WP Weekly Insight (7/26 - 8/1)

Waldron Partners

August 13, 2025

WP Weekly Insight (7/26 - 8/1)

Market Recap & Snapshot[1]

July 28 through August 1

The week ended, August 1 lived up to its billing as the summer’s (and perhaps the year’s) most impactful by way of global trade developments, a litany of significant economic data releases, and corporate earnings reports from market-moving Big Tech firms.
The Nasdaq Composite kicked off the week by recording its 14^th record close in July.
Excellent earnings reports from tech giants Microsoft and Meta Platforms failed to buoy the market on Thursday, even though their respective stocks rallied 4% and 11%. Hotter-than-expected inflation muddied the interest rate picture while the Trump administration’s August 1 trade deadline loomed.
Stocks tumbled across the board on Friday as poor jobs data had investors questioning the true strength of the US economy. The 10-year Treasury yield nosedived 14 basis points on the news as money flowing out of the stock market found its way into safer government bonds, with expectations of a rate cut increasing. All the major indexes closed down more than 2% for the week.

The Fog of [Trade] War

Armistice Day[2]

President Trump announced from Scotland that the US had reached a trade agreement with the European Union (EU), setting a 15% baseline tariff for European goods, including automobiles, which had previously been subject to a 25% levy. As part of the deal, the EU agreed to buy $750 billion of energy products from the US and to invest an additional $600 billion stateside. Trump had threatened to impose a 30% baseline tariff if a deal had been reached by August 1, whereas the EU had already finalized plans for retaliatory tariffs that would have affected over $100 billion of US exports.
The 15% level matches the US agreement reached with Japan a week prior.
The 50% tariff that the US has imposed on steel and aluminum imports remains in place, but the two sides agreed to a quota system that would keep tariffs lower for some EU metals exports.
Items on a “zero-for-zero” tariff list include aircraft and their parts, semiconductor equipment, and some agricultural products. The two sides will continue to work to add items to the free trade catalog.
Treating the EU’s 27 member states as a unified bloc makes it the largest US trading partner, so this could be considered the biggest trade deal yet.

K-Pop the Champagne[3]

President Donald Trump announced on July 30 a preliminary trade agreement with South Korea, reducing import tariffs from the country to, you guessed it, 15% from the 25% previously threatened. South Korea’s government pledged to invest $350 billion in assets owned and controlled by the United States, and selected by Trump, as well as to purchase $100 billion of American energy products.
South Korea is the United States’ sixth-largest bilateral trading partner.

Tariff Siesta

The US and Mexico agreed to a 90-day extension to reach a trade deal just as reciprocal tariffs of 30% were set to kick in on August 1. America imports more from its southern neighbor than from any other country on Earth.

8/1 deadline

President Trump announced additional tariffs on multiple countries, including Brazil (50%), Switzerland (39%), and Canada (35%).
Deutsche Bank Macro Strategist Henry Allen sounded an alarm of sorts on the market’s sanguine attitude toward global trade upheaval. “On tariffs, it’s clear that markets aren’t pricing in the proposed August 1 rates,” Allen wrote. “But the paradox is that as markets discount the tariffs and perform strongly, that’s actually making the higher tariffs more likely as the administration grows in confidence.”[4]Essentially, strong stock market performance may embolden the Trump administration by implying that its drastic trade policies aren’t as extreme and far-reaching as originally feared. The proof of the pudding will be in the economic data that rolls in over the next six months or so.
On the flip side, even if the August 1 tariffs came in higher than the market expected (there’s no way to really measure this), they are not permanent so long as the Trump administration remains willing to negotiate, which it seems clear that they will be. August 1 did not slam the door on countries without a deal, but it did turn up the heat.

So, Where Do We Stand?

