A pedestrian wearing a face mask looks at a smartphone while passing in front of the New York Stock Exchange (NYSE) in New York, on Monday, July 20, 2020.
Michael Nagle | Bloomberg | Getty Images
The market could lose some of its exuberance in the week ahead as the calendar turns to August, and investors await Friday’s July employment report and keep their eyes on Washington.
The focus will also be squarely on politicians, as Congress struggles to find a middle ground on a new fiscal spending package and decide the fate of the $600 a week unemployment supplement that was set to expire July 31. Former vice president Joe Biden is also expected to name his running mate in the coming week.
The jobs data will be crucial, particularly since the number of people filing for unemployment benefits has been edging higher, instead of falling back, as expected. According to Refinitiv, about 1.36 million new jobs are expected, well below the 4.8 million added in June, and the unemployment rate is expected to fall to 10.7% from 11.1%.
Trading around the report could be volatile, since some economists expect more than 2 million jobs were added, and some even see flat or negative payrolls.
Stocks have done well for the month of July, with the S&P 500 finishing at 3,271, a gain of 5.5%. The Nasdaq has performed the best, rising 6.8% for the month to 10,745, after a 3.7% gain for the past week.
“August has traditionally been a challenging month for investors,” said Sam Stovall, chief investment strategist at CFRA. The market is entering what historically has been the worst two months for stocks.
According to Stovall, the S&P 500 has been higher in August 53% of the time, and its average move is a gain of just 0.01%, going back to World War II. September is worse, down 0.51% on average, and up just 48% of the time.
In presidential election years, however the odds for August gains are better, as it rose 63% of the time and 73%, when the incumbent is up for re-election.
There are also about one-fifth of the S&P 500 companies reporting earnings, but the big earnings show for markets was this past week when four of the five biggest tech giants all reported Thursday afternoon. Three of those stocks — Apple, Amazon and Facebook — surged, helping Nasdaq outperform Friday with a more than 1.5% gain.
Earnings scorecard
“We’re only a month into the reporting period, and things are going to become less and less important from an earnings perspective,” said Stovall. “I think investors are sort of disappointed in that the bar was set so low for second quarter earnings that expectations were that we were going to see a lot of companies beat, which we have. But we were also going to see a gradual uplift of earnings expectations for forward quarters. We’re not seeing that.”
Eighty-two percent of the companies reporting so far have beaten estimates, well above the average 65%, according to Refinitiv. The earnings decline is now looking closer to 33% from an initial 40%, and tech, which has been leading the market is one of the best performers. Profits for the sector now look to be up 1.4%, according to I/B/E/S data from Refinitiv.
Because the tech names have contributed so much to market gains, their earnings were an important test for the market, and they didn’t disappoint. But they didn’t manage to pull up the whole market very far on Friday.
Among the names reporting in the coming week are a diverse group, including Disney, ViacomCBS, Bristol-Myers Squibb, Berkshire Hathaway, AIG, Clorox, and Wayfair, to name a few.
Politics now in play
“The earnings story is over. My call had been once we had gotten through the earnings season, we would be more vulnerable to a sustainable pullback,” said Barry Knapp, Ironside Macroeconomics managing partner and director of research. “Obviously, it’s volatility season, but it’s also an election year. … We’re more vulnerable to that next week and earnings won’t hold us up.”
Knapp said if President Donald Trump and Republicans do not begin to perform better in the polls by Labor Day, the market is likely to focus on what a Democratic win would mean for taxes and regulation. That could be a negative for stocks.
“If he hasn’t made headway by then, it’s likely he’s done.That’s about the point when things become pretty set in stone. The market will presume that’s the case,” Knapp said.
The politics of the stimulus package could also reverberate through markets, until it looks like the Senate Republicans and House Democrats can find common ground.
The two sides look to be at a standoff, but an agreement is still expected in early August. The market is particularly watching to see what happens with the enhanced unemployment benefits. Republicans have proposed cutting it to $200, but Democrats support keeping it.
The economy
Cutting the size of the payments back might be good for the labor market and persuade more workers to return to work, some strategists say. However, there is also concern that the funding has helped stimulate the economy and keep the unemployed from defaulting on loans and payments. Consumer spending on goods in June was even higher than last year, and that was also seen as getting a lift from stimulus.
Besides the jobs report, there are other important data like ISM manufacturing on Monday. There are also monthly vehicle sales Monday, and ISM nonmanufacturing data Wednesday.
“I think the macro data is going to be fine next week,” said Knapp. “I’m not in the camp that thinks the payroll number is going to be negative.”
