• Stocks: The S&P 500 and Nasdaq were dragged lower by a stark selloff in tech stocks like Sandisk, Marvell Technology, and Nvidia—which sank for a seventh straight session, its longest losing streak in nearly four years. The Dow managed to escape the carnage largely unscathed.
• Commodities: Oil prices fell as traders shook off new US sanctions against Iran and its trading partners (more on that later).
• Bitcoin: Crypto kept climbing today, reversing a months-long slump that began last October, pushing crypto-related stocks like Strategy and Bitmine higher.

Trade

Illustration: Shannon May, Photos: Adobe Stock

Remember all the fun times we had together on Liberation Day? Don’t get nostalgic, because we’re about to get a sequel.

The White House kicked off the week with two major, aggressive economic moves.

First, trade talks with our northern neighbor fell apart on Friday, automatically triggering 50% levies on a slew of Canadian goods worth roughly $20 billion. Then, in a fit of Truth Social posts, President Trump announced this afternoon that he’s slapping 50% tariffs on Canadian automobiles starting in January.

“They feel entitled, and yet, WE DON’T NEED CANADA, THEY NEED US!” he wrote. “They do 95% of their business with the U.S., with us, the exact opposite!”

Both sides blamed each other for the talks falling apart. And Canada doesn’t look like it’s going to back down: Canadian Prime Minister Mark Carney is expected to announce the nation’s own tariff retaliation on September 8, targeting specific sectors that are particularly politically sensitive ahead of the midterms. And, of course, Trump has vowed to escalate even further after Canada strikes back.

What this all means: While the first Liberation Day roiled markets, the long-term damage was relatively mild, all things considered—and some analysts expect the same from this latest round of tariff tit-for-tat.

“End of the day, the Canadian tariffs on US goods equates to a drag of -0.5% to -1.0% on S&P 500 earnings, whereas it could negatively impact 5%–8% of Canada’s index,” explained Zacks Investment Management Chief Market Strategist Brian Mulberry. “That gives a significant advantage to US markets if this becomes a long lasting dispute, but as history tells us this is likely a short term political gamble on Canada’s part, we will wait to see who wins the best deal on the far side of all the politics.”

D-Day doom

But the Canada debacle isn’t the only economic battle the US waged today. This afternoon, Treasury Secretary Scott Bessent announced an “Economic D-day” against Iran dubbed “Operation Economic Outcast.”

Dramatic names aside, what this actually means is a slew of punishing sanctions against Iran and its trading partners, with Bessent threatening that, “Any entity that facilitates money laundering on behalf of Iran will be removed from the U.S. dollar system.” The specific sanctions will hit technology, gold, digital assets, and shipping, Bessent said.

The Iranian rial hit a new low against the dollar this morning, another blow to Iran’s already beleaguered economy. At a press conference, Bessent said the goal was to “sever every economic lifeline that sustains this tyrannical regime.”

As per usual, investors are playing the highest stakes game of whack-a-mole ever: Just as one crisis seems to wane, two more pop up.—LB

      

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Stocks

🟢 What’s up

• Expedia Group gained 5.47% after Evercore ISI raised its price target to $430.
• RUM Group surged 3.43% on a $13.7 billion deal to supply AI chips to an unnamed cloud customer.
• Lithium battery maker Expion Energy jumped 80.49% following a $9 million private financing infusion of convertible debt and warrants.
• Zillow climbed 3.26% on a proposed FTC order that would preserve its rental-listing partnership with Redfin.

🔴 What’s down

• Tesla slipped 3.83% despite winning approval to deploy up to 5,000 robotaxis in Nevada over the next year.
• XPeng fell 8.61% on weaker-than-expected quarterly sales and a disappointing outlook.
• Regenxbio tumbled 24.86% after regulators halted testing of an experimental gene therapy, the company’s second program put on hold in recent months.
• Applied Optoelectronics dropped 13.77% on plans to potentially sell up to $600 million of stock, raising concerns about shareholder dilution.
• Hims & Hers Health sank 7.99% after Visa flagged elevated customer disputes tied to its weight loss subscriptions.
• Coinbase fell 3.76% despite launching a new service that lets investors trade US stocks on its crypto network.

Warning of the day

The bond battle continues

Illustration: Morning Brew Inc., Photos: Adobe Stock, Getty

Scott Bessent is rolling out the big guns to save the US bond market—and no, we’re not talking about using the military (unlike President Trump).

Last week, the Treasury secretary attempted to repress bond yields that had reached multi-year highs. That seems to have flopped: All of the gains bonds made after his announcement that the US will double its bond buyback program dissipated in a matter of hours. But he isn’t done yet: CNBC reported this morning that Bessent is ready to use the Treasury Department’s nearly $1 trillion General Account to support bond prices and keep yields low, giving him plenty of firepower for the fight ahead.

