General Market News

Confluence Asset Allocation's Q3 2026 outlook anticipates continued near-trend US economic growth with low recession risk, supported by dovish Fed policy and fiscal stimulus favoring business investment. The firm expects inflation to persist in the 2.5-3.5% range above the Fed's target, with equity market leadership broadening beyond mega-cap technology stocks. International developed equities and gold are positioned favorably due to fiscal support abroad, valuation advantages, and US dollar weakness.

• The firm excludes US small caps due to expected headwinds from tariff-related cost pressures, higher financing costs, and limited pricing power, while maintaining large-cap exposure with sector emphasis on communication services and defense technologies
• Fixed income strategy involves shortening duration with focus on intermediate maturities, underweighting corporate bonds due to historically tight spreads, and emphasizing US Treasurys and mortgage-backed securities
• Gold allocation maintained across all strategies driven by central bank buying and reserve diversification trends, with new platinum allocation in higher-risk portfolios citing favorable supply-demand fundamentals and industrial demand leverage

Minneapolis Fed President Neel Kashkari called for rate hikes despite a weak ADP jobs report showing only 44,000 positions added in July, well below the 75,000 expected. Markets are pricing in 57% odds of a September rate hike, but analysts argue Fed Chair Kevin Warsh's focus on underlying trends rather than monthly volatility, combined with rising long-term bond yields already tightening financial conditions, makes further hikes unlikely.

• ADP reported just 44,000 private sector jobs added in July, the weakest since January and significantly below the 75,000 forecast, with goods-producing sectors shedding 3,000 jobs
• The 10-year Treasury yield has climbed since late June, effectively tightening financial conditions without Fed action and reducing the need for additional rate hikes
• Three analysts recommend buying AI infrastructure stocks following the resolution of forced selling from the $45 billion Situational Awareness fund liquidation, viewing recent weakness as a capitulation bottom

Federal Reserve Governor Lisa Cook stated she is prepared to support an interest rate hike if inflation does not show signs of improvement soon. Cook, who voted with the majority to hold rates steady at 3.5%-3.75% last week, warned that five years of above-target inflation risks becoming entrenched in price and wage-setting behavior. Markets expect a potential rate increase in September or October.

• Cook considers inflation risks higher than employment risks and warned that prolonged inflation above the Fed's 2% target could become entrenched in the economy
• The Fed voted 9-3 to hold rates steady at 3.5%-3.75% last week, with Cook citing concerns about tariff impacts, Iran war energy shocks, and AI buildout pressures
• Markets are pricing in a Fed rate hike as soon as September, with higher odds for an October move according to CME Group's FedWatch

Oil and gas producer APA exceeded Wall Street's second-quarter profit expectations on Wednesday, driven by higher oil prices resulting from Middle East geopolitical tensions. The U.S.-Israeli conflict with Iran pushed benchmark Brent crude prices up 19.2% year-over-year to average $89.62 per barrel during the quarter.

• APA's realized price per barrel of oil produced jumped to $98.24 from $65.58 a year ago, a 50% increase
• The company reported adjusted profit of $1.89 per share, beating analyst estimates
• APA's operations are primarily U.S.-based, with additional exposure in Egypt, the North Sea, and Suriname, making it vulnerable to commodity price fluctuations from geopolitical events

The Dow Jones closed at a record high of 54,349.92 on Wednesday, gaining 0.49%, driven by Nvidia's 4% rally after securing SpaceX's exclusive AI chip business. However, the S&P 500 and Nasdaq slipped 0.17% and 0.85% respectively, as major tech stocks including Alphabet (down 4% on AI division restructuring) and AMD (down 6% despite beating earnings) dragged on the broader market.

