the industry and the freedom they have to make decisions. Recent studies found that individual CEOs can explain a meaningful share of earnings differences, with one U.S. study attributing 29% of the variation in earnings to CEOs. Company characteristics and industry structure also play important roles, and year-to-year economic conditions for the most part don’t explain as much. Data suggests that CEOs tend to matter more in fast-changing, competitive and uncertain industries such as technology, consumer brands, and entertainment, where certain choices can greatly improve or damage results. On the other hand, leaders in regulated, capital-intensive industries like utilities, railways, and steel have less room to influence outcomes because pricing, returns, and investment decisions are more constrained.
Diversion: Don’t move
