ANGLES.

The weekend newswires were dominated by the resignation of Japanese prime minister Ishiba after two crushing parliamentary defeats, political chaos and public disorder on the rise in the UK, France and Argentina, a brutal intensification of Russia’s assault on Ukraine and Trump’s plans to militarize the streets of Chicago and Memphis.

Stocks recovered from the previous Friday’s wobble, regaining some equilibrium on Monday at the start of a week likely to be dominated by key inflation data on Wednesday and Thursday. The indexes meandered around aimlessly for the entire session but closed a tad higher.

The annual revision of Bureau of Labour Statistics employment data came out on Tuesday. This is when the under-fire agency uses hindsight to transparently compare its monthly labor market survey findings to the actual facts. The mea culpa for the March 2024 to March 2025 period showed an estimate of 911k fewer jobs actually created than estimated by the surveys and provided ripe political fodder for Trump who delighted in the terrible-sounding number. The fact is, however, that this kind of delta represents a lower statistical margin of error than most other kinds of surveys.

Wall Street understands this even if Trump-world doesn’t and the meltup in stocks continued. Israel deciding to bomb key US ally Qatar kept a bit of a lid on things, but we still ended the day at more new all-time highs for the S&P 500 and the NASDAQ.

On Wednesday morning we got the first inflation drop of the week before markets opened. Wholesale PPI, which had surprised to the upside for July, surprised to the downside for August. Wall Street’s reaction was predictable, stocks jumped and interest rates fell.

Oracle issued a stunning earnings report with a fiercely aggressive forecast and the stock price skyrocketed by more than 35% (resulting in co-founder Larry Ellison blowing past Elon Musk as the world’s richest individual).

The stock indexes just about held on to their gains over the course of the day despite a Russian drone incursion into NATO domain in Poland and both the S&P 500 and the NASDAQ tiptoed a little deeper into fresh record high territory.

The last big data point release before the next Fed meeting was the retail CPI inflation report pre-market on Thursday. It came in slightly hotter than expected, accelerating to a 2.9% annualized rate with noticeable price increases in tariff-exposed products, but still kept a Federal Funds interest rate cut very much in play and that elated stock markets which zoomed higher again. A third consecutive day of new all-time highs, obviously.

The Epstein affair (or “hoax” depending who you talk to) rumbles on and claimed its first major political scalp on Thursday as Peter Mandelson, Britain’s US ambassador, was unceremoniously sacked just days before a Trump state visit to the UK.

On Friday, we learned that sentiment among American consumers had sunk again and the public’s long term inflation fears have increased. JP Morgan CEO Jamie Dimon began bandying the word “recession” around on CNBC. Healthcare stocks were hurt by reports that the Trump administration is set to preposterously claim that COVID vaccines routinely kill children.

Stocks flatlined as traders took something of a break from their seemingly endless buying spree, but the NASDAQ still managed to squeak out a fourth consecutive day of new all-time highs. Shorter term interest rates reversed course and moved higher but the longer end continued to head lower (see INTEREST RATES below).

Usually, the big questions in advance of a Fed policy meeting revolve around what the committee will do and what the chairman will say. This time, however, we don't even know for sure who will be in the room.

Senate Republicans are seeking to fast-track Trump’s hand-picked White House adviser Stephen Miran as a temporary Fed governor on Monday, which would allow him to join the meeting that begins on Tuesday morning and culminates on Wednesday afternoon with chairman Jerome Powell’s press conference.

Meanwhile, the court battle over whether the president can unilaterally fire Fed governor Lisa Cook has also been put in the fast lane. A district court judge last week ruled that he cannot legally do so until her case has been fully litigated and any wrong-doing proven in court. The Trump administration's appeal against that ruling could be heard before Tuesday.

The outcome of these two processes could not only determine the magnitude of the interest rate cut to be announced on Wednesday lunchtime (the expected quarter-point or a possible jumbo half-point?) but much more importantly, whether this cut will be just a mid-cycle adjustment to be followed by maybe a small number of measured trims here and there over the next couple of years or a beginning of the series of multiple frequent and dramatic cuts that Trump keeps demanding.

The stakes could not be higher; the upcoming trajectory of the entire US economy.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

The guys at Dimensional (DFA) make excellent points about keeping calm in the face of all the doom-mongering noise out there about an imminent huge market crash.

.. AND I QUOTE ..

“Would you choose the cheapest dentist in town? The restaurant with rock-bottom prices? The cheapest used car on the lot? Most of us instinctively know the answer is no - yet when it comes to investing, many people fall into the dangerous trap of equating cheap with attractive and desirable.”

Bogumil Baranowski

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Technology (two biggest holdings: Nvidia, Microsoft) ⬆︎ 3.1% for the week

Last week’s worst performing US sector: Consumer Defensive (two biggest holdings: Walmart, Costco) ⬇︎ 0.7% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 1.6% last week, is up 12.2% so far this year and ended the week 0.3% below its all-time record closing high (09/11/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 0.3% last week, is up 7.9% so far this year and ended the week 2.7% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 1.8% last week, is up 24.0% so far this year and ended the week 0.2% below its all-time record closing high (09/11/2025).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.08% (4.07% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.56% (3.51% a week ago)

* 5 YEAR TREASURY ⬆︎ 3.63% (3.59% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.06% (4.10% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.65% (4.72% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.68% (4.78% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday

* Decided upon by the Federal Reserve Open Market Committee. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.

** Wall Street Journal Prime Rate as of Friday’s close. Used as a basis for determining many consumer loan interest rates such as credit cards, personal loans, home equity loans/lines of credit, securities-based lending and auto loans.

*** Used as a basis for determining mortgage interest rates and some business loans

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.35%

One week ago: 6.50%, one month ago: 6.60%, one year ago: 6.20%

Data courtesy of Freddie Mac Primary Mortgage Market Survey

INTEREST RATE EXPE…

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Confusion reigned on Wall Street and around the world after the previous Friday’s appellate court decision confirming that IEEPA tariffs are illegal. The exchanges were closed on Monday, but the general sense in the futures market was that, while the smart money was not going to immediately freak out, it was going to have to keep a close eye on how things evolve here.

There was also the small matter of the crucial jobs data release coming up on Friday to think about as well as ongoing concerns about the independence of the Federal Reserve in the light of Trump’s audacious attempt to oust Governor Lisa Cook and replace her with a henchman to do his bidding on the interest-rate setting committee. Wall Street’s historically most tricky month of the year began on Tuesday and this time around it is chock-full of potentially market-moving events (see below).

Traders seemed to be coming to the conclusion that tariffs aren’t vanishing but might possibly be changing. If Trump’s Supreme Court majority does somehow step out of character and actually rule against the president, then financial markets will need to prepare for the upheaval of a likely migration from country-by-country tariffs to the more legally-grounded sector-by-sector ones. That would be very messy for an already dazed and confused US and global business community overseeing trillions upon trillions of dollars of international trade.

Stock indexes took a substantial leg lower, dragged down once again by heavy profit-taking in tech and small cap names. The bond market seemed more focused on the fact that “easy-money” Treasury revenue generated by IEEPA tariffs may dry up and that’s not good for keeping those pesky longer term interest rates under control.

