Brief Summary
This Bloomberg Television broadcast delivers a concise overview of key market trends and economic developments. It covers European reactions to potential US trade tariffs, Japan's Prime Minister's strategy following election setbacks, and significant earnings reports from companies like Stellantis. The report also examines market sentiment, potential catalysts, and specific stock movements, providing viewers with a comprehensive snapshot of the current financial landscape.
- EU prepares for trade fight with the U.S.
- Japan's Prime Minister to negotiate tariffs despite election setback.
- Big Tech earnings on deck.
Intro
The broadcast begins by outlining the key topics for the day, including Europe's preparation for a trade dispute with the U.S. due to upcoming tariff deadlines, Japan's Prime Minister's commitment to negotiating tariffs despite recent election losses, and Stellantis' significant losses in the U.S. The focus then shifts to the busy earnings week ahead, highlighting that major tech companies like Alphabet and Tesla are set to report their earnings. The introduction also notes the market's slight upward trend and the questions surrounding Federal Reserve independence amid tariff inflation concerns.
First Look Movers
Valerie provides an update on stocks moving in premarket trading, starting with Stellantis, which is down 1.4% after reporting a first-half loss of 2.3 billion euros, influenced by an impairment charge of around 3.3 billion euros. Block's shares are up 9% as it is being added to the S&P 500, replacing Hess, which was acquired by Chevron. Alaska Airlines shares are trading slightly lower due to grounding its fleet earlier in the year.
Max Kettner, HSBC Chief Multi-Asset Strategist
Max Kettner of HSBC discusses the potential for the U.S. equity rally to continue, supported by low earnings expectations for the reporting season, particularly in the tech sector, driven by a weaker dollar and AI spending. He notes that short-term sentiment and positioning signals are sending sell signals, the biggest since mid-2023, suggesting caution is warranted heading into September. Kettner advises using market squeezes to implement hedges on cyclical parts of the market, such as the auto sector, to lock in gains. He acknowledges potential downside risks, such as rising yields due to strong growth or increased goods inflation, but views these as buying signals. He also suggests that while geopolitical events and Fed actions pose risks, fundamental concerns like negative integration flows are more concerning.
Trending on the Terminal
The segment covers top stories, including Stellantis reporting a net loss of $2.3 billion due to restructuring expenses and U.S. tariffs, which led to a 25% drop in North American shipments in the second quarter. Ryanair expects to recover most of last year's fare drop, cautioning that second-quarter increases will be lower than the first due to capacity constraints. Additionally, Microsoft server software was exploited by unidentified hackers, who accessed file systems and internal configurations, prompting Microsoft to release a security patch. The segment concludes by noting the EU is preparing for a potential no-deal scenario with the U.S., despite the U.S. remaining confident in reaching an agreement.
Front Page News
The front pages of major newspapers are reviewed, starting with calls from members of Congress for more files to be released in the Epstein case, following the Justice Department's request to unseal grand jury testimony. The Wall Street Journal reports that Treasury Secretary Scott Bessent privately argued against firing Fed Chair Powell, citing the strong economy. The Financial Times covers Japan's Prime Minister's vow to continue leading Japan despite the Liberal Democratic Party losing its majority in both houses of Parliament.
First Look Movers
The segment revisits stocks in premarket trading, with Stellantis shares down nearly 2% after reporting a $2.3 billion loss for the first half of the year, impacted by an impairment charge and a 25% drop in North American shipments due to Trump's auto tariffs. Block's shares are up nearly 10% as it replaces Hess in the S&P 500 following Chevron's acquisition of Hess. Verizon shares are trading in the green, and Domino's Pizza is also reporting before the bell.
Amy Wu Silverman, RBC Capital Markets Head of Derivatives Strategy
Amy Wu Silverman of RBC Capital Markets discusses the lack of conviction in the markets, suggesting that this reluctance could lead to more upside if earnings come in better than expected. She describes the current rally as a "reluctant rally," noting that investors are aware of stretched valuations and various overhanging issues. Silverman points out a dichotomy between retail and institutional investors, with the latter needing to participate due to high benchmark concentrations. She suggests that the market's apparent complacency, indicated by the VIX below 17, is actually a difficulty in tactically hedging, as consistent hedging has been challenging with the market's upward grind.
Trending on the Terminal
The segment highlights trending stories, including Israel warning of a move into a town in Gaza and accusing Hamas of stalling cease-fire talks. Germany's top firms have unveiled at least $116 billion worth of new projects to uplift the country out of stagnation. Additionally, Microsoft server software was exploited by unidentified hackers, who accessed file systems and internal configurations, prompting Microsoft to release a security badge. The segment concludes by noting rising trade uncertainty as the U.S. readies for a potential no-deal scenario with Washington.
What to Watch
The segment sets up the trading week, noting that big tech earnings will be kicking off, with Tesla and Alphabet reporting on Wednesday, followed by Intel on Thursday, which is also when jobless claims data will be released. Block is rallying as it joins the S&P 500, up 9.6%, replacing Hess after Chevron's acquisition. Tesla is leading the Mag 7 stocks, up just under 1.5%, ahead of its earnings report later in the week. The segment concludes by noting that 20% of the market by market cap will be reporting this week.
