From Reuters:

A new minister in Albania charged to handle public procurement will be impervious to bribes, threats, or attempts to curry favor. That is because Diella, as she is called, is an AI-generated bot.

Prime Minister Edi Rama, who is about to begin his fourth term, said on Thursday that Diella, which means "sun" in Albanian, will manage and award all public tenders in which the government contracts private companies for various projects.

All ahead full: Rate cuts are on the agenda for each of the Fed’s next four meetings, economists at Morgan Stanley predict, with quarter point downshifts in September, October, December and January bringing the benchmark funds rate to a 3.25% to 3.5% range by early 2026. “Softer inflation and weakening labor market conditions give the Fed room to move quickly toward a neutral policy stance,” Michael Gapen et al. write.

Mr. Market has largely come around to that view, with interest rate futures now predicting 84 basis points of cuts by January, compared to 71 basis points a month ago. Corporate America is also on board, with allocations to Treasury debt due in more than 90 days at their highest since 2018 according to Clearwater Analytics. 

In turn, average holdings of cash and cash equivalents such as money market funds ebbed to 27% of investable assets at the end of August from more than 40% in 2021. “If we see a lowering of rates and a return to a normal, upward-sloping yield curve, that would probably prompt more companies to. . . extend duration and marginally take credit risk,” Joseph Neu, CEO and eponym of advisory firm NeuGroup told Bloomberg.

Yet as a jobs-focused Fed (under the watchful eye of E-Z money aficionado President Trump) prepares to wield its monetary scissors, the already-hairy inflation picture grows increasingly unruly. Consumer prices rose at a 0.38% sequential clip in August, the Department of Labor relayed Thursday, pushing the year-over-year gauge to 2.9% from 2.7% in July and 2.3% in April.  September CPI is now tracking at 0.39% per the Cleveland’s “nowcast,”  which would put annual price growth above 3% to match the hottest reading since June 2024.

Changes to the tax code could serve to accelerate the unwelcome trend. As David Kelly, chief global strategist at JPMorgan Asset Management, relayed on Aug. 25, the Internal Revenue Service has opted not to amend the W2 or 1099 forms for the current calendar year in response to the recently passed One Big Beautiful Bill Act. The law features array of tax cuts backdated to take effect on Jan. 1 of this year even as withholding schedules have remain unchanged. 

Accordingly, “we will see an even larger crop of personal income tax refunds in early 2026 than was anticipated when the OBBBA was passed,” Kelly pointed out, estimating that the country’s 104 million taxpayers will see reimbursement of nearly $3,300 on average.“These higher income tax refunds should work much like a new round of stimulus checks, adding to consumer demand and inflation pressures early next year.”

Equating those givebacks with sugar rather than nourishing protein, Kelly added thus: “when their effects fade, it is quite possible that Washington will provide yet another round of stimulus to boost demand ahead of the mid-term elections. For investors, this underscores the limited potential for a sustained decline in long-term interest rates.”

Treasurys came under moderate pressure with yields rising by three to five basis points across the curve, while stocks cruised through a sleepy session with the S&P 500 finishing unchanged and the Nasdaq slightly higher.  WTI crude ticked towards $63 a barrel, gold edged higher to $3,643 per ounce, bitcoin jumped above $116,000 and the VIX stayed below 15.

- Philip Grant

From The Wall Street Journal:

Public companies in the U.S. have dutifully shared financial results with investors every three months for the past 50-plus years. A new proposal hopes to change that.

The Long-Term Stock Exchange plans to petition the Securities and Exchange Commission to eliminate the quarterly earnings report requirement and instead give companies the option to share results twice a year, the group told The Wall Street Journal. 

It says the idea would save companies millions of dollars and allow executives to focus on long-term goals instead of worrying about hitting quarterly targets or prepping for earnings calls. “We hear a lot about how it’s overly burdensome to be a public company,” said Bill Harts, the exchange’s chief executive officer. “This is an idea whose time has come.”

The tally of publicly-traded U.S. companies stood at about 3,700 in late June per the Center for Research in Security Prices, down 17% over the past three years and roughly half that seen in 1997.

Turn those machines back on!  The Organization of the Petroleum Exporting Countries is back on the front foot, with the cartel (alongside non-members such as Russia and Mexico) unveiling plans to increase production by 137,000 barrels per day (bpd) beginning next month. 

