Welcome to RBC’s Markets in Motion podcast, recorded July 28th, 2025. I’m Lori Calvasina, head of US equity strategy at RBC Capital Markets. Please listen to the end of this podcast for important disclaimers.

The big thing you need to know:

• Our overall impression from 2Q25 reporting season is that companies are managing through tariffs fairly well so far, but it’s still too early to assume tariffs won’t generate inflation pressures.

If you’d like to hear more, here’s another four minutes.

• This past week was the first one with both volume and breadth in reporting season, giving us a sense of the story that’s emerging. But the narrative could still change as this upcoming week sees well over 150 SPX companies report.
• Key takeaways from our earnings call transcript reading so far are:
• First, the overall tone still seems “fine but not fabulous” as we observed last week.
  • Week 2 sounded more mixed than week 1, which was mostly Financials
  • Uncertainty, unevenness, ongoing challenges in certain markets, cost pressures, consumer caution, delays in decision making, the fluidity of the tariff environment, interest rates, and difficulties forecasting remained key themes for some companies, while others emphasized resilience along with greater stability, consistent business conditions, healthy corporate balance sheets, improving sentiment, a desire to push forward among their customers, and easier comps coming up.
  • Overall, companies seem to be managing through headwinds, though some are doing so better than others or sound more confident about their ability to do so going forward.
• Second, on demand - our impression coming into last week was that tariffs and policy uncertainty generally had been accompanied by no meaningful impact to demand for some companies, a pause in activity or delay in decision making for others, and a pull-forward of purchases or activity for others, though the exact mix between the three seemed unclear to us. That generally remains our impression after going through last week’s transcripts.
  • We found a number of companies in all three categories and think we’re still in a discovery process here as to how this will end up shaking out. This matters b/c pull-forward poses downside risk to EPS while delay poses upside risk to EPS.
• Third, on the consumer, we spent some time focusing on what the consumer companies, who we think give a more boots on the ground read for what’s going on than the Financials, had to say about the health of the consumer.
  • We continued to get descriptions of the consumer as cautious yet resilient, while highlighting pressures on the low end and value-seeking behavior generally.
  • Some companies are also highlighting the consumers’ sensitivity to pricing.
• Fourth, and probably most important – there was a discussion of the timing of tariff impacts that’s worth noting – we took note of five different companies from the consumer goods and industrials sectors that discussed how tariff impacts were set up to hit in the 2nd half of the 2025.
  • This helps to keep us in the camp that it’s too early to write off potential inflation impacts from tariffs as many investors have done.
  • This also keeps us nervous heading into the fall, as US equities tend to be strong over the summer, if you look at the past five years, but weak in the September-October time frame.

That’s all for now. Thanks for listening. And be sure to reach out to your RBC representative.