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US President Trump said they are very close to an India deal, could possibly make one with Europe & it is too soon to say re. Canada.US stocks finished higher but with volatile trade amid reports that Trump had drafted a letter to fire Powell; later, Trump denied this.DXY has regained some composure after getting hit on Fed independence concerns, G10s softer with AUD lagging after soft jobs data.USTs ease after Wednesday's upside, JGBs initially followed suit but picked up after the latest JGB liquidity auction.Crude remains afloat, XAU rangebound, base peers lack conviction in contained trade.Highlights include Australian Employment, UK Jobs, EZ HICP (Final), US Trade, Jobless Claims, Retail Sales & Atlanta Fed GDPNow, G20 Finance Ministers Meeting, Speakers including Fed's Kugler, Daly, Cook & Waller, Supply from Spain, France & UK, Earnings from Novartis, Publicis, Volvo, PepsiCo, GE, Abbott Laboratories, Netflix & TSMC.Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Markets are anything but predictable right now. Central banks are pulling in different directions, inflation’s uneven, and geopolitical risks are on the rise. So, how can investors protect their portfolios without sacrificing yield? Short-term interest rate strategies might just be the smart middle ground. On Wealth Tracker, Hongbin Jeong speaks to Angus Hui, Deputy CIO and Head of Fixed Income at Fullerton Fund Management, for a breakdown of why these flexible, liquid approaches are gaining attention and what it means for your investments.See omnystudio.com/listener for privacy information.

U.S. tariffs have had limited impact so far on inflation and corporate earnings. Our Head of Corporate Credit Research Andrew Sheets explains why – and when – that might change.Read more insights from Morgan Stanley.----- Transcript -----Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley. Today I'm going to talk about why tariffs are showing up everywhere – but the data; and why we think this changes this quarter. It's Wednesday, July 16th at 2pm in London. Investors have faced tariff headlines since at least February. The fact that it's now mid-July and markets are still grinding higher is driving some understandable skepticism that they're going to have their promised impact. Indeed, we imagine that maybe more of one of you is groaning and saying, ‘What? Another tariff episode?' But we do think this theme remains important for markets. And above all, it's a factor we think is going to hit very soon. We think it's kind of now – the third quarter – when the promised impact of tariffs on economic data and earnings really start to come through. My colleague Jenna Giannelli and I discussed some of the reasons why, on last week's episode focused on the retail sector. But what I want to do next is give a little bit of that a broader context. Where I want to start is that it's really about tariff impact picking up right about now. The inflation readings that we got earlier this week started to show US core inflation picking up again, driven by more tariff sensitive sectors. And while second quarter earnings that are being reported right about now, we think will generally be fine, and maybe even a bit better than expected; the third quarter earnings that are going to be generated over the next several months, we think those are more at risk from tariff related impact. And again, this could be especially pronounced in the consumer and retail sector. So why have tariffs not mattered so much so far, and why would that change very soon? The first factor is that tariff rates are increasing rapidly. They've moved up quickly to a historically high 9 percent as of today; even with all of the pauses and delays. And recently announced actions by the US administration over just the last couple of weeks could effectively double this rate again -- from 9 percent to somewhere between 15 to 20 percent.A second reason why this is picking up now is that tariff collections are picking up now. US Customs collected over $26 billion in tariffs in June, which annualizes out to about 1 percent of GDP, a very large number. These collections were not nearly as high just three months ago. Third, tariffs have seen pauses and delayed starts, which would delay the impact. And tariffs also exempted goods that were in transit, which can be significant from goods coming from Europe or Asia; again, a factor that would delay the impact. But these delays are starting to come to fruition as those higher tariff collections and higher tariff rates would suggest. And finally, companies did see tariffs coming and tried to mitigate them. They ordered a lot of inventory ahead of tariff rates coming into effect. But by the third quarter, we think they've sold a lot of that inventory, meaning they no longer get the benefit. Companies ordered a lot of socks before tariffs went into effect. But by the third quarter and those third quarter earnings, we think they will have sold them all. And the new socks they're ordering, well, they come with a higher cost of goods sold. In short, we think it's reasonable to expect that the bulk of the impact of tariffs and economic and earnings data still lies ahead, especially in this quarter – the third quarter of 2025. We continue to think that it's probably in August and September rather than June-July, where the market will care more about these challenges as core inflation data continues to pick up. For credit, this leaves us with an up in quality bias, especially as we move through that August to September period. And as Jenna and I discussed last week, we are especially cautious on the retail credit sector, which we think is more exposed to these various factors converging in the third quarter. Thank you as always for your time. If you find Thoughts on the Market useful, let us know by leaving a review wherever you listen; and also tell a friend or colleague about us today.