The Sunday announcement, which followed a virtual meeting that wrapped up in a mere 11 minutes, caught some observers off guard, as OPEC+ begins to reverse 1.65 million bpd in supply cuts which were supposed to extend through 2026. For reference, global oil demand stands at roughly 104 mbpd per May estimates from the International Energy Agency.

“The barrels may be small, but the message is big,” Jorge León, former OPEC official turned analyst at Rystad, told Reuters. “The increase is less about volumes and more about signaling. OPEC+ is prioritizing market share even if it risks softer prices.”

Soft is the watchword in the energy patch these days, with Brent crude prices languishing near $67 a barrel, down 11% so far this year and nearly 50% since Russia launched its invasion of Ukraine in early 2022. Today’s sub-optimal conditions have spurred substantial industry belt-tightening, illustrated by last Thursday’s bulletin that ConocoPhillips plans to dismiss up to 25% of its approximately 13,000-strong workforce.

“This isn’t just a Conoco problem,” Kim Edwards, head of independent producer Latigo Petroleum, told the Financial Times today. “It’s a flashing red warning light for the entire U.S. oil and gas industry.”  At Brent prices below $60 per barrel, none of the western oil majors (including Exxon, Chevron, Shell and BP) would be able to cover their current investment plans alongside Wall Street’s anticipated pace of shareholder dividend and stock buybacks, analysts at Wood Mackenzie warn. Global oil and gas capital spending, meanwhile, will ebb to $341.9 billion this year, the research firm predicts, down 4.3% from 2024 to mark the first such downshift since the plague year.

Alongside that spending slowdown, secular changes could serve to support the price of black gold, as Bloomberg flags waning production potential from a trio of prominent, low-cost oil fields, including Guyana’s Stabroek Block, Brazil’s pre-salt oil region and the Permian basin in Texas. That tryptic, which boasts breakeven oil prices of approximately $36 to $45 per barrel, has provided 6.1mbpd in combined production growth over the past decade, providing virtually all of the 6.7% increase in world oil supply over that stretch. “Some of these cheap resources could deplete or, at least, run low by the end of this decade,” Bloomberg notes.

Might offshore players help fill the void? One resource-focused investor is making a concentrated bet on that outcome.  See “Man with a big idea” in the Aug. 1 edition of Grant’s Interest Rate Observer for the bull case on a shallow jack-up operator which boasts a youthful fleet and changes hands “at a modest multiple on what could prove to be trough earnings.”  Auspiciously, the firm guided its full-year adjusted Ebitda forecast above sell-side consensus during its second-quarter earnings call last month.   

Stocks retained their bullish momentum as the S&P 500 enjoyed a late uptick to advance 0.3% and carve out another round of fresh highs, while Treasurys paused their recent rally ahead of August PPI and CPI tomorrow and Wednesday, respectively, with 2-year yield rising five basis points to 3.54% and the long bond ticking to 4.72% from 4.69% Monday. WTI crude edged towards $63 a barrel, gold consolidated recent gains at $3,631 per ounce, bitcoin stayed around $111,000 and the VIX likewise remained just above 15.

- Philip Grant

From CNBC:

The average rate on the 30-year fixed mortgage dropped 16 basis points to 6.29% Friday, according to Mortgage News Daily, following the release of a weaker-than-expected August employment report.

It marks the lowest rate since October 3 and the biggest one-day drop since August 2024. Rates are finally breaking out [from] the high 6% range, where they’ve been stuck for months. . .

The drop is a major change from May, when the rate on the 30-year fixed peaked at 7.08%. It’s big for buyers out shopping for a home today, especially given high home prices.

Flattery is the sincerest form of imitation, or something like that. “Tech CEOs take turns praising Trump at White House dinner,” as The Wall Street Journal described Thursday’s gathering, whereby Silicon Valley’s leading lights helped mark First Lady Melania Trump’s  artificial intelligence education initiative.  

“Thank you for being such a pro-business, pro innovation president,” OpenAI boss Sam Altman told Trump. Pointing to his firm’s $600 billion domestic manufacturing outlay announced in August, Apple CEO Tim Cook addressed the commander-in-chief thus: “I want to thank you for setting the tone such that we can make a major investment in the U.S. and have some key manufacturing here. I think it says a lot about your leadership and focus on innovation.”

