Good morning,
Market volatility remained muted last week, largely because the White House extended the 90-day tariff pause—originally set to expire last Wednesday, July 9—to August 1. That delay delivered the quote of the week: when asked, President Trump said the new deadline was “firm, but not 100% firm,” depending on negotiations. Is it any wonder the equity market seems indifferent to the tariff narrative?
Yes, futures are down 0.30% pre-market following Trump’s threat of a 30% tariff on EU goods, but that hardly reflects the real risk if those tariffs materialize.
Despite April’s “tariff tantrum,” economists surveyed by Bloomberg haven’t meaningfully revised their economic forecasts higher. The contrast between that and the equity market’s rebound is striking. This quote from Bloomberg seems particularly apt:
“The market is not the economy, and even earnings expectations—more pertinent to stocks than economic growth—only account for about half the variation in stock prices over a one-year horizon. The contribution is substantially smaller on shorter horizons. In the short run, the weight of narrative and, dare we say, the madness of crowds are more important drivers of stock prices and other market moves. If markets collectively decide that none of the background stories matter, then in the short run they won’t. But that in turn could make the final reckoning more abrupt when and if unpleasant growth and earnings surprises emerge.”
We have a data-packed week ahead. Earnings season unofficially kicks off tomorrow with results and forecasts from many of the big banks. On the economic front, CPI hits Tuesday, PPI on Wednesday, Retail Sales on Thursday, and more. The list below suggests “Busy” might be an understatement.
Economic Calendar:
- Monday (7/14): No reports
- Tuesday (7/15): Consumer Price Index (CPI), Empire State Manufacturing
- Wednesday (7/16): Producer Price Index (PPI), Capacity Utilization, Industrial Production, MBA Mortgage Applications, EIA Crude Oil Inventories
- Thursday (7/17): Retail Sales, Business Inventories, Initial & Continuing Claims, Import/Export Prices, NAHB Housing Market Index, TIC Flows, Philadelphia Fed Index, EIA Natural Gas Inventories
- Friday (7/18): Building Permits, Housing Starts, University of Michigan Consumer Sentiment
Key Earnings Releases:
- Monday (7/14): Fastenal (FAST), FB Financial (FBK), Equity Bancshares (EQBK), Barnes & Noble Education (BNED), Simulations Plus (SLP)
- Tuesday (7/15): JPMorgan (JPM), Wells Fargo (WFC), BlackRock (BLK), Citigroup (C), BNY Mellon (BK), State Street (STT), JB Hunt (JBHT), Omnicom (OMC), Pinnacle Financial (PNFP)
- Wednesday (7/16): Johnson & Johnson (JNJ), Bank of America (BAC), ASML (ASML), Morgan Stanley (MS), Goldman Sachs (GS), Progressive (PGR), Prologis (PLD), Kinder Morgan (KMI), United Airlines (UAL), Alcoa (AA)
- Thursday (7/17): TSMC (TSM), GE Aerospace (GE), Novartis (NVS), Abbott Labs (ABT), PepsiCo (PEP), Cintas (CTAS), Elevance Health (ELV), US Bancorp (USB), Travelers (TRV), Netflix (NFLX), Interactive Brokers (IBKR), Western Alliance (WAL), Bank OZK (OZK)
- Friday (7/18): American Express (AXP), Charles Schwab (SCHW), 3M (MMM), Truist Financial (TFC), Schlumberger (SLB), Regions Financial (RF), Ally Financial (ALLY), Comerica (CMA)
And before we get to any of that, President Trump has promised a “major statement” on Russia this morning.
Be well,
Mike