NatWest Markets economist Kevin Cummins is one of the economists who expects the jobs gains to be much smaller than the past two months. He expects the payrolls to come in at just 200,000. “You look at jobless claims, and you see a stalling out,” he said. “The Fed is right. There is significant downside risk to the economy.”
A trade to watch
Treasury yields, in the 2-year to 7-year range, fell to new lows in the past week. The 10-year yield, not yet at a record low, was also falling and was at 0.53% Friday. At the same time, the dollar was down more than 1% on the week and 4% for the month.
Strategist say investors are reacting to super-low interest rates, concerns about the economy, and the possibility that huge government spending will send inflation higher.
Investors are also jumping into inflation-protected bonds. According to Refinitiv’s Lipper, inflation-protected bond funds took in $271 million of net new money for the fund-flows week ended July 29, the sixth week of gains. About $1 billion went into the SPDR Gold Shares ETF, (GLD) in the last week, Lipper said.
During this time period, the Treasury Inflation-Protected Securities funds recorded their two best weekly net inflows ever with increases of $1.9 billion and $1.5 billion, respectively, for the fund-flows weeks of June 24 and July 1.
Lipper said investors started to put money into TIPS funds in the middle of the second quarter, and the flows have been . net positive in 11 out of 13 weeks since the beginning of May. This its second-worst quarterly net outflows ever as oil prices slumped in the first quarter.
“I think this is going to be a much more inflationary decade. It will start out slowly. [Fed Chairman Jerome] Powell is right that more forces are putting downward pressure on inflation at present. But the market looks past that,” said Knapp. “The big story in 2021 will be the recovery of inflation. You’re already seeing it in import prices.”
Tom Cotton speaks at a press conference in December 2023.Kevin Dietsch/Getty Images
The MAGA right exists in a perpetual state of overheated grievance. But as the November election nears, the temperature seems to be rising, getting dangerously high.
This week, following Gaza war protests that disrupted travel in major American cities Monday, Senator Tom Cotton explicitly called on Americans to “take matters into [their] own hands” to get demonstrators out of the way. Asked to clarify those comments Tuesday, Cotton stood by them, telling reporters he would “do it myself” if he were blocked in traffic by demonstrators: “It calls for getting out of your car and forcibly removing” protestors,” he said.
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The right-wing senator’s comments came on the heels of Kari Lake, the GOP candidate for Senate in Arizona, suggesting supporters should arm themselves for the 2024 election season. “The next six months is going to be intense,” she said at a rally Sunday. “And we need to strap on our—let’s see, what do we want to strap on? We’re going to strap on our seat belt. We’re going to put on our helmet or your Kari Lake ballcap. We are going to put on the armor of God. And maybe strap on a Glock on the side of us, just in case.”
And those comments came a couple weeks after Donald Trump, who regularly invokes apocalyptic and violent rhetoric, shared an image on social media depicting President Joe Biden—his political rival—hog-tied in the back of a pick-up truck. “This image from Donald Trump is the type of crap you post when you’re calling for a bloodbath or when you tell the Proud Boys to ‘stand back and stand by,’” a Biden spokesperson told ABC News last month, referring to the former president’s dog-whistle to extremist groups during a 2020 debate and to cryptic remarks he’s made from rally stages this spring suggesting Biden’s reelection would mean a “bloodbath”—for the auto industry and for the border. This kind of thing is nothing new—not for Trump, not for his allies, and not in American history, which is what makes these flirtations with political violence all the more dangerous.
We’ve seen where this kind of reckless rhetoric can lead. Throughout Trump’s first campaign for president, it led to eruptions of violence at his rallies, which he openly encouraged: “Knock the crap out of ‘em, would you?” he told supporters of hecklers. It also inflamed tensions throughout his presidency, which culminated with his instigating a violent insurrection at the United States Capitol. According to a PBS Newshour/NPR/Marist poll this month, 20 percent of Americans believe violence may be necessary to get the country on track. A disturbing new study out of University of California-Davis found openness to political violence was even higher among gun owners, particularly those who own assault weapons, recently purchased their firearms, or carry them in public. And an October survey by the Public Religion Research Institute and the Brookings Institution suggested that support for political violence, while still limited, appears to be increasing, with nearly a quarter of respondents overall—and a third of Republicans—agreeing with the statement: “Patriots may have to resort to violence in order to save our country.”
“It looks like the temperature has gone up across the board, but especially among Republicans,” Robert P. Jones, president and founder of PRRI, told Axios of the survey last fall. That’s no accident. It’s the kind of political climate you get when a sitting senator promotes vigilantism, a Senate candidate calls on supporters to take up arms, and a major party embraces or enables a demagogue. “Political violence,” as Biden campaign communications director Michael Tylerput it a couple weeks ago, “has been and continues to be central to Donald Trump’s brand of politics.”
