General Market News

Swedish gaming company Embracer Group reported first-quarter adjusted operating profit that more than doubled analyst expectations, driven by improved performance in its PC and console games division. The strong results signal a turnaround in the company's core gaming business.

• Adjusted operating profit exceeded analyst forecasts by more than 100%
• The PC and console games segment was the primary driver of the earnings beat
• Results indicate strengthening fundamentals in Embracer's traditional gaming business after previous restructuring efforts

South Korea's Kospi benchmark has surged more than 20% from its July low, entering bull-market territory after a rout driven by leveraged positions and forced selling pushed it into bear-market territory last month. The rapid reversal, fueled by strong semiconductor stocks and renewed AI optimism, raises questions about the rally's sustainability given the index's heavy concentration in a handful of chip companies.

• The rebound was driven by strong U.S. tech earnings, continued AI infrastructure spending commitments, and the unwinding of leveraged positions as brokerages normalized margin requirements
• The Kospi's heavy dependence on semiconductor giants creates significant exposure to AI sentiment shifts, with analysts warning that any negative signals on capex spending or Fed tightening could trigger pullbacks
• Analysts are divided on sustainability: some cite improving fundamentals and corporate governance reforms reducing the 'Korea discount,' while others caution that elevated retail participation and steep concentration resemble late-cycle behavior

Iran has disputed U.S. President Trump's claims of having 'total control' over the Strait of Hormuz, stating the waterway remains blocked pending acceptance of Iranian conditions. Ship traffic through the strait has dropped to near 3-month lows at approximately 13 vessels daily, down 90% from pre-conflict levels of 130 ships per day. The standoff follows U.S. and Israeli attacks on Iran on February 28, with both sides hardening their negotiating positions.

• Ship traffic through Hormuz has fallen to around 13 vessels on Tuesday, nearly the lowest since May 12 and 90% below the pre-conflict daily average of 130 ships
• Iran's conditions for reopening include ending the U.S. naval blockade, sanctions relief, American troop withdrawals, and war reparations
• A top IRGC advisor stated that Iran aims to 'attain deterrence' by prolonging the conflict to impose costs on potential attackers, claiming the U.S. military is 'weaker than what we perceived'

Goldman Sachs says Japan has sufficient reserves to conduct several more large-scale yen interventions similar to July's historic operation, with approximately $1 trillion in U.S. dollar reserves available. Access to a Federal Reserve facility could make the full amount available in liquid form, giving Tokyo substantial capacity to support the yen. However, whether further intervention occurs depends on the interest rate differential between Japan and the U.S., which remains the primary driver of exchange rate movements.

• Japan has about $200 billion in cash or cash equivalents from its $1 trillion in U.S. dollar reserves, enough for multiple interventions on the scale of July's estimated $85 billion operation (the largest two-day action on record outside 2011).
• The yen has given back half its gains from the intervention, slipping back near the key 160 per dollar level, demonstrating that intervention is 'not a sustainable fix' without addressing the underlying carry trade dynamics.
• Markets price a 65% chance of a 25-basis-point Bank of Japan rate hike in September; failure to deliver could renew downward pressure on the yen, with the current yield differential between U.S. 10-year (4.69%) and Japanese 10-year (2.84%) bonds remaining the overwhelming exchange rate driver.

Singapore-based hedge fund 3D Investment Partners filed a court injunction to block Japanese drug wholesaler Toho Holdings' poison pill defense, challenging the growing use of such tactics against activist investors in Japan. The case could test whether companies can deploy takeover defenses against activists not seeking full control, as 3D's 27% stake falls below the threshold Toho claims would confer management veto power.

• A record 10 contingency-based poison pills targeting specific investors were adopted in Japan last year, often preventing activist funds from raising stakes beyond roughly 20%
• 3D Investment Partners argues the defense is invalid since its 27% stake does not constitute a threat to management control under Toho's own criteria
• Critics warn such measures against non-control-seeking investors risk entrenching management and undermining Japan's corporate governance reforms initiated under former Prime Minister Shinzo Abe

Japan's wholesale inflation (PPI) rose 7.2% year-over-year in July, undershooting the 7.4% forecast and slightly down from June's revised 7.3%. Despite elevated producer prices driven by higher energy costs and yen weakness, consumer inflation remains subdued at 1.9% headline and 1.6% core in June, largely due to government energy subsidies.

