The Levers of Trade

Good Morning - Tariffs used to be the diplomatic equivalent of a stern letter. Now they’re wielded like crowbars at a corporate earnings call. The White House’s latest “reciprocal” import taxes may feel like déjà vu, but this round comes with tighter supply chains and fewer places to duck.

Wall Street shrugged on the surface. Apple rallied, McDonald’s fried expectations, but underneath, bond yields flinched and services PMI tiptoed past contraction. Meanwhile, AI spending is back in vogue, and DraftKings booked a winning quarter. Apparently, training algorithms and betting slips are this cycle’s defensive plays.

Keep an eye on margin compression, especially for retailers juggling inventory and import math. And don’t miss the quiet stories: Redwire’s plunge and Singapore banks’ caution tell us more than the index moves.

As always, let me know what you're thinking with our poll below. Let’s cut through the noise. Here come your Morning Bullets.

– Truly yours, Fred Frost

📈 Yesterday's Market Recap

U.S. equities ended the day with a clear upswing, led by a tech‑focused rally that lifted indexes amid mounting tariff concerns and soft economic data. While growth sectors surged, small caps and defensives showed mixed results.

• Tech-Heavy Bounce Led by Apple: Apple’s 5.1% rally on news of a $100 billion U.S. investment plan helped drive the Nasdaq toward record territory as the Nasdaq jumped 1.2% and the S&P 500 gained 0.7%. → AP News
• Tariff Tensions Loom but Markets Hold Steady: New tariffs on India and Brazil added pressure, yet investor sentiment remained resilient, supported by expectations of a September rate cut. → Reuters
• Dow Lifted by Apple & McDonald’s Strength: Gains in Apple and McDonald’s accounted for nearly 25% of the Dow’s 118‑point rise, underscoring the outsized role of large-cap names. → MarketWatch
• Earnings Divergence Widens: Shopify and McDonald’s outperformed on strong sales, while Super Micro, AMD, and Disney weighed on sentiment after mixed results. → AP News
• Stagflation Fears Creep In: The ISM services PMI barely stayed in expansionary territory at 50.1, with soaring input prices stoking stagflation concerns and briefly rattling markets intraday. → Wall Street Journal

📉 Daily Performance Snapshot

🔭 What to Watch Today

Investors wake to a market that’s humming—not roaring—as tariff aftershocks ripple and earnings season drags its feet toward the exit. Watch the noise, but trade the signal.

💡 Opportunity Watch

Markets are busy chasing shiny narratives — but real positioning signals are hiding in the dull corners of macro, regulation, and quietly turning industries. Eyes off the headlines, please.

• Luxury Housing Fatigue: Billionaires are slashing prices on luxury real estate, not because they have to — but because they finally think it’s dumb money. → Fortune
• Asian Bank Margins Under Pressure: Singapore’s biggest banks are feeling the squeeze as U.S. tariffs and global rate jitters put stress on a long-stable sector. → Fortune Asia
• Niche Aerospace Supply Chain Signals: Redwire’s earnings collapse is a signal: not every space stock is riding the exploration boom — some are suffocating under defense budget shifts. → Benzinga Markets

The Crypto Prediction That Haunts Me

My critics think I’m nuts for sharing this. But I’ve discovered something massive about the 2025 crypto cycle. That’s why I wrote a book… and I’m giving it away at no cost. If I’m right, this could be the most important thing you’ll read all year.

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🔥 The Big Bullet

Trump’s “Reciprocal” Tariffs Take Effect — Markets Yawn, Supply Chains Don’t

What happened: President Trump’s long-signaled “reciprocal” tariffs officially took effect Thursday, applying as much as 100% duties on semiconductors, electronics, autos, and consumer goods from more than 60 nations. The move follows recent Oval Office discussions with Apple’s Tim Cook and aims to rebalance trade relationships on paper. Reaction from U.S. trading partners has been muted but wary. → CNBC

Why it matters: The tariff action may be framed as a fairness play, but its real implications live in cost pass-throughs, margin pressures, and retaliatory whispers. Markets may be tuning out the noise for now—note the Nasdaq’s strong day, but supply chains are already shifting underfoot. The policy rhetoric is nationalist, but the execution still runs through multinational P&Ls. More than fiscal posturing, this is a test of how much political friction globalized systems can still absorb without mispricing risk or stalling capital formation.

What’s next: Watch for margin compression in import-heavy sectors, particularly retail and hardware. Exporters in Asia, Mexico, and Europe are likely to pivot product strategy or pricing, and sentiment in bond markets may shift if tariffs ignite inflation expectations. Expect corporates to mention tariffs more in Q3 guidance—particularly in tech and durable goods. Investors should stay nimble around consumer discretionary plays, transportation, and global manufacturers with embedded Asia exposure.

• Trump announces 100% tariffs on chips and semiconductors – Fortune
• Tariffs cloud Asian export outlook as U.S. trade stance hardens – ABC News

These 3 Stocks Are Off the Radar — For Now

XELA’s 300% move came fast. But early chart signals and news flow gave traders a head start. We’ve identified 3 new names that look similar — right before the move.

This is your early window — before the crowd catches on.

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🧭 Policy & Market Ripples

• ICE Director Blames Left for 800% Spike in Agency Attacks: Regulatory tensions around border enforcement are heating up, with potential spillover into funding and federal oversight debates. Institutional credibility, not rhetoric, will shape long-run investor confidence in immigration-linked policy sectors. → Daily Signal
• JD Vance to Pressure Redistricting Talks in Indiana: Mid-cycle political restructuring isn’t just a partisan tool — it influences municipal bond risk, infrastructure prioritization, and public-sector capital flows. Watch for downstream fiscal implications as GOP-led states reconsider district lines. → AP News
• Xi Jinping’s Planned City Accelerates: China’s “city of the future” isn’t just symbolic — it’s a bellwether for state-led urbanization, construction booms, and capital controls shaping Asian REITs and commodity demand. Ignore it at your portfolio’s peril. → The Economist