Demonstrating the efficacy of that fawning praise-dispensation strategy, Trump declared that his administration is “making it very easy” for big tech to construct the data centers powering the AI revolution, “in terms of electric capacity and. . . getting your permits.”

Securing Uncle Sam’s imprimatur is no small achievement, considering the AI buildout’s eye-watering cost. The sextet of Amazon, Microsoft, Alphabet, Google, Meta, Oracle and CoreWeave will splash out a combined $382 billion in capital expenditures this year by Citigroup’s count, up more than 50% from 2024 and triple that seen during the prior annum. The Magnificent Seven now accounts for 31% of the S&P 500’s total capital spending, Ryan Grabinski of Strategas Asset Management finds, up from 19% at end of 2019. “[Mag 7] management commentary during this earnings season gives no indication of spending slowing down either,” Grabinski noted Wednesday.

As The Information notes today, that gilded group is “developing increasingly complicated financial strategies” to finance data center construction, including joint ventures, backstop agreements and syndicated debt offerings. Amazon, Google, Meta, Microsoft and Oracle held upwards of  $340 billion in net cash as of their most recent quarterly results, “though they’re starting to burn through it more quickly as they spend big on AI,” the tech publication points out.

Freewheeling credit conditions are helping those grand ambitions come to fruition, with lenders currently agreeing to fund 80% to 90% of a data center project according to Goldman Sachs, rather than the typical 65% to 80% share of new cost development cited by commercial real estate firm JLL.   

The prominent role of fast-growing private credit category in that buildout – illustrated by Meta’s $29 billion financing package to help construct the Hyperion facility in Louisiana – could “increase overheating risks,” analysts at UBS warned. 

Meanwhile, Bloomberg reported Thursday that JPMorgan and Mitsubishi UFJ are raising $38 billion in private credit and bank loans to fund a pair of data centers tied to Oracle, the fourth-largest cloud provider behind Amazon, Microsoft and Google. Back in July, both Moody’s and S&P warned Oracle to reduce its debt load or face a potential downgrade, with analysts at Moody’s writing that “while multiple other hyperscale providers are building out AI infrastructure, none are as leveraged or cash flow negative as Oracle entering into this phase.” Oracle’s $27 billion capex budget for the fiscal year ending in May 2026 equates to 40% of projected revenues, S&P relayed.

Big Tech’s AI ambitions pose uncomfortable questions for the stock market at large, as that group’s world-beating returns on capital have played a starring role in its spectacular post-2008 performance. See “Check writing contest” in the July 4 edition of Grant’s Interest Rate Observer for a close look at whether AI will prove a financial winner for the firms providing it. Spoiler alert: not necessarily.

Friday’s soft jobs report seemingly locked in a rate cut at the Fed’s upcoming meeting, sending 2- and 30-year Treasury yields lower by eight basis points apiece, to 3.51% and 4.78%, respectively.  Stocks saw a modest sell-the-news response with the S&P 500 dipping 0.3%, while WTI crude retreated to $62 a barrel, gold topped $3,600 intraday before settling at $3,589 per ounce, bitcoin marked time at $111,000 and the VIX settled just above 18.

- Philip Grant

Labor Day, part two: Friday’s release of August non-farm payrolls data from the Bureau of Labor Statistics looms large, as Federal Reserve officials including Christopher Waller continue to advocate for multiple rate cuts on account of a weakening jobs market. 

Today brought fresh grist for the E-Z money crowd, as the BLS’ Job Openings and Labor Turnover Survey showed 7.18 million open positions in July, some 200,000 spots below the economist consensus and marking only the second sub 7.2 million month since late 2020. As The Wall Street Journal’s Nick Timiraos highlights, the ratio of openings to unemployed workers dipped below 1:1 for the first time since the start of 2021. That metric briefly topped 2:1 in early 2022 and fluctuated near 1.2:1 for the three years prior to the pandemic.

It’s a private credit party, and everyone’s invited. Individual investors in the U.S. have turned headlong into direct lending, the Financial Times reports, as net inflows from that cohort reached $48 billion in the first half of 2025 according to investment bank RA Stanger.  That’s on pace to comfortably surpass last year’s record $83.4 billion figure and already tops the full-year sum logged in 2023.

