Morning Brew July 2 2025

Good morning,

The Big Beautiful Bill took the next hurdle, but markets remain subdued, the Dow closes up 0.9%; the Nasdaq falls 0.8% and the S&P drops 0.1%, Tesla remains the main culprit at -5.4% after the fight between Elon Musk and Donald Trump reemerged and we are expecting Tesla sales data today.

Jerome Powell spoke somewhat cautiously yesterday "As long as the U.S. economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be.", but hopes the nonfarm payroll on Thursday could disappoint and open the way to a cut on July 30 are circulating. The current probability is at 22% for a rate cut so it would be a significant shift. Jeffries wrote yesterday that a nonfarm payroll below 100k would make a July cut possible.

The USD hit new cycle lows yesterday before rebounding, the USD Index is now 96.75, EURUSD 1.1790, GBPUSD 1.3735 and USDJPY 143.70. Gold is 3333, Silver 36.10 and Platinum 1355. Bitcoin and Ethereum are 106800 and 2440.

Main driver today will be the Big Beautiful Bill, Tariff news and to a lesser extent US Data unless there is a massive surprise.

While we await the inputs, enjoy:

• My Podcast with Fabio
• Our Q3 Outlook in the platform under Research
  
  

  Equities:

• Extreme concentration in US equities underscores the critical need for global diversification to mitigate risks associated with overreliance on a small number of technology giants.
• European equities present compelling opportunities, driven by significant fiscal stimulus, robust policy support for strategic autonomy, and favourable valuations compared to the US market.
• Emerging markets and Japan offer attractive investment opportunities, supported by beneficial currency dynamics, meaningful structural economic reforms, corporate governance improvements, and significant valuation advantages relative to developed markets.

FX

• Summary:  The quarter ahead will begin to show how the chaos of Q2 and Trump 2.0 policies and the world's response to them are shaping the outlook for the economy and global market sentiment.

- July 2, 2025 (Wednesday)
  - ADP Employment Report (8:15)–Jun U.S.
  - Unemployment Rate (5:00)–May Eurozone
- July 3, 2025 (Thursday)
- China PMI
  - Trade Balance (8:30)–May U.S.

  - Employment Report (8:30)–Jun U.S.

  - Factory Orders (10:00)–May U.S.
  - ISM Non-Manufacturing Composite (10:00)–Jun U.S.
  - Factory Orders (10:00)–May F U.S.
  - Merchandise Trade Balance (8:30)–May Canada

- July 4, 2025 (Friday)

  - No major G10 releases (U.S. holiday)

- July 7, 2025 (Monday)

  - Leading Indicators (1:00)–May P Japan

  - Current Account (19:50)–May Japan

  - Trade Balance (19:50)–May Japan

  - Retail Sales (5:00)–May Eurozone

- July 8, 2025 (Tuesday)

  - Consumer Credit (15:00)–May U.S.
- July 9, 2025 (Wednesday)
- China CPI & PPI
- AU rate decision
  - Wholesale Inventories (10:00)–May F U.S.
 - Machine Tool Orders (2:00)–Jun P Japan
- July 10, 2025 (Thursday)
  - No major releases
- July 11, 2025 (Friday)
  - Treasury Statement (14:00)–Jun U.S.
  - Employment Report (8:30)–Jun Canada
  - Building Permits (8:30)–May Canada
  - Industrial Production (2:00)–May U.K.
  - Trade Balance (2:00)–May U.K.