Nice Start to August as End-of-War Rally Lifts Stocks and Oil Prices Tumble

Oil prices turn lower as Bessent says U.S. may have Iran deal "today or tomorrow"

Another "End of the War" rally today. President Trump announced that new negotiations with Iran will begin today, after canceling a threatened major new attack over the weekend. The on-again, off-again rumors of meaningful negotiations, between actual attacks, have been a recurring story for several months.

The market nevertheless is willing to stage meaningful rallies on the potential for an end to the conflict. Underpinning the strength of these rallies is a very good earnings season and the sustained spending on AI plans. The economy is strong, the consumer resilient, and if the inflation threat of energy dislocations can be repaired, things can only get better.

Today, crude oil is down over 6%, and gasoline is down 4%. Interest rates are lower, with the U.S. 2-year down 3bps to 4.26%, the 10-year down 5 bps to 4.69%, and the 30-year down 5bps to 5.22%. On the long end, the yields are down about 5bps from the highs for the year, which happened just last week. The 2-year is 11bps lower than its high for the year in late June. There remains a lot of room for lower interest rates once inflation cools.

Notable earnings this week include Berkshire Hathaway (BRKa), Palantir (PLTR), and Marriott (MAR) today, SpaceX (SPCX), AMD (AMD), Merck (MRK), and Amgen (AMGN) on Tuesday, Eli Lilly (LLY), SanDisk (SNDK), Western Digital (WDC), Walt Disney (DIS), and Uber (UBER) on Wednesday.

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