Daily Commentary

MarketMinder’s View: Upward wobbles in oil prices did reaccelerate Canada’s consumer price index (CPI) from 2.8% in June to 3.0% last month, a hair above the 2.9% consensus forecast, which is unwelcome news that likely adds to many consumers’ inflation angst. But the coverage here, especially in the back half, sensibly notes this is chiefly about gasoline: “Excluding gas, the consumer price index rose 2.2 per cent in July for a third consecutive month, Statistics Canada said. CPI-trim and CPI-median — two measures of core inflation that the Bank of Canada looks at — were a touch higher than expected … Despite some of the shorter-term measures of core inflation picking up a bit, those measures were still within the Bank of Canada's target range ….” Look, you can never know what a central bank will do with interest rates beforehand—these human beings aren’t a market function and could act on biases that rational analysis wouldn’t rate heavily. But with CPI excluding gasoline unchanged again, it is fairly apparent oil prices’ war-driven rise isn’t spilling economywide. Absent that, the case for rate hikes is flimsy, unless you think the central bank can somehow hike its way to speeding oil extraction and refining—or boost the Canadian policy rate enough to force Iran and America to reach a peace deal. Supply shocks like this tend to have a limited effect that drives substitution, not inflation, and they aren’t a call for central bank action.

MarketMinder’s View: Here is yet more evidence that sentiment among global fund managers is running on the hotter side: “Fund managers are bullish — so much so that in the last four years, there have only been two occasions when they’ve been more confident, according to Bank of America’s most recent survey published Tuesday. Cash levels at 3.5% have rarely been this low since the turn of the millennium and the allocation to stocks is also a five-year high.” Now, there have been several other periods this survey registered more bullish readings since 2001 that didn’t correlate to a market top (e.g., 2003/2004, 2010, 2013 and after the One Big Beautiful Bill Act passed in 2025), so don’t automatically presume this lofty read is super bearish. But the findings here, which included that managers are most overweight the US and Emerging Markets, further illustrate the high hurdle confronting US and Tech stocks. By contrast, the same firm’s survey of investors that surrounds the EU showed bullishness ticked down last month and is far less stretched. This is one key reason why we think the likelihood of positive surprise—and leadership—is higher for stocks outside America.

MarketMinder’s View: “US industrial production rose for a second month in July, driven by continued strength in manufacturing tied to business investment. The 0.2 per cent advance in production at factories, mines and utilities followed an upwardly revised 0.3 per cent rise a month earlier, Federal Reserve data showed Tuesday (Aug 18). Factory output, which accounts for three-fourths of total industrial production, advanced 0.2 per cent following an upwardly revised 0.3 per cent gain a month earlier and despite a drop in auto manufacturing.” The trend is actually a little broader than this notes. After years of sliding sideways and contracting, US industrial output has climbed in four of the last six months, with manufacturing (the largest sub-industry) up in five of six and flat in the other. This looks more and more like a durable trend underpinned by business investment—a key plank supporting US expansion.