Our analysts Paul Walsh, James Lord and Marina Zavolock discuss the dollar's decline, the strength of the euro, and the mixed impact on European equities.Read more insights from Morgan Stanley.----- Transcript -----Paul Walsh: Welcome to Thoughts on the Markets. I'm Paul Walsh, Morgan Stanley's Head of European Product. And today we're discussing the weakness we've seen year-to-date in the U.S. dollar and what this means for the European stock market.It's Tuesday, July the 15th at 3:00 PM in London.I'm delighted to be joined by my colleagues, Marina Zavolock, Morgan Stanley's Chief European Equity Strategist, and James Lord, Morgan Stanley's Chief Global FX Strategist.James, I'm going to start with you because I think we've got a really differentiated view here on the U.S. dollar. And I think when we started the year, the bearish view that we had as a house on the U.S. dollar, I don't think many would've agreed with, frankly. And yet here we are today, and we've seen the U.S. dollar weakness proliferating so far this year – but actually it's more than that.When I listen to your view and the team's view, it sounds like we've got a much more structurally bearish outlook on the U.S. dollar from here, which has got some tenure. So, I don't want to steal your thunder, but why don't you tell us, kind of frame the debate, for us around the U.S. dollar and what you're thinking.James Lord: So, at the beginning of the year, you're right. The consensus was that, you know, the election of Donald Trump was going to deliver another period of what people have called U.S. exceptionalism.Paul Walsh: Yeah.James Lord: And with that it would've been outperformance of U.S. equities, outperformance of U.S. growth, continued capital inflows into the United States and outperformance of the U.S. dollar.At the time we had a slightly different view. I mean, with the help of the economics team, we took the other side of that debate largely on the assumption that actually U.S. growth was quite likely to slow through 2025, and probably into 2026 as well – on the back of restrictions on immigration, lack of fiscal stimulus. And, increasingly as trade tariffs were going to be implemented…Paul Walsh: Yeah. Tariffs, of course…James Lord: That was going to be something that weighed on growth.So that was how we set out the beginning of the year. And as the year has progressed, the story has evolved. Like some of the other things that have happened, around just the extent to which tariff uncertainty has escalated. The section 899 debate.Paul Walsh: Yeah.James Lord: Some of the softness in the data and just the huge amounts of uncertainty that surrounds U.S. policymaking in general has accelerated the decline in the U.S. dollar. So, we do think that this has got further to go. I mean, the targets that we set at the beginning of the year, we kind of already met them. But when we published our midyear outlook, we extended the target.So, we may even have to go towards the bull case target of euro-dollar of 130.Paul Walsh: Mm-hmm.James Lord: But as the U.S. data slows and the Fed debate really kicks off where at Morgan Stanley U.S. Economics research is expecting the Fed to ultimately cut to 2.5 percent...Paul Walsh: Yeah.Lord: That's really going to really weigh on the dollar as well. And this comes on the back of a 15-year bull market for the dollar.Paul Walsh: That's right.James Lord: From 2010 all the way through to the end of last year, the dollar has been on a tear.Paul Walsh: On a structural bull run.James Lord: Absolutely. And was at the upper end of that long-term historical range. And the U.S. has got 4 percent GDP current account deficit in a slowing growth environment. It's going to be tough for the dollar to keep going up. And so, we think we're sort of not in the early stages, maybe sort of halfway through this dollar decline. But it's a huge change compared to what we've been used to. So, it's going to have big implications for macro, for companies, for all sorts of people.Paul Walsh: Yeah. And I think that last point you make is absolutely critical in terms of the implications for corporates in particular, Marina, because that's what we spend every hour of every working day thinking about. And yes, currency's been on the radar, I get that. But I think this structural dynamic that James alludes to perhaps is not really conventional wisdom still, when I think about the sector analysts and how clients are thinking about the outlook for the U.S. dollar.But the good news is that you've obviously done detailed work in collaboration with the floor to understand the complexities of how this bearish dollar view is percolating across the different stocks and sectors. So, I wondered if you could walk us through what your observations are and what your conclusions are having done the work.Marina Zavolock: First of all, I just want to acknowledge that what you just said there. My background is emerging markets and coming into covering Europe about a year and a half ago, I've been surprised, especially amid the really big, you know, shift that we're seeing that James was highlighting – how FX has been kind of this secondary consideration. In the process of doing this work, I realized that analysts all look at FX in different way. Investors all look at FX in different way. And in …Paul Walsh: So do corporates.Marina Zavolock: Yeah, corporates all look at FX in different way. We've looked a lot at that. Having that EM background where we used to think about FX as much as we thought about equities, it was as fundamental to the story...Paul Walsh: And to be clear, that's because of the volatility…Marina Zavolock: Exactly, which we're now seeing now coming into, you know, global markets effectively with the dollar moves that we've had. What we've done is created or attempted to create a framework for assessing FX exposure by stock, the level of FX mismatches, the types of FX mismatches and the various types of hedging policies that you have for those – particularly you have hedging for transactional FX mismatches.Paul Walsh: Mm-hmm.Marina Zavolock: And we've looked at this from stock level, sector level, aggregating the stock level data and country level. And basically, overall, some of the key conclusions are that the list of stocks that benefit from Euro strength that we've identified, which is actually a small pocket of the European index. That group of stocks that actually benefits from euro strength has been strongly outperforming the European index, especially year-to-date.Paul Walsh: Mm-hmm.Marina Zavolock: And just every day it's kind of keeps breaking on a relative basis to new highs. Given the backdrop of James' view there, we expect that to continue. On the other hand, you have even more exposure within the European index of companies that are being hit basically with earnings, downgrades in local currency terms. That into this earning season in particular, we expect that to continue to be a risk for local currency earnings.Paul Walsh: Mm-hmm.Marina Zavolock: The stocks that are most negatively impacted, they tend to have a lot of dollar exposure or EM exposure where you have pockets of currency weakness as well. So overall what we found through our analysis is that more than half of the European index is negatively exposed to this euro and other local currency strength. The sectors that are positively exposed is a minority of the index. So about 30 percent is either materially or positively exposed to the euro and other local currency strength. And sectors within that in particular that stand out positively exposed utilities, real estate banks. And the companies in this bucket, which we spend a lot of time identifying, they are strongly outperforming the index.They're breaking to new highs almost on a daily basis relative to the index. And I think that's going to continue into earning season because that's going to be one of the standouts positively, amid probably a lot of downgrades for companies who have translational exposure to the U.S. or EM.Paul Walsh: And so, let's take that one step further, Marina, because obviously hedging is an important part of the process for companies. And as we've heard from James, of a 15-year bull run for dollar strength. And so most companies would've been hedging, you know, dollar strength to be fair where they've got mismatches. But what are your observations having looked at the hedging side of the equation?Marina Zavolock: Yeah, so let me start with FX mismatches. So, we find that about half of the European index is exposed to some level of FX mismatches.Paul Walsh: Mm-hmm.Marina Zavolock: So, you have intra-European currency mismatches. You have companies sourcing goods in Asia or China and shipping them to Europe. So, it's actually a favorable FX mismatch. And then as far as hedging, the type of hedging that tends to happen for companies is related to transactional mismatches. So, these are cost revenue, balance sheet mismatches; cashflow distribution type mismatches. So, they're more the types of mismatches that could create risk rather than translational mismatches, which are – they're just going to happen.Paul Walsh: Yeah.Marina Zavolock: And one of the most interesting aspects of our report is that we found that companies that have advanced hedging, FX hedging programs, they first of all, they tend to outperform, when you compare them to companies with limited or no hedging, despite having transactional mismatches. And secondly, they tend to have lower share price volatility as well, particularly versus the companies with no hedging, which have the most share price volatility.So, the analysis, generally, in Europe of this most, the most probably diversified region globally, is that FX hedging actually does generate alpha and contributes to relative performance.Paul Walsh: Let's connect the two a little bit here now, James, because obviously as companies start to recalibrate for a world where dollar weakness might proliferate for longer, those hedging strategies are going to have to change.So just any kind of insights you can give us from that perspective. And maybe implications across currency markets as a result of how those behavioral changes might play out, I think would be very interesting for our listeners.James Lord: Yeah, I think one thing that companies can do is change some of the tactics around how they implement the hedges. So, this can revolve around both the timing and also the full extent of the hedge ratios that they have. I mean, some companies who are – in our conversations with them when they're talking about their hedging policy, they may have a range. Maybe they don't hedge a 100 percent of the risk that they're trying to hedge. They might have to do something between 80 and a hundred percent. So, you can, you can adjust your hedge ratios…Paul Walsh: Adjust the balances a bit.James Lord: Yeah. And you can delay the timing of them as well.The other side of it is just deciding like exactly what kind of instrument to use to hedge as well. I mean, you can hedge just using pure spot markets. You can use forward markets and currencies. You can implement different types of options, strategies.And I think this was some of the information that we were trying to glean from the survey was this question that Marina was asking about. Do you have a limited or advanced hedging program? Typically, we would find that corporates that have advanced programs might be using more options-based strategies, for example. And you know, one of the pieces of analysis in the report that my colleague Dave Adams did was really looking at the effectiveness of different strategies depending on the market environment that we're in.So, are we in a sort of risk-averse market environment, high vol environment? Different types of strategies work for different types of market environments. So, I would encourage all corporates that are thinking about implementing some kind of hedging strategy to have a look at that document because it provides a lot of information about the different ways you can implement your hedges. And some are much more cost effective than others.Paul Walsh: Marina, last thought from you?Marina Zavolock: I just want to say overall for Europe there is this kind of story about Europe has no growth, which we've heard for many years, and it's sort of true. It is true in local currency terms. So European earnings growth now on consensus estimates for this year is approaching one percent; it's close to 1 percent. On the back of the moves we've already seen in FX, we're probably going to go negative by the time this earning season is over in local currency terms. But based on our analysis, that is primarily impacted by translation.So, it is just because Europe has a lot of exposure to the U.S., it has some EM exposure. So, I would just really emphasize here that for investors; so, investors, many of which don't hedge FX, when you're comparing Europe growth to the U.S., it's probably better to look in dollar terms or at least in constant currency terms. And in dollar terms, European earnings growth at this point are 7.6 percent in dollar terms. That's giving Europe the benefit for the euro exposure that it has in other local currencies.So, I think these things, as FX starts to be front of mind for investors more and more, these things will become more common focus points. But right now, a lot of investors just compare local currency earnings growth.Paul Walsh: So, this is not a straightforward topic, and we obviously think this is a very important theme moving through the balance of this year. But clearly, you're going to see some immediate impact moving through the next quarter of earnings.Marina and James, thanks as always for helping us make some sense of it all.James Lord: Thanks, Paul.Marina Zavolock: Thank you.Paul Walsh: And to our listeners out there, thank you as always for tuning in.If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

Higher yields on worries of rate cut delays sank stocks yesterday despite better-than-expected bank earnings and in-line CPI. Today brings fresh bank results and wholesale prices.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0131-0725)