A new walking tour this summer will celebrate the legacy of a man who literally changed the face of Toronto’s politics, Canada’s first elected politician who wasn’t white: William Peyton Hubbard.
Elected as a City Alderman in 1894, Hubbard served until 1914, including stints as acting mayor of Toronto. But east end resident Lanrick Bennett was embarrassed to say he’d never heard of him until the 2010s — when Hubbard’s name was put forward in a park naming contest in Riverdale.
In 2016, a park at Broadview Avenue and Gerrard Street E. was officially named Hubbard Park. This summer, Bennett is organizing a historical walking tour from Hubbard’s former residence on Broadview to the park, which will be lead by fellow east ender Marie Wilson, who initiated the campaign to name the green space after him.
“As a parent, I want my kids to understand that there are people that look like them that were around, that were here, that came before,” Bennett said.
“They were fighting the good fight back then.”
The tour is part of a series of Black history walking tours that Bennett will be hosting this summer to coincide with Emancipation Day in August, called #HearThis. This week, he was awarded a $1,000 grant from the charities Toronto Foundation and Volunteer Toronto to organize the walks.
He will also be digitizing the routes so people can do them on their own time.
A portrait of W.P. Hubbard at 89 years old. He was born in 1842 and died at the age of 93 in 1935. (City of Toronto Archives)
“This entire project is about amplification,” Bennett said. “I don’t know everything about all the history within this neighborhood and within this community, but I want people to start digging.”
Park named after Hubbard in 2016
In the contest to name the park nearly a decade ago, Wilson put up flyers and approached people in the neighbourhood to tell them who Hubbard was and why they should vote for him. She learned of Hubbard from the plaque in front of his former home.
“I’m not only fascinated by history, but by forgotten history and the forgotten people in history,” she said. “I think that Hubbard fell into that category. I know that there are some people who know of him and did back then, but in a big way, I don’t think he was known.”
At the time of the park’s unveiling, Hubbard’s great-granddaughter Lorraine Hubbard said it was the first, permanent public recognition of his contributions to the city.
Marie Wilson, at left, will be leading the walk, which was organized by Lanrick Bennett, at right. (Martin Trainor/CBC)
Aside from the fact that he was the city’s first Black politician, who always stood up for the underdog, she said her favourite fact about Hubbard was that he baked himself a birthday cake every year.
Hubbard was born near Bathurst and Bloor streets, after his parents escaped enslavement in America. But he didn’t begin his political career until he was in his 50s, after working as a baker and cab driver.
He was elected in his second attempt in one of the wealthiest and whitest wards in Toronto, which spanned University Avenue to Bathurst Street. He was reelected 14 times.
Hubbard faced and fought racism
When others wanted them privatized, Hubbard helped keep Toronto’s hydroelectric and water systems public utilities, which led to the creation of Toronto Hydro. He was also part of the city’s Board of Control, a powerful four-member group at the city’s executive level that advised the mayor on municipal spending.
Wilson said he was also an instrumental player in the creation of High Park.
“He was a champion of the underdog and he just felt that the poor people, the disenfranchised, needed what we now call green space,” she said.
While breaking barriers, Heritage Toronto’s website says Hubbard defended other marginalized groups, such as the city’s Chinese and Jewish communities, from discrimination and violence.
But being a Black man at the turn of the century, he had his own experiences of racial abuse from city councillors from other cities, Heritage Toronto says. When conducting business outside the city, he was sometimes required to carry character reference letters from the mayor.
Bennett hopes that through the tour, he can provide a context of the Black history found in Toronto’s east end.
“It’s kind of cool to be living where we do and to know that history is around you and it’s literally outside of your front door,” he said.
For more stories about the experiences of Black Canadians — from anti-Black racism to success stories within the Black community — check out Being Black in Canada, a CBC project Black Canadians can be proud of. You can read more stories here.
Federal Conservative Leader Pierre Poilievre has dipped into the Quebec government ranks to add a new candidate to his team.
Éric Lefebvre, the Coalition Avenir Québec government whip, is leaving the province’s ruling party and will sit as an Independent before joining the Tories ahead of the next federal election.
Poilievre wrote on X, formerly known as Twitter, that he was proud to have Lefebvre join the Conservative team.
On Tuesday night, Lefebvre announced he was leaving the CAQ caucus but would continue to represent the riding of Arthabaska, northeast of Montreal, as an Independent.
Quebec Premier François Legault wrote on X that he asked Lefebvre to withdraw from caucus.
Lefebvre, who was unsuccessful in a 2008 run for the federal Conservatives, first won the Arthabaska riding in a 2016 byelection and was re-elected in 2018 and 2022.
The next federal election must be held by October 2025.
