Warfare.

Open economic warfare broke out between the US and its historically closest ally and second-largest trading partner over the weekend as Canada terminated trade negotiations in response to having been “attacked” by the US, according to Prime Minister Carney who openly said that “America is trying to break us, so it can own us”. He effectively told the Trump administration where to stick its 50% tariff policy and promised to match American levies “dollar for dollar”. It was a sneakily important week for financial markets. With no end in sight to the quagmire that is the Iran war, oil prices remain generally elevated but all eyes were on Nvidia’s earnings scheduled for Wednesday, book-ended by major speeches from Treasury Secretary Bessent and Fed chairman Walsh. The recent interest rate volatility calmed on Monday, with traders perhaps thrown by Trump’s truly bizarre threat to use the US military to control the bond market. Bessent announced a so-called “Economic D-Day” which in the end was nothing more than a warning that countries and companies might possibly face sanctions in the future if they don’t stop doing business with Iran and was squarely aimed at China. Stock indexes fell back, dragged down by another slide in Big Tech/AI names in another typical summer low trading volume session. Stocks and bonds bounced back on Tuesday led by some Big Tech/AI dip-buying and reports of a plan to re-staff US embassies in the Middle East, which signaled an anticipation of no further military escalation, sending oil prices tumbling. Consumer confidence and optimism remains in the toilet according to the latest data but, frankly, that is not even news any more and it had little impact on anything. Stocks and bonds barely reacted on Wednesday to the announcement of a still-sticky 3.7% annualized PCE inflation rate and the latest Q2 GDP estimate of 1.5% US economic growth. Meta settled its social media addiction trial, accepting over $16 billion in penalties but the stock initially rebounded on a sense that the company had dodged a potentially much larger bullet. Nvidia’s earnings are considered a barometer for the whole AI trade and we got to see them after the close with the stock price coming off a recent run of seven straight days of losses, its worst streak since 2022. Shares had fallen in response to six of its eight previous reports including the last four, but the trend was bucked this time around as revenue, earnings and especially forward guidance all blew through estimates and when the market opened on Thursday the stock price of the largest component of the S&P 500 (>7% of the index) and the NASDAQ-100 (>8%) soared, swiftly adding almost half a trillion dollars in value and pulling stock markets nicely into the green for the session. It was ably assisted by Salesforce and Crowdstrike who also announced solid earnings and roared higher. Fed chairman Warsh got a shot at redemption and a possible restoration of at least some of his tattered credibility following his ghastly press conference earlier this month with a speech at the central bank’s annual Jackson Hole retreat on Friday. Although he failed to even once reference the colossal national debt (see below) and stopped short of saying whether he would support raising the Fed Funds Rate at September’s meeting, markets were somewhat satisfied after his speech that he had finally got the memo about expressing inflation and interest rate concerns. But stocks (especially interest rate-sensitive small caps) and bonds drifted lower as the odds on imminent Fed rate hikes solidified (see INTEREST RATE EXPECTATIONS below). The S&P 500 and NASDAQ-100 large cap indexes as well as international stocks ended the week with gains but US small caps finished lower. Some other things I’m thinking about .. * The Treasury’s Daily Statement showed current outstanding US national debt now at $40.05 trillion (that’s $40,050,000,000,000), a level i) that has doubled in less than a decade, ii) works out to be roughly $117k per American iii) is growing by ~$6-$7 billion per day, more than half of which is interest payments on debt already issued, iv) is worth more than the value of all the gold ever mined in history and iv) would take 110 years to pay off even if a billion dollars was repaid every day. The interest expense alone is running at over a trillion dollars a year, which consumes about 19% of the entire annual revenue generated by federal taxes and exceeds the total US defense budget. 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: Young adults have completely lost faith in real estate as an investment. It’s all about stocks. .. AND I QUOTE: “It’s a little bit like paying your mortgage with your credit card. It can work for a while, but eventually the bill comes due.” James Sullivan, Co-Head of Global Fundamental Research, JPMorgan Chase on Treasury Secretary Bessent’s plan for the U.S. government to essentially buy its own debt to try to artificially push long term interest rates lower ahead of the midterm elections. LAST WEEK BY THE NUMBERS: * 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. * Up by 0.8% last week * Up by 3.7% over the past month * Up by 1.7% over the last three months * Up by 12.8% so far this year * QQQ, 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 1.4% last week * Up by 4.8% over the past month * Down by 3.0% over the last three months * Up by 16.6% so far this year * 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. * Down by 1.1% last week * Up by 1.1% over the past month * Up by 1.8% over the last three months * Up by 20.2% so far this year * VXUS, 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 0.4% last week * Up by 3.2% over the past month * Up by 1.7% over the last three months * Up by 16.0% so far this year * BRENT CRUDE OIL .. $88.25 (down by 5.2% last week) * GOLD .. $4,505 (down by 4.0% last week) * BITCOIN .. $77,680 (down by 0.1% 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 3.90% (3.88% a week ago) * 2 YEAR TREASURY 4.34% (4.24% a week ago) * 5 YEAR TREASURY 4.48% (4.43% a week ago) * 10 YEAR TREASURY *** 4.73% (4.74% a week ago) * 20 YEAR TREASURY 5.21% (5.25% a week ago) * 30 YEAR TREASURY 5.22% (5.27% 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: * 6.66% One week ago: 6.65%, one month ago: 6.64%, one year ago: 6.56% 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 .. 58% probability (40% a week ago) * Unchanged from now .. 42% probability (60% 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, 40% probability (a week ago: one increase, 45% 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%. PERCENT OF S&P 500 STOCKS ABOVE THEIR OWN 200-DAY MOVING AVERAGE: * 69% One week ago: 70%, one month ago: 65%, one year ago: 42% Data courtesy of barchart.com as of Friday’s market close. This widely-used technical measure of market breadth is considered to be a very robust indicator of the overall health of the S&P 500 index. A high percentage (above 70%) generally suggests broad market strength and a bullish trend, while a low percentage (below 30%) may indicate market weakness and a bearish trend. 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. WWW.ANGLIAADVISORS.COM | [email protected] | CALL OR TEXT: (646) 286 0290 | FOLLOW ANGLIA ADVISORS ON INSTAGRAM This material represents a highly opinionated, speculative assessment of the financial market environment based on assumptions and prevailing information and data at a specific point in time and is always subject to change at any time. Although the content is believed to be correct at the time of publication, no warranty of its accuracy or completeness is ever given. 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