US President Trump says he is working on five to six trade deals and there will probably be two to three deals by August 1st. Also notes that pharma tariffs will probably begin at month-end and initial tariffs on pharmaceuticals will be lowEuropean bourses are mixed having clambered off early morning lows, Autos/Tech lags following results from Renault and ASML.US equity futures trade on either side of the unchanged mark, NQ lags as it digests ASML's results where it walked back on its 2026 growth outlook amid tariff uncertainty.DXY essentially flat awaiting US PPI, GBP digests hot inflation metrics.EGBs slightly heavy into the MMF, Gilts lag on CPI, USTs flat before PPI.Looking ahead, US PPI, Industrial Production & Capacity Utilisation, Speakers including Fed's Barkin, Barr, Cook, Hammack, Logan, Kugler & Williams. Earnings from J&J, PNC, BAC, Goldman Sachs, Morgan Stanley.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

APAC stocks were mostly subdued following the lacklustre handover from Wall St.US President Trump says he is working on five to six trade deals and there will probably be two to three deals by August 1st.European equity futures indicate a marginally softer cash market open with Euro Stoxx 50 futures down 0.2% after the cash market closed with losses of 0.3% on Tuesday.DXY is fractionally softer after gaining again yesterday, EUR/USD has returned to a 1.16 handle, Cable sits sub-1.34 pre-CPI.France's Marine Le Pen warned that if French PM Bayrou does not revise his public spending plan they "will seek to topple him".Looking ahead, highlights include UK CPI, US PPI, Industrial Production & Capacity Utilisation, Fed's Barkin, Barr, Cook, Hammack, Logan, Kugler & Williams, Supply from Germany, Earnings from J&J, PNC, BAC, Goldman Sachs, Morgan Stanley, ASML & Sandvik.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Highlights include:00:02:15 Why should millennial investors consider bonds?00:05:20 Break it down: what exactly are bonds?00:07:30 Selling a bond before maturity00:09:30 Bond ETFs vs. individual bonds00:12:00 Today's top takeaways For a full transcript in English and French, please visit the TD Asset Management Podcast page: https://www.td.com/ca/en/asset-management/insights/podcast Email any questions or ideas for future episodes to: td.tdamtalks@td.comPlease follow "TD Asset Management" on LinkedIn: https://ca.linkedin.com/showcase/tdassetmanagement/

With the US dollar battered by stop-start tariff policy, fiscal profligacy and questions about the independence of the Federal Reserve, where should investors turn? The dollar index, which measures the currency's strength against a basket of six others including the pound, euro and yen, slumped more than 10% in the first half of 2025, the worst start to the year since the end of the gold-backed Bretton Woods system in 1973.For more insights, visit Viewpoint: https://viewpoint.bnpparibas-am.com/Download the Viewpoint app: https://onelink.to/tpxq34Follow us on LinkedIn: https://bnpp.lk/amHosted by Ausha. See ausha.co/privacy-policy for more information.