• Nvidia surged approximately 4% after Elon Musk announced SpaceX would exclusively use Nvidia processors for its AI infrastructure, which saw capital spending surge sixfold to $18.4 billion in Q2
• Alphabet fell roughly 4% following an AI division restructuring and the departure of 27-year chief scientist Jeff Dean, raising investor concerns about execution during critical AI competition
• Mixed economic signals emerged as ADP employment data preceded Friday's key jobs report, while Fed rate hike expectations for September eased to 54.9% amid ongoing assessment of labor market conditions

The Trump administration plans to impose a 15% tariff on polysilicon derivative products as part of a Section 232 investigation into foreign imports. The results of the investigation, which is aimed at countering China, are expected to be announced as soon as Thursday. This move will impact the solar industry, as polysilicon is a key material in solar cell production.

• A 15% tariff will be imposed on polysilicon derivative products following a Section 232 national security investigation
• The administration plans to unveil investigation results as early as Thursday, with the tariffs specifically designed to counter Chinese imports
• The tariffs will affect the solar manufacturing industry, where polysilicon is a critical raw material for solar cell production

Minneapolis Federal Reserve President Neel Kashkari advocated for raising interest rates immediately to prevent entrenched inflation, becoming one of three dissenters who voted for a 25-basis-point hike at last week's Fed meeting. The Fed voted 9-3 to keep rates unchanged at 3.5%-3.75%, with inflation remaining above 3% and well above the central bank's 2% target.

• Kashkari argued current economic strength—strong corporate earnings, resilient consumers, and stable labor markets—shows monetary policy is not restrictive enough, creating room for a small rate increase
• Inflation remains elevated with CPI at 3.5% and PCE at 3.7% year-over-year in June, prompting concerns from dissenters about inflation becoming entrenched
• Markets narrowly favor a rate hike at the September 15-16 FOMC meeting, with CME FedWatch showing 54.9% probability of a 25-basis-point increase

Federal Reserve Chairman Kevin Warsh is considering reducing the number of FOMC policy meetings from the current eight per year, as part of his broader strategy to limit the Fed's communications with financial markets. The proposal has sparked debate among Fed officials and market participants about potential impacts on market volatility and transparency. While some regional Fed presidents are open to discussion, investors and experts worry the move could introduce uncertainty and disrupt markets accustomed to regular Fed guidance.

• Markets have remained relatively stable since Warsh took office in May, with the Dow up 7% and Treasury yields rising modestly, despite his reduced communication approach that includes curtailing forward guidance and shortening post-meeting statements.
• Fed officials like Minneapolis President Neel Kashkari and Philadelphia President Anna Paulson have expressed openness to discussing fewer meetings, noting 'there's nothing magical' about the eight-meeting schedule that's been in place since the early 1980s under Paul Volcker.
• Market strategists warn that fewer meetings combined with less transparency could increase volatility and force a 'regime of continuous market repricing,' though some view it as creating new trading opportunities and forcing investors to focus on economic data rather than Fed signals.

The VIX volatility index rose alongside stocks during Tuesday's 1.8% S&P 500 rally, an unusual occurrence that happens about 20% of the time. This anomaly was driven by record call option buying, with over 4 million S&P 500 index calls traded on Cboe and call option prices surging 42% in a single day. The phenomenon creates both risks for call buyers and opportunities for hedging strategies.

• Over 4 million S&P 500 index calls traded on Cboe Tuesday, setting an all-time volume record, while the put-to-call ratio fell to 0.83, the second lowest reading on record
• Nasdaq call option prices betting on a one-standard deviation move in the index jumped 42%, the largest single-day increase in five years, inflating implied volatility despite bullish sentiment
• The elevated VIX creates a potential 'double-whammy' for new call buyers if both stock prices and volatility decline, but offers a win-win scenario for investors seeking downside protection while maintaining equity positions

WTI crude oil tested the $75 level on August 5, 2026, as Iran signaled progress on a deal with Oman regarding management of the Strait of Hormuz. Oil prices pulled back from session highs despite the geopolitical developments, while natural gas remained flat ahead of an EIA storage report. The potential Iran-Oman agreement on vessel routing through the Strait would require U.S. approval given the existing naval blockade on Iranian ports.