“The growth is coming from a very underpenetrated market,” Brad Marshall, head of private credit at Blackstone, told the pink paper. “Private markets offer investors a premium [over] what they can get in public markets.”  

That retail feeding frenzy has helped offset waning appetite from the likes of endowments and pensions. Preqin finds that fundraising from such large institutions has declined each successive year since 2021, shortly before the Federal Reserve began to aggressively lift benchmark borrowing costs from near zero. For context, private credit AUM, which remained just shy of $2 trillion as of Sept. 30 per data from PitchBook, topped $1.6 trillion in that post-plague year, nearly double that seen in 2017.

“Inflows into the asset class meant that too much capital was committed far too quickly,” analysts at JPMorgan concluded in August. “Underwriting corners were surely cut; and losses will be outsized come the downturn.”  

On that score, today’s buoyant asset prices and resilient economy only go so far. As of March 31, roughly 45% of private equity portfolio companies – a primary contingent for direct loans – were in breach of their leverage cap, MSCI finds, failing to generate sufficient Ebitda to cover two times their interest payments. That share of potentially stressed credits remained well below 20% until fall 2022.  

Trailing 12-month defaults across the private credit realm registered at 3.4% during the second quarter according to Lincoln International, up from 2.9% on a sequential basis. Borrower friendly fine print directly informs those modest figures, however. “A major selling point of private credit is the low default rates,” analysts at S&P Global pointed out earlier this summer. However, “this reputation depends on a narrow definition of default.” 

Indeed, cash-strapped borrowers turn to an increasingly well-worn playbook in hopes of averting formal restructuring. During the second quarter, 11.4% of p.e. promoted firms opted to service their obligations with additional debt rather than cash, up from 6.4% in the last three months of 2021, Lincoln finds.

See the current edition of Grant’s Interest Rate Observer dated Aug. 28 for a closer look at deteriorating corporate fundamentals within the private equity-cum-credit complex, and the Aug. 1 edition for more on the travails of lenders put through the wringer of so-called liability-management exercises.

Instructively, private credit’s black box business model finds adherents in the banking world.  As the FT notes today, U.S. regulators including the Federal Reserve will no longer compel banks to disclose the total amount of loans which have been modified to help borrowers keep up with their payments, a rule which has been in force since the 1970s. Instead, lenders must only identify such loans which have been tweaked during the past 12 months.

“It’s a terrible decision,” groused Fed staff economist-turned Florida Atlantic University Finance professor Rebel Cole. “It’s more opacity during a time when we already have too much opacity.” Christopher Whalen, chair and eponym of Whalen Global Advisors, logged a concurring opinion: “I don’t view the change positively. I think [banks] are hiding long-term delinquenc[ies]. That’s the style right now across the industry.”

Stocks managed a solid rebound from back-to-back declines bookending the long weekend, with the S&P 500 advancing 0.5% and the Nasdaq 100 gaining 0.8%. Treasurys enjoyed a bull-flattening rally with 2- and 30-year yields declining five and seven basis points, respectively, to 3.61% and 4.9%, while WTI crude retreated below $64 a barrel and gold charged higher to $3,562 per ounce. Bitcoin ticked above $112,000 while the VIX fell to 16 and change.  

- Philip Grant

From the Financial Times:

Five traders found guilty of manipulating interest rate benchmarks may have been wrongfully convicted, prosecutors in the U.K. have acknowledged, in the latest sign that a post-crisis push to jail perceived wrongdoers in financial services is unravelling. . .

The admission comes a month after the U.K.’s highest court overturned the conviction of ex-UBS and Citigroup trader Tom Hayes, who spent five and a half years in jail for a supposed scheme to manipulate the now-defunct London interbank offered rate.

Now we’re cooking with gas: Fed governor Christopher Waller stoked the easy money flames at the Economic Club of Miami Thursday, declaring that “there are signs of a weakening labor market [and] I worry that conditions could deteriorate further and quite rapidly.”

As for the other side of the policy coin, Waller left no doubts over his dovish convictions: “with underlying inflation close to 2%, market-based measures of longer-term inflation expectations firmly anchored and the chances of an undesirable weakening in the labor market increased, proper risk management means the FOMC should be cutting the policy rate now.” Referencing President Trump’s trade levies, Waller argued the Fed should “look through” tariff-induced price pressures, declaring that “I am back on team transitory.”