• Electricity prices contributed 0.23 percentage points to the July PPI increase, though partially offset by drops in energy and chemical prices
• Consumer inflation remains relatively low (1.9% headline, 1.6% core in June) despite high PPI, attributed to subsidies from the Takaichi administration shielding consumers from energy price increases
• Bank of Japan board members have warned of upside price risks from higher oil prices, with some calling for faster rate hikes to contain inflation

Global electric vehicle sales increased 9% year-over-year to 1.85 million units in July 2024, marking the fifth consecutive month of growth. The increase was driven by strong demand in Europe, which offset declining sales in China and North America. The divergence reflects differing subsidy policies, with European incentives supporting demand while the U.S. removed federal EV tax credits.

• European EV sales surged 33% to 450,000 units in July, with France, Germany, and Britain posting growth of 81%, 46%, and 43% respectively, driven by renewed subsidy schemes
• China sales declined 5% to 980,000 vehicles while North American sales dropped 27% to 140,000 units following the end of U.S. EV tax credits
• Year-to-date global EV volumes reached 11.5 million vehicles, with rest-of-world markets jumping 97% to 280,000 units in July

The Bureau of Labor Statistics divides consumer expenditures into eight categories to calculate the Consumer Price Index, with food, shelter, and clothing representing over 60% of the index. Since 2000, Medical Care and Housing have grown over 100%, while categories like College Tuition (up nearly 200%) and Daycare & Preschool (up over 160%) have dramatically outpaced headline inflation. As of July 2026, headline CPI shows 3.36% annualized inflation while core CPI (excluding food and energy) registers 2.48%.

• Medical Care and Housing have each increased more than 100% since 2000, with cumulative CPI growth at 98.4% and core CPI at 89.2% over the same period
• College Tuition and Fees have surged nearly 200% since 2000, though BLS calculations use sticker prices that don't reflect financial aid, potentially overstating actual costs
• Daycare and Preschool costs accelerated sharply after late 2022 (now up over 160% since 2000), likely due to expired pandemic stabilization grants and tight labor markets, creating costs that can rival monthly housing payments for families with young children

US stocks closed mixed on Wednesday, with the S&P 500 rising 0.26% and Nasdaq gaining 0.54% on strong AI infrastructure earnings and softer-than-expected July CPI data, while the Dow slipped 0.04%. The inflation report reinforced expectations that the Federal Reserve will pause rate hikes in September, with traders assigning a 60-62% probability to unchanged rates.

• July CPI rose 0.1% monthly and 3.4% annually, matching expectations, while core inflation increased 0.2% monthly and 2.5% yearly, both easing from June
• AI infrastructure stocks led gains after CoreWeave and Super Micro Computer beat earnings expectations, with CoreWeave raising its full-year capex forecast and Super Micro projecting fiscal 2027 revenue above estimates
• Geopolitical tensions in the Middle East kept energy markets volatile, with US crude oil remaining above $83 per barrel amid uncertainty over Strait of Hormuz access and US-Iran negotiations

Saudi Arabia has more than doubled oil exports through Egypt's Mediterranean pipeline to approximately 2.3 million barrels per day in August, seeking alternatives to Red Sea routes after Iran-backed Houthi militants declared a maritime embargo and attacked Saudi tankers. This strategic shift forces longer, costlier shipping routes around Africa to reach Asian customers, fundamentally altering Middle East oil export dynamics.

• Saudi exports through the Red Sea's Bab el-Mandeb Strait plunged nearly 90% to 1.3 million barrels in early August compared to 11 million barrels before the Houthi embargo declaration on July 20
• The Mediterranean route via Egypt's Sumed pipeline adds approximately 25 days to shipping times for Asian customers, making it cost-prohibitive and causing cargo resales to European and U.S. buyers instead
• The rerouting creates a domino effect in global oil flows, with Europe receiving more Saudi crude while West African crude typically destined for Europe may redirect to Asia

The three largest U.S. independent oil refiners—Marathon Petroleum, Phillips 66, and Valero Energy—reported combined second-quarter profits of $12.6 billion, the highest since 2022, driven by global supply disruptions from the Iran war and refinery attacks. The companies returned $6.3 billion to shareholders through dividends and buybacks, more than double the $2.6 billion returned in the same quarter last year. Analysts expect robust buyback programs to continue through 2027.

