Market Report.
📈 Today’s initial macroeconomic data is positive. The United Kingdom reported strong retail sales, exceeding expectations and showing clear signs of strengthening consumption. Germany improved its outlook with GDP growth of 0.4% in Q1, and annualised growth expectations are now positive, rising from -0.2% to 0%.
🇺🇸 The U.S. House of Representatives approved President Donald Trump’s “big, beautiful” tax bill on Thursday, marking its next step toward the Senate for final approval.
💸 The centerpiece is an extension of the 2017 Trump tax cuts, preserving lower rates and various tax breaks, with the largest benefits going to the “highest earners” based on financial media.
🍴 Apparently, waiters are now the rich people of society, because the bill proposes exempts tips and overtime pay from federal income taxes, at a cost of $164 billion. The average American family is estimated to save $1,700 annually, equivalent to about nine weeks of groceries, with additional tax cuts of $1,300 for a family of four. Additional tax relief is provided for seniors, with estimates of up to $450 in annual savings. The small business deduction is expanded from 20% to 23% of qualified business income, encouraging entrepreneurship and job creation.
💊 Yes, the bill contains one of the largest Medicaid funding cuts in modern history, projected at nearly $700 billion, but includes several provisions aimed at delivering tangible social benefits to working families, middle-income earners, small businesses, and specific vulnerable groups such as seniors and service workers. It terminates several hundred billion dollars in clean energy tax credits and funds, while boosting military spending by $150 billion.
⚖️ The U.S. Supreme Court’s recent statements indicate that Federal Reserve officials may possess safeguards against presidential removal, thereby diminishing the likelihood of political influence over their policy decisions.
🇮🇳 India faces challenges in becoming a viable alternative manufacturing hub to China. While India has emerged as a significant, albeit nascent, hub for electronics assembly, the path to it becoming a clear-cut alternative to China is not guaranteed, despite U.S. tariffs on Chinese goods. Even if India wins a larger share of Apple’s iPhone assembly business, the benefits for the country may be minimal, as India currently earns only $30 per iPhone, much of which goes back to Apple as subsidies. India offers one of the best long-term growth plays among emerging markets, driven by its large domestic demand. However, India may need to work harder to attract foreign investment.
⚠️ Alarm in Japan. Japan’s core inflation rises to 3.5% in April. While the financial media distracts us with how ‘bad Trump is’ and whether or not there could be a recession in the US, and its deficit and debt etc. Europe’s economy continues to deteriorate, and Japan’s looks like Chernobyl’s reactor. Its temperature is rising and it is on the verge of a chain reaction. It is the fourth-largest economy in the world and has a monstrous debt. Its inflation continues to rise, and its GDP contracted in the last period. Their own data and the US administration are pushing them to keep raising rates; it’s like putting a gun to their head.
🇩🇪 Germany remains a relative safe haven, with its debt-to-GDP ratio below 100%, but not for long. A government that is faltering and lacks public support recently reformed its laws to abandon its strict fiscal discipline and increase its leverage with military spending. What could possibly go wrong? its yields have also spiked due to increased spending commitments.
🛡️ But Germany has expressed a renewed commitment to assuming a prominent leadership position in European defense based on a Chancellor Friedrich Merz speech in Lithuania on Tuesday, emphasizing that the German armed forces are fully prepared to safeguard the Baltic region from “any potential threat.”
💬 U.S. trade negotiators are pushing the EU to make unilateral tariff reductions on U.S. goods, saying the EU will not progress in talks to avoid additional 20% “reciprocal” duties unless it makes concessions. The U.S. Trade Representative Jamieson Greer is preparing to tell the European Trade Commissioner Maros Sefcovic that the EU’s recent “explanatory note” for the talks falls short of U.S. expectations.
🔧 The U.S. had imposed 25% tariffs on EU cars, steel and aluminum, and 20% tariffs on other EU goods, before halving the 20% rate until July 8, setting a 90-day window for talks to reach a more comprehensive tariff deal. In response, the EU suspended its own plans to impose retaliatory tariffs on some U.S. goods and proposed zero duties for all industrial goods on both sides.
🤖 Anthropic, the Amazon-backed OpenAI rival, has launched its most powerful AI models yet – Claude Opus 4 and Claude Sonnet 4. Anthropic claims these models define a “new standard” for AI agents, capable of analyzing thousands of data sources, executing long-running tasks, writing human-quality content, and performing complex actions. Claude Opus 4 is touted as the “best coding model in the world” and can autonomously work for nearly a full corporate workday. The models can search the web, alternate between reasoning and tool use, and extract and save key facts to build knowledge over time. Anthropic’s chief product officer says the models have crossed a threshold where they can now do most of the writing themselves. Anthropic’s annualized revenue reached $2 billion in the first quarter, more than doubling from the prior period. The company has also received a $2.5 billion, five-year revolving credit line to fuel its expansion in the competitive AI market.
Geopolitics:
🇺🇦 Ukrainian conflict: The spotlight has turned to a phone call between Russian President Vladimir Putin and U.S. President Donald Trump, as Russia and Ukraine resume direct talks in Istanbul. Ukraine may have realized the need to move away from its alignment with the European “war lobby” and engage in direct negotiations with Russia. The real battle is now for Trump’s favor, as both sides try to convince him to support their respective positions on a ceasefire and the path to a lasting peace.
🇶🇦 Netanyahu acknowledges that he allowed Qatar to finance Hamas in order to divide the Palestinian cause. An investigation by Israeli internal intelligence revealed that Doha sent around $30 million a month to Gaza.
Market View:
📉 The US markets remain practically at Wednesday’s levels. The Mini S&P 500 futures have barely moved and are currently trading at 5,845 points. Nasdaq 100 futures are in a similar situation, staying close to the weekly support levels of 21,150 points, currently trading at 21,105 points.
💵 The dollar attempted to recover during yesterday’s session, pushing its index up to 100 points before retreating again to the current level of 99.65 points. This left a scar of 100 pips on the EUR/USD pair, which moved from levels around 1.1350 on Wednesday to approximately 1.1255 on Thursday, from where it has since recovered and is now trading above 1.13. The GBP/USD pair also remains exceptionally strong, edging ever closer to the highs of 1.3450, currently trading at 1.3445. This strength is supported by higher inflation and strong retail sales data published earlier today, which reduce the likelihood of further rate cuts by the Bank of England.
📊 In Europe, DAX 40 futures remain in autopilot mode, stable and practically unchanged since the beginning of the week, currently trading at 24,035 points, which constitutes their all-time highs. Eurostoxx 50 futures are also consolidating in a sideways trend, managing to hold above 5,400 points, and are currently trading at 5,425 points.
🛢️ Crude oil continues to weaken, with Brent crude trading slightly below $64 per barrel.
💰 Gold futures fell on Thursday to $3,277 but have since recovered, currently trading at $3,327 per ounce.
💻 Bitcoin has pulled back after reaching the highs we projected earlier this week and is now trading at $110,550.
