August Newsletter

Last month’s cliffhanger: the US paused strikes on July 27 to “give peace talks space.” Iran denied any talks were happening. So what happened next?

Oman stepped in as mediator. Through early August, Tehran and Muscat quietly negotiated over safe shipping routes through the Strait of Hormuz. The US signalled optimism. Trump said the Strait would reopen “soon.” For a few days, it felt like progress.

Then on August 5, Houthis claimed an attack on a Saudi oil tanker. On August 8, Iran targeted a UAE ADNOC tanker in the Strait itself — the UAE confirmed the hit, though there were no casualties. Saudi Arabia condemned the attack. The brief window of hope slammed shut.

By late August, Iran’s position was clear: the Strait remains under Iranian control, and any vessel must follow Tehran’s approved route or face consequences. The US reimposed its naval blockade. And by month-end, Iran was saying “Hormuz remains closed” despite the Oman route deal.

Oil reflected the chaos. Brent crude started August at $87, spiked to $95 by August 20, dipped briefly when talks looked promising, then settled at $93 to close the month.

This was the most anticipated earnings report of the year. Maybe of the decade. Two months ago, people were writing AI’s obituary. “$1.4 trillion wiped!” “Nvidia is a bubble!” The question on everyone’s mind: was AI spending actually producing results, or was it just companies lighting money on fire?

On August 26, Nvidia answered.

Revenue: $96.2 billion. In a single quarter. That’s up 106% from the same quarter last year — it literally doubled. Earnings per share: $2.22, also more than double. Gross margin held at a fat 75%. Data centre revenue alone was $89 billion, with hyperscale cloud revenue growing 102% and enterprise AI revenue surging 138%.

Let’s put $96.2 billion in context. That’s more than the entire GDP of Sri Lanka. In three months. From one company.

The stock soared 9% the next day, adding roughly $440 billion to Nvidia’s market cap in a single trading session. That $440 billion is bigger than the entire market cap of most countries’ stock exchanges.

And the cherry on top? Amazon announced it would buy 2 million Nvidia GPUs for AWS, including chips from Nvidia’s upcoming Rubin architecture. Not “considering.” Not “evaluating.” Buying. Two million of them.

The S&P 500 hit an all-time high early in August. Let that sink in — amid a war, tariff threats, and rate hike fears, the market still found new highs.

By month-end, the S&P 500 gained 2.7% and the Nasdaq-100 surged 4.2% — its best August since 2021 and snapping two consecutive months of losses. Big Tech earnings from July and August fueled the rally. Microsoft, Google, and Amazon all saw massive post-earnings gains as investors decided that yes, the AI money is real.

But the star of the show? Energy stocks, up 7% for the month alone and 44% for the year. When oil keeps climbing because of Hormuz disruptions, energy companies print money. This sector has nearly doubled the return of every other S&P 500 sector in 2026.

Not everyone had a good time though. Five of eleven S&P sectors finished negative. Utilities fell 4.8%. Industrials dropped 2.6%. The market was a tale of two cities — if you owned tech or energy, August was great. If you owned everything else, not so much.

There’s no Fed meeting in August. But there is Jackson Hole — the annual Wyoming symposium where the Fed Chair gives a keynote speech that markets treat like scripture.

On August 28, Kevin Warsh delivered his first Jackson Hole speech as Chairman. The title? “In Our Time.” It was his 100th day on the job.

The message was hawkish. Warsh said recent inflation readings were “better than expected” but that underlying trends have not necessarily improved. He hammered home one point above all: fighting inflation is the Fed’s number one priority. He opened the door to raising rates — without committing to a timeline.

Markets didn’t love it. Treasury yields climbed immediately — the two-year jumped 7.5 basis points to 4.3%. Fed futures started pricing a 55% chance of a rate hike at the September 16 meeting, with 35 basis points of tightening priced in by year-end. Bitcoin dropped 3% as $488 million in crypto positions got liquidated.

The rate has been sitting at 3.50-3.75% since December 2025. Nine straight meetings with no change. But a July jobs report that came in weak and a cooler-than-feared inflation print pulled some of the hike certainty back. It’s genuinely 50/50 heading into September.

Last month we told you 50% tariffs on Canadian goods were coming August 19. Well, they got delayed three days to August 22 — then they hit.