• TD Cowen estimates Marathon and Valero will each repurchase approximately 20% of their market value (roughly $91 billion and $90 billion respectively) between Q3 2026 and end of 2027, while Phillips 66 will repurchase about 10% of its $81 billion market cap
• Refining profitability metrics hit records: ultra-low sulfur diesel crack spreads reached $93.84 per barrel on August 10, and gasoline crack spreads hit $60 per barrel in July, the highest since April 2020
• U.S. gasoline prices exceeded $4 per gallon in late March for the first time in over three years due to supply disruptions from the Iran conflict and refinery attacks, though executives remain cautiously optimistic about seasonal demand transitions

Russia's central bank proposed new rules limiting retail investors to trading only Bitcoin, Ether, and USDT, with a cap of 300,000 rubles (approximately $3,600) per year for each cryptocurrency. This marks a significant shift from the central bank's previous stance calling for a complete crypto ban in 2022, as the country now moves toward regulated crypto trading through licensed platforms.

• Retail investors can only trade the three most liquid cryptocurrencies with an annual purchase limit of roughly $3,600 per currency, aimed at protecting 'unqualified investors' from price volatility
• Russia's largest bank Sberbank plans to launch a crypto wallet integrated into its existing platforms once the 'Digital Currency and Digital Rights' bill takes effect next month
• The proposal represents a reversal from the Bank of Russia's 2022 call for a complete ban on crypto trading, mining, and usage due to financial stability concerns

The U.S. budget deficit reached $432.3 billion in July, the highest monthly level since March 2021, marking a 48% increase from the prior year. The year-to-date deficit through the first 10 months of the fiscal year climbed to nearly $1.8 trillion, surpassing the same period in 2025, driven by surging Medicare costs and ongoing debt interest payments.

• Medicare expenses jumped to $174 billion in July (from $103 billion in June), becoming the single largest expenditure and totaling $955 billion for the fiscal year
• Debt financing costs reached $1.17 trillion year-to-date on the $39.9 trillion national debt, up $157 billion from the prior year, ranking as the third-largest government expense behind Social Security and Medicare
• Markets have tempered rate hike expectations due to benign inflation data and soft payrolls, though futures traders are not pricing in any rate cuts for the next five years

The July CPI inflation report showed modest increases of 0.1% monthly (3.4% annually) for headline inflation and 0.2% monthly (2.5% annually) for core inflation, coming in on target with expectations. The benign readings reduced market expectations for a September Federal Reserve rate hike from 70% to 38%, though inflation remains above the Fed's 2% target and faces upside risks from rising gasoline prices.

• Energy price declines drove July's moderation, but gasoline has jumped 10% in the past week, creating upside risk for August CPI readings unless Middle East tensions ease
• Shelter inflation, representing one-third of CPI weighting, rose only 0.1% over two months, though gains were mainly from temporary 'lodging away from home' declines while owners' equivalent rent remained steady
• Core inflation now matches pre-war levels from before the U.S.-Israel attack on Iran in late February, suggesting geopolitical turmoil has been the primary driver of recent inflation pressures

The Federal Reserve remains focused on fighting inflation following a cooler July CPI report, but economists at Natixis say the weak jobs data from the previous week means the Fed must now balance both inflation control and employment concerns. The disinflationary trend continues, with broad-based price pressures easing, though progress toward the Fed's 2% target remains slow and inconsistent.

• The three-month annualized inflation rate has declined for four consecutive months, with shelter costs remaining subdued and the 'supercore' index staying well contained at only 19 basis points monthly
• Despite easing inflation, Natixis expects the Fed to maintain an extended hold on rate changes, waiting for upcoming PPI, PCPI, and August employment data before making any policy shifts
• Gold prices surged to multi-month highs following the CPI release, with spot gold reaching $4,441.31 and trading at $4,421.11, up 1.21% on the day

Ship traffic through the Strait of Hormuz has fallen to near a three-month low of around 13 vessels per day (five-day average), down 90% from the pre-conflict average of 130 ships daily. The drop comes as prospects dim for a U.S.-Iran agreement to fully reopen the critical oil export corridor, which handles roughly 20 million barrels per day in normal conditions. Iran insists it will not fully open the strait until the U.S. meets its demands, despite an earlier interim deal collapsing in late June.