Our analysts Paul Walsh, James Lord and Marina Zavolock discuss the dollar's decline, the strength of the euro, and the mixed impact on European equities.Read more insights from Morgan Stanley.----- Transcript -----Paul Walsh: Welcome to Thoughts on the Markets. I'm Paul Walsh, Morgan Stanley's Head of European Product. And today we're discussing the weakness we've seen year-to-date in the U.S. dollar and what this means for the European stock market. It's Tuesday, July the 15th at 3:00 PM in London.I'm delighted to be joined by my colleagues, Marina Zavolock, Morgan Stanley's Chief European Equity Strategist, and James Lord, Morgan Stanley's Chief Global FX Strategist. James, I'm going to start with you because I think we've got a really differentiated view here on the U.S. dollar. And I think when we started the year, the bearish view that we had as a house on the U.S. dollar, I don't think many would've agreed with, frankly. And yet here we are today, and we've seen the U.S. dollar weakness proliferating so far this year – but actually it's more than that.When I listen to your view and the team's view, it sounds like we've got a much more structurally bearish outlook on the U.S. dollar from here, which has got some tenure. So, I don't want to steal your thunder, but why don't you tell us, kind of frame the debate, for us around the U.S. dollar and what you're thinking.James Lord: So, at the beginning of the year, you're right. The consensus was that, you know, the election of Donald Trump was going to deliver another period of what people have called U.S. exceptionalism. Paul Walsh: Yeah.James Lord: And with that it would've been outperformance of U.S. equities, outperformance of U.S. growth, continued capital inflows into the United States and outperformance of the U.S. dollar. At the time we had a slightly different view. I mean, with the help of the economics team, we took the other side of that debate largely on the assumption that actually U.S. growth was quite likely to slow through 2025, and probably into 2026 as well – on the back of restrictions on immigration, lack of fiscal stimulus. And, increasingly as trade tariffs were going to be implemented…Paul Walsh: Yeah. Tariffs, of course…James Lord: That was going to be something that weighed on growth.So that was how we set out the beginning of the year. And as the year has progressed, the story has evolved. Like some of the other things that have happened, around just the extent to which tariff uncertainty has escalated. The section 899 debate. Paul Walsh: Yeah. James Lord: Some of the softness in the data and just the huge amounts of uncertainty that surrounds U.S. policymaking in general has accelerated the decline in the U.S. dollar. So, we do think that this has got further to go. I mean, the targets that we set at the beginning of the year, we kind of already met them. But when we published our midyear outlook, we extended the target.So, we may even have to go towards the bull case target of euro-dollar of 130.Paul Walsh: Mm-hmm. James Lord: But as the U.S. data slows and the Fed debate really kicks off where at Morgan Stanley U.S. Economics research is expecting the Fed to ultimately cut to 2.5 percent... Paul Walsh: Yeah. Lord: That's really going to really weigh on the dollar as well. And this comes on the back of a 15-year bull market for the dollar. Paul Walsh: That's right. James Lord: From 2010 all the way through to the end of last year, the dollar has been on a tear. Paul Walsh: On a structural bull run.James Lord: Absolutely. And was at the upper end of that long-term historical range. And the U.S. has got 4 percent GDP current account deficit in a slowing growth environment. It's going to be tough for the dollar to keep going up. And so, we think we're sort of not in the early stages, maybe sort of halfway through this dollar decline. But it's a huge change compared to what we've been used to. So, it's going to have big implications for macro, for companies, for all sorts of people.Paul Walsh: Yeah. And I think that last point you make is absolutely critical in terms of the implications for corporates in particular, Marina, because that's what we spend every hour of every working day thinking about. And yes, currency's been on the radar, I get that. But I think this structural dynamic that James alludes to perhaps is not really conventional wisdom still, when I think about the sector analysts and how clients are thinking about the outlook for the U.S. dollar. But the good news is that you've obviously done detailed work in collaboration with the floor to understand the complexities of how this bearish dollar view is percolating across the different stocks and sectors. So, I wondered if you could walk us through what your observations are and what your conclusions are having done the work.Marina Zavolock: First of all, I just want to acknowledge that what you just said there. My background is emerging markets and coming into covering Europe about a year and a half ago, I've been surprised, especially amid the really big, you know, shift that we're seeing that James was highlighting – how FX has been kind of this secondary consideration. In the process of doing this work, I realized that analysts all look at FX in different way. Investors all look at FX in different way. And in …Paul Walsh: So do corporates.Marina Zavolock: Yeah, corporates all look at FX in different way. We've looked a lot at that. Having that EM background where we used to think about FX as much as we thought about equities, it was as fundamental to the story...Paul Walsh: And to be clear, that's because of the volatility…Marina Zavolock: Exactly, which we're now seeing now coming into, you know, global markets effectively with the dollar moves that we've had. What we've done is created or attempted to create a framework for assessing FX exposure by stock, the level of FX mismatches, the types of FX mismatches and the various types of hedging policies that you have for those – particularly you have hedging for transactional FX mismatches. Paul Walsh: Mm-hmm. Marina Zavolock: And we've looked at this from stock level, sector level, aggregating the stock level data and country level. And basically, overall, some of the key conclusions are that the list of stocks that benefit from Euro strength that we've identified, which is actually a small pocket of the European index. That group of stocks that actually benefits from euro strength has been strongly outperforming the European index, especially year-to-date.Paul Walsh: Mm-hmm.Marina Zavolock: And just every day it's kind of keeps breaking on a relative basis to new highs. Given the backdrop of James' view there, we expect that to continue. On the other hand, you have even more exposure within the European index of companies that are being hit basically with earnings, downgrades in local currency terms. That into this earning season in particular, we expect that to continue to be a risk for local currency earnings. Paul Walsh: Mm-hmm.Marina Zavolock: The stocks that are most negatively impacted, they tend to have a lot of dollar exposure or EM exposure where you have pockets of currency weakness as well. So overall what we found through our analysis is that more than half of the European index is negatively exposed to this euro and other local currency strength. The sectors that are positively exposed is a minority of the index. So about 30 percent is either materially or positively exposed to the euro and other local currency strength. And sectors within that in particular that stand out positively exposed utilities, real estate banks. And the companies in this bucket, which we spend a lot of time identifying, they are strongly outperforming the index.They're breaking to new highs almost on a daily basis relative to the index. And I think that's going to continue into earning season because that's going to be one of the standouts positively, amid probably a lot of downgrades for companies who have translational exposure to the U.S. or EM.Paul Walsh: And so, let's take that one step further, Marina, because obviously hedging is an important part of the process for companies. And as we've heard from James, of a 15-year bull run for dollar strength. And so most companies would've been hedging, you know, dollar strength to be fair where they've got mismatches. But what are your observations having looked at the hedging side of the equation?Marina Zavolock: Yeah, so let me start with FX mismatches. So, so we find that about half of the European index is exposed to some level of FX mismatches. Paul Walsh: Mm-hmm. Marina Zavolock: So, you have intra-European currency mismatches. You have companies sourcing goods in Asia or China and shipping them to Europe. So, it's actually a favorable FX mismatch. And then as far as hedging, the type of hedging that tends to happen for companies is related to transactional mismatches. So, these are cost revenue, balance sheet mismatches; cashflow distribution type mismatches. So, they're more the types of mismatches that could create risk rather than translational mismatches, which are – they're just going to happen.Paul Walsh: Yeah. Marina Zavolock: And one of the most interesting aspects of our report is that we found that companies that have advanced hedging, FX hedging programs, they first of all, they tend to outperform, when you compare them to companies with limited or no hedging, despite having transactional mismatches. And secondly, they tend to have lower share price volatility as well, particularly versus the companies with no hedging, which have the most share price volatility. So, the analysis, generally, in Europe of this most, the most probably diversified region globally, is that FX hedging actually does generate alpha and contributes to relative performance.Paul Walsh: Let's connect the two a little bit here now, James, because obviously as companies start to recalibrate for a world where dollar weakness might proliferate for longer, those hedging strategies are going to have to change.So just any kind of insights you can give us from that perspective. And maybe implications across currency markets as a result of how those behavioral changes might play out, I think would be very interesting for our listeners.James Lord: Yeah, I think one thing that companies can do is change some of the tactics around how they implement the hedges. So, this can revolve around both the timing and also the full extent of the hedge ratios that they have. I mean, some companies who are – in our conversations with them when they're talking about their hedging policy, they may have a range. Maybe they don't hedge a 100 percent of the risk that they're trying to hedge. They might have to do something between 80 and a hundred percent. So, you can, you can adjust your hedge ratios…Paul Walsh: Adjust the balances a bit.James Lord: Yeah. And you can delay the timing of them as well.The other side of it is just deciding like exactly what kind of instrument to use to hedge as well. I mean, you can hedge just using pure spot markets. You can use forward markets and currencies. You can implement different types of options, strategies. And I think this was some of the information that we were trying to glean from the survey was this question that Marina was asking about. Do you have a limited or advanced hedging program? Typically, we would find that corporates that have advanced programs might be using more options-based strategies, for example. And you know, one of the pieces of analysis in the report that my colleague Dave Adams did was really looking at the effectiveness of different strategies depending on the market environment that we're in.So, are we in a sort of risk-averse market environment, high vol environment? Different types of strategies work for different types of market environments. So, I would encourage all corporates that are thinking about implementing some kind of hedging strategy to have a look at that document because it provides a lot of information about the different ways you can implement your hedges. And some are much more cost effective than others.Paul Walsh: Marina, last thought from you? Marina Zavolock: I just want to say overall for Europe there is this kind of story about Europe has no growth, which we've heard for many years, and it's sort of true. It is true in local currency terms. So European earnings growth now on consensus estimates for this year is approaching one percent; it's close to 1 percent. On the back of the moves we've already seen in FX, we're probably going to go negative by the time this earning season is over in local currency terms. But based on our analysis, that is primarily impacted by translation.So, it is just because Europe has a lot of exposure to the U.S., it has some EM exposure. So, I would just really emphasize here that for investors; so, investors, many of which don't hedge FX, when you're comparing Europe growth to the U.S., it's probably better to look in dollar terms or at least in constant currency terms. And in dollar terms, European earnings growth at this point are 7.6 percent in dollar terms. That's giving Europe the benefit for the euro exposure that it has in other local currencies. So, I think these things, as FX starts to be front of mind for investors more and more, these things will become more common focus points. But right now, a lot of investors just compare local currency earnings growth.Paul Walsh: So, this is not a straightforward topic, and we obviously think this is a very important theme moving through the balance of this year. But clearly, you're going to see some immediate impact moving through the next quarter of earnings. Marina and James, thanks as always for helping us make some sense of it all.James Lord: Thanks, Paul. Marina Zavolock: Thank you.Paul Walsh: And to our listeners out there, thank you as always for tuning in.If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

Though early affects of tariffs might show up in today's June CPI report, inflation data and bank earnings could dominate the day, keeping tariff policy off the front page.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0131-0725)

APAC stocks were ultimately mixed with the region indecisive in the aftermath of the latest Chinese GDP and activity data.European equity futures indicate a marginally higher cash market open with Euro Stoxx 50 future up 0.3% after the cash market closed with losses of 0.2% on Monday.DXY has given back some of yesterday's gains, EUR/USD remains on a 1.16 handle, other majors are contained.EU draws up retaliatory tariffs for US goods in case a trade deal is not reached, including aircraft and booze, according to WSJ.Crude futures remained subdued after US President Trump announced 100% tariffs on Russia and secondary sanctions on other countries that buy oil from Russia if a Ukraine deal is not struck within 50 days.The ECB is to discuss a more negative scenario next week than previously envisaged in June after Trump's latest tariff threat, according to Reuters.Looking ahead, highlights include EZ Industrial Production, German ZEW, US & Canadian CPI, OPEC MOMR, Bundesbank Monthly Report, Fed's Bowman, Barr, Barkin & Collins, BoE's Bailey & UK Chancellor Reeves, Supply from Germany, Earnings from JPMorgan, Blackrock, Wells Fargo, Citi and Ericsson.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

