📈 Market Report.
⚠️ President Trump has threatened to impose “secondary tariffs” of around 100% on Russia’s trade partners if President Putin does not agree to a deal to end the invasion of Ukraine within 50 days. The secondary tariffs could heavily impact countries that rely on Russian fossil fuels, such as China, India, Brazil and Turkey.
📊 The Russian ruble reversed earlier losses and rose against the U.S. dollar and Chinese yuan after President Trump warned he would impose “very severe tariffs”. The Russian stock market has risen nearly 7% since last Friday’s lows. The ruble’s recovery suggests the market interpreted Trump’s threats as less severe than initially expected, with the 50-day deadline seen as an opportunity for further negotiations.
🛡️ The president also announced the U.S. will send “billions of dollars worth of military equipment” purchased from American companies to NATO allies to be delivered to Ukraine. This supports our previous suggestion yesterday, that Germany was requesting missile systems for Ukraine from the US, which would be paid for with European funds, thereby benefiting US companies.
💬 When asked what weapons will be sent to Ukraine via NATO, president Trump said: “It’s everything… It’s all of them. It’s a full compliment.”
📉 White House economic advisor Kevin Hassett speculated that new tariff policies are not yet sparking widespread price inflation because President Trump has convinced more people to buy American products out of “patriotism.” Hassett pointed to a recent White House report that found prices of imported goods fell between December and May, arguing that the demand for imports has gone down as people prefer American products. Hassett also claimed that countries with trade deficits with the U.S. are eating the cost of the tariffs, rather than passing them on to American consumers.
📊 None of this sounds like a realistic economic argument. The real reason we are not yet seeing the impact of tariffs on prices is the rapid increase in future imports in the present, to avoid the tariffs that are coming. And this could be demonstrated by the US trade balance data, which is showing a record deficit (acceleration of imports prior to the tariffs).
🇪🇺 The European Union has finalized a second list of countermeasures worth €72 billion ($84 billion) to target U.S. goods, including Boeing aircraft, automobiles, and bourbon, if it decides to retaliate against U.S. tariffs. The list represents the EU’s response to President Trump’s earlier 20% tariff on most EU goods and additional 25% tariffs on cars and car parts, which were later temporarily lowered to 10%. Initially, the amount was €95 billion but was cut down after consultations with companies and member states. Countries must approve the list before its adoption.
🏢 Federal Reserve Chair Jerome Powell has asked the central bank’s inspector general to review the costs involved in the renovation of the Fed’s historic headquarters in Washington, D.C. Powell said in a letter that some features that had drawn criticism, such as VIP elevators or dining rooms, were never in the project’s scope, and changes to the original design did not add to the costs.
🔍 However, the Fed has autonomy over its building projects too, with oversight from Congress and the Fed’s independent inspector general, who has been reviewing the renovations throughout the process. El descontento de Trump con la Fed por el mantenimiento de los tipos, emplea este asunto, como mera excusa para proseguir con su critica a Powell.
🇬🇧 In UK, British retail spending grew 3.1% in June compared to a year earlier, up from 1.0% growth in May, as unusually hot weather boosted demand for fans and summer clothin. The British Retail Consortium (BRC) said the spending increase partly reflected higher food prices, with supermarket sales rising 4.1% compared to a 2.2% rise for non-food stores. However, Separate data from Barclays showed overall consumer spending dropped 0.1% year-on-year in June, compared to a 1.0% rise in May, indicating weaker retail spending growth than the BRC figures.
💻 Nvidia plans to resume sales of its H20 artificial intelligence chip to China, after its CEO met with U.S. President Donald Trump. The U.S. government has assured Nvidia that licenses will be granted to allow the company to resume H20 chip deliveries to China soon. The move to resume H20 chip sales comes amid easing tensions between the U.S. and China, with China relaxing rare earth export controls and the U.S. allowing some chip design software services to resume in China.
🤔 However, uncertainties between the two countries remain high, and Chinese companies are likely to continue diversifying their supply chain options. The H20 chip ban had previously forced Nvidia to write off $5.5 billion in inventories and walk away from $15 billion in sales. China is a critical market for Nvidia, generating $17 billion in revenue for the company in the last fiscal year, accounting for 13% of its total sales.
🚀 Elon Musk stated that he does not support a merger between his AI company xAI and his electric vehicle company Tesla. Musk had previously suggested that Tesla would hold a shareholder vote on whether to invest $5 billion into xAI, and the majority of voters had supported the idea. Musk has been looking to bring his various businesses, including xAI and the social media platform X, closer together since exiting his position in the Trump administration. Another Musk venture, SpaceX, has reportedly agreed to invest $2 billion into xAI as part of a broader $10 billion fundraising effort. xAI is aiming to take on other AI startups and established competitors as it builds out infrastructure and develops Grok, which it has billed as the “world’s smartest artificial intelligence.”
🗞️ Geopolitics:
📰 The British newspaper UnHerd, owned by prominent hedge fund manager Sir Paul Marshall, has launched a harsh criticism against European bureaucracy. The recent no-confidence vote in the European Parliament has revealed growing cross-party discontent with European Commission President Ursula von der Leyen’s increasingly authoritarian leadership.
🌐 The motion of censure was also directed at von der Leyen’s second-in-command, Kaja Kallas, the EU’s High Representative for Foreign Affairs, who has become the face of the EU’s “toxic blend of incompetence, irrelevance and outright stupidity” on foreign policy. Kallas is criticized for her single-minded fixation on Russia, her aggressive and unilateral rhetoric, and her lack of diplomatic nuance (which is paradoxical, given that she is the representative of European diplomacy), which has alienated even EU member states that broadly support the Ukraine policy.
❌ Kallas’s hypocrisy in demanding the total economic isolation of Russia while her own family’s business continued to operate there, as well as her selective moralism in whitewashing Israeli atrocities while lecturing China on international law. The no-confidence vote and the growing discontent with von der Leyen and Kallas’s leadership reflect a deeper crisis of legitimacy and competence within the European Union’s political institutions.
📈 Market View:
📊 The markets recover and return to peak levels. The S&P 500 futures climb back to the crest, reaching 6,330 points. The Nasdaq-100 futures hit new records and are currently at 23,145 points.
💵 The US dollar slows its ascent but remains firm. The DXY dollar index surpassed 98 points overnight and remains in this range. The EUR/USD pair continues its decline, albeit at a slower pace, currently standing at 1.1685, after falling to almost 1.1650 during yesterday’s session. The GBP/USD pair has also experienced a significant drop against the dollar and appears to be stabilising around the 1.3440 zone.
📈 European equities regain some of the optimism lost at the start of the week, with indices advancing into positive territory. DAX 40 futures are currently at 24,345 points, having dropped close to 24,000 points at the beginning of the week. Euro Stoxx 50 futures are also advancing, now positioned above 5,400 points.
🛢️ Crude oil deflates following yesterday’s surge when Brent crude nearly reached $71.50 per barrel, from which it has now declined to the current $68.70 per barrel.
🥇 Gold futures, which also started the week with declines, have risen in recent hours, surpassing $3,350 per ounce and now standing at $3,370 per ounce.
💰 Bitcoin exceeded $123,230 but has experienced a sharp pullback in the past few hours. It now appears to be finding support at its most recent level around $117,000, currently trading at $116,840.
