General Market News

The United States has threatened to maintain an indefinite naval blockade of Iran as ceasefire talks have collapsed and global oil supply concerns mount. Iran has responded by blocking the Strait of Hormuz and attacking vessels attempting to transit the strategic waterway, through which a fifth of the world's oil previously flowed. The standoff is creating significant economic pressure globally, with oil supply forecast to fall 4% this year.

• Vessel traffic through the Strait of Hormuz has plummeted to 8 ships on Tuesday from a pre-war average of 130-140, with Iran attacking UAE oil tankers and demanding removal of sanctions before reopening the strait
• Global oil supply is forecast to drop by 4.3 million barrels per day (4%) in 2026, up from a 3.7 million barrel projection just one month earlier
• President Trump faces domestic pressure to end the unpopular war as high fuel prices drag down his approval ratings ahead of November midterm elections, though economic sanctions have failed to bring Iran back to negotiations

The U.S. Court of International Trade ruled that President Trump had authority under emergency powers to eliminate the 'de minimis' tariff exemption for imports under $800 from China, Mexico, and Canada in February 2025. This marks a rare legal victory for Trump's tariff policies, which have largely been blocked by courts. Congress separately voted to end the exemption but delayed implementation until July 2027.

• The court found Trump could use the International Emergency Economic Powers Act (IEEPA) to rescind trade-related 'privileges' like the de minimis exemption, rejecting a challenge from auto parts importer Detroit Axle
• Detroit Axle had built its business model around the exemption, opening a distribution center in Juarez, Mexico to ship small orders directly to U.S. consumers
• Trump's broader tariff policies have fared poorly in courts, with the Supreme Court blocking February tariffs and subsequent replacement tariffs also being challenged

US stocks rallied on Thursday with the S&P 500 closing at a record high of 7,799.73, driven by softer-than-expected inflation data and strong technology sector performance. Producer prices rose just 0.1% monthly versus 0.2% expected, reinforcing market expectations for a Federal Reserve rate pause in September with traders pricing in 63% probability of no change.

• The S&P 500 gained 0.66% to a record close while the Nasdaq rose 0.81%; both indexes are up approximately 14-15% year-to-date in 2026
• Technology stocks led gains with SanDisk surging on growth strategy, Netflix rising on Bill Ackman's new position, and Meta and Broadcom adding strength to the AI-driven rally
• Cisco Systems dropped roughly 9% despite upbeat guidance, while falling Brent crude prices to $87.07 per barrel helped improve overall market sentiment

The S&P 500's net profit margin reached a record high of 16.9% in the second quarter, up from 14.8% in Q1 and 12.9% a year ago, surpassing the five-year average of 12.4%. This represents the highest margin since FactSet began tracking the metric in 2009, driven largely by technology companies' ability to scale efficiently. The improving profitability across most sectors is providing significant support for the ongoing stock market rally.

• Alphabet and Amazon are the largest contributors to record margins, with Alphabet reporting 34% operating margin and Amazon posting 13.7% operating margin in Q2, both up year-over-year
• Even excluding Alphabet and Amazon, the S&P 500 margin stands at 15%, still a record high since 2009, indicating broad-based strength
• Eight of 11 S&P 500 sectors show improved margins versus a year ago, led by technology, communication services, consumer discretionary and energy, though competitive pressure from new entrants poses potential future risk to tech margins

A federal trade court upheld President Trump's elimination of the 'de minimis' exemption that previously allowed goods valued under $800 to enter the U.S. tax-free. The ruling rejected a challenge from Michigan-based auto-parts distributor Detroit Axle, which argued Trump lacked authority under the International Emergency Economic Powers Act to rescind the loophole. The decision has significant implications for e-commerce companies like Shein and Temu that previously exploited the exemption.

• The three-judge panel ruled Trump's rescission does not violate separation of powers and is 'not an exercise of the power of the purse' or 'power to legislate,' unlike his global tariffs that the Supreme Court struck down in February
• E-commerce giants like Shein and Temu had heavily exploited the exemption by shipping individual packages directly from Chinese manufacturers or through warehouses in Canada and Mexico to avoid tariffs
• Ending the exemption could disproportionately impact lower-income and minority consumers who purchase inexpensive goods online, while Trump claims the loophole cost billions in uncollected tax revenue

The stock market has become heavily disconnected from the current economy, with valuations primarily driven by expectations of a future AI-driven economy rather than present economic activity. This represents the most future-weighted market in history, where major indices and traditional diversifiers now carry significant AI exposure. Investors face a strategic choice of how to allocate between today's economy and the anticipated AI-transformed future.

