Morning Watchlist: Friday Edition
A quick note from Behind the Markets
The inflation scare of the last two weeks is over, at least for now.
Wednesday's consumer price report came in line — 3.4% annual, core at 2.5%. Thursday's producer price report was better than that: wholesale prices were flat in July against expectations of a 0.2% rise, with the annual rate cooling to 4.7%. Goods prices actually fell 0.7%, led by an energy decline. Traders responded exactly as you'd expect: the odds of a September rate hike collapsed to roughly 34%, down from about 55% a week ago, and the S&P 500 set another record high.
So the macro fever has broken. Good. That frees us up to look at what actually determines who makes money — and today's four stories are all versions of the same thing.
Wall Street treats tariffs, industrial policy, metals, and consumer earnings as separate sectors. They're not. They're all tests of who has pricing power when the cost of doing business changes faster than the spreadsheet. Today's issue starts with the part most investors miss — the first victim of a tariff is usually working capital, not demand — and ends with a company that just proved a good product can still command full price.
1) The Tariff Deadline Is Really a Working-Capital Test
The White House is still negotiating with Canada ahead of a threatened August 19 tariff increase — five days from now — with Ottawa reportedly unhappy with the latest U.S. offer.
Investors will focus on the headline rate. Operators are watching something less visible: how much inventory can be moved, financed, repriced, or stranded before the rule changes again.
A manufacturer doesn't experience a tariff as a line in a policy memo. It experiences it as a purchase-order decision, a customs bill, a delayed shipment, and a customer who wants the old price. Notice what that does to the balance sheet before it does anything to the income statement: inventory gets pulled forward to beat a deadline, cash converts to goods sitting in a warehouse, receivables stretch while customers argue about surcharges, and the company that guessed wrong on timing is financing someone else's hesitation.
Here's a useful piece of context from this week's data. Producer prices for final demand goods fell 0.7% in July, and the decline was led by energy. Whatever tariffs are doing to costs, they are not currently overwhelming the goods complex at the wholesale level — which means the pain is showing up somewhere less visible than price indexes. That somewhere is working capital.
So the strongest small and mid-cap companies here aren't necessarily the ones with the lowest import exposure. They're the ones with short cash-conversion cycles, qualified local alternatives already in place, and the standing to pass through cost without losing the account. Run this screen on anything you own with a cross-border supply chain: How many days of inventory? How fast do receivables turn? Is there a second source already qualified, or just identified? And has this company raised prices before without losing volume — or is that a theory?
Bottom line: A tariff deadline is a stress test for working capital. Look for cash discipline and pricing power before you look for a patriotic label.
2) Green Steel Just Hit the Financing Wall
Thyssenkrupp is in advanced talks to adjust the funding framework for its planned green-steel plant in Duisburg, because — in the company's framing — the economic environment has changed.
That's not a rejection of decarbonization. It's the moment a political promise has to become a project-finance model, and the two are very different documents. A subsidy announcement tells you a government wants something built. A financing framework tells you whether anyone will actually lend against it at a price that works.
The market has spent years rewarding announcements: hydrogen, direct reduction, clean electricity, a new industrial base. The next winners are more likely to be the suppliers who make the economics work — power equipment, specialty materials, process controls, maintenance, financing — than the headline producer carrying the project risk. When capital gets more expensive, projects with a credible offtake customer, reliable power, and staged spending survive. Projects that need perfect subsidies and perfect commodity spreads do not.
Two weeks ago it was Germany's state bank opening credit lines for grid buildout — capital arriving. Today it's a steelmaker renegotiating because capital got expensive. Same theme, opposite direction, three weeks apart. That's what "moving from vision to underwriting" actually looks like in practice.
Bottom line: The green-industrial trade is moving from vision to underwriting. Own the picks and shovels with real orders, not the press release.
3) Copper's Bottleneck Isn't Where You Think
Antofagasta reported first-half results yesterday, and the numbers make the case for copper better than any forecast could: revenue up 18% to $4.5 billion, EBITDA up 27% to $2.8 billion at a 63.4% margin, and profit before tax up 72% — all achieved while copper production fell 9% to 285,000 tonnes. Realized copper prices averaged $6.19 a pound, up 36% year over year.
Higher prices, lower output, record margins. That's a supply story wearing a demand story's clothing.
The intuitive assumption is that when metal is scarce, the toll collector between rock and refined metal gets rich. The exact opposite is happening.
Treatment and refining charges — the fees miners pay smelters to turn concentrate into usable metal — were settled for 2026 at zero dollars per tonne and zero cents per pound. For context, the 2025 benchmark was $21.25 a tonne. Spot processing fees have gone negative, meaning smelters effectively pay for the privilege of processing material. Negative treatment charges leave standalone smelters unprofitable even with copper near record prices, and China's smelter purchasing group has said members would cut production by more than 10% this year to rebalance.
The bottleneck is not the smelter. The world has abundant refining capacity and not enough ore. Pricing power has shifted decisively up the chain to whoever controls the rock — which is why Antofagasta has been able to abandon the traditional fixed-benchmark model in favor of spot-indexed sales with a guaranteed floor.