Bond vigilantes around the world began to stir again and the outcome was a serious shift higher in global interest rates with the US 30-year flirting with the 5% level again and multi-decade highs in Europe and Japan.

A highly favorable anti-trust case verdict for Alphabet/Google which allowed the company to keep Chrome and continue to make lucrative product distribution payments to the likes of Apple removed a long-time overhang and nicely boosted both firms’ stock prices on Wednesday. The result was a modest rebound in the indexes, particularly the NASDAQ.

Some lower-key employment data pre-market released on Thursday showed, among other things, that for the first time since before the pandemic, the number of job openings has now fallen below the number of people seeking jobs. The data generally implied continued sluggish economic conditions with US companies not firing but not hiring either and the non-trivial risk of a nasty downside surprise in the payrolls number 24 hours later.

Senate confirmation hearings began for Stephen Miran, Trump’s pick to temporarily replace Adriana Kugler, who quit the Fed interest rate-setting committee in still murky circumstances last month. If confirmed, Miran would unfathomably be allowed to maintain his current job on the White House payroll while sitting on the policy committee of an autonomous entity. When asked, he blah-blahed all the right noises about central bank independence, but he was plainly rewriting history, having recently published that a US president should be able to fire and hire Fed decision-makers “at will”.

Stocks were unfazed and headed north again, comfortably erasing the declines from earlier in the week with the S&P 500 index closing at another new all-time record high and above 6500 for the first time. Interest rates backed off sharply from the elevated levels caused by Tuesday’s spike.

The Jobs Report dropped pre-market on Friday and was alarmingly weak relative to expectations. Only 22k jobs were created in August, there were more downward revisions to prior months’ data and a tick up in the unemployment rate to 4.3%. Any lingering doubts about whether we will get a Fed rate cut on September 17th were swiftly demolished and interest rates plummeted across the board as the prospect of even a jumbo 0.50% cut started getting some votes (see INTEREST RATE EXPECTATIONS below).

The knee-jerk reaction in the stock market was to adopt a “bad news is good news” view that the job numbers will force the Fed to come to rescue with multiple cuts. But things then took a somewhat darker turn as the indexes rolled over on developing fears that the current pace of economic growth stagnation might swamp any of the benefits of lower short term interest rates and they closed lower on the day but a fraction higher for the week.

These next few weeks are going to be crucial to Wall Street. They should give us something of a reading on whether this almost three-year-old rally will continue or if it’s doomed to finally get derailed. In the next month alone, we’ve got a Fed interest rate-setting meeting, more inflation and job reports, ongoing legal proceedings regarding the legality of tariffs and the future of Fed Governor Cook, fiery Senate confirmation hearings, a Triple Witching day and even a possible government shutdown.

And that’s just the stuff that we know about. In this chaotic environment, I think we can safely assume that there’ll be plenty more to capture our attention.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

Why are lottery winners far more likely to go bankrupt than the general population?

.. AND I QUOTE ..

“I’m not going to bet against the US market in an environment where earnings are growing, estimates are accelerating, economic data is still generally good and interest rates are going to come down.”

Steve Chiavarone, deputy chief investment officer, Federated Hermes

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Communication Services (two biggest holdings: Alphabet/Google, Meta) ⬆︎ 3.0% for the week

Last week’s worst performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) ⬇︎ 3.4% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 0.3% last week, is up 10.4% so far this year and ended the week 0.8% below its all-time record closing high (09/04/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 1.1% last week, is up 7.6% so far this year and ended the week 2.9% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 0.6% last week, is up 21.8% so far this year and ended the week 1.0% below its all-time record closing high (08/22/2025).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.07% (4.23% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.51% (3.59% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.59% (3.68% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.10% (4.23% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.72% (4.86% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.78% (4.92% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday

* Decided upon by the Federal Reserve Open Market Committee. Used as a basis for overnight interbank loans and for determining high yield savings interest rates

** Wall Street Journal Prime Rate as of Friday’s close. Used as a basis for determining many consumer loan interest rates such as credit cards, personal loans, home equity loans/lines of credit, securities-based lending and auto loans

*** Used as a basis for determining mortgage interest rates and business loans

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Traders came into last week breathing easier after Fed chairman Powell strongly implied the previous Friday that a Federal Funds rate cut is coming on September 17th. But there are still plenty of data releases to navigate before then, including Nvidia’s earnings on Wednesday and more inflation data on Friday.

Stocks unwound some of Friday’s gains over the course of a mostly quiet summer session on Monday, but it felt more like light short term profit-taking rather than any reassessment of optimism surrounding rate cuts and the indexes all closed somewhat lower.

Word that crackpot Health Secretary Kennedy was considering scrapping all COVID vaccines in the US and firing the head of the Center For Disease Control (CDC) for daring to push back against such a deranged proposal, actions supposedly endorsed by the president whose approval numbers are plunging according to polls released earlier in the day, sent many healthcare stocks reeling.

After the close, Trump announced that he was going to follow through on his threat to take the unprecedented step of firing Federal Reserve governor and voting member on the interest rate-setting committee Lisa Cook “for cause” on the basis of some evidence-free verbal allegations (but no charges, let alone a conviction) of mortgage fraud. Cook refused to roll over and vowed to fight Trump’s legally dubious decision in the courts. This undisguised attempt at a power-grab by the president has now clearly set up an epic showdown over the independence of the US central bank.

Asian and European stocks fell, as did the US Dollar, in advance of the New York open on Tuesday but Wall Street decided to take a more chill view of things and to watch how the potentially protracted legal battle over Governor Cook’s job plays out. The indexes kept calm and carried on, rising moderately on the day to almost exactly reverse Monday’s declines. Longer term interest rates inched higher while shorter term rates sank.

Nvidia Day dawned on Wednesday with the normally most impactful of quarterly earnings reports due after the closing bell. It was another session of gentle gains for the indexes, enough for the S&P 500 to close at another new all-time record high, a calm before the potential storm of the chipmaker’s Q2 numbers. Going into the report, NVDA was up 35% in 2025 and that rally alone had accounted for a quarter of the whole 10% year-to-date return of the S&P 500. It’s that big a factor in the performance of entire investment and retirement portfolios.

The results met expectations but failed to wow and, by Nvidia’s standards, that is a bit of a miss in Wall Street’s book and the stock price tumbled in the after-market. When the real market opened on Thursday, however, the indexes displayed continued zen as the main surprise from Nvidia report was that it had virtually zero effect on markets once the stock price stabilized. Nvidia who? There was also a slight tick up to 3.3% in the second of three estimates of Q2 Gross Domestic Product.

Once again, a slow and steady climb in stocks generated another all-time high in the S&P 500 which closed a hair’s breadth away from 6500.

The Fed watches the core version of PCE inflation data closely when making its interest rate decisions and we got the latest reading on Friday morning. It was bang in line with expectations, rising to 2.9% annualized, probably not enough to derail Fed Funds rate cut hopes (see INTEREST RATE EXPECTATIONS below).