• AI capital expenditure continues exceeding expectations, creating inflationary pressures through shortages in energy, grid infrastructure, and chips while driving prices higher across computing-dependent products
• Traditional index classifications are breaking down as future-growth AI stocks have grown too large to fit entirely in Growth indices, forcing AI-exposed companies like Micron into Value indices and making TSMC 14% of emerging markets
• The Federal Reserve under new chair Kevin Warsh held rates at 3.5%-3.75% with a hawkish tone, while inflation remains sticky at 4.1% headline and 3.4% core PCE, above the Fed's target

July's CPI report met expectations with core CPI rising 0.2% and headline CPI up 0.1%, easing market concerns about accelerating inflation. The data led markets to reduce the probability of a September rate hike from around 50% to less than 40%. While inflation remains above the Fed's 2% target at 3.4% headline and 2.5% core year-over-year, the report weakens the case for imminent Federal Reserve tightening.

• Treasury yields declined following the report as futures markets lowered expectations for rate hikes through 2026
• Year-over-year inflation stands at 3.4% for headline CPI and 2.5% for core CPI, still above the Fed's 2% target but showing sideways to lower movement
• Recent softening in labor market data combined with steady inflation reduces urgency for Fed action, though elevated energy prices remain a risk factor

Mortgage rates declined for the first time in six weeks, with the average 30-year fixed mortgage rate falling to 6.67% from 6.69% the previous week, according to Freddie Mac's latest survey. The slight decrease has led to increased purchase and refinance applications, suggesting borrowers remain responsive to rate changes despite affordability challenges.

• The 30-year fixed mortgage rate dropped to 6.67%, down from 6.69% last week but still higher than the 6.58% rate from a year ago
• The 15-year fixed mortgage rate fell to 5.96% from 6.01% in the prior week
• Housing affordability has improved year-over-year, with recent application data showing borrowers responding to even modest mortgage rate changes

Despite ongoing tensions in the Strait of Hormuz and Iran conflicts, oil prices have remained below $100 per barrel, stabilizing around $85 after significant volatility. Major Wall Street firms including RBC and EvercoreISI have issued updated energy stock recommendations, highlighting opportunities in oil, gas, LNG, and alternative energy companies. The market's resilience is attributed to smaller inventory draws, declining China demand, and faster-than-expected supply responses from U.S. and South American production.

• Oil prices have fluctuated 40% from peak to recent bottom during Iran conflict, but avoided super-spike scenarios due to China demand cuts and strong U.S./South American production increases
• RBC and EvercoreISI recommend multiple energy stocks with significant upside potential, including NRG Energy (60% upside to $195 target) and Bloom Energy (45% upside to $350 target)
• OPEC and IEA project oil demand recovery in Q4 2026 and 2.4 million barrels per day growth in 2027, though estimates depend on normalization of Iran, Hormuz, and Red Sea situations

The week of August 17-21, 2026 will feature important economic data releases including July FOMC meeting minutes and U.S. Manufacturing PMI, along with housing market indicators. Major retailers and blue-chip companies including Target, Lowe's, TJX, Walmart, and Toll Brothers are scheduled to report earnings. The focus will be on housing market health and employment data alongside corporate earnings.

• Key economic releases include July FOMC meeting minutes (Aug 19), housing starts and building permits (Aug 18), and Flash Manufacturing/Services PMI data (Aug 21)
• Major earnings reports scheduled from Advanced Auto Parts, Baidu, Estée Lauder, Lowe's, Target, Toll Brothers, and Wolfspeed
• Housing market indicators and weekly jobless claims will provide insights into economic health amid ongoing Fed policy considerations

Wood Mackenzie's report identifies three economic forces that could accelerate global electric vehicle production: oil supply shocks from conflicts in Russia and Iran, high fuel prices driving consumer adoption, and rapid technological innovation, particularly from China. These trends could significantly impact oil demand, power grids, and metal markets over the coming decades.