The supporting data is stark. The International Copper Study Group cut its 2026 mine production growth forecast to 1.6% from 2.3%, and projects refined production growth of just 0.4% because concentrate supply constrains smelter output. Codelco has effectively retired its 1.7-million-tonne 2030 target. Antofagasta's own analysis sees copper demand rising 8 million tonnes by 2035 against only 4 million tonnes of new mine supply.
One honest caveat that most copper bulls skip: the same study group forecasts a 377,000-tonne refined surplus once restarting mines return concentrate to the market after 2027. Scarcity narratives have expiration dates. This one has a rough postmark.
The Stock: Freeport-McMoRan (NYSE: FCX)
If the pricing power sits with whoever controls the ore, Freeport is the largest U.S.-listed way to own that position — and unusually, it sits on both sides of this squeeze, because it also owns smelting capacity in Indonesia and therefore feels the negative-TC pain firsthand.
Second-quarter results, reported in late July — event risk cleared — beat convincingly: adjusted earnings of $0.74 a share against a $0.62 consensus, revenue of $7.03 billion, and copper sales of 710 million pounds at a realized $6.17. First-half net income rose 65%. U.S. mining operations generated 2.4 times the operating income of the prior-year period. Management cut full-year unit net cash cost guidance to about $1.90 a pound from $1.95 — the rare miner lowering its cost outlook mid-cycle. And the Grasberg Block Cave recovery, the company's biggest overhang after the 2025 mud-rush incident, is tracking: daily production doubled from 34,000 tonnes in April to 69,000 in June, targeting roughly 65% of capacity in the second half, 80% by mid-2027, and near-full by the end of 2027. Freeport returned $600 million to shareholders in the first half and holds a policy of returning half of available cash.
The other side, and it's substantial. The stock is up roughly 37% year to date and 70% over the past year — you are buying copper's re-rating after it has largely happened, and at least one detailed analyst who owns the shares moved to Hold in the past week specifically because valuation "tempers new buying." Grasberg execution is not finished; it is a ramp with maintenance downtime baked into guidance and a water-management problem management is actively drilling around. The Bagdad expansion in Arizona now carries a preliminary capital estimate near $4.5 billion — roughly 30% above the 2023 estimate on labor and commodity inflation, which is exactly the industrial-cost problem section two is about. Full-year capex runs $4.3 billion. And this is a commodity producer: if copper corrects, none of the operational excellence above will save the stock.
Bottom line: Copper scarcity creates several profit pools — and right now the smelters are in the wrong one. Own the ore, size for the cycle, and remember the surplus forecast has a date on it.
4) Birkenstock Is a Pricing-Power Test
Birkenstock reported yesterday morning and the market's verdict was immediate: the stock jumped double digits.
Third-quarter revenue rose 13% as reported and 15% in constant currency to €719.5 million, beating the €713.4 million consensus. Management raised full-year guidance to roughly 15% constant-currency growth, up from a 13–15% range, and lifted adjusted EBITDA guidance to at least €710 million with margins of 30.2–30.5%. Direct-to-consumer sales rose 14% and now account for nearly 39% of revenue — outpacing wholesale for the first time in two years, which is the single most important operational detail in the release. Asia-Pacific grew 18%, EMEA 15%, the Americas 11%. The company completed a €230 million buyback. Even the Middle East conflict came in better than feared: management now estimates a high-single-digit-millions euro hit in the second half against an earlier €10–12 million forecast, mitigated by rerouting deliveries.
A brand with loyal customers, controlled distribution, and a product that's hard to substitute protected its margin while much of the apparel and footwear sector fights discounting. As one analyst put it, consumers remain intentional with their purchases — and Birkenstock wins by offering high-end lifestyle positioning at accessible price points.
Now the three things that didn't make the headlines, and you should weigh all of them.
One: earnings actually fell. Net profit dropped 15.2% to €109.6 million from €129.2 million, and adjusted EPS of €0.74 missed the €0.76 consensus. Revenue grew; profit didn't.
Two: the guidance raise implies a softer fourth quarter than the Street expects. Guggenheim's analyst did the arithmetic on the new full-year number and found it implies roughly €595 million of Q4 revenue — below the current consensus of about €604 million. A raise that lowers the implied next quarter is a very particular kind of raise.
Three: you'd be buying after the pop. The stock rose roughly 12% in pre-market trading and finished sharply higher, moving toward the upper end of its 52-week range. The information that caused the move is now public and in the price.
So: a genuinely excellent brand, a validated thesis, and an entry point twelve percent worse than it was on Wednesday. If the business interests you — and it should, because the DTC crossover is a durable margin story — the discipline is to want it at a price, not to want it today.
Bottom line: In a divided consumer economy, pricing power is a balance-sheet asset. Watch who sells fewer units without giving back the margin — then check whether you're paying for that insight after everyone else has.
Before You Go
The common thread today isn't tariffs, steel, copper, or sandals. It's friction.
A tariff deadline drains working capital before it touches demand. A green-steel plant discovers that subsidies and financing are different documents. Copper miners collect record margins on falling output while smelters process ore for free. And a sandal company grows 15% while much of retail discounts to stay level.
When the system gets harder to operate, companies with cash discipline and a real bottleneck earn more — not because the economy is easy, but precisely because it isn't. That's the whole edge. Find the friction, then find who's positioned to be paid for it rather than crushed by it.
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Written by Behind the Markets