Daily Newsletter 8/5/25

U.S. stock futures are pointing slightly higher after a strong rally on Monday.

Markets are closely watching for new U.S. tariffs set to take effect on Thursday, impacting dozens of countries.

The market appears confident that the bull run remains intact, a perspective with which we concur.

We have concluded that the primary positive takeaway from the recent employment report is the prospect of imminent Federal Reserve rate cuts, likely beginning in September.

As a result, market participants largely disregarded prevailing risks in yesterday’s session.

We will need to approach mean reversion strategies and any market dips with flexibility and adapt our actions accordingly.

Positive earnings reports thus far have contributed to prevailing market optimism. However, while the market has generally responded favorably to these results, it is important to recognize that this sentiment has been driven predominantly by large-cap companies. In contrast, earnings from smaller-sized companies have not demonstrated comparable strength.