That stance should be music to the ears of a certain E-Z money loving former leveraged real estate speculator, with wagering site Polymarket assigning a 27% chance that Trump taps Waller to replace outgoing Fed head Jerome Powell by the end of this year, more than any other candidate (the odds of no announcement prior to Dec. 31 stand at 38%).

In any event, no one can accuse Waller of hedging his monetary bets. This morning brought word that the Core Personal Consumption Expenditures Price Index advanced by 2.9% year-over-year in July, a figure which, prior to the not exactly transitory post-pandemic episode, represents the hottest reading since 1993. As for market-based measures of longer-term inflation expectations, the 10-year breakeven rate – the yield differential between nominal Treasurys and inflation-protected securities – reached 2.46% Wednesday, up nearly 20 basis points from mid-June to reach a six-month high.

A trade-related sea change, meanwhile, will do little to improve those dynamics. As of midnight Friday, the Trump administration eliminated the so-called de minimis shipping exemption, which allowed packages valued at $800 and below to enter the country without duties. In place since the 1930s, the exemption applied to 1.4 billion parcels last year according to Bloomberg, equivalent to 92% of U.S. cargo shipments. Stateside-bound packages are now subject to the applicable tariff at the country of origin, or a flat fee ranging from $80 to $200 per item based on the reciprocal tariff rate imposed by the White House.

“These measures could threaten consumer-facing exporting sectors, as well as the pipeline of small and medium-size enterprises that may think twice about exporting,” the British Chamber of Commerce argued in a Tuesday blog post. “Firms accustomed to frictionless exports will now face permanently higher costs.”

Transitory to some, perpetual to others.

Stocks came under early pressure with the S&P 500 down 0.7% as of lunchtime (when your correspondent hit the road) with the long bond rising 5 basis points to 4.92%.  WTI crude ebbed to $64 a barrel, gold advanced nearly 1% to $3,447 per ounce, bitcoin sank to $108,500 and the VIX jumped nearly one point to 15 and change.

- Philip Grant

From Bloomberg:

President Donald Trump said that Meta Platforms Inc. is planning to spend $50 billion on its massive data center in rural Louisiana. Trump, speaking Tuesday during a Cabinet meeting, said he was in awe of the cost of the project, which is currently being built. 

“When they said $50 billion for a plant, I said, ‘What the hell kind of plant is that?’” Trump said, holding up a graphic he said was given to him by Meta Chief Executive Officer Mark Zuckerberg. It shows the data center superimposed over Manhattan, to demonstrate scale. “When you look at this, you understand why it’s $50 billion,” he said. 

A Meta spokesperson declined to comment on Trump’s remarks about the data center, which it has dubbed “Hyperion.” The social media giant, which is spending hundreds of billions in an effort to become a major player [in] the artificial intelligence race, has only said publicly that its investment in the data center will exceed $10 billion. 

What’s in a name? CNBC documents the return of so-called recession specials, with eateries, coffee shops and concert venues from New York City to San Franciso rolling out those evocative deals for cash-strapped customers. Accompanying that signpost, the University of Michigan’s consumer sentiment gauge slipped to 58.5 in August, well below the 10-year average of 81 and near its post-Liberation Day lows of 52.2.

“Consumers are broadly bracing for a slowdown in the economy and a deterioration – not just with inflation, expecting inflation to get worse – but they’re also expecting business conditions to deteriorate,” Joanne Hsu, who directs those monthly polls at the Ann Arbor institution, told CNBC. “What you’re seeing with these [recession specials] could be a reaction to that.”

Downward household earnings pressure on large swaths of the populace informs today’s dour mood.  Average annual after-tax wage and salary growth among lower- and medium-income wage-earners in July reached 1.3% and 2%, respectively, on a rolling three-month basis, Bank of America-compiled data show.  That compares to 6.4% and 4.4% in early 2023.

Though higher income households managed 3.1% average annual wage growth over the three months through July, modestly outpacing the 2.6% uptick in headline CPI over that stretch, pockets of that well-to-do cohort exhibit their own strains.