With the EU (#1) and South Korea (#6) signing deals this past week, the US now has trade agreements with half of its ten largest partners. China (#4) has its own deadline of August 12, but the two sides appear to be engaged in active talks to…well, keep talking, so this will likely be extended. Mexico (#2) was able to kick the can down the road for 90 days, Canada (#3) is out in the cold, and India (#10) is still at the table.
Roughly two-thirds of the U.S.'s 18 largest trade partners have penned a trade deal, according to White House Press Secretary Karoline Leavitt.
The UK, at 10%, has the lowest tariffs agreed to so far.[5]
Documentation of various reported trade details has proved elusive, which means at this stage the markets and other interested stakeholders must simply take President Trump’s word for it. Beyond setting tariff rates at 15%, deals with the EU and Japan have included promises of huge investments in the US economy, which are far from guaranteed. Japan’s $550 billion commitment is set to be in the form of loans, whereas the EU’s pledge to buy $750 billion of US energy by 2028 greatly exceeds the total size of the market (the US sold just $78 billion of fossil fuels to the eurozone last year).[6]Harkening back to Trump’s first term, China never honored the $200 billion it promised to invest as part of the “Phase One” trade deal,[7] which former Treasury Secretary Steven Mnuchin has blamed on COVID and the Biden Administration’s lack of enforcement.
US trading partners may be offering up empty investment promises to secure lower tariff rates, knowing full well that Trump’s time in office is, from a longer-term perspective, ephemeral. President Trump, meanwhile, could utilize any failures to satisfy the investment commitments as fodder to penalize trading partners that may run afoul of his agenda over the next few years.
The upshot? The headline tariff rates are very real and generating significant revenue for the US Treasury (who ultimately bears the cost is another conversation), but the pledged foreign direct investments in the US economy are far from certain and heavily discounted by WP.

Central Bank Watch

FOMC Meeting

The Federal Open Market Committee (FOMC) kept the federal funds rate in check, as expected. Federal Reserve Vice Chair for Supervision Michelle Bowman and Fed Governor Christopher Waller both dissented by calling for a quarter-point cut, citing nascent labor market weakness. It was the first time that multiple voting members dissented in over 30 years.[8]
Bowman was appointed to her current role as Vice Chair of Supervision—the Fed’s top banking regulator—earlier this year by President Trump, and Waller is on Trump’s short list of potential nominees for the position of Chairperson once Jerome Powell’s term ends next May. The president has made it overtly clear that he desires lower interest rates. Politicization may be creeping into the venerated institution, which, if it proliferates, would, in WP’s opinion, be detrimental to economic growth, jeopardize the status of the US dollar as the global reserve currency, and induce interest rate volatility. None of this would be good for stocks.
“It seems to me—and to almost the whole committee—that the economy is not performing as though monetary policy is holding it back inappropriately and modestly restrictive policy seems appropriate,” Powell said during his press conference following the release. As long as the economy is growing and the jobs market remains stable, Powell will remain focused on reining in inflation. Fed Watch put the odds of a 0.25% cut at the FOMC’s September meeting at roughly 50/50 after Powell spoke.

Economic Data

Q2 GDP[9]

Real gross domestic product (GDP) grew at an annualized rate of 3% in the second quarter, according to the initial estimate released by the Bureau of Economic Analysis. Economists surveyed by FactSet had expected 2.0% growth after 0.5% shrinkage in Q1.
Imports, which have a downward effect on GDP, fell by a whopping 30.3% annualized rate during Q2 after businesses front-loaded inventories in Q1 to beat anticipated tariffs. Exports declined as well, albeit by a relatively meager 1.8%, as global trade decelerates due to the Trump administration’s tariffs.
Consumer spending, which comprises ~70% of overall consumption, increased at an annual rate of 1.4% from April to June, compared with 0.5% growth in the first quarter.
For the first half of 2025, real GDP growth slowed to 1.2% versus 2.5% last year.
Data on many fronts has been muddied by the various policies of the Trump administration. The upshot from this report appears to be that the economy is still growing amid heightened uncertainty, but that the pace of growth is decelerating as consumers and businesses exhibit cautious behavior.

