Fed Holds Fire as Tariff Smoke Rises

Good Morning, services were supposed to be the economy’s cruise control. Yesterday, they tapped the brakes.

The ISM readout suggests the sector’s momentum is cooling, and the bond market noticed. Yields slipped, the Fed’s rate-cut camp got louder, and equity traders started eyeing defensives again.

Add in tariff talk, sticky wage data, and tech’s ongoing tug-of-war with valuations, and you’ve got a market looking for the next foothold.

As always, your feedback at the end is appriciated.

Let’s cut through the noise. Here come your Morning Bullets.

– Truly yours, Fred Frost

📈 Yesterday's Market Recap

Markets digested a mix of heavy policy news and corporate earnings on August 7 — newly imposed tariffs weighed on the S&P 500 and Dow, while tech and earnings surprises lent support, resulting in mixed index performance.

• Nasdaq Holds Up, Other Indexes Slip: The Nasdaq rose modestly (+0.3%), while the S&P 500 and Dow edged lower (-0.1% and -0.5%, respectively). → Associated Press
• Tariffs Implemented, Tech Rally Emerges: New reciprocal tariffs took effect, yet markets rallied on optimism from Apple’s planned U.S. expansion and Fed’s dovish tone. → Reuters
• Duolingo and DoorDash Jump Pre-Market: Duolingo surged nearly 25% and DoorDash rose 9% in pre-market following strong Q2 earnings and raised guidance. → Investopedia
• S&P Futures Rise on Broad Strength: Futures climbed on upbeat corporate earnings and reduced volatility, with Tesla and Google nearing technical buy points. → Barron’s
• Market Rally Masks Underlying Weakness: Despite stock strength, soft jobs data and cooling services growth highlight economic fragility and raise stagflation concerns. → MarketWatch

📉 Daily Performance Snapshot

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🔭 What to Watch Today

Markets woke up to a strong coffee of earnings beats, political curveballs, and a whiff of Fed policy déjà vu. Keep your eyes on the signals that actually matter before you place your bets today.

💡 Opportunity Watch

While the tape is busy chasing headlines, there are quieter shifts setting up asymmetric trades — the kind you only spot if you’re looking past the noise.

• TSMC Supply Chain Fallout: Japan’s Tokyo Electron faces political and client pressure after a TSMC secrets leak — a reminder that geopolitical tech risk isn’t just a chipmaker story. → Fortune
• Stablecoin Payments in the Wild: Jack Dorsey’s Block signals willingness to enable stablecoin transactions via Cash App — a small step with potentially big implications for payment rails. → Stocktwits
• Gold Tariff Revenue Math: The U.S. expects $50 billion a month from tariffs, but shifting bullion flows may tell a different story about sustainability and trade balance. → Yahoo Finance

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🔥 The Big Bullet

U.S. Tariffs Hit Gold Bars, Forcing a Reroute of Bullion Flows

What happened: The United States has imposed new tariffs on imports of one-kilogram and 100-ounce gold bars, a move that took effect recently and was reported by the Financial Times. This decision by US Customs and Border Protection targets gold bars primarily exported from Switzerland, a key global hub for gold refining, as part of reciprocal tariffs enacted by President Trump. The tariffs have led to an immediate surge in gold futures prices, hitting a record high of $3,534.10 per ounce on Friday. This escalation comes amid broader trade tensions, with the US aiming to address perceived imbalances in gold trade routes. → Mining.com

Why it matters: These tariffs could disrupt established global bullion flows, particularly affecting Swiss exporters who dominate the production of these specific gold bar sizes, potentially raising costs for US buyers and investors. The move heightens trade tensions, boosting gold's appeal as a safe-haven asset and contributing to its price rally amid market uncertainty. Broader implications include potential shifts in supply chains, with refiners possibly rerouting exports or facing higher premiums in New York futures over London spot prices. This could also signal further protectionist policies, impacting commodities markets and international relations with trading partners like Switzerland.

What’s next: Monitor responses from Swiss gold refiners and exporters, who may seek alternative markets or challenge the tariffs through diplomatic channels. Keep an eye on gold price volatility, as ongoing trade disputes could drive further gains or corrections in futures and spot markets. Watch for potential retaliatory measures from affected countries, which might escalate into wider tariff battles impacting other luxury goods or commodities. Finally, observe US policy updates from the Trump administration, as these could expand to other gold products or influence Federal Reserve decisions on interest rates. → Youtube

• How Gold Prices React to Tariff Changes Globally? – Markets.com
• Gold Price History: Highs and Lows – Investopedia

🧭 Policy & Market Ripples

• Commerce Moves to Redefine U.S. Census Count: The Department of Commerce plans to adjust census methodology to count only legal residents, a shift that could alter congressional apportionment and federal fund flows for decades. Markets won’t price this in until population-based funding formulas start moving real dollars. → Daily Signal
• California–Texas House Seat Standoff: California is scrambling to plan an unscheduled election amid a redistricting dispute with Texas—political brinkmanship that leaves certain districts without representation and complicates federal vote counts. For investors, instability here can stall legislation tied to budget cycles. → Associated Press