Round one in what will be a marathon Trump/Cook legal fight ended in a tie as a judge deferred an initial ruling on the validity of the firing. While one voting Fed governor was fighting to keep their job, another was intensifying an audition for the role of chairman. Governor Chris Waller parroted Trump’s views in the financial media, minimizing tariff-impacted inflation risk and promoting the idea of multiple rate cuts over the coming months, quite clearly performing for an audience of one.

The indexes fell back from their record highs (helped lower by poor numbers from Dell), erasing the week’s gains but they still managed to finish higher for the month, heading into the “September scaries”. The month is historically the worst of the year for stock price returns.

And September might get off to a highly volatile start when markets open on Tuesday after the long weekend as a federal appellate court on Friday evening upheld a previous Court of International Trade ruling that struck down Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs as illegal, cutting off a major new source of cash for the government and raising huge questions about what on earth businesses are supposed to do next.

Strap in.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

The wisdom of crowds. Why you absolutely have to respect price.

.. AND I QUOTE ..

"What keeps me up at night is not what I know, but what I do not know."

Franz Kafka

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Energy for the second week in a row (two biggest holdings: Exxon-Mobil, Chevron) ⬆︎ 2.6% for the week

Last week’s worst performing US sector: Consumer Defensive (two biggest holdings: Costco, Walmart) ⬇︎ 2.1% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price was unchanged last week, is up 10.1% so far this year and ended the week 0.7% below its all-time record closing high (08/28/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 3.4% last week, is up 6.4% so far this year and ended the week 4.1% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price fell 1.4%% last week, is up 21.1% so far this year and ended the week 4.1% below its all-time record closing high (11/22/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.23% (4.27% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.59% (3.68% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.68% (3.76% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.23% (4.26% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.86% (4.84% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.92% (4.88% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday

* Decided upon by the Federal Reserve Open Market Committee. Used as a basis for overnight interbank loans and for determining high yield savings interest rates

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan interest rates such as credit cards, personal loans, home equity loans/lines of credit, securities-based lending and auto loans

*** Used as a basis for determining mortgage interest rates and business loans

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.56%

One week ago: 6.58%, one month ago: 6.73%, one year ago: 6.35%

Data courtesy of Freddie Mac Primary Mortgage Market Survey

INTEREST RATE EXPECTATIONS:

Where will the Fed Funds interest rate be after the next rate-setting meeting on September 17th?

* Unchanged from now .. ⬇︎ 14% probability (16% a week ago)

* 0.25% lower than now .. ⬆︎ 86% probability (84% a week ago)

With three more rate-setting meetings left in 2025, what is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts this year?

* ⬌ Two (unchanged from a week ago)

Data courtesy of CME FedWatch Tool

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market clos…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Clarity around Ukraine failed to emerge over the weekend despite the US administration pumping out happy-clappy PR spin ahead of Trump’s meeting with Zelensky and the Europeans. The Federal Reserve began gathering in Jackson Hole for its annual boondoggle which always culminates in a closely-watched speech from the chairman. Earnings focus was set to switch to the major retailers.

So Wall Street was mostly in wait-and-see mode when the opening bell rang on Monday. Markets are trading as if a 0.25% rate cut in the Federal Funds Rate on September 17th was already in the bag (see INTEREST RATE EXPECTATIONS and ARTICLE OF THE WEEK below) to the extent that a severe market disruption can be expected if it doesn’t happen.

A nonsense Trump/Zelensky news conference in the early afternoon shed no new light on anything except perhaps golf and voting machines and the indexes meandered around aimlessly on light volume to finish a touch lower.

Stocks wavered at the open on Tuesday after Home Depot issued a mixed earnings report showing that consumers are deferring big ticket purchases and there was a widening of US sector-specific tariffs to include more consumer goods like auto parts, motorcycles, furniture and baby gear.

The slump in the indexes accelerated rapidly and they closed near the lows of the day, predominantly dragged down by a profit-taking-generated rout in tech heavyweights in general and a horror show of a session for Nvidia (which alone counts for ~8% of the weighting of the S&P 500), Palantir and Oracle in particular. A massive record-breaking run-up like we have recently seen in these stocks will always put shareholders at risk of sudden plunges like this, particularly in the kind of low volume trading conditions currently being experienced.

Tuesday’s hefty tech wobble spilled over into Wednesday and a shaky earnings report and outlook from Target didn’t help. Trump’s relentless campaign to undermine and banish existing central bank officials and replace them with his own hand-picked glove puppets intensified as he turned his ire on Fed Governor Lisa Cook. The indexes dumped early on with dip buyers notably absent until the last hour or so of trading, eventually limiting the damage to relatively light losses for the session. Interest rates shifted higher.

For the first time in three years, Walmart missed expectations in its quarterly earnings report on Thursday morning and pointed to a bleak tariff-infested landscape going forward. The comparatively small drop up to this point in the indexes from their recent highs has masked fairly steep declines in some of the hottest high momentum names. This phenomenon persisted throughout the session and the outcome was a fifth straight day in the red for stocks, the longest such losing streak since January and interest rates continued to drift slowly north.

The week’s main event was Jerome Powell’s speech at 10am ET on Friday to close out the Jackson Hole Economic Policy Symposium, with stock and bond markets laser-focused on his perspective on upcoming Fed rate cuts (see ARTICLE OF THE WEEK below). He proceeded to fling the door wide open to a cut next month by stating that a "shifting balance of risks .." between the potentially contradictory prospects for inflation and those of economic growth “.. may warrant policy adjustment”.

In response, an elated stock market exploded higher and shorter term interest rates tumbled as did the value of the US Dollar. More rocket fuel was added by the decision of Canada to withdraw its retaliatory tariffs against the US. The indexes erased their losses from the five-day losing run and spiraled upwards to close the week on the brink of yet more new all-time record highs.

Despite Friday’s charge higher, last week highlighted some legitimate concerns about the fact that just 2% of the S&P 500 index’s holdings account for 40% of the index’s total market capitalization value.

This bull market is now more dependent than ever on the continuation of the rally-supporting AI story and the risk of more frequent sudden air pockets like we saw on Tuesday is becoming greater and greater as stock prices perhaps begin to run out of room on the upside in the short term.

And let’s not forget that between now and the next Federal Funds Rate decision day on September 17th, there are two massive data releases that could still possibly derail the narrative of an inevitable rate cut; a Jobs Report on September 5th and a CPI inflation reading on September 11th.

I would still be very, very surprised if there were no rate cut next month, but it’s not yet a total slam dunk (see INTEREST RATE EXPECTATIONS below).

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

What does this whole Fed rate cut business mean anyway? Why does the stock market care so much?

.. AND I QUOTE ..

“Most financial mistakes come when you try to force things to happen faster than is required. Compounding doesn’t like it when you try to use a cheat code.”

Morgan Housel, author and partner at Collaborative Fund

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Energy (two biggest holdings: Exxon Mobil, Chevron) ⬆︎ 3.0% for the week

Last week’s worst performing US sector: Technology (two biggest holdings: Nvidia, Microsoft) ⬇︎ 1.2% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 0.3% last week, is up 10.1% so far this year and ended the week 0.2% below its all-time record closing high (08/14/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 3.4% last week, is up 6.3% so far this year and ended the week 4.1% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 1.3% last week, is up 22.8% so far this year and ended the week at its all-time record closing high.