Inflation

The core personal consumption expenditures price (PCE) index, the Fed’s preferred inflation gauge, rose 2.5% in the second quarter. While this represents substantial moderation from Q1’s 3.5%, it remains stubbornly higher than the Fed’s 2% inflation target, with tariff uncertainty still looming.[10]
For the month of June, core PCE ran slightly hotter than economists were expecting, rising 0.3% from May and 2.8% year-over-year. Headline PCE, which includes food and energy prices, advanced 2.6% on an annual basis, the highest rate since February. The Fed is looking for inflation to move more convincingly toward its 2% target before resuming interest rate cuts, but prices appear to be moving slowly higher and may get even worse as tariffs take effect.[11]

Labor Market

US nonfarm payrolls grew by just 73,000 in July, versus economists’ expectations of a 115,000 rise. The unemployment rate ticked higher to 4.2% from 4.1% in June. The big news, however, was a massive downward revision of 258,000 jobs gained in the months of May and June, reducing the three-month average of payroll gains to 35,000. It was the largest revision across two months, dating back to 2013.[12] Add it all up and, over the last three months, the labor market demonstrated its most anemic rate of growth since the early pandemic.
According to the CME Fed Watch tool, the odds of a rate cut at the September FOMC meeting jumped to 77% following the gloomy employment data, up from just 38% the day before.[13]The steep revisions somewhat vindicated warnings from FOMC dissenters Bowman and Waller that the labor market may be stalling out.
Labor force participation has declined by half a point since the beginning of the year, to 62.2% in July. Many believe that this is evidence that the Trump administration’s immigration crackdown is keeping undocumented workers from seeking jobs, even if they remain in the country.
President Trump reacted to the dismal adjustment by calling for the head of the Bureau of Labor Statistics (BLS). The thinking probably went that, if the May and June payroll numbers had been reported more accurately, the Fed may have been inclined to cut interest rates during the FOMC meeting that wrapped up a couple days prior to the July report. Or maybe it was just a case of shooting the messenger from the hip.
Macroeconomist Peter Boockvar opined, “Let’s be honest here, volatile and costly trade policy has stalled decision making on the part of companies, with many hitting the ‘pause button’ on hiring.”[14]
On the bright side, wage growth remains in Goldilocks mode. Compensation costs for all civilian workers in both private and government jobs climbed 0.9% in Q2, the BLS reported on July 31, matching the pace of wage growth posted in Q1 and in the fourth quarter of 2024. Compared with a year ago, compensation climbed 3.6% in the second quarter. Stable wage growth helps keep inflation in check—historically, an annual rate of 4% has been associated with the Fed’s 2% inflation target.[15]

Housing Market

The S&P CoreLogic Case-Shiller US National Home Price NSA Index reported a 2.3% annual return for May, down from the 2.7% gain in April. After seasonal adjustment, the US National Index posted a decline of -0.3% month-over-month. West Coast markets exhibited flatlining on an annual basis—Los Angeles rose just 1.1%, San Diego 0.4%, and San Francisco turned negative at -0.6%.[16]
Pending home sales unexpectedly fell 0.8% in June and 2.8% year-on-year, according to the National Association of Realtors. Economists had expected a monthly rise of 0.2%, but high prices and mortgage rates continue to impact sales. The data follows last week’s report that existing home sales fell to a nine-month low in June.[17]

High mortgage rates and stubbornly elevated home prices have locked up the housing market. Current 30-year fixed mortgage rates are hovering just below 7%, whereas the average outstanding mortgage for existing homeowners is just 4.1%.[18] WP maintains that prices will likely fall somewhat before there is a drop in interest rates meaningful enough to influence affordability. It’s worth noting that the 30-year fixed mortgage tends to track the 10-year Treasury rate, which is dictated by market sentiment and supply and demand but is not directly influenced by the Federal Reserve’s short-term policy rate.

