U.S. Indices closed on Tuesday amid a deluge of earnings, which saw Industrials reside as the sectoral laggard and hit by Boeing (BA) (-4%) and UPS (UPS) (-10.5%) post-results, with the latter weighed on as it did not provide revenue or operating profit guidance amid the current macro uncertainty. Real Estate, Utilities, and Energy sit atop the pile, and the latter is buoyed by gains in excess of 3.5% in the energy space amid comments from President Trump and Treasury Secretary Bessent. 1) Trump on changing the Russia deadline, reiterated what he said on Monday and that it is 10 days from today [to get a deal with Ukraine on ending the war], and referred to threatened secondary sanctions on Russian oil; 2) Bessent told Chinese officials that given US secondary tariff legislation on sanctioned Russian oil, China could face high tariffs if it continues to purchase it. On trade, the US and China had trade talks yesterday, with the overwhelming readout being positive, although Bessent said he will be meeting Trump in the Oval Office this afternoon to discuss the China deal, and the decision will be up to him. Although Bessent did say China jumped the gun a little on the 90-day pause, likely referring to China Vice Commerce Minister Li stating the US and China have agreed to extend the trade truce and both sides will continue to push forward the extension of the pause of reciprocal tariffs. The Dollar extended on Monday’s gains, with the EUR lagging again, as the fallout from the US/EU trade deal for the Euro continues to be felt. Treasuries were firmer across the curve in the wake of cooling house price data, soft JOLTS, and a stellar 7 Year Treasury Auction, which sparked a notable bid in T-Notes. On the data, US consumer confidence rose more than expected, while JOLTS ticked lower, but the report painted a familiar picture of the labour market, as hiring remains fairly low, but so do layoffs. While Tuesday has largely been the “calm before the storm”, Wednesday serves up plenty of scheduled risk events with the Bank of Canada, FOMC, Microsoft/Meta earnings, ADP, GDP, QRA, BoJ after-hours, and also the aforementioned Bessent briefing to Trump on China trade talks. The number of job openings slightly fell to 7.437 million in June from 7.712 million in May, and marginally shy of the expected 7.5 million. The vacancy rate ticked lower to 4.4% from 4.6%, while the quits rate was unchanged and remains low at 2.0%, given the prior months were revised down to 2.0% from 2.1% and continues to underscore that workers with jobs are staying put and continues to signal that wage growth will not be a source of inflationary pressure. Overall, the report painted a familiar picture of the labour market, as hiring remains fairly low, but as do layoffs, which Oxford Economics notes it will allow the Federal Reserve to keep policy steady as it waits for a clearer indication of how tariffs will impact inflation and growth. US Consumer Confidence increased more than expected in July, rising to 97.2 (exp. 95), albeit from an upwardly revised 95.2 (prev. 93). The Present Situation Index fell 1.5 points to 131.5 as the cooling in consumers’ view of the labour market offset the slight improvement in consumers’ assessments of current business conditions. The Expectations Index rose 4.5 points to 74.4, helped by consumers’ outlook on the labour market and business conditions being less negative/pessimistic, as well as being more positive on income prospects. Stephanie Guichard, a Senior Economist at The Conference Board, says, “Consumers’ write-in responses showed that tariffs remained top of mind and were mostly associated with concerns that they would lead to higher prices. In addition, references to high prices and inflation rose in July, even though consumers’ average 12-month inflation expectations eased slightly to 5.8%, down from 5.9% in June and a peak of 7% in April”. Meanwhile, consumers’ assessments of their family’s current financial situation ticked lower but remained solid in July; while the future component remained relatively strong; Consumers’ perceived likelihood of a US recession over the next 12 months declined. The FOMC is widely expected to leave rates on hold, but there may be some dissent from either Governor Waller or Governor Bowman, or both, given their recent commentary; other Fed policymakers have largely toed a patient, wait-and-see approach due to the uncertainties of the tariff impact and delayed imposition of tariffs, with new tariff rates not set to come into force until August 1st. Tariffs on China are set to come into effect on August 12th, but talks early this week are looking to extend that deadline to avoid tariffs of 145% on the US side and 125% on the Chinese side. Attention at the press conference will be on Chair Powell, to see if he offers any guidance for rates ahead, or if it may soon be time to lower rates, depending on the data, albeit the Fed has been reluctant to commit to future moves in the past, given the ongoing uncertainties around trade policies. During the Press Conference, Powell will also likely be quizzed about his future given President Trumpʼs continuing criticisms of the Fed Chair. Powell tends to avoid these sorts of questions, usually stating that he is focused on the Fed’s mandate. Note, the press conference may also see Powell quizzed on the accuracy of recent data, with an increasing number of economists worried about the accuracy and whether it could distort Fed policy. Elsewhere, Oil surged, closing higher by almost 4% while Gold ended Tuesday’s session with a 0.4% gain.
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For anyone following my Platinum Service it made 20 points yesterday and is now ahead by 3663 points for July after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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