Thus, the share of debt repayments more than 90 days in arrears among super prime borrowers (defined as those sporting credit scores of between 781 and 850) rose 109% year-over-year in July, a new report from VantageScore finds, while prime borrower (i.e., credit scores ranging from 661 to 780) delinquencies rose 47% over the same period.  

Though the figures remain low on an absolute basis, July’s data  “show that consumers considered the most credit-healthy are also starting to see some stress with regard to repayments,” VantageScore chief economist Rikard Bandebo told Reuters Monday.

A lurch higher in slow-paying apartment dwellers likewise suggests a broader downshift in consumer health. Late payments among independently-owned rentals registered at a projected 11.7% of sampled over the three months through June (the most recently available data) per Chandan Economics, the highest since at least 2021 and up from 8.8% early last year.   

As property publication CRE Daily pointed out today, such late payments have typically ebbed in springtime as tax refunds permitted delinquent renters to catch up on their bills. No such decline took place this year, however, “hinting that more households are relying on mid-month paychecks to make ends meet.”

The Trump vs. Cook fireworks produced little but blue skies during Tuesday’s session, with stocks climbing 0.4% on the S&P 500 while the long bond settled at 4.89%, up a solitary basis point on the day. WTI crude turned back towards $63 a barrel, gold advanced to $3,390 per ounce, bitcoin rebounded above $111,000 and the VIX ticked to 15.  

- Philip Grant

We hardly knew ye: Monday marks a milestone in the Middle Kingdom, as the Hong Kong Stock Exchange is set to delist defunct mega-developer China Evergrande Group. 

Evergrande, once China’s largest property player by sales until its collapse under the weight of some $300 billion in liabilities, has been suspended from the bourse since January 2024 after defaulting on its debt and failing to finalize a restructuring plan. Though “largely symbolic,” the delisting nevertheless represents “the end of the golden age of China’s real estate sector,” Gary Ng, senior economist at Natixis, told Reuters today.

Skeptics of the sprawling, uber-levered firm may view it differently. “We suspect the company name will one day become proverbial, like ‘Bank of United States,’ or ‘Hindenburg,’” Grant’s Interest Rate Observer concluded in June 2017 after Evergrande shares had exploded higher by 215% in the year-to-date, pushing its market capitalization above $23 billion.  Four months later, that figure briefly topped $53 billion.

Ghosts of the bygone zero interest rate era continue to haunt the U.S. corporate bond market, as Bloomberg highlights the feverish investor demand for fresh long-term supply.  Thus, new high-grade issues maturing in at least 30 years have garnered bids in excess of five times available supply on average this year, the strongest such ratio since at least 2021. Earlier this week, double-A-minus/single-A-plus-rated Eli Lilly & Co. attracted nearly $15 billion of orders for just $1 billion each of 30- and 40-year bonds at coupons of 5.55% and 5.65%, respectively.

“Being able to buy high-quality, investment-grade credit near 5% is something that, for a long time, was not available,” David Brown, global co-head of investment-grade at Neuberger Berman, told Bloomberg. “People are trying to lock in these rates.”   

Indeed, investors poured a net $11.6 billion into high-grade funds and ETFs over the week through Aug. 6 per data from EPFR, the strongest weekly inflow since November 2020, followed by $10.6 billion and $8.6 billion influxes over the subsequent pair of seven-day stretches. “There does seem to be just an insatiable demand for investment-grade credit right now,” noted Loomis Sayles portfolio manager Brian Kennedy.

Considering the fact that the ICE BofA US Corporate Index maintains a razor-thin 77 basis point option-adjusted spread over Treasurys, near the lowest since Long Term Capital Management bought the farm in 1998, the path of 30-year Treasury bonds looms large for those long-duration bets.

Notably, perhaps, Fed chair Jerome Powell’s speech this morning that seemingly tees up more rate cuts – in accordance with President Trump’s well-ventilated wishes – elicited only a modest rally at the back end of the curve, leaving 30-year yields at 4.92%. The long bond’s yield premium to the two-year note jumped 7 basis points to 120 basis points, marking a three-and-a-half-year high and comparing to a mere 20 basis point spread as of the 2024 Jackson Hole central bankers’ powwow.

One year-inflation swaps, meanwhile, reached 3.41% this morning, up nearly 100% from the 1.9% seen at this time last year. “If the market thinks the Fed is cutting for political reasons, it puts upward pressure on inflation expectations and, ultimately, long rates,” Apollo chief economist Torsten Sløk wrote Tuesday.