Corporate Earnings & Stocks in the News

Big Tech Reports

Microsoft reported 39% revenue growth in its Azure cloud business, which helped drive fiscal Q4 earnings of $3.65/share and revenue of $76.4 billion. Both figures topped expectations of $3.37/share and $73.9 billion, respectively. The firm also said that it expects double-digit revenue and operating profit growth in the coming fiscal term.[19]The market reacted positively by crowning MSFT the second company ever to reach $4 trillion in market capitalization.
Meta Platforms reported earnings of $7.14 per share, crushing analyst expectations of $5.88, while top-line revenue also beat. “The strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ad system,” said CEO Mark Zuckerberg on the firm's earnings call. Meta delivered on all of its most important metrics—daily users, ad impressions (the number of times an advertisement is displayed to users), and price-per-ad—and offered guidance that projects 21% sales growth. Zuckerberg is making a huge push into “super-intelligence,” or the development of a machine that can do any intellectual work at least as well as a human, which includes poaching top engineers from competitors.[20]META surged almost 8% to finish off the week.
Apple reported better-than-expected Q3 sales of $44.58 billion for the iPhone, beating estimates of $40 billion. iPhone sales accounted for just under half of the quarterly revenue of $94 billion, which also beat analyst forecasts of $89.35 billion. Services revenue, which includes Apple Music and the App Store, rose 13% to $27.42 billion, an all-time high for the segment. CEO Tim Cook said on the company's earnings call that for the June quarter, the company incurred about $800 million in tariff-related costs, slightly below the $900 million the company was expecting.[21]
Amazon reported solid Q2 earnings that beat expectations, but that didn’t stop the stock from selling off into the weekend—AMZN tumbled 8% on Friday, August 1. Investors are concerned that tariffs will dent the company’s retail segments and negatively impact operating income. Amazon Web Services (AWS), the company’s public cloud service provider, is still humming along.
Together, Microsoft, Meta, Amazon, and Alphabet are poised to spend more than $300 billion on AI-related technology this year, MarketWatch reports. It appears that the thought process for Big Tech is that “they who spend the most will come out on top.” Failure to monetize this gargantuan amount of capex, however, may land one or more of these companies in balance sheet purgatory, jeopardizing future cash flow and shareholder return.

Selected Anecdotes

Although same-store sales declined for a sixth consecutive quarter, Starbucks beat with top-line revenue of $9.5 billion vs. $9.31 billion expected. New-ish CEO Brian Niccol, who in his former gig turned around Chipotle following a series of food safety issues, is bullish on the coffee chain’s comeback timetable.[22]The company’s new “Green Apron Service” and “Back to Starbucks” campaign are aimed at re-humanizing the customer service experience by creating a more welcoming café environment and emphasizing barista personality.[23] Starbucks is facing new competition from China’s Luckin Coffee, which is viewed as a cheaper alternative and recently opened its first two US locations in New York.
Visa, the world’s largest card network by payments volume,reported quarterly profit growth, with CEO Ryan McInerney commenting that “consumer spending remains resilient.” WP keeps tabs on payments firms such as Visa, American Express, Mastercard, and even PayPal, to monitor the pulse of the US consumer, driver of 70% of the American economy.
Exxon and Chevron both posted strong earnings on huge upstream production numbers. Exxon’s CEO hinted at potential M&A activity.
Eli Lilly’s best-selling diabetes drug Mounjaro lowered the risk of heart attacks and stroke in a late-stage trial. The wonder drug may soon be able to include this benefit on its label, opening it up to a wider swathe of the populace.
Samsung reached a multiyear $16.5 billion deal to supply AI chips to Tesla for use in the latter’s self-driving cars, AI data centers, and humanoid robots. Samsung’s stock rose 7% on the news to its highest level since September 2024.[24]
Norfolk Southern and Union Pacific merged, creating “America’s First Transcontinental Railroad.” If approved by the DOJ, the combined network would span 43 states and over 50,000 miles and would allow freight to travel coast to coast without spending two days in Chicago to switch railroads. In a presentation, the railroads said that a seamless transcontinental network will bring jobs to US ports by better competing with Canadian transcontinental competition.[25] Berkshire Hathaway, which owns BNSF, may entertain an acquisition of CSX to defend market share.

In Other News…

An 8.8 magnitude earthquake rocked the North Pacific Ocean just off the Kamchatka Peninsula in Eastern Russia. A Tsunami warning was issued for Hawaii, Alaska, and much of the West Coast of the US, but the feared wave thankfully did not have a major impact on coastal communities. It was the fourth-largest tremor recorded in the last century and the sixth-largest ever recorded.
Terry Bollea, better known as Hulk Hogan (or “Hollywood” Hogan for those of us who appreciated the infamous heel turn that kickstarted WCW’s NWO angle), died of a heart attack at the age of 71.