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.27% (4.30% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.68% (3.74% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.76% (3.82% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.26% (4.29% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.84% (4.86% a week ago)

* 30 YEAR TREASURY ⬌ 4.88% (4.88% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday

* Decided upon by the Federal Reserve Open Market Committee. Used as a basis for overnight interbank loans and for determining high yield savings interest rates

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan interest rates such as credit cards, personal loans, home equity loans/lines of credit, securities-based lending and auto loans

*** Used as a basis for determining mortgage interest rates

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬌ 6.58%

One week ago: 6.58%, one month ago: 6.74%, one year ago: 6.46%

Data courtesy of Freddie Mac Primary Mortgage Market Survey

INTEREST RATE EXPECTATIONS:

Where will the Fed Funds interest rate be after the next rate-setting meeting on September 17th?

* Unchanged from now .. ⬆︎ 16% probability (15% a week ago)

* 0.25% lower than now .. ⬇︎ 84% probability (85% a week ago)

With three more rate-setting meetings left in 2025, what is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts this year?

* ⬌ Two (unchanged from a week ago)

Data courtesy of CME FedWatch Tool

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices a…

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Over the weekend, Nvidia and Advanced Micro Devices (AMD) entered into an unprecedented “pay-to-play” agreement with the US government whereby they will be allowed to continue to deal with China as much as they want so long as they kick back 15% of all revenues generated there to the Treasury, making a total mockery of the idea (that Wall Street never believed anyhow) that chip export prohibitions have ever had anything to do with national security concerns, fentanyl, creating American jobs or any other such poppycock.

This kind of purely transactional arrangement, which directly takes money out of the pockets of shareholders, could prove to be an almost Soviet-style central planning and state capitalism framework for other companies or sectors going forward.

There was a muted reaction on Monday morning in the prices of those two stocks but the broader indexes continued to surf all-time record highs although markets were somewhat unnerved by Trump’s decision to deploy the US military to patrol the streets of Washington DC and to federalize the city’s police force, falsely citing an increase in violent crime (in fact such crimes in the nation’s capital recently hit a 30-year low and are down 26% this year). TACO was on full display as the US/China trade talk deadline was extended by another 90 days. Stocks bled lower and closed moderately in the red for the session.

Markets learned overnight the troubling news that economist E.J. Antoni had been tapped to serve (subject to Senate confirmation) as the new head of the Bureau of Labor Statistics (BLS), a pick that was roundly ridiculed and does precisely nothing to allay serious concerns about the credibility of future economic data, especially when the first thing he did was to float the somewhat unhinged idea of halting the monthly public release of the Jobs Report.

Pre-market on Tuesday, after new all-time record highs were reached overnight in Japanese and Australian stock markets, the big reveal of the latest US CPI inflation data showed an as-expected acceleration to a 2.7% annualized retail inflation rate which was viewed with relief by markets since it very much left Fed Funds interest rate cuts on the table.

Stocks soared led by tech and Small Caps and short term interest rates fell to multi-month lows as traders further boosted bets on a likely September cut. The indexes built on those initial gains as the session wore on and both the S&P 500 and the NASDAQ comfortably closed yet again at their own fresh all-time record highs.

It was an uneventful Wednesday, but the sense remained that the Fed will dare not disappoint on September 17th. Stocks responded by continuing to grind higher to close at more new record levels.

The release on Thursday morning of PPI wholesale price data, which can often be a leading indicator for retail inflation, injected a strong note of caution following Tuesday’s benign CPI report by coming in massively hotter than expected and at its highest level in three years. One possible conclusion drawn by analysts from this is that heightened inflation may already be coursing through the economy, it just hasn’t made its way to the consumer quite yet.

Stocks initially retreated from their highs as a result with Small Caps falling hardest and the recent steady move south in interest rates came to a screeching halt and reversed course as traders dialed back their bets on a September Fed interest rate cut. The S&P 500 recovered its mojo after lunch, however, to close fractionally in the green for a third straight session of new all-time record highs.

Retail Sales and Industrial Production data were released on Friday morning and provided no surprises, but Consumer Sentiment continues to visibly slump. The indexes drifted gently lower over the course of the day on some profit-taking but still ended nicely higher for the week.

Based on the ridiculous sham of a “press conference” with no questions taken in Alaska on Friday evening, nothing of consequence seemed to have been achieved in the very odd Trump/Putin meeting and an obviously deflated US president came home empty-handed. As one analyst put it; “Lunch was cancelled but there were plenty of TACOs being served.”

The stock market is a powerful discounting mechanism that looks out six to nine months and frankly doesn’t care about the three-to-five year outlook where a lot of the perceived risks lie. And, with the economy generally holding up, interest rate cuts on the horizon and earnings still looking mostly wonderful, there isn’t a whole hell of a lot right now that calls for the indexes to cool down in the short term.

That can change very quickly at almost any moment, of course, and when the correction or even a bear market does hit (as it will), it is going to likely feel pretty painful since stock prices will be falling from their highly elevated levels.

Long term investors will need to hold their nerve, tune out the inevitable hysteria and look down the back of the sofa for a way to increase their systematic recurring buying of diversified ETF investments while prices are temporarily depressed.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

Five massive red flags. When you see these, don’t walk, run.

.. AND I QUOTE ..

"History suggests that we are heading towards an unhealthy level of investor optimism, but are not there just yet."

Nick Colas, co-founder of Datatrek

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Healthcare (two biggest holdings: Eli Lilly, Johnson & Johnson) ⬆︎ 3.8% for the week

Last week’s worst performing US sector: Real Estate (two biggest holdings: Welltower, Prologis) ⬇︎ 1.3% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 2.0% last week, is up 10.0% so far this year and ended the week 0.2% below its all-time record closing high (08/14/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 3.8% last week, is up 3.3% so far this year and ended the week 6.8% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 1.3% last week, is up 20.7% so far this year and ended the week 0.5% below its all-time record closing high (08/13/2025).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.30% (4.32% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.74% (3.76% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.82% (3.84% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.29% (4.27% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.86% (4.84% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.88% (4.85% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday.

* Decided upon by the Federal Reserve Open Market Committee. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan interest rates such as credit cards, personal loans, home equity loans/lines of credit, securities-based lending and auto loans.

*** Used as a basis for determining mortgage interest rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.58%

One week ago: 6.63%, one month ago: 6.74%, one year ago: 6.49%

Data courtesy of: Freddie Mac Primary Mortgage Market Survey.

INTEREST RATE EXPECTATIONS:

Where will the Fed Funds interest rate be after the next rate-setting meeting on September 17th?

* Unchanged from now .. ⬆︎ 15% probab…

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Wall Street is suddenly staring at two existential questions that it never thought it would have to face; about the independence of the Federal Reserve and about the credibility of future economic data coming out of the 141 year-old Bureau of Labor Statistics (BLS) as both historically autonomous agencies face upcoming politicization with Trump set to insert his own hand-picked minions into highly influential positions (see SPECIAL NOTE below).

