Summary
Highlights
The European Union prepares for a potential trade conflict with the U.S. as a trade deadline approaches. Japan's Prime Minister pledges to remain in office to address tariff negotiations despite election losses. Stellantis reports significant losses in the U.S. Big Tech earnings are anticipated, with Alphabet and Tesla reporting this week.
Stellantis shares decline following the release of figures indicating a loss of 2.3 billion euros. Block is being added to the S&P 500, replacing Hess, which was acquired by Chevron.
Max Kettner from HSBC provides insights on market signals, noting short-term sentiment indicators suggest a sell signal. Despite this, he believes the rally may continue due to low earnings expectations, particularly in the tech sector, supported by AI spending.
An discussion of potential downside risks in the second half of the year, including rising yields and goods inflation. Tactical hedging is suggested, especially in cyclical sectors like autos. Tariffs are mentioned ironically as a potentially bullish catalyst if deadlines are extended.
The European Union is preparing for a no-deal scenario with the U.S. due to disagreements over baseline tariff rates. Uncertainty is becoming worse than a bad deal.
The Japanese Prime Minister faces challenges after the Liberal Democratic Party lost its majority in both houses of Parliament. This electoral setback could weaken Japan's position in ongoing trade talks with the U.S.
Equity markets are experiencing a “reluctant rally” with underlying investor uncertainty. Focus on regional banks and recent muted reactions to earnings reports. There is a lack of conviction and uncertainty remain in market sentiment.
The European Union trade negotiating team indicates the US negotiating position is hardening, making a deal not in their favor, leading the EU to consider retaliatory actions. The EU has about $100 billion dollars worth of US products targeted from airplanes to bourban and soybeans to initate as retaliatory measures.
Alaska Airlines resumed flights after temporarily grounding its fleet. Discussion of Ryanair's increased profits, driven by strong travel demand and the misfortunes of its rivals.
Stellantis reports a nearly $3 billion net loss for the first half of the year due to restructuring expenses and U.S. tariffs. The new CEO is taking steps to reset expectations, re-shifting priorities during a difficult time for the industry.
Preview of the trading week ahead, highlighting big tech earnings reports from Tesla and Alphabet on Wednesday, and Intel on Thursday. Also focuses on jobless claims data on Thursday. Block is rallying up 9.6%.
An analysis of the bond market's sensitivity to inflation concerns and the point at which higher bond yields might trigger concern in the equity market. The relationship between bond yields and risk assets is described as nonlinear.