Morning Brew July 31 2025

Good morning,

Disappointing earnings and the elephants in the room caused traders to show nerves, ending the six-day record streak in the S&P 500. The big three US indexes closed down near 0.5%, but there were significant internal fluctuations. UnitedHealth stumbled by 7.5%, and United Parcel Service shares plunged 10.6%. Overall, after 200 companies in the S&P 500 reported, earnings are more than 6% higher than expected. Volumes were near the 20-day average.

Margin debt in the US reached a record of 1 trillion dollars for the first time ever—this poses a significant risk as an amplifying factor in a risk-off scenario. The most affected positions would be those of the strongest recent winners, similar to the move we saw last year in early August.  This is not a call for a selloff, but the risk is significant when traders become too complacent and willing to take risks. 

Shares of Novo Nordisk fell 20% yesterday due to a disappointing outlook for sales and profit. UBS might beat expectations with a profit of USD 2.4 billion vs. an expectation of USD 2 billion. Mercedes reports lower earnings and warned that annual revenue will be significantly lower than last year as tariffs hit sales of its cars and vans. Toyota reported record sales in the first six months of the year. HSBC Holdings reported a 26% lower pretax profit

Today marks the first day of a three-day data and earnings spree, with many key companies reporting. Focus will be on Meta and Microsoft after the bell. 

Among the many data points expected today, the US rate decision and Powell's press conference stand out. At the moment, rate traders see virtually no chance (2.5%) of action today, despite Trump's demands. The year-end rate is seen at 3.5%, which is almost 50 basis points below the current rate. A shift in this number would be market-moving, and this is most likely to be addressed in the press conference. Any comments on the disagreement between Powell and Trump would be significant, and after the recent alteration at the Fed building, not impossible.

In other news:
Trade negotiations between China and the US continue, but a 90-day extension of the truce will depend on Trump's agreement.
In economic data, job openings declined, while consumer confidence was higher than expected
An earthquake in East Russia causes tsunami warnings in Hawaii and Japan.

Keep your risk in check and enjoy three fascinating trading days. As Reuters writes this morning in their European update: MORNING BID EUROPE - No more sleep this week.

Wednesday, July 30, 2025

- Swiss KOF INdicator

- Expectations that rates will remain steady; markets will US Federal Reserve (FOMC) Meeting & Rate Decision: focus on the policy tone

- Bank of Canada Interest Rate Decision: No change expected in benchmark rates

- Eurozone & German GDP, Retail Sales (Q2): Regional growth snapshot

- US ADP Employment, GDP Advance

- Key Earnings: Microsoft, Meta, American Tower, KraftHeinz, Ford, TEVA Robinhood, Qualcom Mercedes

Thursday, July 31, 2025

• Swiss retail Sales-

 Bank of Japan Interest Rate Decision & JGB Purchases: Critical for yen and global bond markets

- Australian Retail Sales (June): Indicator for Asia-Pacific markets

- Chinese PMI (July): Update on manufacturing activity in the world’s second-largest economy

- US PCE Price Index (June): The Fed’s preferred inflation metric

- German Consumer Price Inflation (July): Key for ECB policy watchers

- Key Earnings: Apple, Mastercard,  Amazon.com AbbVie, , Comcast, Roku, Reddit, Coinbase

 Friday, August 1, 2025

- Swiss National Holiday

- US Nonfarm Payrolls (July): Flagship labor market report, forecast to show slowdown in hiring

- Japan Rate Decision

- US Unemployment Rate (July): Expected at 4.2%

- Average Hourly Earnings (July): Monitoring wage growth pressures

- US ISM Manufacturing PMI (July): Vital for near-term growth signals

- Eurozone Consumer Price Inflation (July): Crucial inflation readout

- Chinese Manufacturing PMI (July): Health of the world’s manufacturing engine

- Key Earnings: Chevron, Exxon Mobil, Colgate-Palmolive, Linde,