The Week Ahead

Alphabet may soon learn from a federal judge what it will need to do to remedy its deemed monopoly status in general search services and text advertising. An example of one such remedy would be to end its exclusive search engine agreement with Apple, to which Alphabet pays billions to ensure that Google is the default search engine on all Apple devices.[26] Perversely, ending this agreement would likely hurt Apple’s bottom line much more than it would that of Google’s parent.
Earnings season rolls on with reports expected from Palantir, AMD, McDonald’s, and Disney.

Economic and Index Definitions

[1] Data obtained from YCharts unless otherwise noted

[2] Mackrael and Andrews. “Trump and EU Reach Tariff Deal, Avoiding Trade War.” The Wall Street Journal, 27 July 2025, https://www.wsj.com/economy/trade/trump-says-he-has-a-tariff-deal-with-european-union-avoiding-trade-war-3ca72c5d?mod=djem10point

[3] Desrochers, Daniel. “US and South Korea reach trade agreement.” Politico, 30 July 2025, https://www.politico.com/news/2025/07/30/us-south-korea-trade-agreement-00485888

[4] Pringle, Eleanor. “Tariffs look like ‘the dog that didn’t bark’ to Wall Street, with inflation expected to trake a one-time hit and Trump unlikely to enforce threats.” Fortune, 23 July 2025, https://fortune.com/2025/07/23/tariffs-dog-that-didnt-bark-wall-street-inflation-trump/

[5] Mackrael and Andrews. “Trump and EU Reach Tariff Deal, Avoiding Trade War.” The Wall Street Journal, 27 July 2025, https://www.wsj.com/economy/trade/trump-says-he-has-a-tariff-deal-with-european-union-avoiding-trade-war-3ca72c5d?mod=djem10point

[6] Saefong, Myra. “The E.U. to buy $750 billion of U.S. energy products. Why that’s ‘absurd.’” MarketWatch, 28 July 2025, https://www.marketwatch.com/story/the-e-u-says-it-will-buy-750-billion-of-u-s-energy-products-why-thats-absurd-ac5de025?mod=djem_b_Feature_7292025%2065355%20AM

[7] “Trump’s Trade Victories Could Be Hollow. Why Markets Must Be Wary of China Talks.” Barron’s, 29 July 2025, https://www.barrons.com/articles/trumps-trade-deals-china-things-to-know-today-9e940a2a?lid=nh1jzsgfmxa3&mod=BRNS_ENG_NAS_EML_BULLETIN_AUTO_NAH

[8] Goodkind, Nicole. “The Fed Hasn’t Seen a Split Like This in 30 Years.” Barron’s, 25 July 2025, https://www.barrons.com/articles/federal-reserve-interest-rate-cut-decision-fomc-jerome-powell-e94af66f?mod=article_inline

[9] Peterson, Matt. “The MAA Takeover of the Fed Begins Now.” Barron’s, 7 August 2025, https://www.barrons.com/articles/stephen-miran-fed-interest-rates-ab803813?mod=djem_b_reviewpreview_20250729

[10] Peterson, Matt. “The MAA Takeover of the Fed Begins Now.” Barron’s, 7 August 2025, https://www.barrons.com/articles/stephen-miran-fed-interest-rates-ab803813?mod=djem_b_reviewpreview_20250729

[11] Goodkind, Nicole. “Core PCE Inflation Runs a Touch Hot, Dimming Hopes for September Rate Cut.” Barron’s, 31 July 2025, https://www.barrons.com/articles/inflation-pce-june-fed-interest-rates-60c3575b?mod=hp_LEDE_C_2&mod=djem_b_reviewpreview_20250731

[12] Leonhardt, Megan. “Trump Fires BLS Chief. He’s Missing the Real Reason for the Big Change in Jobs Numbers.” Barron’s, 1 August 2025, https://www.barrons.com/articles/trump-orders-firing-bls-chief-cf0a8b86?mod=livecoverage_web&mod=djem_b_reviewpreview_20250801