EU draws up retaliatory tariffs for US goods in case a trade deal is not reached, including aircraft and booze, according to WSJ.European bourses are modestly firmer, US futures also gain with clear outperformance in the NQ boosted by NVIDIA.NVIDIA (+5% pre-market) to resume H20 sales to China and announces new, fully compliant GPU for China.USD a little lower into US CPI, Antipodeans top the G10 pile given the risk sentiment.USTs flat into CPI & Bowman, Bunds lead, OATs await Bayrou & Gilts await Bailey/Reeves.Crude lower but off worst levels on reports that Trump asked if Ukraine are able to hit Moscow with US weapons.Looking ahead, US & Canadian CPI, OPEC MOMR, Bundesbank Monthly Report, Speakers including Fed's Bowman, Barr, Barkin & Collins, BoE's Bailey & UK Chancellor Reeves. Earnings from JPMorgan, Blackrock, Wells Fargo, Citi.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Stocks hold steady as tariff uncertainty continues. Our CIO and Chief U.S. Equity Strategist Mike Wilson explains how policy deferrals, earnings resilience and forward guidance are driving the market.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley's CIO and Chief U.S. Equity Strategist. Today on the podcast I'll be discussing why stocks remain so resilient. It's Monday, July 14th at 11:30am in New York. So, let's get after it. Why has the equity market been resilient in the face of new tariff announcements? Well first, the import cost exposure for S&P 500 industries is more limited given the deferrals and exemptions still in place like the USMCA compliant imports from Mexico. Second, the higher tariff rates recently announced on several trading partners are generally not perceived to be the final rates as negotiations progress. I continue to believe these tariffs will ultimately end up looking like a 10 percent consumption tax on imports that generate significant revenue for the Treasury. And finally, many companies pre-stocked inventory before the tariffs were levied and so the higher priced goods have not yet flowed through the cost of goods sold. Furthermore, with the market's tariffs concerns having peaked in early April, the market is looking forward and focused on the data it can measure. On that score, the dramatic v-shaped rebound in earnings revisions breadth for the S&P 500 has been a fundamental tailwind that justifies the equity rally since April in the face of continued trade and macro uncertainty. This gauge is one of our favorites for predicting equity prices and it troughed at -25 percent in mid-April. It's now at +3 percent. The sectors with the most positive earnings revisions breadth relative to the S&P 500 are Financials, Industrials and Software — three sectors we continue to recommend due to this dynamic. The other more recent development helping to support equities is the passage of the One Big Beautiful Bill. While this Bill does not provide incremental fiscal spending to support the economy or lower the statutory tax rate, it does lower the cash earnings tax rates for companies that spend heavily on both R&D and Capital Goods.Our Global Tax Team believes we could see cash tax rates fall from 20 percent today back toward the 13 percent level that existed before some of these benefits from the Tax Cuts and Jobs Act that expired in 2022. This benefit is also likely to jump start what has been an anemic capital spending cycle for corporate America, which could drive both higher GDP and revenue growth for the companies that provide the type of equipment that falls under this category of spending. Meanwhile, the Foreign-Derived Intangible Income is a tax incentive that benefits U.S. companies earning income from foreign markets. It was designed to encourage companies to keep their intellectual property in the U.S. rather than moving it to countries with lower tax rates. This deduction was scheduled to decrease in 2026, which would have raised the effective tax rate by approximately 3 percent. That risk has been eliminated in the Big Beautiful Bill. Finally, the Digital Service Tax imposed on online companies that operate overseas may be reduced. Late last month, Canada announced that it would rescind its Digital Service Tax on the U.S. in anticipation of a mutually beneficial comprehensive trade arrangement with the U.S. This would be a major windfall for online companies and some see the potential for more countries, particularly in Europe, to follow Canada's lead as trade negotiations with the U.S. continue. Bottom line, while uncertainty around tariffs remains high, there are many other positive drivers for earnings growth over the next year that could more than offset any headwinds from these policies. This suggests the recent rally in stocks is justified and that investors may not be as complacent as some are fearing. Thanks for tuning in; I hope you found it informative and useful. Let us know what you think by leaving us a review. And if you find Thoughts on the Market worthwhile, tell a friend or colleague to try it out!

Today offers little in terms of key data or earnings, but several large U.S. banks report early Tuesday and June consumer prices also bow then. Tariffs sent stocks lower last week.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0131-0725)

US President Trump sent trade letters to the EU and Mexico announcing 30% tariffs from August 1st (separate from sectoral tariffs).The EU is planning to "step up engagement" with other nations impacted by US President Trump's tariffs, according to Bloomberg sources.APAC stocks were mostly positive but with some cautiousness seen following US President Trump's tariff letters, while the region also reflected on mixed Chinese trade data.European equity futures indicate a lower cash market open with Euro Stoxx 50 future down 0.6% after the cash market closed with losses of 1.0% on Friday.DXY is marginally firmer, EUR/USD is only slightly softer despite Trump's tariff announcement, other majors are contained.Looking ahead, highlights include US President Trump's Comments on Russia, ECB's Cipollone, supply from the EU.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

US President Trump sent trade letters to the EU and Mexico announcing 30% tariffs from August 1st (separate from sectoral tariffs).The EU is planning to "step up engagement" with other nations impacted by US President Trump's tariffs, according to Bloomberg sources.European bourses hampered by US-EU trade developments, US futures also in the red but off worst levels.FX & Fixed markets contained as traders continue to look through Trump tariff threats.Crude modestly boosted by Iran comments, XAU helped by tariff updates.Looking ahead, US President Trump's Comments on Russia, ECB's Cipollone.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

