In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497 — Warren Buffett

1. Trump Takes Iran Hard Line as Hormuz Tensions Mark New Normal — The memorandum of understanding that the US and Iran signed in June in an effort to buy time to negotiate a lasting peace deal — as repeatedly violated as it had been during that 60-day window — has expired. There are no plans to extend it. The United Arab Emirates on Tuesday said it was cutting off trade, commercial exchanges and financial transactions with Iran until further notice “in light of regional escalations that undermine regional and international peace and security.”
2. U.S. Imposes 50% Tariffs on Some Canadian Goods After Last-Ditch Talks Fail — Trade talks between the U.S. and Canada broke down on Friday, officials from both countries said, paving the way for the U.S. to impose 50% tariffs on about $20 billion worth of Canadian goods early on Saturday and risking escalation into an all-out trade war. The Trump administration first threatened the latest round of tariffs last month, saying they would be imposed in response to Canada’s provincial bans on American alcohol, protections for its domestic dairy industry and quotas and tariffs on some U.S. vehicles. Many of Canada’s recent trade actions against the U.S. were put in place in retaliation for earlier levies imposed by Trump, including his sector-specific levies of up to 50% on automobiles, steel, aluminum and forest products. Though most Canadian exports have avoided those duties because they complied with the U.S.-Mexico-Canada Agreement, the new round of tariffs doesn’t exempt such products.
3. Fed Minutes Reveal Broader Support for Rate Increases — The decision to hold the benchmark rate steady between 3.5% and 3.75% drew three dissents from Fed presidents who thought a rate increase was warranted. While there are 12 voting members of the Federal Open Market Committee, a total of 19 officials, including seven bank presidents without a vote, participate in the meetings. The minutes suggested that some officials without a vote would have also supported raising rates. At a press conference after the July 28-29 meeting, Chairman Kevin Warsh deflected criticism that holding rates meant the Fed was doing nothing. He pointed to the rise in market interest rates since the June meeting, in both nominal and inflation-adjusted terms, as evidence that financial conditions had tightened without the Fed acting.

strong>The week ahead — Economic data from Econoday.com:

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