Get Smart.

The shortage of any important news over the weekend was highlighted by the fact that the story of Trump’s Lake Ontario stunt grabbed the headlines even as polls emerged to show that two-thirds of Americans do not approve of his tariff policy, with the midterms around the corner. This is in stark contrast to Canada where the more that Prime Minister Carney sticks it back to the US, the more popular he becomes with his electorate. These opposing political dynamics will definitely have an impact on the short term trajectory of the US/Canada relationship. A resumption of US strikes in the Strait of Hormuz and the inevitable Iranian response triggered an oil price bounce and a moderate stock selloff on the final trading day of August on Monday. Nonetheless, the month still proved to be a positive one for the S&P 500 and the NASDAQ indexes, which both enjoyed their best Augusts since 2021. Interest rates jumped across the board with the probability of Fed Funds Rate increases before year-end continuing to rise. The highly impactful 10-year rate surpassed 4.75% for the first time in 20 months and mortgage rates reached another 2026 peak (see AVERAGE 30-YEAR FIXED MORTGAGE RATE below). The global bond rout deepened on Tuesday as long term interest rates around the world reached more multi-decade highs on growing inflation fears. Long term rates in the US rose back above where they were when Treasury Secretary Bessent made his clumsy and visibly unsuccessful intervention attempt to bring them down just a couple of weeks earlier. September is historically the worst month of the year for stocks and everything that did well in August - Bitcoin, gold and stocks - fell hard as the calendar flipped over. Pretty much the only thing that moved higher on what was a rough day all round for global financial markets was the price of oil, despite Trump’s dismissal of the enduring conflict which is rapidly depleting US military hardware as just “a little war”. Dell impressed Wall Street with its Q2 earnings and the stock surged on Wednesday. Exchanges of fire intensified in Iran, further spiking oil prices back above $95. US interest rates, however, finally took a breather from their seemingly relentless march higher and the stock indexes closed lightly in the green for the session. With attention starting to turn to Friday’s unemployment numbers, interest rates pulling back from recent highs (following FOMC voting member Christopher Waller’s surprise comments that he saw promising signs of disinflation) and no coherent or credible developments in the war or tariffs, stock indexes seemed comfortable moving very solidly higher on Thursday, although chip-makers continued to flounder. On Friday, we got to see the August Jobs Report which showed a sharp reversal from the previous month’s shockingly bad release with job creation crushing estimates this time around, but the overall unemployment rate holding at 4.1%. The good news for US workers was not so great for stocks, as the data was deemed to somewhat increase the chances of one or two Fed Funds Rate hikes this year. Weirdly, Trump reacted by citing the blowout report in a bizarre social media post to further pressure the Fed to lower interest rates which, of course, is contrary to all established sensible economic theory. If the voting members of the FOMC don’t “get smart” and “be patriots” by cutting interest rates, he said, he will cut off all two-way trade with every one of the estimated 97 countries around the world (including China, Mexico, Germany and Japan) that have a trade surplus with the US. The combination of an increased likelihood of Fed rate hikes and Trump’s outlandish threats initially sent stocks spinning lower before gradually clawing their way back on to finish the day largely unchanged going into the long weekend. Over the course of the week, the S&P 500 and NASDAQ-100 large cap indexes, US small caps and international stocks all made gains. Anglia Advisors clients are now able to access customized model portfolios in managed investment accounts which exclusively use ETFs, many of which carry no management fee - contact me for more details. If you are not yet a financial planning or investment management 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: There have been 228,000 newly-minted millionaires in the US since the end of March. Here’s the very simple way they did it. .. AND I QUOTE: “Fighting drags on with no end and no winner in sight. The wider Middle East is now an arena for war and surging oil prices are taxing the global economy.” Bloomberg economic analyst note LAST WEEK BY THE NUMBERS: * SPY is a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. * Up by 0.5% last week * Down by 0.1% over the past month * Up by 1.7% over the last three months * Up by 12.7% so far this year * QQQ is a US Large Cap ETF, tracks the NASDAQ-100 index, made up of the largest 100 non-financial companies listed on the tech-heavy NASDAQ exchange. * Up by 0.4% last week * Down by 0.7 over the last month * Down by 2.9% over the last three months * Up by 17.3% so far this year * IWM is 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. * Up by 0.8% last week * Down by 1.9% over the past month * Up by 1.4% over the last three months * Up by 19.0% so far this year * VXUS is an International 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. * Up by 0.8% last week * Up by 2.3% over the past month * Up by 2.5% over the last three months * Up by 15.5% so far this year * BRENT CRUDE OIL .. $95.85 (up by 6.0% last week) * GOLD .. $4,477 (up by 0.3% last week) * BITCOIN .. $ 79,890 (up by 2.7% last week) Data courtesy of finviz.com as of Friday’s close. INTEREST RATES: * FED FUNDS RATE * 3.625% (unchanged from a week ago) * PRIME RATE ** 6.75% (unchanged from a week ago) * 3 MONTH TREASURY 3.91% (3.90% a week ago) * 2 YEAR TREASURY 4.37% (4.34% a week ago) * 5 YEAR TREASURY 4.54% (4.48% a week ago) * 10 YEAR TREASURY *** 4.78% (4.73% a week ago) * 20 YEAR TREASURY 5.25% (5.21% a week ago) * 30 YEAR TREASURY 5.24% (5.22% a week ago) Data courtesy of the Federal Reserve and the Department of the Treasury as of Friday’s market close. * Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. 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. Moving in lockstep with the Fed Funds interest rate, this measure is used as a basis for determining certain consumer loan interest rates such as credit cards, auto loans, personal loans, home equity loans/lines of credit and securities-based lending. *** Used as a basis for determining mortgage interest rates. AVERAGE 30-YEAR FIXED MORTGAGE RATE: * 6.71% Data courtesy of the Federal Reserve Bank of St. Louis. INTEREST RATE EXPECTATIONS: Where will the Fed Funds interest rate be after the next rate-setting meeting on September 16th? * 0.25% higher than now .. 40% probability (41% a week ago) * Unchanged from now .. 60% probability (59% a week ago) * 0.25% lower than now .. 0% probability (0% a week ago) With three more rate-setting meetings this year, what is the most commonly-expected number of remaining Fed Funds interest rate changes in 2026? * Two increases, 41% probability (a week ago: two increases, 40% probability) Data courtesy of the CME FedWatch Tool and is derived from futures market pricing as of Friday’s market close based on the current Fed Funds interest rate of 3.625%. FEAR & GREED INDEX: “Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffett. Data courtesy of CNN Business as of Friday’s market close. The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand. Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment. Extreme Greed readings can be associated with possibly too-frothy prices and a sense of “FOMO” with investors chasing rallies in an excessively risk-on environment . This overcrowded positioning leaves the market potentially vulnerable to a sharp downward reversal. 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