Good morning, Joe. Ed, >> Phil, >> congratulations on a quarter where you beat on the top of the bottom line. Um, what what's the change because I think there was some uncertainty after Q2 and certainly after Q1.What's changed in Q3 in terms of what you're seeing with the customer. >> Well, first and foremost, a big shout out to our team. They did an amazing job in the quarter.Really strong results. Very proud of the work they did. We continue to lead the industry.In fact, our results for Q3, we believe wil ...

Now that we've heard from the president of the UN, let's start on the next big focus for the market and that will be the Fed chair's speech this afternoon that follows the Fed's quarterpoint rate cut just last week. Joining us this morning, chief economics correspondent of the Wall Street Journal, Nick Timos is with us. Nick, good to have you.Welcome back. >> Thanks for having me, Carl. >> We always sort of have I don't know when pal speaks expressor kind of low expectations.His remarks might not get to mon ...

Core Viewpoint - Wall Street is preparing for potential turmoil due to an upcoming Supreme Court decision regarding the constitutionality of tariffs, which could impact Corporate America and raise concerns about the country's fiscal health [1]. Group 1: Market Reactions and Expectations - The decline in asset prices in early April, following President Trump's tariff announcements, indicates potential market volatility if the Supreme Court overturns the current tariff regime [2]. - Despite the Supreme Court hearing the case expeditiously, a ruling may take a month or longer, with the current term ending on June 6, 2026 [3]. - Upholding the tariffs would maintain the current market status quo, while reversing them could introduce significant uncertainty, which markets typically dislike [4]. Group 2: Potential Financial Implications - A ruling that tariffs are unconstitutional could lead to substantial one-time refunds for companies, potentially amounting to $100 billion, but this may be countered by increased uncertainty and political/legal challenges [4]. - Trade uncertainty could lead businesses to pause investments and freeze hiring, which may result in declines in U.S. stock indexes and widening credit spreads [5]. - Financial markets have adjusted to the impacts of tariffs on inflation, economic growth, and asset prices, indicating a level of acceptance among market participants [5]. Group 3: Legal Context - The Supreme Court case revolves around whether President Trump overstepped his authority under the International Emergency Economic Powers Act (IEEPA) when imposing tariffs, complicating investor analysis of potential market reactions [6].

Economic Outlook - The S&P year-end target is set at 6,600, indicating limited upside potential but also no significant downside risk from current levels [1] - A potential 5 to 10% market pullback is anticipated in September due to various catalysts, including trade uncertainty [2] Labor Market Dynamics - The unemployment rate for the 18 to 34 demographic stands at approximately 10%, raising concerns about job creation for new college graduates [4] - The labor market's weakness is attributed to trade uncertainties and the impact of artificial intelligence on entry-level job availability [3] - The current job creation requirement to maintain stable unemployment is estimated at 150,000 jobs per month, but the new normal may be reduced to 50,000 to 75,000 jobs, with current figures falling below this threshold [5] Demographic Changes - The retirement of 11,000 baby boomers each month contributes to workforce demographic challenges [4] - A decline in immigration further complicates the labor market situation, impacting job availability and unemployment rates [5]

Core Insights - Canada's manufacturers and wholesalers are showing signs of stabilization after facing challenges from trade uncertainty and increased tariffs, with early sales estimates indicating a positive impact on the sluggish economy as it enters the third quarter [1][2] Group 1: Manufacturing and Wholesale Sales - An advance tally indicates a solid 1.8% improvement in manufacturing sales in July compared to the previous month [1] - Wholesale sales are estimated to have risen by 1.3% for the same month, suggesting a recovery in trade-exposed sectors [1]