Stocks took flight after Powell let the doves out, with the S&P 500 settling 1.5% in the green to emphatically break its five-session losing streak and approach fresh highs. The bull-steepening rally in Treasurys left the 10-year note at 4.26%, down seven basis points on the session, while WTI crude ticked towards $64 a barrel and gold jumped to $3,371 per ounce. Bitcoin climbed to $117,000 and the VIX tumbled towards 14, down two points and change.

- Philip Grant

From ESPN, via Jason Gay at The Wall Street Journal:

Oklahoma [football] is offering fans a chance to attend postgame news conferences, but it won't be cheap.

It's one of the "Sooner Magic Memories" offerings the program has created to give fans greater access this season. The cost for two people to sit in on the media session after the Oklahoma-Michigan nonconference showdown on Sept. 6 is $692.11. For the SEC home opener Sept. 20 against Auburn, it's $576.86.

"Get exclusive postgame media access for you and one guest and see where real-time reactions unfold," the advertisement says. "Hear OU coaches and players address reporters moments after the final whistle. Watch the story take shape through the questions, the insights, and the atmosphere that set the headlines."

The Michigan and Auburn numbers might seem steep, but the cost for the Illinois State season opener on Aug. 30 is $461.61 – and it's already sold out.

The early bird gets the tendies: Fed chair Jerome Powell’s upcoming Jackson Hole policy address is a mere postscript for the crypto crowd, who began massing in the Cowboy State early this week for the Wyoming Blockchain Symposium. 

Loaded with high-profile political figures, the gathering features no shortage of soaring rhetoric aligning with the Trump administration’s wholesale endorsement of digital assets. Senate Banking Committee chair Tim Scott, who plans to advance crypto market structure legislation in the coming weeks, declared Tuesday that “I think this is the most important time in American history for the evolution of this innovative opportunity. . . we need to empower people to want to take risk.” 

Michelle Bowman, recently elevated to the country’s top bank regulator as Fed vice chair for supervision, warned that lenders who resist the crypto revolution “will play a diminished role in the financial system more broadly,” adding that “it is essential that banks and regulators are open to engaging in new technologies and departing from an overly cautious mindset.”  Indeed, the United States is “at the beginning of what appears to be a seismic shift in the way we think about money, value and the fabric of our financial system.”

For policymakers too, perhaps, markets make opinions, with the crypto complex’s near-70% rally from early April through last Thursday to a $4.2 trillion aggregate market value certainly doing little to dent D.C.’s enthusiasm.  

Part and parcel of that dramatic move: a headlong rush from the corporate sector towards accumulating crypto assets in the manner of bitcoin evangelist and Strategy (née MicroStrategy) boss Michael Saylor.  The global tally of firms adopting crypto treasury strategies now stands at 297 according to BitcoinTreasuries.com, more than double that seen two months ago.  

There’s plenty more where that came from, if sentiment at the Wyoming Blockchain Symposium is any indication: “the event is all about how to marry Nasdaq vehicles with tokens to maximize treasury strategies,” one attendee told the Financial Times yesterday. “The bankers are here and are more than happy to help facilitate.”

Saylor, of course, needs little encouragement on that score. His firm, which raised over $20 billion in equity and debt last year to fund its bitcoin shopping spree, has pivoted towards perpetual preferred stock, highlighted by a $2.5 billion offering in late July. Those securities (deemed “Stretch”) feature no maturity date and permit the issuer to change or forego dividend payments, while conferring no voting rights on hodlers.

Alongside that deal, Strategy pledged that it would refrain from issuing common shares below a threshold of 2.5 times net asset value, except to cover interest payments on outstanding debt or to fund preferred dividends. Yet the firm backtracked on that self-installed floor less than a month later, declaring in a form 8-K filing that such sales could also take place “when otherwise deemed advantageous by the company.”

The Stretch transaction, meanwhile, which registers among the largest crypto deals of this freewheeling 2025, sent some Wall Street eyebrows aloft over its reliance on retail cohort, as Bloomberg relays that mom and pop buyers accounted for nearly one-quarter of total demand. “I have no past knowledge of any company doing this the way MicroStrategy just has to capitalize on the retail fervor,” Michael Youngworth, head of global convertibles and preferred strategy at Bank of America, commented to Bloomberg.