As U.S. retailers manage the impacts of increased tariffs, they have taken a number of approaches to avoid raising prices for customers. Our Head of Corporate Strategy Andrew Sheets and our Head of U.S. Consumer Retail and Credit Research Jenna Giannelli discuss whether they can continue to do so.Read more insights from Morgan Stanley.----- Transcript -----Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.Jenna Giannelli: And I'm Jenna Giannelli, Head of U.S. Consumer and Retail Credit Research.Andrew Sheets: And today on the podcast, we're going to dig into one of the biggest conundrums in the market today. Where and when are tariffs going to show up in prices and margins? It's Friday, July 11th at 10am in New York. Jenna, it's great to catch up with you today because I think you can really bring some unique perspective into one of the biggest puzzles that we're facing in the market today. Even with all of these various pauses and delays, the U.S. has imposed historically large tariffs on imports. And we're seeing a rapid acceleration in the amount of money collected from those tariffs by U.S. customs. These are real hard dollars that importers – or somebody else – are paying. Yet we haven't seen these tariffs show up to a significant degree in official data on prices – with recent inflation data relatively modest. And overall stock and credit markets remain pretty strong and pretty resilient, suggesting less effect.So, are these tariffs just less impactful than expected, or is there something else going on here with timing and severity? And given your coverage of the consumer and retail sectors, which is really at the center of this tariff debate – what do you think is going on?Jenna Giannelli: So yes, this is a key question and one that is dominating a lot of our client conversations. At a high level, I'd point to a few things. First, there's a timing issue here. So, when tariffs were first announced, retailers were already sitting on three to four months worth of inventory, just due to natural industry lead times. And they were able to draw down on this product.This is mostly what they sold in 1Q and likely into 2Q, which is why you haven't seen much margin or pricing impact thus far. Companies – we also saw them start to stock up heavily on inventory before the tariffs and at the lower pause rate tariffs, which is the product you referenced that we're seeing coming in now. This is really going to help mitigate margin pressure in the second quarter that you still have this lower cost inventory flowing through. On top of this timing consideration, retailers – we've just seen utilizing a range of mitigation measures, right? So, whether it's canceled or pause shipments from China, a shifting production mix or sourcing exposure in the short run, particularly before the pause rate on China. And then really leaning into just whether it's product mix shifts, cost savings elsewhere in the PNL, and vendor negotiations, right? They're really leaning into everything in their toolbox that they can. Pricing too has been talked about as something that is an option, but the option of last resort. We have heard it will be utilized, but very tactically and very surgically, as we think about the back half of the year. When you put this all together, how much impact is it having? On average from retailers that we heard from in the first quarter, they thought they would be able to mitigate about half of the expected tariff headwind, which is actually a bit better than we were expecting. Finally, I'll just comment on your comment regarding market performance. While you're right in that the overall equity and credit markets have held up well, year-to-date, retail equities and credit have fared worse than their respective indices. What's interesting, actually, is that credit though has significantly outperformed retail equities, which is a relationship we think should converge or correct as we move throughout the balance of the year.Andrew Sheets: So, Jenna, retailers saw this coming. They've been pulling various levers to mitigate the impact. You mentioned kind of the last lever that they want to pull is prices, raising prices, which is the macro thing that we care about. The thing that would actually show up in inflation. How close are we though to kind of running out of other options for these guys? That is, the only thing left is they can start raising prices?Jenna Giannelli: So closer is what I would say. We're likely not going to see a huge impact in 2Q, more likely as we head into 3Q and more heavily into the all-important fourth quarter holiday season. This is really when those higher cost goods are going to be flowing through the PNL and retailers need to offset this as they've utilized a lot of their other mitigation strategies. They've moved what they could move. They've negotiated where they could, they've cut where they could cut. And again, as this last step, it will be to try and raise price.So, who's going to have the most and least success? In our universe, we think it's going to be more difficult to pass along price in some of the more historically deflationary categories like apparel and footwear. Outside of what is a really strong brand presence, which in our universe, historically hasn't been the case.Also, in some of the higher ticket or more durable goods categories like home goods, sporting goods, furniture, we think it'll be challenging as well here to pass along higher costs. Where it's going to be less of an issue is in our Staples universe, where what we'd put is less discretionary categories like Beauty, Personal Care, which is part of the reason why we've been cautious on retail, and neutral and consumer products when we think about sector allocation.Andrew Sheets: And when do you think this will show up? Is it a third quarter story? A fourth quarter story?Jenna Giannelli: I think this is going to really start to show up in the third quarter, and more heavily into the fourth quarter, the all-important holiday season.Andrew Sheets: Yeah, and I think that's what's really interesting about the impact of this backup to the macro. Again, returning to the big picture is I think one of the most important calls that Morgan Stanley economists have is that inflation, which has been coming down somewhat so far this year is going to pick back up in August and September and October. And because it's going to pick back up, the Federal Reserve is not going to cut interest rates anymore this year because of that inflation dynamic. So, this is a big debate in the market. Many investors disagree. But I think what you're talking about in terms of there are some very understandable reasons, maybe why prices haven't changed so far. But that those price hikes could be coming have real macroeconomic implications.So, you know, maybe though, something to just close on – is to bring this to the latest headlines. You know, we're now back it seems, in a market where every day we log onto our screens, and we see a new headline of some new tariff being announced or suggested towards countries. Where do you think those announcements, so far are relative to what retailers are expecting – kind of what you think is in guidance?Jenna Giannelli: Sure. So, look what we've seen of late; the recent tariff headlines are certainly higher or worse, I think, than what investors in management teams were expecting. For Vietnam, less so; I'd say it was more in line. But for most elsewhere, in Asia, particularly Southeast Asia, the rates that are set to go in effect on August 1st, as we now understand them, are higher or worse than management teams were expecting. Recall that while guidance did show up in many flavors in the first quarter, so whether withdrawn guidance or lowered guidance. For those that did factor in tariffs to their guide, most were factoring in either pause rate tariffs or tariff rates that were at least lower than what was proposed on Liberation Day, right? So, what's the punchline here? I think despite some of the revisions we've already seen, there are more to come. To put some numbers around this, if we look at our group of retail consumer cohort, credits, consensus expectations for calling for EBITDA in our universe to be down around 5 percent year-over-year. If we apply tariff rates as we know them today for a half-year headwind starting August 1st, this number should be down around 15 percent year-over-year on a gross basis…Andrew Sheets: So, three times as much.Jenna Giannelli: Pretty significant. Exactly. And so, while there might be mitigation efforts, there might be some pricing passed along, this is still a pretty significant delta between where consensus is right now and what we know tariff rates to be today – could imply for earnings in the second half.Andrew Sheets: Jenna, thanks for taking the time to talk.Jenna Giannelli: My pleasure. Thank you.Andrew Sheets: And thank you as always for your time. If you find Thoughts to the Market useful, let us know by leaving a review wherever you listen. And also tell a friend or colleague about us today.

With light earnings and data today, focus could be on tariffs. Stocks again set records Thursday but tech lost ground and the rally broadened. Nvidia's CEO is traveling to China.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see ​schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.(0131-0725)

US President Trump announced a 35% tariff for Canada and flagged a potential 20% blanket tariff for other countries; US is set to keep the tariff exemption for USMCA goods, according to a US official.Trump also noted the EU will receive a letter by Friday. Ahead of this, European bourses are in the red with sectors (ex-energy, post-BP) following suit.Stateside, futures are lower into a docket headlined by potential trade developments, ES -0.6%.USD extends on its recent recovery, resilient to trade updates. DXY notched a 97.89 peak, G10s broadly under pressure with the JPY lagging.Fixed was lifted by the above updates, since pulled back and moved into the red, a pullback intensified by a hawkish interview with ECB's Schnabel.Choppy trade for crude awaiting developments on numerous in-play factors, precious metals glean from the risk tone while base peers are tarnished.Looking ahead, highlights include Canadian Jobs, Fitch on Germany, DBRS on Sweden, Speakers including ECB's Cipollone. Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

US President Trump announced a 35% tariff for Canada and flagged a potential 20% blanket tariffs for other countries; US is set to keep the tariff exemption for USMCA goods, according to a US official.Brazil's President Lula said the main thing is the reciprocity law, and if US charges 50%, they will charge him 50%.US President Trump noted the EU will receive a letter notifying them of new tariff rates by Friday.APAC stocks were ultimately mixed; European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.2% after the cash market finished with losses of 0.1%.Looking ahead, highlights include German WPI, UK GDP Estimate, Canadian Jobs, IEA OMR, Fitch on Germany, DBRS on Sweden, Speakers including ECB's Panetta & Cipollone.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

This week, we discuss the best & worst performing stocks through June, new equity all-time highs, copper breaking out, and international equity score improvement.

The ultimate market outcomes of President Trump's tactical tariff escalation may be months away. Our Global Head of Fixed Income Research and Public Policy Strategy Michael Zezas takes a look at implications for investors now.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Michael Zezas, Global Head of Fixed Income Research and Public Policy Strategy. Today: The latest on U.S. tariffs and their market impact. It's Thursday, July 10th at 12:30pm in New York. It's been a newsy week for U.S. trade policy, with tariff increases announced across many nations. Here's what we think investors need to know. First, we think the U.S. is in a period of tactical escalation for tariff policy; where tariffs rise as the U.S. explores its negotiating space, but levels remain in a range below what many investors feared earlier this year. We started this week expecting a slight increase in U.S. tariffs—nothing too dramatic, maybe from 13 percent to around 15 percent driven by hikes in places like Vietnam and Japan. But what we got was a bit more substantial. The U.S. announced several tariff hikes, set to take effect later, allowing time for negotiations. If these new measures go through, tariffs could reach 15 to 20 percent, significantly higher than at the beginning of the year, though far below the 25 to 30 percent levels that appeared possible back in April. It's a good reminder that U.S. trade policy remains a moving target because the U.S. administration is still focused on reducing goods trade deficits and may not yet perceive there to be substantial political and economic risk of tariff escalation. Per our economists' recent work on the lagged effects of tariffs, this reckoning could be months away. Second, the implications of this tactical escalation are consistent with our current cross-asset views. The higher tariffs announced on a variety of geographies, and products like copper, put further pressure on the U.S. growth story, even if they don't tip the U.S. into recession, per the work done by our economists. That growth pressure is consistent with our views that both government and corporate bond yields will move lower, driving solid returns. It's also insufficient pressure to get in the way of an equity market rally, in the view of our U.S. equity strategy team. The fiscal package that just passed Congress might not be a major boon to the economy overall, but it does help margins for large cap companies, who by the way are more exposed to tariffs through China, Canada, Mexico, and the EU – rather than the countries on whom tariff increases were announced this week. Finally, How could we be wrong? Well, pay attention to negotiations with those geographies we just mentioned: Mexico, Canada, Europe, and China. These are much bigger trading partners not just for U.S. companies, but the U.S. overall. So meaningful escalation here can drive both top line and bottom line effects that could challenge equities and credit. In our view, tariffs with these partners are likely to land near current levels, but the path to get there could be volatile. For the U.S., Mexico and Canada, background reporting suggests there's mutual interest in maintaining a low tariff bloc, including exceptions for the product-specific tariffs that the U.S. is imposing. But there are sticking points around harmonizing trade policy. The dynamic is similar with China. Tariffs are already steep—among the highest anywhere. While a recent narrow deal—around semiconductors for rare earths—led to a temporary reduction from triple-digit levels, the two sides remain far apart on fundamental issues. So when it comes to negotiations with the U.S.' biggest trading partners, there's sticking points. And where there's sticking points there's potential for escalation that we'll need to be vigilant in monitoring. Thanks for listening. If you enjoy Thoughts on the Market please leave us a review. And tell your friends about the podcast. We want everyone to listen.