• EIA data showed U.S. crude inventories increased by 2.5 million barrels versus analyst expectations of a 1.5 million barrel decline, with inventories currently 6% below the five-year average
• Iran and Oman reached a preliminary deal on managing the Strait of Hormuz with a designated route for vessels, though implementation depends on U.S. approval amid the ongoing naval blockade
• Natural gas traded flat near $2.70 ahead of an EIA report expected to show working gas storage increased by 30 Bcf, while Brent oil failed to hold above $80.00 despite initial gains

Ed Liu, a senior technology executive at Bank of America serving as vice chairman of technology and global head of software, has resigned to join a competitor. His departure comes days after Citi announced hiring another Bank of America executive for tech sector coverage. The specific destination of Liu's move has not been disclosed.

• Liu previously worked at Morgan Stanley as co-head of Americas technology banking before joining Bank of America
• His resignation follows closely after Citi's recent announcement of hiring a Bank of America executive to lead technology services sector coverage
• The competitor Liu is joining has not been identified, and both Liu and Bank of America declined to comment

Major Wall Street hedge funds including Citadel, Two Sigma, and Point72 Asset Management were targeted in recent sophisticated cyberattacks, according to Bloomberg News. The hackers used phone-based social engineering tactics to trick employees into granting system access or revealing sensitive information. The attacks are part of a broader surge in AI-powered cyberattacks affecting global companies.

• Attackers used phone calls to manipulate employees into providing access or sensitive data, a tactic associated with cybercriminal groups like 'Scattered Spider'
• Multiple major hedge funds and private equity firms were targeted, though attempts to breach financial institutions are considered routine
• The White House formed a working group earlier this year bringing together AI developers and critical infrastructure operators to address the rising threat of AI-powered cyberattacks and ransomware

The Federal Reserve Banks of Dallas and New York will launch a pilot survey of the $1.3 trillion private credit market after Q3, with results expected in Q1 2027. The initiative aims to address regulatory concerns about lending standards and transparency in this rapidly growing but largely unregulated sector that emerged after the 2008 financial crisis.

• The survey will segment the market by borrower size: upper middle market (over $100M EBITDA), middle market ($30M-$100M EBITDA), and lower middle market (under $30M EBITDA)
• Regulators have struggled to assess private credit risks due to lack of data and inability to force disclosure from the unregulated industry
• Investor redemptions from business development companies have accelerated in 2024 amid concerns about competition, falling returns, and AI's potential impact on financed software businesses

Salad and Go filed for Chapter 11 bankruptcy and is closing all 70 remaining locations, citing strategic growth challenges, weakening consumer demand, and higher costs. While not directly implicated, the cyclospora outbreak that sickened at least 10,000 people and caused multiple deaths weakened consumer confidence in lettuce across the industry, compounding the chain's existing problems.

• The company has assets and liabilities both valued between $500 million and $1 billion, having previously expanded rapidly under private equity firm Volt Investment to more than double its store count
• The cyclospora outbreak devastated industry-wide lettuce sales, with even chains like Taco Bell experiencing traffic plunges after CDC linked iceberg lettuce to the outbreak
• Salad and Go had already closed dozens of Texas and Oklahoma stores earlier in 2025 under new CEO Mike Tattersfield, reducing its footprint from a much larger national presence to just Arizona and Nevada locations

Roundhill Investments is launching a new photonics and optics ETF (LYTE) on Thursday, following the success of its DRAM memory chip ETF which amassed nearly $25 billion since April 2026. The fund targets the optical networking boom in AI data centers, a sector Goldman Sachs projects will grow from $15 billion to $154 billion by 2028, with Nvidia investing billions in the technology.

• Roundhill's DRAM ETF became the first fund to reach $10 billion in assets within 10 days of launch, demonstrating the firm's track record with niche AI-related investment themes
• Goldman Sachs forecasts the optical networking market will expand more than nine times from 2026 through 2028, while Nvidia has committed billions to photonics companies and plans its Feynman architecture for 2028
• Roundhill will be second to market after Tema ETFs launched LAZR on June 30, though LAZR has only attracted $18 million in assets amid recent AI sector volatility

Energy Transfer LP raised its 2026 adjusted EBITDA guidance to $18.8-$19.1 billion from $18.2-$18.6 billion following strong Q2 performance across multiple segments. The partnership beat earnings expectations significantly, reporting 59 cents per common unit versus consensus of 39 cents, driven by outperformance in Midstream, Intrastate, Crude, and NGL segments. Management emphasized growth opportunities in natural gas infrastructure and NGL exports, with major projects scheduled for late 2026 and 2027.