• Global oil demand could decline to 99 million barrels per day by 2040 from over 100 million bpd today as EV adoption accelerates
• China is advancing battery technologies including 5-minute charging and sodium-ion batteries, while the U.S. may need to boost domestic EV supply chains to remain competitive
• Supporting 50% growth in global EVs by 2040 requires an additional $45 billion in metals investment over the next decade, with copper identified as the critical bottleneck

Luigi Mangione is expected to plead guilty Friday in his federal stalking case related to the December 2024 killing of UnitedHealthcare CEO Brian Thompson in Manhattan, according to The New York Times. Mangione still faces separate murder charges in New York state court, though his attorneys may argue double jeopardy if he pleads guilty federally. The federal case carries a maximum life sentence on the remaining stalking charges after a murder count was dismissed.

• Mangione is scheduled to appear before Judge Margaret Garnett on Friday for a pretrial conference requested jointly by prosecutors and defense lawyers on Tuesday
• Two federal counts including murder during stalking (which carried a possible death penalty) were dismissed in January; two remaining stalking counts each carry maximum life sentences
• Defense attorneys are expected to argue that a federal guilty plea would bar state murder prosecution under New York's double jeopardy law, with state jury selection scheduled for September 8

Cheniere Energy (LNG) reported Q2 2026 earnings of $3.02 per share, beating estimates by 8.6%, with revenues of $5.73 billion up 23.5% year-over-year. The strong performance was driven by record LNG volumes of 672 TBtu (up 22.2%) and improved margins from new Corpus Christi Stage 3 capacity and better operational reliability. The company raised its full-year 2026 EBITDA guidance to $7.90-$8.40 billion and production outlook to 53-54 million tons.

• Q2 revenues of $5.73B beat consensus by 14%, with LNG export volumes reaching 672 TBtu as Corpus Christi Stage 3 ramped up and 184 cargoes were shipped (up 19.5% year-over-year)
• Consolidated adjusted EBITDA rose 27.4% to $1.8B and distributable cash flow increased 27.2% to $1.17B on higher margins per MMBtu and volume growth
• Company raised 2026 EBITDA guidance range to $7.90-$8.40B (from $7.25-$7.75B) and distributable cash flow guidance to $5.30-$5.80B while tightening production outlook to 53-54 million tons

Citgo Petroleum's second-quarter profit surged to $936 million from $100 million in the same period last year, driven by stronger refining margins resulting from global supply disruptions. The Venezuela-owned U.S. refiner, which processes 829,000 barrels per day, faces potential ownership change pending U.S. Treasury approval of a court-ordered auction to pay Venezuela-linked creditors.

• Q2 profit jumped 836% year-over-year to $936 million, up from $100 million in Q2 2025
• Enhanced margins attributed to global supply disruptions affecting refining markets
• Ownership transfer to Elliott Investment Management affiliate awaits U.S. Treasury Department approval following court-ordered auction to satisfy Venezuela-linked creditors

The article argues that the July CPI report, showing 3.4% year-over-year inflation, significantly understates the real impact of energy costs on consumers and businesses. Gas prices rose 29% year-over-year to $4.07 per gallon, costing the average household $2,500 annually, while diesel jumped 45% to $5.40 per gallon. Since trucks move 70% of U.S. freight by weight, the diesel price surge will likely drive further increases in consumer goods prices beyond what CPI currently captures.

• Gas prices increased 29% year-over-year to $4.07 per gallon, with 30% of Americans driving over 15,000 miles annually and some states averaging over 17,000 miles, making the $2,500 annual household fuel cost particularly burdensome
• Diesel prices surged 45% year-over-year to $5.40 per gallon, and with trucks moving 70% of all freight by weight, transportation costs are expected to pressure food and consumer goods prices higher
• The CPI's 3.4% inflation figure is viewed as potentially blocking Fed rate increases, but the article suggests energy costs (gas up 24.7%, fuel oil up 39.1%) will have delayed but significant pass-through effects on consumer prices

July's Consumer Price Index rose just 0.1% and Producer Price Index was flat month-over-month, causing market expectations for a Federal Reserve rate hike in September to plummet from 55% to 32%. The back-to-back cooler inflation readings have forced investors to reconsider positioning around Fed Chair Kevin Warsh's monetary policy stance, though inflation remains elevated at 3.4% annually, well above the Fed's 2% target.