After closing at or near record highs yesterday, Wall Street braces for Delta results and a Fed governor's speech. Fed minutes showed willingness to consider rate cuts this year.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0131-0725)

Host Amar Reganti is joined by head of financial reserves management Alyssa Irving to discuss the state of commercial real estate lending, focusing on CMBS, private credit, and evolving market dynamics.2:00 What is financial reserves management?3:05 Early days of the commercial real estate lending5:30 Similarities and differences with the current CMBS market7:45 Effect of private credit9:50 Valuations and risks of CMBS13:00 How can investors gain exposure?14:30 Esoteric securitizations

European bourses began with modest gains and have gradually increased, largely led by reports of Chinese housing support.US futures are contained as newsflow has been limited, ex-China, since the overnight tariff developments.DXY is marginally firmer but well within Wednesday's band, G10s flat aside from Antipodeans benefiting from metals action and China support; BRL lags on 50% tariffsFixed benchmarks have been gradually drifting from overnight highs, now essentially flatBase metals glean on reports of Chinese stimulus, precious peers also firmer though action has been more gradualLooking ahead, highlights include US Weekly Claims, Chinese M2/New Yuan Loans, Speakers including Fed's Musalem, Waller & Daly, BoE's Breeden, Supply from the US. Earnings from Delta & Conagra Brands.Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

US President Trump announced tariff rates for seven countries and later announced a 50% tariff for Brazil; President Trump also announced the US is to impose a 50% tariff on copper, effective August 1st.The EU is discussing car import quotas and export credits with the US in trade talks, according to sources cited by Reuters.A muted reaction was seen across markets following the FOMC minutes; FOMC Minutes stated that most saw some reduction in the Fed funds rate this year as appropriate.European equity futures indicate a mildly higher cash market open with Euro Stoxx 50 futures up 0.2% after the cash market closed with gains of 1.4% on Wednesday.Looking ahead, highlights include German CPI final, Norwegian CPI, Swedish GDP, US Weekly Claims, Chinese M2/New Yuan Loans, OPEC WOO, Speakers including Fed's Musalem, Waller & Daly, ECB's Cipollone & BoE's Breeden, Supply from US, Earnings from Delta & Conagra Brands.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Our Chief Cross-Asset Strategist Serena Tang discusses whether demand for U.S. stocks has fallen and where fund flows are surging. Read more insights from Morgan Stanley.----- Transcript -----Serena Tang: Welcome to Thoughts on the Market. I'm Serena Tang, Morgan Stanley's Chief Cross-Asset Strategist.Today – is the demand for U.S. assets declining? Let's look at the recent trends in global investment flows.It's Wednesday, July 9th at 1pm in New York.The U.S. equity market has reached an all-time high, but at the same time lingering uncertainty about U.S. trade and tariff policies is forcing global investors to consider the riskiness of U.S. assets. And so the big question we need to ask is: are investors – particularly foreign investors – fleeing U.S. assets?This question comes from recent data around fund flows to global equities. And we have to acknowledge that demand for U.S. stocks overall has declined, going by high-frequency data. But at the same time, we think this idea is exaggerated. So why is that? As many listeners know, fund flows – which represent the net movement of money into and out of various investment vehicles like mutual funds and ETFs – are an important gauge of investor sentiment and market trends. So what are fund flows really telling us about investors' sentiment towards U.S. equities? It would be nice to get an unequivocal answer, but of course, the devil is always in the details. And the problem is that different data sources and frequencies across different market segments don't always lead to the same conclusions. Weekly data across global equity ETF and mutual funds from Lipper show that international investors were net buyers through most of April and May. But the pace of buying has slowed year-to-date versus 2024. Still, it remains much higher than during the same period in 2021 through 2023. Treasury TIC data point to something similar – a slowdown in foreign demand, but not significant net selling. So where are the flows going, if not to the U.S.? They are going to the rest of the world, but more particularly, Europe. Europe stocks, in fact, have been the biggest beneficiary of decreasing flows to the U.S. Nearly $37 billion U.S. has gone into Europe-focused equity funds year-to-date. This is significantly higher than the run-rates over the prior five years. What's more notable here is that year-to-date, flows to European-focused ETFs and mutual funds dominated those targeting Japan and Emerging Markets. This suggests that Europe is now the premier destination for equity fund flows, with very little demand spillovers to other regions' equity markets.These shifts have yet to show up in the allocation data, which tracks how global asset managers invest in stocks regionally. Global equity funds' portfolio weights to Rest-of-the-World has gone up by roughly the same amount as allocation to the U.S. has come down. But allocation to the U.S. has actually gone down by roughly the same amount, as its share in global equity indices; which means that If allocation to the U.S. has changed, it's simply because the U.S. is now a smaller part of equity indices. Meanwhile, an estimated U.S.$9 billion from Rest-of-the World went into international equity funds, which excludes U.S. stocks altogether. Granted, it's not a lot; but scaled for fund assets, it's the highest net flows international equities have seen. In other words, some investors are choosing to invest in equities excluding U.S. altogether. These trends are unlikely to reverse as long as lingering policy uncertainty dampens demand for U.S.-based assets. But as we've argued in our mid-year outlook, there are very few alternative markets to the U.S. dollar markets right now. U.S. stocks might start to see less marginal flows from foreign investors – to the benefit of Rest-of-the-World equities, especially Europe. But demand is unlikely to dry up completely over the next 12 months. Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

The week started on a slow note following the holiday with investors nervous about tariffs and the start of earnings. Fed minutes later today could provide some color on rates.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0131-0725)

US President Trump flagged the release of at least 7 tariff letters today. Reports that the EU is closing in on a temporary "framework" agreement, via FT.European bourses began modestly firmer and have been grinding higher since, Euro Stoxx 50 +1.1%; German autos bid on trade nuances, Basic Resources hit by non-US copper performance, Media lags after WPPStateside, futures are in the green and directionally in-fitting with Europe but gains are much more muted, ES +0.2%; updates around AAPL, NVDA, AMZN in focusUSD steady with G10s mixed but essentially flat. RBNZ as expected, no significant NZD move.Fixed benchmarks have a modest upward bias, though they remain markedly lower on the week; today's action in Europe is a retracement of Tuesday's supply-induced pressure rather than a pronounced move higher.Crude has an upward bias, specifics light. XAU softer. Front-running of US copper into potential tariffs has widened the Comex-LME arbitrage to over USD 2,000/t.Looking ahead, highlights include FOMC Minutes, Speakers include ECBʼs Lane, Nagel & de Guindos, Supply from the US.Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

