Weekend Update #238
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Earnings season is underway, with early results showing S&P 500 earnings on track to rise 3.2% for Q2—slightly above the 2.8% growth expected before the season began, according to Bloomberg Intelligence. The upbeat start has helped lift market sentiment, especially in tech, where shares jumped after Nvidia and AMD announced they will resume some chip sales to China.
At the same time, monetary policy developments remain a key market focus as speculation over Federal Reserve Chair Jerome Powell’s future briefly unsettled markets, before President Trump downplayed the likelihood of replacing him. Still, Trump continued his criticism of the Fed, accusing policymakers of “choking out the housing market with their high rates.” Meanwhile, Fed Governor Christopher Waller signaled growing support for policy easing, calling for a quarter-point rate cut this month. He cited a labor market “on the edge” and noted that upside risks to inflation now appear limited. Waller’s remarks add to a shifting tone within the Fed as economic data softens and political pressure mounts. Money markets still assign near-zero odds of a cut on July 30 with about 45 basis points of cuts by year-end.
Amid macroeconomic developments, crypto markets grabbed headlines this week as the global crypto market cap surpassed $4 trillion for the first time, driven by a rally in altcoins and momentum from a wave of U.S. legislative action. This historic week, dubbed “Crypto Week” by lawmakers, saw the passage of several key bills, including the Genius Act, the first federal legislation to regulate stablecoins. Signed into law by President Trump on Friday, the bill mandates that stablecoins be backed by safe, liquid assets and provides a framework for banks to issue them. The House also passed the Clarity Act, which creates a framework for determining which digital assets fall under SEC or CFTC oversight, and advanced the broader crypto market structure bill to the Senate. The House is expected to vote on a third piece of legislation next week, the Anti Central Bank Digital Currency (CBDC) Surveillance State Act.
Looking at the latest economic reports, retail sales rebounded strongly in June, growing 0.6% after a 0.9% decline in May and comfortably exceeding the 0.1% forecast. Core retail sales—excluding volatile categories like autos, gasoline, building materials, and food services—also rose a solid 0.5%, following a 0.2% gain in May. Much of the increase stemmed from price hikes linked to tariffs on goods such as household furnishings, appliances, sporting goods, and toys, rather than higher purchasing volumes. Key sectors like autos (+1.2%), clothing (+0.9%), and health/personal care (+0.5%) led the gains, although some tariff-exposed categories such as electronics and appliances saw declines.
In June 2025, headline CPI rose 0.3% month-over-month, matching expectations and accelerating from May’s 0.1%. Year-over-year, CPI increased 2.7%, slightly above the 2.6% forecast and up from 2.4% in May. Core CPI rose a cooler-than-expected 0.2% on the month, aligning with the Fed’s preferred pace, while the annual core rate held steady at 2.9%. Shelter costs—key to the services component—rose just 0.2% MoM, the slowest pace since early 2021. Goods prices picked up, particularly in household furnishings, apparel, and recreation, possibly reflecting early tariff impacts, but overall inflation remained balanced as softer services prices offset any emerging pressures.
U.S. producer prices were flat in June, with the headline PPI and core measures (excluding food, energy, and trade) all coming in at 0.0%, below the 0.2% estimates. Year-over-year, headline PPI rose 2.3% and core PPI 2.6%, both cooling from upwardly revised May readings. The flat monthly reading was driven by a 0.1% decline in services, led by a 4.1% drop in traveler accommodation prices and other declines in airline fares and auto retailing. In contrast, goods prices rose 0.3%, with broad-based gains in energy, food, and core goods; however, egg prices plunged 21.8%. The report suggests inflationary pressures remain moderate, with businesses possibly absorbing some cost increases amid higher import duties.
Friday’s Close (Weekly Performance)
S&P 500 6,296.79 (+0.59%)
Nasdaq 20,895.66 (+1.51%)
Dow Jones 44,342.19 (-0.07%)
Thank you Blue Room Senior Analyst NICK PEART.
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