While these are very legitimate longer term anxieties, the short term effect was a renewed conviction that Fed interest rate cuts will resume in September and that was what boosted stock prices at the opening bell on Monday.

The indexes roared higher out of the gate, this time led by Big Tech and Small Caps who were the biggest victims of the previous Friday’s wipeout as well as the main potential beneficiaries of any interest rate reduction and they held on to those gains through the close to get back to within 1% of all-time highs.

The pharmaceutical sector was scratching its head on Tuesday morning, baffled and troubled by what it was hearing. Beaten and battered recently by the ridiculous Health Secretary Kennedy and his constant promotion of nonsensical and dangerous falsehoods about medical science (including canceling all grants for mRNA vaccine research just last week), it now found itself facing a US president who, after going on TV and bizarrely pledging to cut drug prices to the consumer by over a thousand percent (something that is not mathematically possible), then promptly proclaimed that tariffs on the sector’s imports could soon shoot as high as 250%.

The broad indexes sank early on after data gave off a whiff of stagflation in the service sector and stocks remained down in the dumps for the rest of the session, erasing the previous day’s gains.

Stocks opened moderately higher on Wednesday morning and spent the day climbing steadily deeper into the green as mostly solid earnings reports continued to pour in, including from McDonalds and Disney. But it was Big Tech that really drove the upward move, particularly Apple which announced some significant US investments.

The move higher was in spite of a trigger-happy Trump doubling tariffs on India and teasing “a lot more” new levies in the coming hours and days. But he waited until after the closing bell to drop the big one: a 100% tariff on chip and semiconductor imports (with some exemptions for US-based production) which risks upending global supply chains.

Markets largely shrugged off the new tariff turmoil on Thursday morning however, choosing instead to focus on the growing number of Fed officials seemingly falling into line when it comes to imminent interest rate cuts. The market-driven probability of a September Fed cut reached as high as 95%, having been around 40% going into the previous Friday’s Jobs Report.

The session then essentially became a microcosm of the state of financial markets right now; a tug of war between tariff bad news and interest rate cut good news which ended the day pretty much as a tie as the indexes blew their early lead to close basically unchanged.

Trump named the chairman of his Council of Economic Advisers Stephen Miran, a skeptic of central bank independence, to fill the vacant seat at the Federal Reserve but only as temporary five-month stop-gap measure until a permanent appointment is made next year, so markets were relatively relaxed about the decision.

In a separate development, the head of the IRS was removed by Trump just two months into his tenure and replaced by Treasury Secretary Bessent who will become the seventh head in eight months of the agency which has had its staff gutted by over 25% since the election.

Friday dawned with markets perky again, having sort of dodged a bullet with the short-term appointment of Miran. On the geopolitical front, there seem to be a few flickering hopes of some kind of possible de-escalation in Ukraine with a Trump/Putin summit scheduled for Friday in Alaska, but any end to the death and destruction in Gaza now seems further away than ever. The indexes stayed elevated into the close to bring a positive week to an end, with the NASDAQ-100 reaching new all-time highs yet again and the S&P 500 only a hair’s breadth away from accomplishing the same.

At around 6400 the S&P 500 has hardly any room for disappointment (as we saw two Fridays ago) and this week could possibly provide just such a potential pitfall with the release of the latest CPI inflation data on Tuesday.

If inflation comes in hot, it could massively complicate things and dent the new-found confidence that Fed interest rate cuts are just around the corner next month since cutting rates in an inflationary environment is not a smart thing to do and the Fed knows it.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

SPECIAL NOTE:

I never discuss any specific custom-managed portfolio changes in this newsletter, but I will make an exception here.

What is happening at the Bureau of Labor Statistics is causing particular concern with Treasury Inflation Protected Securities (TIPS) which depend on data from agencies like this in order to be correctly priced by markets. If even the slightest doubt is cast upon the integrity and believability of such data, there is in my opinion a non-trivial chance that these types of securities could be heavily dumped by market participants.

Allocation to TIPS has only ever been extremely light in just a few of Anglia Advisors’ more defensive custom-managed portfolios but, while this risk persists, I have sold out of all TIPS positions in these accounts as a risk management measure and redeployed the proceeds to more generic fixed income ETFs.

THIS NOTE IS INFORMATIONAL ONLY AND IS ABSOLUTELY NOT INVESTMENT ADVICE. Anglia Advisors clients who hold any TIPS in their own self-managed portfolios or in allocations that may be guided by other advisors are welcome to reach out and talk things over with me.

ARTICLE OF THE WEEK ..

Trump last week signed off on legislation that will allow private equity, venture capital and hedge funds to possibly infect your 401k by being included as options. Don‘t fall for this terrible idea.

.. AND I QUOTE ..

“One of the important factors behind the fluctuation between bull and bear markets, between booms and crashes and bubbles, is that investor memory has to fail us – and fail universally – in order for these extremes to be reached.”

Howard Marks, co-founder and co-chairman of Oaktree Capital Management.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Consumer Cyclical (two biggest holdings: Amazon, Tesla) ⬆︎ 3.6% for the week

Last week’s worst performing US sector: Energy (two biggest holdings: Exxon Mobil, Chevron) ⬇︎ 0.8% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 2.5% last week, is up 8.7% so far this year and ended the week 0.4% below its all-time record closing high (07/28/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 2.5% last week, is down 0.3% so far this year and ended the week 10.1% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 3.2% last week, is up 19.5% so far this year and ended the week 0.9% below its all-time record closing high (07/23/2025).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.32% (4.35% a week…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

The big news of the weekend was the announcement of a US/EU trade deal resulting in a 15% tariff on imports from most of mainland Europe (including on automobiles) similar to that agreed with Japan days earlier, representing the starkest example yet of TACO as it was a 50% rate that was being dangled just weeks ago.

Despite lingering confusion around some particulars of the agreement and backlash from quite a few corners of the EU (including from the Prime Minister of France), the pact was still viewed on Wall Street as the removal of a major risk for the global economy.

This was a potentially decisive jam-packed week that could set the tone for the rest of the year with 40% of S&P 500 firms reporting their Q2 earnings including four of the Magnificent Seven names, another round of US/China trade talks in Stockholm, a Fed interest rate announcement and a new Gross Domestic Product (GDP) report on Wednesday, more inflation data on Thursday followed by a critical Jobs Report on Friday which was also scheduled to be the latest tariff deadline day.

US stock markets initially celebrated the EU accord on Monday after a decent session in Europe, boosted by surprisingly not-terrible earnings from Boeing. But enthusiasm waned as the session wore on with traders unwilling to place big bets ahead of the bonanza of new information due over the coming days. A minuscule gain in the S&P 500 at the close was however enough to run its new all-time high winning streak to six straight days.

Tuesday morning’s earnings reports were mixed but the stock of international index heavyweight Novo Nordisk got wrecked following disheartening numbers. The indexes spent the session mostly treading water but eventually closed lower on the day. After the close, it became clear that the US and China were kicking the can down the road in their trade talks and a 25% tariff was slapped on India.

