So Far, So Great
A 'broken record' with a new opening tune... Oil down, stocks up... Jobs numbers to watch... More AI earnings on tap... So far, so great... Trouble for Taco Bell...
It was over before it began (again)...
For a few hours on Saturday, it appeared that the U.S. military was ramping up for a large-scale attack on Iran – only for it to be "called off" at the last minute by the White House. Forgive us: You've heard that, more or less, a few times in 2026.
But this wasn't entirely a "broken record" sequence of events. There was a new opening tune, at least, and it's one that should concern all Americans...
Turns out, Iranian cyberattacks could be behind last week's disruption of public water systems in at least seven U.S. states.
Reports started surfacing last week. And by early Saturday evening, we were reading speculation that President Donald Trump was threatening to shut off all the electricity in Tehran, Iran's capital... and the U.S. State Department issued a public alert urging all U.S. citizens to consider leaving the Middle East.
But then... "nothing" happened.
Trump wrote on Truth Social around 10 p.m. Saturday that while the U.S. was "locked and loaded and ready to go," the threat was off. The Saudi Arabian crown prince in particular urged against escalation (as he has before). And Trump agreed to cancel attacks, "subject to being able to rapidly make a DEAL" to reopen the Strait of Hormuz.
We've been waiting on that deal for about four months now... And yet, the market reacted to the weekend developments as if it all mattered.
Oil down, stocks up...
Oil futures dropped about 5% in the past 24 hours. And the major U.S. stock indexes all gained at least 1%. The benchmark S&P 500 Index and tech-heavy Nasdaq Composite Index were up around 1.5%, and the Dow Jones Industrial Average hit a new all-time high.
Remember that risk of oil prices moving higher and stocks lower? We wrote about it a couple weeks ago amid what looked like a new leg of escalation in the war in Iran. This latest move is a notable interruption of that trend... and a reset of the state of play for the conflict.
How long can this cycle of "Iran risk on, risk off" continue? We're not sure, but it keeps happening – and hasn't broken the bull market yet.
On the other hand, it has been a volatile year in oil, commodities, and markets in general. Whether they end the year up or down, I (Corey McLaughlin) expect that volatility to continue along the way.
What else to watch this week...
Beyond the Iran war, we're watching for a fresh batch of jobs numbers that could move markets...
The big kahuna – the "nonfarm payrolls" report for July – comes out Friday morning with an updated unemployment rate. The number stood at 4.2% as of June. But before then, the market will get a read on the labor market through other data.
The monthly Job Openings and Labor Turnover Survey ("JOLTS") report comes out Tuesday morning, followed by ADP's private-payrolls report on Wednesday.
These numbers matter because of what they'll show about the health (or not) of the labor market. That not only signals the health of the economy, but it also influences Federal Reserve policy moving ahead.
Based on Fed Chair Kevin Warsh's comments last week, the new central-bank head doesn't see today's inflation as a problem. So if the labor market remains strong, it would justify his decision to keep interest rates as they are. And it would signal that he's unlikely to raise them like the market is expecting.
Weaker jobs numbers might even signal a rate cut.
Either steady or falling interest rates would be a near- or medium-term tailwind for stocks.
More AI earnings on tap...
The week's other big news will come from earnings season. Among others, we'll see earnings from newly public SpaceX (SPCX) and chipmaker Advanced Micro Devices (AMD) after markets close tomorrow.
SpaceX's earnings will likely set off a fresh round of trading activity for the stock that's already down about 50% from its post-IPO intraday peak. We'll have a full report in our Wednesday edition.
Overall, for the AI ecosystem, it's "so far, so great"...
Last night, we saw an interesting post on the social platform X from the Kobeissi Letter, a financial commentator. It noted that the Bloomberg AI Value Chain Index – which includes chipmakers, cloud and data-center operators, memory and hardware suppliers, and networking and power-infrastructure companies – is beating consensus Wall Street analyst expectations by an average of 71%.
For comparison, the average S&P 500 company is beating earnings estimates by "only" an average of 27% for the second quarter of 2026. The S&P 500 is tracking for its strongest quarter in years, but AI-intensive businesses are doing even better.
Of course, the circular nature of a lot of the AI build-out – agreements among all these companies for future business – is a reason for concern.
We've been tracking the "hyperscalers" earnings season close thus far, and the companies have been showing continued revenue growth. But the market has favored the ones that also show plans for positive cash flow (like Microsoft and Amazon).
After a roughly 10% drawdown for the Magnificent Seven and 20% for semiconductors heading into earnings season, this could be the start of a turnaround we've been expecting.
Lastly, it turns out I wasn't the only one avoiding Taco Bell...
We wrote to you last week about the Cyclospora parasite that has had millions of people worried.
Our main purpose of bringing up the subject was to share our Dr. David "Doc" Eifrig's tips to avoid getting sick from the parasite. These include buying whole heads of lettuce rather than bagged stuff, and understanding that "heat is the kiss of death" – meaning it can't survive in foods heated to at least 158 degrees Fahrenheit.
But I also mentioned I've "even avoided Taco Bell – which I consider a delicacy" after reports that its iceberg lettuce was a source of the outbreak. (One Cyclospora test from Taco Bell's now-former lettuce supplier was a false positive. Federal investigators still see the fast-food chain as a source of 1,947 cases as of last week.)
Turns out, I wasn't the only one being cautious.
Late last week, Yum Brands (YUM), Taco Bell's parent company, reported earnings. It said the Cyclospora outbreak and related fears led to a "meaningful near-term sales impact" in recent weeks.
Yum Brands executives said in the company's earnings call that daily traffic to Taco Bell had plunged by double digits. As of last week, they said sales are starting to come back – but only to about half their previous levels.
U.S. same-store sales fell 2% over Yum's entire second quarter, which ended June 30 and included only the first two weeks of Cyclospora impacts.
Taco Bell is one of Yum Brands' biggest revenue drivers, the other being KFC. The stock is down about 10% since its most recent high in early July.
As people remain wary of lettuce – something we didn't predict we'd write this year – other restaurant chains have seen sales slip too, like Chipotle Mexican Grill (CMG).
We imagine, gradually, people will move on and this outbreak will turn out to have been a short-term problem for the industry. But in the past 24 hours, we read the unfortunate report about two deaths tied to the outbreak, in folks with underlying health conditions.
So, figure the concerns about the parasite – and how you might get it – will linger over the restaurant industry for a bit longer. In the meantime, follow Doc's tips and stay healthy.
New 52-week highs (as of 7/31/26): Bristol-Myers Squibb (BMY), Alpha Architect 1-3 Month Box Fund (BOXX), Dexcom (DXCM), iShares MSCI Spain Fund (EWP), and Illumina (ILMN).
In today's mailbag, thoughts on the new Fed chair and what he has been saying... and feedback on Dan Ferris' Friday essay, "Terror at the Edge of the Abyss"... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"I get the feeling that our new Fed chairman just may be the last one. Something tells me he would love to eliminate it and allow the market to work without it." – Subscriber Alan F.
"Thank you for writing this article, Dan. I wanted it to go further. I wasn't ready to just be left hanging, because I too believe there are dark waters ahead, and just 'tryna' figure out what to do (slowly swim away). Thanks!" – Subscriber Joan D.
"I feel the same way. Yet it's still not breaking. Could the madness keep going? I like your perspectives and warnings... It looks like a deep rocky abyss ahead to me. But what does this investor know? I know I've benefited and learned from Stansberry, and from Porter, and other associates of yours. Keep showing us the real facts and goods. Thank you." – Subscriber Jerry W.
All the best,
Corey McLaughlin
Baltimore, Maryland
August 3, 2026