Whither the crypto treasury boom?  See the June 20 edition of Grant’s Interest Rate Observer for a closer look at Saylor’s feat of financial engineering and its broader accompanying risks.

Stocks remained for sale but pared early losses, leaving the S&P 500 lower by 0.2% and the Nasdaq 100 in the red by 0.6% while Treasurys remained bid with 2- and 30-year yields each dropping one basis points to 3.74% and 4.89%, respectively. WTI crude jumped toward $63 a barrel, gold rebounded to $3,349 per ounce, bitcoin edged above $114,000 and the VIX remained just below 16.

- Philip Grant

From the New York Post:

Money does grow on his “happy little trees!” A pair of Bob Ross paintings sold for double and triple their estimated selling prices at a recent auction — shattering sales records for the mild-mannered late artist.

Two oil-on-canvas works from the “Joy of Painting” star, both depicting serene mountain and lake scenes, raked in some serious green at Bonhams’ American Art Online sale, which ended on Aug. 7.

“Lake Below Snow-Capped Peaks and Cloudy Sky” fetched $114,800 — double what it was estimated to sell for — and “Lake Below Snow-Covered Mountains and Clear Sky” took in $95,750, triple its anticipated price tag. . .

The pricey pieces managed to dethrone Ross’ previous auction high-water mark, set at $55,000 on July 25 for the sale of another landscape, “Snow-capped barn and trees behind a post and wire fence,” at Eldred’s Auction Gallery in Dennis, Massachusetts.

Call it a commercial pole vault: U.S. firms dusted their second quarter profit expectations, with S&P 500 components growing aggregate earnings per share by 11% from the same period a year ago according to Goldman Sachs. That’s nearly triple the sell-side’s 4% year-over-year bogey.  Three fifths of the blue-chip gauge, meanwhile, eclipsed their respective consensus forecast by at least one standard deviation across observed estimates.

“The quarter has been marked by one of the greatest frequency of earnings beats on record,” Goldman’s chief U.S. equity strategist David Kostin relayed Friday.

Might that pleasant surprise serve to rule out worst-case scenarios regarding the impact of President Trump’s trade levies? “The sheer number of ‘what-ifs’ caused analysts to reduce earnings estimates months ago on tariff fears,” Yung-Yu Ma, chief investment strategist at PNC Asset Management Group, told Bloomberg today. “Now there’s more belief that this won’t be a crushing blow to the economy as once feared.” 

To that point, 68% of respondents to Bank of America’s August Global Fund Manager survey anticipate a “soft landing” over the next 12 months, with a further 22% foreseeing no landing at all and a mere 5% believing a sharper slowdown is in the cards.  Then, too, option-adjusted spreads on the ICE BofA U.S. Corporate Index ebbed to 75 basis points Friday, the skimpiest pickup over Treasurys since 1998.

Today’s booming backdrop makes for a discordant duet with broad expectations of a renewed rate cut cycle, which Fed chair Jerome Powell may preview in Jackson Hole Friday: Some 61% of the 110 economists surveyed by Reuters anticipate a 25-basis point downshift to the 4.25% to 4.5% funds rate at the central bank’s next scheduled meeting beginning on Sept. 16, up from 53% last month.

Interest rate futures, meanwhile, now point to 118 basis points of cuts over the next year, with the bulk of that move penciled in before President Trump presumably replaces Powell next spring with a minion willing to enact his oft-expressed easy money preferences.

“It is worth reminding ourselves that the cuts embedded in market expectations have never occurred without a double-digit decline in U.S. profits,” Andrew Lapthorne, global head of quantitative research at Société Générale, found last week. “The reason for this relationship is straightforward. Interest rates rise to slow down the economy and reduce inflation, and inflation – i.e., price changes – is a key driver of sales growth.”

Treasurys came under modest pressure with 2- and 30-year yields each ticking higher by two basis points to 3.77% and 4.94%, respectively, while stocks stayed put in a low-wattage, tight-range summer session.  WTI crude climbed towards $63 a barrel, gold saw overnight gains erased to finish flat at $3,334 per ounce, bitcoin edged below $117,000 and the VIX settled just below 15.

- Philip Grant