Fed day rolled around on Wednesday with a pre-market upside surprise to the initial estimate of Q2 GDP at +3.0% annualized. No surprises from the central bank however as the Federal Funds interest rate was left unchanged despite two dissenting committee members for the first time since 1993. The dissent was largely dismissed by markets as little more than performative stunts from two auditioning candidates simply bending the knee and kissing the ring of the president who will be selecting a new Fed chairman next year.

The current chairman Powell had one job to do at his press conference; to make it as boring as possible. He was largely successful, but his failure to overtly signal a September rate cut disappointed Wall Street. Stocks dropped to finish lower and interest rates jumped. After hours, both Meta and Microsoft issued outstanding earnings reports, each totally crushing expectations.

In general, strong Mega Cap Tech earnings have become expected rather than appreciated by this market but these were so sensational that the indexes ripped higher first thing on Thursday morning. Trump obviously s**t-posted Powell (who is a “stubborn moron” apparently) again but Wall Street is now insensitive to the non-stop barrage of juvenile insults.

PCE inflation data, which is closely followed by the Fed, showed a pick-up in retail prices and further complicated the path to interest rate cuts. This took the gloss off the initial earnings exuberance and the indexes ended the session in the red.

Amazon and Apple were next up on the earnings docket. Despite kinda-ok Q2 numbers, Amazon disappointed on projected revenue, sales and profits in its forward guidance. And then there’s the tariffs. Apple did better, reporting its fastest quarterly revenue growth in three years and a renewed expansion of device sales around the world, particularly in China.

Pre-market on Friday, traders had a blitz of tariff announcements to get their heads around (see ARTICLE OF THE WEEK below), including the jacking up of the rate on non-USMCA imports from Canada from 25% to 35%.

They also had to deal with international markets plummeting in response to the levies and a very weak Jobs Report from the US Bureau of Labor Statistics (BLS) showing a dramatic fall in new jobs created along with massive downward revisions to previous months’ data. Manufacturing jobs are being particularly decimated. The unemployment rate ticked back up to 4.2%.

In response to the poor numbers, Trump promptly shot the messenger by firing the head of the BLS. This outrageous move shocked Wall Street which has always trusted BLS-generated economic data, long considered the gold standard in objectivity and accuracy that drives investment decisions around the world.

Stocks plunged and bonds surged as interest rates completely rolled over on the suddenly-strengthened prospect of an interest rate cut in September (see INTEREST RATE EXPECTATIONS below). Amazon stock was brutally punished for its shaky report and even Apple got hit hard. US nuclear submarines are on the move in response to “provocative” statements out of Russia. Adrianna Kugler, Fed governor and voting member of the interest rate-setting committee suddenly resigned under somewhat mysterious circumstances, opening up a seat to be filled by a hand-picked Trump appointee which should prove, to say the least, interesting.

The result was a rotten end to the week for the indexes with tech stocks and Small Caps getting especially beaten down as the extended benefit of the doubt that Wall Street has so far seemed to have given to the administration and the US economy seems to be suddenly crumbling.

I think we had all better buckle up.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

Here is the full list of tariffs by country/region and their effects (as of 08/01/2025)

.. AND I QUOTE ..

“We are all at a wonderful ball where the champagne sparkles in every glass and soft laughter falls upon the summer air. We know that, by the rules, at some moment, the Black Horseman will come shattering through the great terrace doors, wreaking vengeance and scattering the survivors. The ball is so splendid that no one wants to leave but everyone keeps asking “What time is it? What time is it?” But none of the clocks have any hands.”

Adam Smith (no, not that one), “Supermoney”.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Utilities (two biggest holdings: Next Era Energy, Southern Co.) ⬆︎ 1.5% for the week

Last week’s worst performing US sector: Materials (two biggest holdings: Linde, Sherwin Williams) ⬇︎ 6.1% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price fell 2.4% last week, is up 6.1% so far this year and ended the week 2.8% below its all-time record closing high (07/28/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price fell 4.2% last week, is down 2.7% so far this year and ended the week 12.3% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price fell 3.2% last week, is up 15.8% so far this year and ended the week 4.0% below its all-time record closing high (07/23/2025).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.35% (4.42% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.69% (3.91% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.77% (3.95% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.23% (4.40% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.79% (4.92% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.81% (4.92% a week ago)

Data courtesy of the Federal Re…

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Ahead of a big week of earnings reports including a first look at some Big Tech, it was a relatively quiet weekend on the newswires although reports did emerge that the European Union may not necessarily be willing to roll over and have its tummy tickled by the United States, supposedly preparing meaningful retaliatory trade measures in advance of tariff impositions on August 1st.

Stocks opened cautiously higher on Monday morning helped by encouraging Q2 numbers from Verizon, but the indexes flattened out as the session wore on after the non-partisan Congressional Budget Office confirmed that the recently-passed tax and spending bill will indeed add $3.4 trillion to US deficits over the next decade and leave millions of Americans without medical coverage. Tiny gains by the closing bell were still enough however to squeak out new all-time highs yet again, with the S&P 500 closing above 6300 for the first time.

Pre-market Q2 reports on Tuesday were mixed. Coca-Cola handily beat estimates but General Motors confirmed that it sees close to a five billion dollar hit to earnings (almost a third of its annual profits) in the upcoming year due to likely enforced tariff cost absorption. The stock indexes continued to hover nervily around their record levels ahead of the first set of Big Tech earnings the following day.

A broad cooling of market tensions overnight sent stock prices solidly higher and deeper into record territory in New York on Wednesday following vigorous sessions in Asia and Europe.

The announcement of a trade deal with Japan, a burst of optimism about progress in US/EU trade talks and “good cop” Treasury Secretary Bessent throwing cold water on the idea of an early dismissal of Fed chairman Powell (described by “bad cop” Trump earlier in the week as “either evil or stupid”) all served to lower the perceived risk temperature.

Alphabet/Google shares had previously experienced a record-breaking ten day winning streak in the lead-up to the day of the company’s after-market earnings report which helped carry the stock price up by over 14% in just the last three weeks. So traders had set a very high bar on pushing that price any further upwards on the back of Q2 earnings. The company however passed with flying colors, blowing through estimates on revenue and earnings with a boosted rate of largely AI-related capital expenditure.

Things are not so rosy over at Tesla. Quarterly revenues suffered their largest decline in a decade on the back of a massive slump in worldwide vehicle sales and earnings fell short of expectations. In a poorly-received, somewhat incoherent conference call with analysts, Musk warned of more pain to come in upcoming quarters. IBM and Texas Instruments also badly disappointed.

Obviously, Wall Street traders butchered Tesla, IBM and Texas Instruments for their disastrous numbers after the opening bell on Thursday but Google is now clearly sitting at the cool kids’ table with Meta, Nvidia and Microsoft.

Markets decided that, on balance, Wednesday’s developments were just about a net positive, particularly the growing sense that the Japan trade deal may end up being some kind of a framework for a similar EU one that might be put in place before August 1st. Stock indexes closed a little higher, tuning out Trump’s cringe-worthy failed attempt to show up Powell when they met at the Fed HQ.