[13] “Jobs Report: Hiring Misses the Mark, Revisions Shave 258,000 Payrolls Off May and June,” Barron’s, 1 August 2025, https://www.barrons.com/livecoverage/july-jobs-report-data-today-news?mod=hp_SP_A_1&mod=djem_b_reviewpreview_20250801

[14] Salzman, Avi. “Strong Earnings Can’t Save the Stock Market From Jobs and Tariffs.” Barron’s, 1 August 2025, https://www.barrons.com/articles/strong-earnings-stock-market-jobs-tariffs-c923d592

[15] Leonhardt, Megan. “Wage Growth Is Stuck in Neutral as Pay Gains Slow.” Barron’s, 31 July 2025, https://www.barrons.com/articles/wage-growth-eci-pay-inflation-5954b294?mod=djem_b_reviewpreview_20250731

[16] “S&P CoreLogic Case-Shiller Index Records 2.3% Annual Gain in May 2025.” S&P Dow Jones Indices, 29 July 2025.

[17] Frankl, Ed. “Pending Home Sales Fell Unexpectedly in June.” The Wall Street Journal, 30 July 2025, https://www.wsj.com/economy/housing/pending-home-sales-fell-unexpectedly-in-june-a35402a3?gaa_at=eafs&gaa_n=ASWzDAgbsZxcNT-51kmyMgDBjenbbmi7faDsfiU5ei4_PHdSndwLDizHLfq_Ys_OvZA%3D&gaa_ts=688fc51b&gaa_sig=Iw-yoDzaKlbU43WXQ329x0FTcDidAgXZHGf6qu0T4eynMNiPP9sGaIKaeP7gu02_HjdXZz7jpH4-i91MjBSY_A%3D%3D

[18] “The impact of today’s changing interest rates on the housing market.” U.S. Wealth Management – U.S. Bank, 30 July 2025, https://www.usbank.com/investing/financial-perspectives/investing-insights/interest-rates-impact-on-housing-market.html.

[19] Palumbo, Angela. “Microsoft Just Misses $4 Trillion Market Cap After Earnings. The Stock Is on Fire.” Barron’s, 30 July 2025, https://www.barrons.com/articles/facebook-instagram-meta-stock-price-earnings-2d9e3b80?mod=djem_b_reviewpreview_20250730

[20] Levine, Adam. “Meta Stock Surges Near Record High. Everything to Know About the Facebook Parent’s Blowout Earnings.” Barron’s, 31 July 2025, https://www.barrons.com/articles/facebook-instagram-meta-stock-price-earnings-2d9e3b80?mod=djem_b_reviewpreview_20250730

[21] “Apple Earnings Beat Estimates. iPhone Sales Were Strong.” Barron’s, 31 July 2025, https://www.barrons.com/livecoverage/apple-earnings-stock-price-news-aapl

[22] Lucas, Amelia. “Starbucks same-store sales fall again, but CEO Niccol says turnaround is ahead of schedule.” CNBC, 29 July 2025, https://www.cnbc.com/2025/07/29/starbucks-sbux-q3-2025-earnings.html

[23] Rogers, Katie. “Starbucks leans into hospitality push to try to reverse sales slump.” CNBC, 29 July 2025, https://www.cnbc.com/2025/07/29/starbucks-rolls-out-green-apron-service-ahead-of-earnings.html

[24] Jun, Kwanwoo. “Tesla, Samsung Sign $16.5 Billion Deal to Make AI Chips.” The Wall Street Journal, 28 July 2025, https://www.wsj.com/tech/samsung-signs-16-5-billion-chip-supply-contract-with-tesla-a0d61216?mod=djem10point

[25] Root and Alpert. “Norfolk Stock Drops on Union Pacific Merger. That Isn’t Supposed to Happen.” Barron’s, 30 July 2025, https://www.barrons.com/articles/norfolk-southern-union-pacific-railroad-merger-stock-price-598d2239?mod=RTA

[26] Palumbo, Angela. “Google Will Soon Be Told How to End Its Monopoly. What That Means for Apple.” Barron’s, 28 July 2025, https://www.barrons.com/articles/google-monopoly-apple-alphabet-stocks-b401df6d?mod=hp_LEDE_C_4&mod=djem_b_reviewpreview_20250725