Labor Market Overview - American firms added only 73,000 jobs in July, falling short of expectations [1] - Trade uncertainty may be contributing to the slowdown in job growth [1]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Viewpoints - Trade uncertainty is expected to persist, impacting corporate confidence, capital expenditure (capex), and the overall trade cycle [6][36] - High-frequency data is anticipated to reflect negative impacts on the growth cycle in the upcoming 2-3 months [6][36] Summary by Relevant Sections Trade Negotiation Status - Vietnam is the only country that has secured a trade agreement, while negotiations with other economies remain unclear [6] - The US and China face significant challenges in reaching a comprehensive trade deal, particularly regarding transshipments and sectoral tariffs for pharmaceuticals and semiconductors [6][33] Economic Implications - The report highlights that if trade agreements are secured, the best-case scenario would be for tariff rates to remain at current levels [18] - If no progress is made, tariff rates could revert to levels announced on April 2, 2025, which would significantly impact various economies [18] Country-Specific Negotiation Updates - **China**: Current tariff rate is 42%, with ongoing negotiations regarding rare earth exports and chip design software [56] - **India**: Current tariff rate is 11%, with India emphasizing that trade agreements must align with national interests [56] - **Indonesia**: Current tariff rate is 15%, with a focus on securing a comprehensive trade deal covering critical minerals and energy [56] - **Japan**: Current tariff rate is 17%, with unresolved issues on auto tariffs and agricultural market access [56] - **Korea**: Current tariff rate is 16%, with ongoing negotiations to extend tariff pauses [56] - **Malaysia**: Current tariff rate is 8%, with limited updates following two rounds of negotiations [56] - **Taiwan**: Current tariff rate is 7%, aiming for a zero-tariff deal and increased US goods purchases [56] - **Thailand**: Current tariff rate is 11%, with proposals to reduce trade surplus with the US [56] - **Vietnam**: Current effective tariff rate is 20%, with commitments to remove tariffs on US goods [56] Tariff Rate Changes - The report indicates that the US trade-weighted tariff rates on imports from Asia have increased significantly, with potential further increases [13][14] - The emergence of a two-tiered tariff structure for imports from Vietnam highlights the US's focus on addressing transshipment issues [21][22] Economic Data Trends - High-frequency shipping indicators show a slowdown in activity, suggesting that the initial strength in trade may be waning [36][46] - Capital goods imports have held up, but there are signs of potential weakness in the coming months [36][41]

Core Viewpoint - The pharmaceutical industry is facing uncertainty due to impending tariffs from the Trump administration, leading to a general market wariness and notable declines in major pharmaceutical stocks [1][2][3]. Group 1: Market Reaction - Major pharmaceutical stocks experienced significant declines, with Pfizer down 3.2%, Merck down 2.9%, and Eli Lilly down 2.7% [2]. - The market's bearish sentiment was influenced by the uncertainty surrounding the tariffs, which were speculated to be as high as 25% but lacked concrete details [3][11]. Group 2: Lobbying Efforts - The pharmaceutical industry is actively lobbying for a phased implementation of the tariffs rather than an immediate full-scale imposition [4]. - Industry lobbyists are advocating for a gradual ramp-up to the proposed 25% tariffs to mitigate the impact on the sector [4]. Group 3: Vulnerability of the Industry - The pharmaceutical industry is particularly susceptible to tariffs on foreign manufacturers due to the complex nature of drug development and production, which often relies on components sourced from lower-cost markets outside the U.S. [5]. - Even U.S.-based drug production frequently depends on foreign-made components, highlighting the industry's global supply chain vulnerabilities [5]. Group 4: Positive Developments - Despite the negative market sentiment, there were positive announcements from industry players, such as Pfizer's RSV vaccine receiving expanded approval in the EU for patients aged 18 to 59 [8]. - Eli Lilly's tirzepatide, a key ingredient in its obesity drug Zepbound, is set to be sold through telehealth specialist Hims & Hers Health, indicating new distribution opportunities [9][10]. Group 5: Future Outlook - There are indications that the Trump administration may adopt a more flexible approach to the tariffs, potentially implementing them in phases or at lower rates than initially expected [6][12]. - The uncertainty surrounding the tariffs remains a significant concern for investors, but there is cautious optimism regarding the potential for a more favorable outcome for the pharmaceutical sector [11][12].