It was another relatively low-key summer Friday, but despite a downside earnings surprise from Intel resulting in its stock price getting slaughtered, the indexes continued their seemingly endless rally, scoring a fifth consecutive day of new record highs for the S&P 500 which is now closing in on 6400.

An entire week with a new record closing high in stocks every single day? And in the run-up to the busiest week of Q2 earnings and both a tariff deadline and a Fed interest rate-setting meeting next week? Crazy, right? Maybe not.

Q2 earnings so far have been largely positive, economic data has been hanging in there including stable inflation and a solid labor market, traders are starting to get some sense of clarity on tariffs, TACO is still very much alive and well and many of the Wall Street’s key concerns have so far failed to materialize. Small retail investors are diving back in, buying any dips and even triggering a renewed bout of meme stock madness (this time around, think: Kohls, Krispy Kreme, GoPro and Beyond Meat and other heavily-shorted names).

This rally could easily run and run (see .. AND I QUOTE .. below). At some point though (no-one knows when), it will come to an end and we could potentially experience a nasty trap-door of a quick 10%, 20% or more plunge in stock prices as the market corrects a possible short term over-shoot. Long term investors and certainly anyone under the age of 45 investing for retirement need to be ready for this decline.

When I say ready, I mean ready to sit on their hands and do nothing other than keep systematically buying diversified broad market ETFs and maybe buy a bit more if they can afford to do so once stock prices have fallen sharply lower.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

The effects of tariffs are here already, whether you have noticed them yet or not.

.. AND I QUOTE ..

“Bubbles last until they don’t.”

Rob Arnott, founder and chairman of Research Affiliates

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Real Estate (two biggest holdings: American Tower, Prologis) ⬆︎ 2.6% for the week

Last week’s worst performing US sector: Technology (two biggest holdings: Nvidia, Microsoft) ⬆︎ 0.1% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 1.0% last week, is up 8.3% so far this year and ended the week at its all-time record closing high.

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price fell 0.1% last week, is up 1.1% so far this year and ended the week 8.8% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 1.9% last week, is up 19.8% so far this year and ended the week 0.7% below its all-time record closing high (07/23/2025).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.42% (4.40% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.91% (3.88% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.95% (3.96% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.40% (4.44% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.92% (4.99% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.92% (5.00% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday.

* Decided upon by the Federal Reserve Open Market Committee. Used as a basis for overnight interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity loans/lines of credit, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.74%

One week ago: 6.75%, one month ago: 6.78%, one year ago: 6.78%

Data courtesy of: Freddie Mac Primary Mortgage Market Survey

INTEREST RATE EXPECTATIONS:

Where will the Fed Funds interest rate be after the next rate-setting meeting on July 30th?

* Unchanged from now .. ⬆︎ 97% probability (95% a week ago)

* 0.25% lower than now .. ⬇︎ 3% probability (5% a week ago)

What is the most commonly-expected number of r…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Over the weekend we learned of Trump’s proposed 30% tariff on imports from Mexico (non-USMCA) and the European Union, supposedly to take effect on August 1st, with not-so-veiled threats of a rate increase in the case of any retaliation.

Wall Street traders’ strong confidence in the TACO narrative that I talked about in last week’s report wavered somewhat on Monday morning after the weekend’s decrees and stocks sank at the open, following down-sessions in Asia and Europe. The stock indexes recovered but rather listlessly on low trading volume as the session wore on when Trump quickly dialed back the rhetoric with the EU to finish the day a smidge higher, ahead of the week’s inflation data and the Q2 earnings season kickoff.

Just hours after Trump proclaimed that inflation in the United States was dead, the Consumer Price Index (CPI) measure of retail inflation begged to differ when it came out pre-market on Tuesday, showing an acceleration to an annualized rate of 2.7% which was higher than expected, although not by much. Under the hood, price increases in tariff-impacted goods like apparel, footwear, furniture/appliances, toys, sporting goods etc. all jumped disproportionately while more muted inflation in components broadly unaffected by tariffs like housing, insurance and travel etc. were what kept a lid on the overall rate.

Markets once again took the attitude that a lack of really bad news counts as good news these days and stocks initially shifted higher, boosted also by decent Q2 earnings reports from the likes of JP Morgan and Citibank. But the indexes spent the afternoon drifting lower again on fading hopes of interest rate cuts in either of the Fed’s next two meetings to finish fractionally in the red.

More solid earnings from financial and pharmaceutical firms and a benign Producer Price Index (PPI) measure of wholesale inflation experienced by manufacturers pushed stocks into the green on Wednesday morning.

However, lunchtime reports that Trump was on the brink of trying to fire Federal Reserve chairman Powell sent stocks and the US Dollar into a swift tailspin and longer-dated interest rates soared, pushing the 20- and 30-year Treasury rates above 5.00% and the 10-year close to 4.50%. The president quickly backed down during another of his chaotic press conferences but still took the opportunity to refer to the head of his own central bank as a “dummy” and a “knucklehead”. Markets recovered their mojo and stocks closed the session back in positive territory.

Pre-market data for Retail Sales on Thursday showed an unexpectedly strong rebound in consumer spending after two months of declines and drove stocks higher at the open. With the additional tailwinds of highly respectable earnings reports from the likes of Pepsico and Taiwan Semiconductor, both the S&P 500 and the NASDAQ cruised to new all-time record highs again.

Stocks took a breather on a low-volume summer Friday, finishing the session unchanged although earnings reports continued to generally look really good, to cap a slightly positive week. Interest rates pulled back a bit following Wednesday’s spike.

The president’s assault on Fed chairman Powell is unrelenting and intensified last week, with White House advisor Kevin Hassett and former Fed governor Kevin Warsh now both brazenly auditioning for the job, frantically falling over themselves to see who can echo Trump’s views the loudest and become the anointed one. Existing Fed governor Chris Waller is also desperately trying to squeeze himself into the unseemly beauty contest, suddenly scrambling to shift his stance in favor of early interest rate cuts and publicly downplaying tariff concerns.

As JP Morgan’s Jamie Dimon and other high-level financial institution CEOs warned on Tuesday and as markets very briefly made clear on Wednesday, it’s impossible to overstate how badly Wall Street could react to any damage to the US central bank’s sacred independence with the installation of a presidential glove puppet at its head. The US Dollar, in particular, could decline significantly and that would be highly inflationary which would, ironically, make interest rate cuts even more difficult.

Stocks appear to have been rallying to all-time highs on vibes rather than actual fundamentals. The relative nonchalance of financial markets is clearly emboldening Trump to escalate the global trade war and reach for even higher tariffs. The gap between what’s being threatened and what the market expects to happen is vast right now.

Such a degree of disconnect can’t stay in place for long and a non-trivial risk is steadily rising that Wall Street will one day abruptly start to care all of a sudden and if that happens, stock prices could drop sharply and extremely rapidly from these levels.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

“Don’t just hold onto your wallet, digital or otherwise, but run the other way as fast as you possibly can because you are about to be scammed.”

