Daily Newsletter 9/2/25
Welcome to the four-day trading week.
Stock-index futures are slightly lower this morning ahead of the first full trading day of a shortened four-day trading week following the Labor Day holiday. International equity markets were mostly down, reflecting profit-taking after modest gains on Monday. Safe-haven gold continues to hover near record highs as investors weigh the implications of recent developments in trade policy, particularly after a federal appeals court ruled that President Trump exceeded his authority in imposing tariffs. There are also significant moves not only in gold stocks but across a broad range of gold-related instruments, reflecting strong investor interest in the sector. With limited economic data scheduled this week, market participants remain cautious, awaiting greater clarity ahead of the upcoming Federal Open Market Committee (FOMC) meeting in mid-September, which remains a key debate point for future monetary policy. Geopolitical tensions also persist, notably surrounding a summit in China where new alliances and trade rules are expected to be redefined. For example, India’s decision to strengthen energy ties with Russia introduces a significant shift in the global geopolitical landscape, likely to have lasting effects on international relations and economic dynamics in the years ahead.
The ISM Manufacturing PMI for August is scheduled for release today at 10:00 a.m. EST. The index is forecasted to rise to 53.3 from the previous 49.8 reading in July. This figure will provide key insights into the manufacturing sector's expansion or contraction, with a reading above 50 indicating growth.
As we have been discussing recently, the number of factors influencing the future trajectory of global markets is extraordinarily complex. Beyond the evident structural shifts, global market dynamics are undergoing a profound transformation, driven by more than just the ongoing trade conflicts, fragmentation, and tariffs. It is critical to recognize that the role of artificial intelligence (AI) in these developments warrants careful and thorough analysis. AI’s impact is multifaceted, affecting productivity, supply chains, competitive landscapes, and even geopolitical strategies. Navigating this multi-dimensional landscape requires a nuanced understanding of both traditional economic forces and emerging technological disruptions, which together will shape the course of markets and economies in the medium to long term.
Our outlook for the U.S. economy has remained relatively steady in recent months. We anticipate a gradual deceleration as ongoing inflationary pressures continue to dampen consumer spending. Globally, many industrialized nations also face significant challenges. For instance, Europe must undertake substantial reconstruction efforts to avoid falling behind in the evolving global trade landscape marked by heightened competition and fragmentation. U.S. tariffs continue to affect export flows and trade relationships worldwide, adding to uncertainty. Meanwhile, China is expected to maintain moderate growth despite these headwinds. Over time, tariffs are likely to be passed on to consumers, intensifying demand constraints and potentially hampering economic expansion. While our overall perspective remains consistent, we have aligned more closely with the consensus that a Federal Reserve rate cut in September appears increasingly likely. Nevertheless, we remain cautious about the timing and extent of further reductions, given uncertainties around tariffs' full impact on inflation and the broader economy.