• CME FedWatch odds of a September rate hike dropped from 55% before the CPI release to 32% after both inflation reports, as headline CPI cooled to 3.4% annually from 3.5% in June
• Average monthly crude oil prices fell from $80.38 to $79.32 per barrel in July despite Strait of Hormuz tensions, but retail gasoline has since climbed from $3.87 to $4.07 per gallon, potentially impacting August's data
• The Fed is now genuinely data-dependent under Warsh, meaning every CPI and PPI release before the September 18 meeting will trigger volatility for rate-sensitive assets and long-duration bonds

The Cooper Companies (COO), a specialty medical device firm, is seeing growth driven by CooperVision's premium contact lens migration and MiSight myopia-management products, alongside CooperSurgical's fertility business recovery. However, the stock faces headwinds from Asia-Pacific weakness, tariff pressures, and FX challenges that are expected to compress margins in the second half of fiscal 2026. The company maintains a Zacks Rank #1 (Strong Buy) despite reducing full-year CooperVision organic growth outlook to 3.5-4.5%.

• CooperVision achieved its 18th consecutive year of market share gains, with MiSight myopia-control revenues growing 24% to $32 million in Q2, led by strong adoption in Japan and Europe.
• CooperSurgical's fertility segment posted 10% organic revenue growth to $144 million, supported by IVF cycle increases and new clinic wins, providing a counterbalance to contact lens weakness in Asia-Pacific.
• Second-half margins face pressure from approximately $22 million in tariff costs, unfavorable FX impacts, and freight expenses, with Q3 gross margin expected to decline to around 66% despite strong first-half profitability.

US stocks opened higher on Thursday as softer-than-expected Producer Price Index data and a 2% decline in oil prices boosted investor sentiment. The weaker inflation readings increased expectations that the Federal Reserve will pause rate hikes at its September meeting, with Fed funds futures implying a 65% probability of no change. Combined with Wednesday's in-line CPI data, the reports suggest inflationary pressures remain contained despite geopolitical tensions in the Middle East.

• PPI rose 0.1% monthly versus 0.2% expected; core PPI increased 0.2% versus 0.3% forecast, strengthening case for a Fed pause in September with probability rising to 65% from 60%
• Crude oil fell roughly 2% (Brent to $87, WTI to $81.30) after six consecutive gains, driven by weaker demand projections and higher US inventories despite ongoing US-Iran tensions and reduced Strait of Hormuz shipping
• Cisco dropped 9.2% despite beating revenue guidance, while Cerebras fell on below-estimate quarterly revenue; Dell and HP gained on positive Lenovo results, and Accelerant surged 44% on a $4B+ Thoma Bravo acquisition

Steve Eisman, known for his 'Big Short' housing market bet, warns that the AI boom's success hinges heavily on just two companies: OpenAI and Anthropic. These startups account for roughly 70% of AI-related revenue at major cloud providers and 25-35% of their total cloud revenue, creating significant concentration risk.

• OpenAI and Anthropic represent approximately 70% of AI revenue for major hyperscalers (Amazon, Microsoft, Google, Oracle) and up to 35% of their cloud revenue
• Eisman identifies cheaper Chinese open-source AI models as the 'Achilles heel' that could threaten this revenue if they gain market share
• Fellow 'Big Short' investor Michael Burry has taken a more bearish stance, placing bets against AI beneficiaries and the semiconductor sector

Cleveland Federal Reserve President Beth Hammack called for immediate interest rate increases to combat inflation running above 3% and cool excessive business growth and investment. She expressed concern that strong business optimism and borrowing could add further upward pressure on prices, necessitating policy restraint to bring inflation back to the Fed's 2% target.

• Hammack stated inflation is currently 'above 3%' and needs to return to the Fed's 2% objective through tighter monetary policy
• Business enthusiasm for borrowing and investment, while positive for growth, risks intensifying inflationary pressures if left unchecked
• The Cleveland Fed president advocated for immediate rate hikes to provide 'restraint coming from policy' to control economic overheating