We’ve all seen them. Social media posts, spam text and WhatsApp messages aggressively promoting obscure investments and promising stock riches.

What exactly is going on here?

.. AND I QUOTE ..

“Volatility is going to be a feature, not a bug, of the new world order.”

Jane Fraser, CEO of Citigroup

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Technology (two biggest holdings: Nvidia, Microsoft) ⬆︎ 1.6% for the week

Last week’s worst performing US sector: Healthcare (two biggest holdings: Eli Lilly, Johnson and Johnson) ⬇︎ 2.6% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 0.4% last week, is up 7.2% so far this year and ended the week 0.1% below its all-time record closing high (07/17/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price fell 0.4% last week, is up 1.3% so far this year and ended the week 8.6% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price fell 0.3% last week, is up 17.6% so far this year and ended the week 0.4% below its all-time record closing high (07/03/2025).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.40% (4.42% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.88% (3.86% a week ago)

* 5 YEAR TREASURY ⬆︎ 3.96% (3.93% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.44% (4.35% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.99% (4.87% a week ago)

* 30 YEAR TREASURY ⬆︎ 5.00% (4.86% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.75%

One week ago: 6.72%, one month ago: 6.82%, one year ago: 6.77%

Data courtesy of: Freddie Mac Primary Mortgage Market Survey

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on July 30th?

* Unchanged from now .. ⬆︎ 95% probability (93% a week ago)

* 0.25% lower than now .. ⬇︎ 5% probability (7% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts in 2025?

* ⬌2 (unchanged from a week ago)

All da…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Ahead of a risk-filled big few days in tariff-world, stock markets were jittery at the opening bell on Monday, not helped by yet another massive plunge in the price of Tesla shares on the back of Musk’s apparent dive back into politics. Things got worse for stocks as a chaotic wave of different tariff proclamations began to come out, including for Japan and South Korea which were each slapped with 25% by letter, taking effect on what appears to be the latest new drop-dead date of August 1st following another deadline extension from July 9th (cue: the return of the TACO narrative). The indexes closed the session considerably lower.

Markets seemed largely stuck in place on Tuesday morning, anticipating more tariff shoes to drop. But a rambling, disjointed press conference from Trump cast no new light on anything that financial markets really care about, other than him walking back his claim from just the previous day that the August 1st effective date was not set in stone and grumbling yet again about Fed chairman Powell. The indexes continued to tread water into the close.

The president teased more tariff and trade announcements on Wednesday and stock traders cracked out the popcorn and settled in to watch for them. But the session was kind of a nothing burger as no new trade deals were announced (the UK deal is still the only one that has been officially completed and signed off on) and the latest list of countries to be sent tariff letters was relatively unexciting with rates ranging from 20%-30% for the likes of Iraq, the Philippines and Moldova.

Given very little to work with, stocks eventually just went with the flow of the path of least resistance and drifted higher into the close with Nvidia becoming the world’s first-ever $4 trillion company by valuation and Microsoft’s stock price reaching a new all-time record high.

Thursday proved to be another rudderless session as traders continued to sit around waiting in vain to hear about deals with (or letters to) more impactful regions like Canada, India and the European Union. All they got to hear about, however, was Trump’s 50% tariff threat to Brazil - based not on economics (the US actually has a trade surplus with Brazil) but on his personal disapproval of the domestic matter of the criminal trial of disgraced ex-president and his old chum, Bolsanaro. A small uptick in the S&P 500 by the close was nonetheless enough to record yet another new all-time record high.

By the time markets opened on Friday, Trump had announced a 35% tariff rate on non-USMCA imports from Canada and had mused about 15-20% minimum baseline rate for everyone else. Stocks pulled back somewhat on the day, but rather unconvincingly on very low trading volume, finishing pretty much flat for what was a strangely meandering, directionless week.

While tariff chaos and confusion returned to the stage with the intensification of Trump’s rather obvious “escalate to de-escalate” theater (a 200% tariff on all pharmaceuticals? Really?), in some other ways the fog of uncertainty is lifting for US markets as economic data continues to be robust and domestic legislative and political risk seems to have been mostly taken off the table, at least until the mid-terms next year.

The simple fact is that Wall Street traders don’t currently believe that the announced tariffs will stay at the threatened levels for long, if they even get there in the first place (after all, August 1st may be nothing more than the new April 2nd or July 9th).

Stock markets are still pricing macro-economic and earnings risks at near zero. After totally freaking out in the spring about a tariff-induced slowdown, Wall Street is now pretty much dismissing that danger. The so-called “fear index”, the VIX, last week touched its lowest level since February.

Things get better if: There are a series of trade deals announced over the coming weeks that reduce tariff risks, economic growth remains stable or rebounds, the Fed signals that interest rate cuts may be coming in September and the 10 year Treasury rate stays around or below 4.50% (it’s currently 4.35%), reflecting market calm despite the passage of the tax and spending bill. This is basically a perfect outcome for markets and would almost certainly fuel a move to and beyond the mid-6000s in the S&P 500 (currently 6260).

Things get worse if: TACO is invalidated as Trump becomes emboldened by the relative financial market tranquility and overreaches, higher tariffs come to pass and actually persist, economic growth and the labor market slows further, the Fed fails to cut rates as a result of the tariff uncertainty and bond vigilantes flex their muscles in response to the passage of the deficit-exploding tax and spending bill and push the 10 year Treasury rate meaningfully and sustainably above 4.60%. This outcome would effectively reverse all the positive progress of the past two or three months and put trade-war-driven stagflation back on the table. The most likely result would be a sharp decline in stocks and bonds.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

How many dates should you go on before you start talking about money?

.. AND I QUOTE ..

“Investors may be done with tariffs but I doubt tariffs are done with investors.”

Nancy Lazar, chief global economist at Piper Sandler

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) ⬆︎ 2.0% for the week

Last week’s worst performing US sector: Consumer Defensive (two biggest holdings: Costco, Walmart) ⬇︎ 1.3% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 0.1% last week, is up 6.8% so far this year and ended the week 0.2% below its all-time record closing high (07/10/2025).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 0.8% last week, is up 1.8% so far this year and ended the week 8.2% below its all-time record closing high (11/08/2021).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8000 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price fell 0.1% last week, is up 17.9% so far this year and ended the week 0.1% below its all-time record closing high (07/03/2025).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬌ 4.42% (4.42% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.86% (3.88% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.93% (3.94% a week ago)

* 10 YEAR TREASURY *** ⬌ 4.35% (4.35% a week ago)

* 20 YEAR TREASURY ⬌ 4.87% (4.87% a week ago)

* 30 YEAR TREASURY ⬌ 4.86% (4.86% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.72%

One week ago: 6.67%, one month ago: 6.85%, one year ago: 6.89%

Data courtesy of: Freddie Mac Primary Mortgage Market Survey

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on July 30th?

* Unchanged from now .. ⬇︎ 93% probability (95% a week ago)

* 0.25% lower than now .. ⬆︎ 7% probability (5% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts in 2025?

* ⬌2 (u…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com