• Q2 segment outperformance included roughly $100 million above expectations in each of Midstream, Intrastate and Crude, plus over $200 million in NGL and refined products
• Hugh Brinson Phase I is targeting full 1.5 Bcf/day capacity by September 2026, with Phase II scheduled for Q1 2027; Nederland expansion adds 240,000 bpd ethane export capacity starting mid-2028
• Management views market volatility as potential upside rather than a requirement for guidance, stating base operations alone can meet the raised outlook while maintaining 3-5% annual distribution growth targets

The Trump administration has refunded approximately $100 billion in tariff revenue, representing 60% of the $167 billion collected from 'liberation day' duties imposed in 2025. The Supreme Court ruled these IEEPA-based tariffs were unauthorized, and a federal judge ordered refunds to importers. The administration is now attempting to reimpose similar tariffs using different legal authorities.

• Of the roughly $167 billion collected under IEEPA tariffs, $100 billion has been certified and sent to Treasury for disbursement, with $129 billion accepted for processing through the CAPE refund system
• More than 330,000 importers paid IEEPA tariffs on over 53 million entries, but only 252,496 refund declarations covering 25 million entries have been received so far
• Trump has expressed anger at the Supreme Court ruling but stated the administration is 'allowed to do it in a different manner,' with new tariff methods already facing legal challenges

Bank of America CEO Brian Moynihan characterized the near-collapse of AI hedge fund Situational Awareness as a warning shot for overleveraged markets. The fund, run by Leopold Aschenbrenner, was forced to liquidate most of its public equities last week after its AI bets soured, requiring a rescue deal with Citadel. The incident has prompted Wall Street's largest prime brokers to reexamine their exposure to highly leveraged investment firms.

• Situational Awareness ballooned to $45 billion in assets since its 2024 inception before collapsing last week, forcing liquidation of positions through prime brokers including Bank of America, Goldman Sachs, and Morgan Stanley
• The fund held concentrated positions in AI hardware suppliers like South Korean memory chip maker SK Hynix, and faced mounting margin calls as technology stocks pulled back, triggering a downward cycle of forced selling
• Moynihan indicated prime brokers are tightening underwriting standards in response, stating 'valuations get out, leverage in the system gets there. You have to be careful' amid elevated AI-driven market valuations

Fusion energy developer TAE Technologies signed an agreement with Black Moon Energy to secure a potential future helium-3 fuel supply for its planned commercial power plants. TAE, backed by Google and Chevron and set to be acquired by Trump Media & Technology Group in a $6+ billion deal, is preparing to build its first fusion plant, Da Vinci, with 50 megawatts capacity expected to begin operations in 2031.

• TAE has raised over $1 billion and plans site selection for its 50-megawatt Da Vinci plant later this year, with future plants designed for 350-500 megawatt output
• The helium-3 supply agreement provides an alternative fuel option as the fusion industry works to bridge the gap between experimental reactors and commercial viability
• Trump Media's acquisition of TAE, valued at over $6 billion in an all-stock deal, is expected to close before end of 2026 and will spin off Truth Social into a separate entity

Private sector employers added only 44,000 jobs in July, according to ADP's latest report, falling short of economists' expectations of 70,000 jobs and down from June's revised 95,000. The weak hiring numbers suggest employers are reacting cautiously to shifting macroeconomic conditions, though wage growth for job-changers accelerated to 7% year-over-year.

• Education and health services led job creation with 36,000 positions, while leisure and hospitality lost 11,000 jobs
• Pay gains for workers changing jobs accelerated to 7% year-over-year, the largest increase since August 2025, indicating supply constraints in parts of the labor market
• Small businesses (fewer than 50 employees) added 23,000 jobs, outpacing large businesses with 500+ employees which added only 13,000