Concerns Pressure Markets

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💰Concerns Pressure Markets

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Markets pulled back Tuesday as fresh signs of economic weakness and rising trade tensions unsettled investors. A surprise slowdown in U.S. services activity added to fears that growth is losing steam just as earnings season hits full stride. Meanwhile, tariff threats and speculation around Fed policy are keeping risk appetite in check.

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BIG IDEA 1💡
Cracks Beneath the Surface

Markets Retreat After Record Run

• Rally Loses Steam: The S&P 500 slipped 0.4% Tuesday, snapping its recent climb as weak services data and trade concerns spooked investors.

• All Eyes on the Fed: Traders are now pricing in a high chance of a rate cut in September, betting the Fed won’t ignore signs of a cooling economy.

• Tariffs Cloud the Outlook: New tariff announcements from Trump have reintroduced uncertainty just as optimism from earnings was starting to settle markets.

Trade Tensions Resurface

• Trump Unleashes New Tariffs: Sweeping duties were announced on India, Vietnam, and Switzerland, with pharma and chip tariffs also on deck.

• Shadow Chair Speculation: Analysts say Trump may use a Fed board vacancy to install a loyalist before Powell’s term expires in May.

• Volatility Risk Builds: UBS expects the average U.S. tariff rate to rise to 15%, enough to weigh on growth but unlikely to trigger a recession.

Earnings Paint a Murky Picture

• Palantir Powers Ahead: The data analytics firm posted record revenue, driven by government demand for its AI-enhanced software tools.

• Pharma Beats, Travel Lags: Pfizer raised its full-year outlook, but Marriott flagged ongoing weakness in business travel and government bookings.

• Caterpillar Comes Up Short: Despite stronger-than-expected revenue, the industrial bellwether missed on earnings, stirring concerns about capex trends.

BIG IDEA 2💡
Shifting Tides in Tech & Policy

Crypto Struggles with Headwinds

• August Pullback: Bitcoin slipped below $115,000 amid seasonal weakness and lingering macro uncertainty.

• Leverage Still High: Nearly $1 trillion in long liquidations last week underscored the risks of elevated DeFi leverage.

• Regulatory Shift: The CFTC opened the door to federally regulated spot crypto trading, part of a broader push toward crypto oversight.

AI and Valuation Tensions

• OpenAI Soars in Value: The AI firm is reportedly eyeing a $500 billion valuation after massive user growth and recent fundraising.

• Stargate Delays Raise Eyebrows: Despite momentum, some insiders worry about execution risks tied to the company’s ambitious infrastructure projects.

• AMD Faces Scrutiny: Analysts at Lynx warned AMD’s stock may be overextended, with AI chip optimism running ahead of actual hyperscaler adoption.

Currency Moves and Central Bank Signals

• Rupee Slides on Tariff Talk: The Indian rupee touched a record low before stabilizing, part of a broader wave of currency volatility.

• Rate Cuts Elsewhere: The Reserve Bank of India is expected to cut rates again, mirroring global central bank efforts to boost liquidity.

• Dollar Demand Stays Firm: Persistent geopolitical risk and safe-haven flows are helping the U.S. dollar maintain strength across major pairs.

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Today’s Inflation Rate: 2.41% (relatively down)