Tariffs Take Center Stage: Your Weekly Market Brief

How renewed trade tensions, major bank earnings, and a surging Bitcoin are shaping the week ahead.

In This Edition:

• Trade Tensions Escalating: How renewed tariff threats are shaking global markets and what it means for your portfolio.
• Q2 Earnings Kick-off: Key financial sector reports that could set the tone for the coming weeks.
• Inflation Watch: The critical CPI data release and its implications for interest rates and consumer spending.
• S&P 500 & Bitcoin: Technical Take: Expert analysis on what the charts are saying for two of the market’s hottest assets.
• Beyond the Headlines: Decoding the major news impacting your investments this week.

Market Summary

The past week saw US equities close mixed to slightly lower, primarily influenced by renewed trade rhetoric from Washington. After a somewhat quiet start following the July 4th holiday, President Trump’s threats of higher tariffs on various trading partners, including Canada, Brazil, South Korea, and Japan, injected a dose of uncertainty into the market.

While some tech stocks, especially those tied to AI, showed resilience and even hit new record highs (Nasdaq), the broader market, including the S&P 500 and Dow, pulled back on Friday due to these tariff concerns. Despite this, the S&P 500 managed to close the week near record highs.

European equities, on the other hand, posted gains, and Asian markets ended mixed. Treasuries continued their decline with yields rising, while crude oil and gold saw positive movements. The dollar strengthened against its peers. Bitcoin continued its impressive rally, pushing beyond $118,000 and reaching new all-time highs, driven by institutional inflows and a general risk-on sentiment spilling over from the equity markets.

Upcoming Earnings (July 14-18)

This week marks the unofficial start of the Q2 earnings season, with a focus on several key players, particularly in the financial sector. Investors will be looking closely at forward guidance given the current economic climate.

Monday, July 14:

• Fastenal Company (FAST)

Tuesday, July 15:

• Bank of America (BAC)
• Johnson & Johnson (JNJ)
• Morgan Stanley (MS)
• Goldman Sachs (GS)
• PNC Financial Services (PNC)
• Progressive (PGR)
• United Airlines Holdings (UAL)
• BlackRock (BLK)
• Citigroup (C)
• Wells Fargo (WFC)
• State Street (STT)

Wednesday, July 16:

• Abbott Laboratories (ABT)
• PepsiCo (PEP)
• Travelers Companies (TRV)

Upcoming Economic Data (July 14-18)

Economic data releases this week will provide crucial insights into the health of the global economy, particularly regarding inflation and growth amidst the ongoing tariff discussions.

Monday, July 14:

• China: Balance of Trade, Exports/Imports (June) – Key indicator of global trade flows.
• Singapore: GDP Growth Rate (Q2, advanced)

Tuesday, July 15:

• US: Consumer Price Index (CPI) (June) – This is a major release, with markets anticipating an acceleration in inflation due to tariff-related price rises. Both headline and core CPI will be closely watched.
• US: Empire State Manufacturing Index (July)
• US: Industrial Production (June)
• US: Capacity Utilization (June)
• China: GDP Growth Rate (Q2), Industrial Production (June), Retail Sales (June) – Critical for assessing the resilience of the Chinese economy amid trade tensions.

Wednesday, July 16:

• US: Federal Reserve Beige Book – Provides anecdotal evidence on economic conditions across various districts, including tariff impacts.

Thursday, July 17:

• US: Retail Sales (June) – Will gauge consumer spending trends after a sharp fall in May.

Friday, July 18:

• UK: Consumer Price Index (June)

Technical Analysis

S&P 500: The S&P 500 closed out last week near record highs, having rallied significantly off its April lows. The index is currently trading within the confines of its objective July opening range. Initial resistance is seen around the 200% extension of the 2022 advance at 6344. For the bullish trend to continue, losses would ideally be limited to 6130, with a close above the monthly range high needed to propel it towards 6344. The technical outlook remains constructive above 6130/40.

Bitcoin (BTC): Bitcoin has demonstrated strong positive momentum, breaking out from a short-term horizontal trend channel and reaching new all-time highs above $118,000. The currency has met its objective at $115,727 from a previous formation, with further upside indicated. There’s no immediate price resistance above current levels, suggesting potential for continued ascent. Support is noted around $109,000. While the RSI is above 70, indicating strong positive momentum, for such a significant asset, this could also hint at an overbought condition and a potential for a near-term pullback. However, the overall short-term technical assessment remains positive, with strong institutional interest and ETF buying continuing to fuel the rally.

Major Headlines Impacting Markets This Week

The dominant narrative for the coming week will undoubtedly revolve around trade tensions and tariffs. President Trump’s recent announcements of planned increases in tariffs on various countries, especially Canada, are a major concern. Experts widely believe these tariffs could lead to higher inflation and hurt economic growth, a sentiment that already contributed to market jitters at the end of last week.

Investors will be closely watching for any further developments or statements regarding these trade policies. The potential for a “trade war” is a significant overhang on market sentiment. The upcoming CPI data will be particularly scrutinized for any signs that these tariff threats are already translating into higher prices, which could influence the Federal Reserve’s stance on interest rates.

Expect continued volatility as markets digest the implications of these trade policies and their potential impact on corporate earnings and consumer spending. Geopolitical developments, particularly those related to trade, will remain front and center.

Pulse AI Report from Glideslope.ai

Investors should be on the lookout for the following critical headlines in the coming week:

1. **US Inflation Data**: A key economic indicator that can significantly influence market sentiment and policy decisions. This data could shed light on the potential directions of interest rate adjustments by the Federal Reserve. Read more

2. **Earnings Season Performance Reviews**: As the earnings season progresses, updates on corporate earnings results will be crucial. These will provide insights into the financial health and future prospects of companies, influencing stock prices and market movements. Read more

3. **Global Response to Trump’s Tariff Threats**: The ongoing global reaction to President Trump’s tariff threats will be critical for investors, especially those involved in international trade and markets. Such policies can affect global trade dynamics and market volatility. Read more

4. **Sector Performance Leaders**: Notable sectors like energy and financial sectors leading the market could offer strategic investment opportunities or warrant caution depending on the broader economic context. Read more

5. **Stablecoins in Cryptocurrency**: With stablecoins gaining traction as a significant crypto trend, updates in this area could impact investors interested in digital assets and their regulatory landscape. Read more

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