TQ Morning Briefing
Barely one factory in five raised its own prices in the Philadelphia Fed's August reading. Flowers Foods pushed price anyway. It cut its full year guide at five past four, four minutes after Ross Stores raised its own.
The bond rally lasted one day.
Walmart (WMT) fell hard on its outlook. That one name did most of the damage to the Dow. The other two indexes followed it down.
The ten year Treasury yield gave back most of Wednesday's relief. The thirty year Treasury yield did the same. Both are backing up again this morning.
Futures are higher across the board, with the Russell 2000 and the Nasdaq leading. The volatility index is giving back Thursday's spike.
The dollar is softer against everything. Crude has turned higher.
The after hours tape did the sorting. It split retail along one line. Who still gets to name their own price.
Market Implication
Two sessions of violent bond moves have left the long end roughly where it started. The discount rate has stopped being the variable. The guide has taken over, and two more land before the open.
I've Read a Lot of Mining Filings. They All Sound the Same.
This one stopped me cold.
Sitting in the filings of one small American gold company is a phrase I have never seen on a gold project: substantial support and partnership from the Department of War.
The Department of War does not partner with gold miners. Except it's partnering with this one.
Here's why. The deposit carries a second metal — one China formally banned from export to the United States. The only domestic reserve of it in the country.
Gold for the dollar war. The banned metal for the shooting war. Both from the same pit.
Washington didn't stop at words. On May 21, 2026, a federal bank voted unanimously to lend nearly $3 billion to build it. Congress got 25 days notice. Nobody objected.
When final papers are signed, funding risk goes to zero — and Wall Street re-rates the stock from speculative developer to federally backed strategic asset.
The company is about one fiftieth the size of Newmont.
The Cost Kept Arriving Anyway
In July, firms told S&P Global they were pushing through the steepest price rises in about four years. They named the reasons.
Fuel. Shipping. Tariffs.
None of the three has eased since. Fuel is dearer and the blockade is still up. The July tariff program is still running.
The cost side is still pushing. That is ordinary. The other side is what broke.
Firms have stopped being able to pass it on.
The Philadelphia Fed's factory survey just printed its best headline reading since 2021. The same survey's measure of what those firms charge fell hard.
Barely one in five raised prices at all. Three quarters held them flat.
Strong demand. No pricing power. Read those two lines together and you have the quarter.
Walmart is cutting price to buy units back. That is the other answer to the same squeeze.
The cost still lands either way. It just lands on the seller now.
Structural Setup
This is a margin story, not a rate story. The cost still arrives. The price no longer moves. The gap comes out of margin, and it comes out this quarter.
The Tape Sorted By Who Sets The Price
The Dow took the worst of it. Crypto linked names and fertilizer makers led. Auto parts retailers and cosmetics fell with the rest of retail.
What led had one thing in common. None of it sells to an American household.
The clean read came after the bell. Ross Stores (ROST) put up double digit comparable sales for the second quarter running. It lifted its full year guide.
Read the margin line twice. Most of that expansion came from tariff refunds. Strip them out and the gain is real but far smaller.
Its chief executive said a lot of goods are being cancelled and expects more. He called off-price the winning sector.
Growth against value explained nothing on Thursday. Pricing power explained everything.
Sector Read
Cancelled orders are where the racks get filled. Off-price gets better as everyone else gets worse. But the refund flatters this quarter and will not repeat. What other retailers cancel this autumn is what has to carry the next one.
Why are companies flying spy planes over Elon's closely-guarded AI lab?
Elon did the seemingly impossible – far faster than anyone expected...
And it's sent the tech industry into PANIC MODE.
ChatGPT, Claude, Google Gemini, and DeepSeek could soon become obsolete.
And three little-known firms could soar 10X or higher as a result.
Two Supply Shocks, One Barrel
The United States moved this week to cut Iran out of the world's payment and trade systems. The President called it an economic D-Day.
The Strait of Hormuz used to carry about a fifth of the world's oil. Barely a tenth of that traffic gets through now.
A second squeeze is running alongside. Ukrainian strikes have knocked out Russian refineries, and fuel selling limits have spread across nearly all of Russia.
Those two hits land on refined product first. The barrel is the smaller part of the story.
Crude is still heading for a second straight weekly gain. That cost has not reached this morning's survey.
Watch Signal
Watch diesel rather than crude. Diesel is the line that turns a barrel into a grocery bill. A firm that cannot raise its price eats every cent of it. Trucking and packaged goods take that hit before the Fed meets in September.
What A Survey Can Count
S&P Global's flash survey lands this morning. It gives a firm three boxes for price.
Higher. The same. Lower.
It never asks how many units left at the new price. It cannot. The box is the whole answer.
So a firm that raises price and empties its aisle ticks the same box as one that raises price and keeps every buyer. The index cannot tell them apart.
Flowers Foods (FLO) reported at five past four. Price and mix were positive. Volume fell more than three times as much.
Same shelf. Same brand. Fewer loaves leaving it.
Bread did not stop selling. It stopped selling at that price.
Revenue dropped anyway. Margin dropped with it. The company cut its sales guide and its earnings guide in the same release.
Grocery units have been falling for most of this year. This loaf fell about three times faster than the aisle around it.
The brand asked for more. The shopper said no.
The Read
Packaged food re-rates on volume now. Price is the one line that no longer converts. The shelf keeps whatever margin the brand gives up. Private label share is the read, and no list price the maker announces will change it.
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It’s already racked up $26 billion in government contracts.
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Economic Data: S&P Global Flash US Composite, Manufacturing and Services PMI (August), 9:45am ET. Baker Hughes rig count, 1:00pm ET.
Fed Speakers: None scheduled.
Earnings: BJ's Wholesale Club (BJ), The Buckle (BKE), KE Holdings (BEKE), ZKH Group (ZKH) before open, BJ's call at 8:00am ET | Prospect Capital (PSEC) fiscal year results with a call today. Flowers Foods (FLO) holds its question and answer webcast today; the results published Thursday after the close.
Overnight: Nikkei 225 -0.30%, Shanghai Composite +0.04%, FTSE +0.11%, DAX +0.30%
Two numbers arrive this morning and they measure opposite things.
Before the open, BJ's Wholesale Club (BJ) posts its merchandise margin. That line is what it costs to hold a shopper who counts. At nine forty five, a survey reports what firms charged.
If the price index eases while the output index holds, sellers have started eating the cost themselves. The Philadelphia Fed's August survey says that is already happening in one district.
If it rises instead, pass-through is alive everywhere else and only the mid-Atlantic cracked. Then Flowers Foods was early rather than typical.
The receipt reports before the survey today. Read them in that order.