• Oil exports through Hormuz currently average nearly 9 million barrels per day with U.S. military escorts, down from pre-war levels of 20 million bpd when including crude and petroleum products
• A June 17 interim deal temporarily boosted traffic to 60 ships per day by June 26, but collapsed after disputes over shipping routes, with Iran attacking tankers using the U.S.-protected route along Oman's coast
• Energy Secretary Chris Wright claims private firms undercount ship transits due to vessels moving covertly, though current traffic remains 80% below post-deal peak levels

Retail investors, who have become a major force in U.S. stock markets in recent years, face potential setbacks from policy changes that could limit their access to critical market information. Three key developments threaten to disadvantage individual investors: reduced corporate earnings reporting frequency, less communication from the Federal Reserve, and Trump Media's paid API service offering early access to market-moving Truth Social posts. These changes could reverse decades of progress that leveled the playing field between Main Street and Wall Street investors.

• The SEC backed a proposal allowing companies to report earnings semi-annually instead of quarterly, potentially creating an information vacuum where institutional investors with direct C-suite access would maintain advantages over retail traders who rely on public earnings calls
• Fed Chairman Kevin Warsh has reduced policy communication and floated eliminating post-meeting press conferences, making it harder for retail investors to gauge economic direction while Wall Street firms deploy teams of economists and Fed alumni to predict policy moves
• Trump Media's Truth API offers paid, faster access to Truth Social posts that have driven the S&P 500's best and worst days during Trump's second term, with Trump's family owning over 50% of the company despite reporting more than $230 million in Q2 losses

Bangladesh has approved a long-term LNG supply agreement with U.S.-based Gunvor for 117 cargoes between 2026 and 2038, plus eight additional cargoes from international suppliers. The deal aims to secure energy supplies amid global gas market disruptions caused by the U.S.-Israeli conflict with Iran, including force majeure declarations by QatarEnergy on some long-term contracts.

• The U.S. deal starts with 5 cargoes in 2026, scaling to 10 cargoes annually from 2029-2038, with pricing based on JKM index plus $0.0875/mmBtu initially, then shifting to 121% of Henry Hub plus $5.20/mmBtu
• Eight additional cargoes approved through direct procurement from suppliers in Hong Kong, UK, Oman, and Australia, priced at either $14.95/mmBtu fixed or JKM plus $0.54/mmBtu
• The purchases aim to diversify LNG sources and reduce exposure to supply disruptions following QatarEnergy's force majeure declarations amid regional conflicts affecting production and shipping routes

As equity markets near all-time highs heading into autumn, investors are preparing for a busy conference season through September, with focus shifting to AI capital expenditure and sustainability of recent earnings growth. The S&P 500 posted its best week since April in early August, driven by 50% Q2 earnings growth fueled by equity gains, tariff refunds, and AI-related investments. However, concerns are emerging about whether these tailwinds can be sustained as easy comparisons end.

• S&P 500 Q2 earnings surged 50% due to multiple factors including equity holding gains, tariff refunds, AI/OBBBA capex, and World Cup boost, but these favorable comparisons may not continue
• AI capital expenditure has become the key metric for investors, with Intel's recent equity offering highlighting concerns about chip sector spending trends ahead of Hot Chips 2026 (Aug 23-25)
• Major upcoming catalysts include Goldman Sachs Communacopia Technology Conference (Sept 8-11) in San Francisco and numerous sector-specific events across tech, healthcare, consumer, financials, and energy through September

The Hindenburg Omen, a rare stock market crash indicator, has been triggered 13 times in the past three months on the S&P 500, signaling potential internal weakness despite the index trading near record highs. This concentration of signals has only occurred twice before in history, both times preceding significant market declines. The indicator identifies periods when stocks simultaneously make new 52-week highs and lows, suggesting fragmentation beneath the market surface.

• Previous instances of 13 triggers within three months occurred in January 1980 (followed by 13.4% decline) and September 2018 (followed by 13.1% maximum drawdown)
• The warning comes as market concentration remains elevated, with technology and communication services dominating gains while the S&P 500 continues setting new highs in 2026
• The indicator has a history of false positives and does not guarantee a correction, with many warnings appearing during bull markets that continued higher