That latest show of support pushed yields down today, but where bonds go from here isn’t up to Bessent alone. All eyes are on the Jackson Hole Economic Policy Symposium kicking off on Thursday, with Kevin Warsh scheduled to provide his inaugural address on Friday afternoon.

The new Fed chair has been reluctant to provide markets with any forward guidance about the central bank’s plans for interest rates, which has partly contributed to the bond market’s recent turbulence, as traders try to guess what lies ahead. Analysts expect Warsh to largely continue to stay mum about future rate policy, which could cause further consternation among bond vigilantes—and spark another dramatic selloff.

The battle for the bond market has only just begun, and investors should brace themselves for the next big clash right around the corner.—MR

International investing

Illustration: Morning Brew Inc., Photos: Adobe Stock

Just like their US peers, Chinese tech companies are spending enormous sums to keep up in the global AI arms race. And just like their US peers, shares of Chinese companies are paying the price.

Alibaba priced a $10.2 billion sale of newly issued shares, the largest secondary offering ever by a Hong Kong-listed company, with all of the proceeds earmarked to pay for its “full stack” AI capabilities. The shares were sold to non-US investors at an 8.4% discount to Friday’s closing price.

Alibaba could use the cash: In its latest quarter, capex jumped 75% year-over-year, while revenue grew just 9% and net profit plunged 75%. Plus, last year the e-commerce company pledged to spend $56.5 billion on AI and cloud infrastructure over the coming three years. It’s already spent roughly half of that.

Michael Burry isn’t exactly helping investor confidence, either. The Big Short investor wrote on Sunday that he dumped Alibaba for rival JD.com and “cannot bless share issuances,” adding that Alibaba’s share price “would have to fall by half” before he became interested again.

Alibaba shares fell nearly 10% in Hong Kong as investors digested both the dilution and the growing price tag of its AI ambitions, though its US-listed shares remained largely flat today.

China’s memory boom

While Alibaba is spending heavily to build AI, China’s memory-chip makers are cashing in on the boom.

Last month, ChangXin Memory Technologies, or CXMT, surged 466% in its trading debut. CXMT makes DRAM, the high-speed working memory that computers, smartphones, and AI servers use to temporarily process data. CXMT has already grown into the world’s fourth-largest DRAM producer.

Now, another alphabet-soup chipmaker is lining up: Yangtze Memory Technologies, or YMTC, filed to raise as much as $4.9 billion in a Shanghai IPO. Unlike CXMT, YMTC specializes in NAND flash, the memory used to permanently store data.

YMTC generated $7 billion of revenue in the first quarter, nearly five times as much as a year earlier, as NAND shortages sent prices soaring and pushed its gross margin from 35% to 77% year-over-year.

Micron meets it match

That’s becoming a problem for US rival Micron, which sank 5.83% today. NAND accounts for roughly a quarter of Micron’s revenue, and YMTC’s share of the global NAND market has climbed from 8% to 13% in just a year, putting it roughly neck and neck with Micron.

Throw in the fact that the Trump administration has reportedly decided to allow Apple to purchase memory chips from CXMT and YMTC, and suddenly Micron’s position as a market leader looks to be in jeopardy.

Zoom out: China is increasingly building the entire AI stack at home. Companies like Alibaba are creating demand by pouring billions into AI infrastructure, while CXMT and YMTC are racing to supply the memory chips that infrastructure needs. If those Chinese suppliers eventually win more business abroad, US tech companies could face the same kind of competitive pressure they’ve already seen in industries like EVs and solar—only this time, with much more money at stake.—SY

      

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News

• These are the biggest mistakes advisors see investors make when rolling over their 401(k)s.
• Weddings are notoriously expensive. That’s why some brides are turning their nuptials into brand deals.
• The United Auto Workers union voted down an offer from Deere to extend its contract, sparking what will likely be tense negotiations.
• Amazon raised prices on a slew of products, including Kindle, Fire TV, and Echo, in response to a memory chip shortage.
• AI is replacing everything bankers do—even using their own judgement. Here’s why one Goldman Sachs partner thinks that’s a bad idea.
• Trump Media interim CEO Kevin McGurn said the company’s controversial offering—to let paid users access Trump’s posts first—is attracting customers despite the backlash.

Calendar

Economic reports: It’s a slow start to a busy week, with just the US August Conference Board consumer confidence index and the July new home sales report worth watching.

Earnings announcements: Intuit, Zoom, Box, and Dick’s Sporting Goods kick off a new slate of quarterly reports.

recs

🤖 Readers’ most-clicked story this time last week was about how Goldman Sachs believes rising enterprise AI spending will soon boost bottom lines in ways nobody sees coming—and these 20 stocks will soar as AI productivity transforms the economy.

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