$20 billion worth of Canadian products now face 50% tariffs entering the US. Trump framed it as payback for “Canadian discrimination” — mostly about dairy quotas and energy disputes. The tariffs bypass the USMCA trade deal entirely, using a different legal authority (Section 338).

Canadian PM Mark Carney responded with fire. He called it a “war” — not a trade dispute, not a disagreement, but war. Canada announced it would match the tariffs “dollar for dollar” starting September 8. That’s a former central banker using the language of combat. It tells you how serious this has gotten.

Remember, this comes on top of the 25% tariffs already in place since February 2025. We’re now looking at combined US tariffs of 75% on some Canadian goods. That’s not a tariff — that’s a trade barrier.

Remember when gold was looking tired? It peaked near $5,600 in January, then fell for months. By July it was hanging around $4,086 — recovering, but nothing dramatic.

August changed everything. Gold surged roughly 16% in a single month, climbing toward $4,600 per ounce. Two big drivers: the US dollar weakened (DXY slid below the 100 mark to around 99.5), and concerns over the US national debt hit a nerve with investors. When the dollar falls, gold rises — it’s almost mechanical.

The dollar’s decline is worth understanding. The DXY started 2026 around 107, was at 101 in July, and now sits below 100 for the first time since early 2025. That’s a significant slide. Goldman Sachs and others forecast DXY drifting toward 92-95 by year-end.

Now for Bitcoin — buckle up. BTC started August around $64,000, same as July. Then it started climbing. $69,000 on August 19-20 (overnight jump of 8%). $79,000 by August 24. And on August 28, Bitcoin briefly touched $80,000 — its highest since May. Then Warsh spoke at Jackson Hole, sounding hawkish on rates, and crypto got hit. Bitcoin fell 3%, with $488 million in leveraged positions liquidated overnight.

Malaysia’s economy just keeps outperforming. The official numbers for the first half of 2026 came in at 5.7% GDP growth — smashing Bank Negara’s forecast of 4-5%. Q2 alone grew at 6.0%, up from Q1’s 5.4%. Services and electronics exports drove the acceleration.

The stock market felt the confidence. The KLCI pushed through 1,750 in mid-August, fueled by a Wall Street risk rally and AI-linked data centre spending flowing into Johor’s industrial corridor. YTL group led the charge. Construction, utilities, and semiconductor counters were the standout performers. Foreign direct investment hit RM22.8 billion in Q2.

The month ended a bit softer though — the KLCI pulled back to ~1,726 after Jackson Hole spooked global markets.

The ringgit strengthened to ~RM4.03/USD — its best level since June. The dollar weakening (DXY below 100) helped, plus strong GDP data attracted foreign capital. Year-to-date, the ringgit is only down 0.9% against the dollar. Given everything happening in the world, that’s remarkably stable.

And some great news on fuel subsidies. The government announced that from September 1, the BUDI95 petrol quota will be restored to 300 litres per month (up from 200L), and BUDI Diesel will increase to 400 litres per month.

August gave us clarity on some things and muddied others. AI is definitely not dead — $96 billion proved that. But the Fed just got scarier, oil is still climbing, and Canada is loading retaliatory tariffs. Here’s what to watch:

1. Fed meeting September 16 — The big one. Will Warsh actually hike rates? Markets are split 55/45. A hike would be the first since mid-2023 and would shake everything — stocks, bonds, crypto, currencies. If they hold, markets breathe. Either way, the decision will dominate September.

2. Canada retaliates September 8 — Carney promised “dollar for dollar.” If Canada follows through, we’re in a full-blown US-Canada trade war. Supply chains, prices, and market confidence all take a hit.

3. Iran and the Hormuz question — The Oman talks sputtered out. Iran is attacking tankers. The US has reimposed its blockade. If this escalates further, oil goes above $100 again. If a real deal materialises, oil crashes. There is no middle scenario anymore.

4. Malaysia’s BUDI boost — Starting September 1, the bigger fuel quotas (300L RON95, 400L diesel) kick in. Good for households, but the fiscal maths get tighter if oil stays above $90. Watch Bank Negara’s next meeting for any signals on the ringgit or rates.

September is shaping up to be the most consequential month of 2026 so far. The Fed decides. Canada retaliates. Iran simmers. Stay sharp.