APAC stocks traded mixed following the similar performance stateside where tariff updates remained in focus.US President Trump said he will announce something on pharmaceuticals very soon and will be announcing semiconductor tariffs, believes the copper tariff will be 50%.President Trump said the US is probably two days off from sending the EU a letter, which means a deal.European equity futures indicate a slightly higher cash market open with Euro Stoxx 50 future up 0.3% after the cash market closed with gains of 0.6% on Tuesday.DXY is a touch higher with the USD mixed vs. peers (stronger vs. havens, weaker vs. antipodeans).RBNZ maintained the OCR at 3.25%, as expected, hinted at future rate cuts ahead.Looking ahead, highlights include BoE FSR, FOMC Minutes, RBA's Hunter, BoE Governor Bailey, ECB's Lane, Nagel & de Guindos, Supply from UK, Germany & US.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Take a closer look at a fixed income fund trusted by Singaporeans — with 90% of its investors based in Singapore. What if fixed income isn’t just a defensive play — but a smart way to grow your wealth? Michelle Martin sits down with Kylie Soh of Fullerton Fund Management to explore why short-to-medium-term rate strategies are gaining traction in today’s uncertain markets. They break down the myths younger investors have about bonds, examine the appeal of the Fullerton Short Term Interest Rate Fund, and spotlight what active management brings to the table.See omnystudio.com/listener for privacy information.

Arushi Agarwal from the European Sustainability Strategy team and Aerospace & Defense Analyst Ross Law unpack what a reshaped defense industry means for sustainability, ethics and long-term investment strategy.Read more insights from Morgan Stanley.----- Transcript -----Ross Law: Welcome to Thoughts on the Market. I'm Ross Law from Morgan Stanley's European Aerospace and Defense team.Arushi Agarwal: And I'm Arushi Agarwal from the European Sustainability Research Team.Ross Law: Today, a topic that's rapidly defining the boundaries of sustainable investing and technological leadership – the use of AI in defense.It's Tuesday, July 8th at 3pm in London. At the recent NATO summit, member countries decided to boost their core defense spending target from 2 percent to 3.5 percent of GDP. This big jump is sure to spark a wave of innovation in defense, particularly in AI and military technology. It's clear that Europe is focusing on rearmament with AI playing a major role. In fact, AI is revolutionizing everything from unmanned systems and cyber defense to simulation training and precision targeting. It's changing the game for how nations prepare for – and engage in – conflict. And with all these changes come serious challenges. Investors, policy makers and technologists are facing some tough questions that sit at the intersection of two of Morgan Stanley's four key themes: The Multipolar World and Tech Diffusion.So, Arushi, to set the stage, how is the concept of sustainability evolving to include national security and defense, particularly in Europe?Arushi Agarwal: You know, Ross, it's fascinating to see how much this space has evolved over the past year. Geopolitical tensions have really pushed national security much higher on the sustainability agenda. We're seeing a structural shift in sentiment towards defense investments. While historically defense companies were largely excluded by sustainability funds, we're now seeing asset managers revisiting these exclusions, especially around conventional and nuclear weapons. Some are even launching thematic funds, specifically focused on security and resilience.However, in the absence of standard methodologies to assess weapon related exposures, evaluate sector-specific ESG risks and determine transparency, there is no clear consensus on what sustainability focused managers can hold. Greater policy focus has created the need to identify a long-term approach to investing in this sector, one that is cognizant of ethical issues. Investors are now increasingly asking whether rapid technological integration might allow for a more forward-looking, risk aware approach to investing in national security.Ross Law: So, it's no news that Europe has historically underspent on defense. Now, the spending goal is moving to 3.5 percent of GDP to try and catch up. Our estimates suggest this could mean an additional $200 billion per year in additional spend – with a focus on equipment over personnel, at least for the time being. With this new focus, how is AI shaping the European rearmament strategy?Arushi Agarwal: Well, AI appears to be at the core of EU's 800 billion euro rearmament plan. The commission has been quite clear that escalating tensions have not only led to a new arms race but also provoked a global technological race. Now to think about it, AI, quantum, biotech, robotics, and hypersonic are key inputs not only for long-term economic growth, but also for military pre-eminence.In our base case, we estimate that total NATO military spend into AI applications will potentially more than double to $112 billion by 2030. This is at a 4 percent AI investment allocation rate. If this allocation rate increases to 10 percent as anticipated by European deep tech firms, then NATOs AI military spend could grow sixfold to $306 billion by 2030 in our bull case.So, Ross, you were at the Paris Air Show recently where companies demonstrated their latest product capabilities. Which AI applications are leading the way in defense right now? Ross Law: Yeah, it was really quite eye-opening. We've identified nine key AI applications, reshaping defense, and our Application Readiness Radar shows that Cybersecurity followed by Unmanned Systems exhibit the highest level of preparedness from a public and private investment perspective.Cybersecurity is a major priority due to increased proliferation of cyber attacks and disinformation campaigns, and this technology can be used for both defensive and offensive measures. Unmanned systems are also really taking off, no pun intended, mainly driven by the rise in drone warfare that's reshaping the battlefield in Ukraine.At the Paris Airshow, we saw demonstrations of “Wingman” crewed and uncrewed aircraft. There have also been several public and private partnerships in this area within our coverage. Another area gaining traction is simulation and war gaming. As defense spending increases and potentially leads to more military personnel, we see this theme in high demand in the coming years.Arushi Agarwal: And how are European Aerospace and Defense companies positioning themselves in terms of AI readiness?Ross Law: Well, they're really making significant advancements. We've assessed AI technology readiness for our A&D companies across six different verticals: the number of applications; dual-use capabilities; AI pricing power; responsible AI policy; and partnerships on both external and internal product categories.What's really interesting is that European A&D companies have higher pricing power relative to the U.S. counterparts, and a higher percentage are both enablers and adopters of AI. To accelerate AI integration, these companies are increasingly partnering with government research arms, leading software firms, as well as peers and private players.Arushi Agarwal: And some of these same technologies can also be used for civilian purposes. Could you share some examples with us?Ross Law: The dual use potential is really significant. Various companies in our coverage are using their AI capabilities for civilian applications across multiple domains. For example, geospatial capabilities can also be used for wildfire management and tracking deforestation. Machine learning can be used for maritime shipping and port surveillance. But switching gears slightly, if we talk about the regulatory developments that are emerging in Europe to address defense modernization, what does this mean, Arushi, for society, the industry and investors?Arushi Agarwal: There's quite a lot happening on the regulatory front. The European Commission is working on a defense omnibus simplification proposal aimed at speeding up defense investments in the EU. It's planning to publish a guidance notice on how defense investment will fit within the sustainable finance framework. It's also making changes to its sustainability reporting directive. If warranted, the commission will make additional adjustments to reflect the needs of the defense industry in its sustainability reporting obligations. The Sustainable Fund Reform is another important development. While the sustainability fund regulation doesn't prohibit investment into the defense sector, the commission is seeking to provide clarification on how defense investment goals sit within a sustainability framework.Additionally at the European Security Summit in June, the European Defense Commissioner indicated that a roadmap focusing on the modernization of European defense will be published in autumn. This will have a special focus on AI and quantum technologies. For investors, whilst exclusions easing has started to take place, pickup in individual positioning has been slow. As investors ramp up on the sector, we believe these regulatory developments can serve as catalysts, providing clear demand and trend signals for the sector.Ross Law: So finally, in this context, how can companies and investors navigate these ethical considerations responsibly?Arushi Agarwal: So, in the note we highlight that AI risk management requires the ability to tackle two types of challenges. First, technical challenges, which can be mitigated by embedding boundaries and success criteria directly into the design of the AI model. For example, training AI systems to refuse harmful requests. Second challenges are more open-ended and ambiguous set of challenges that relate to coordinating non-proliferation among countries and preventing misuse by bad actors. This set of challenges requires continuous interstate dialogue and cooperation rather than purely technical fixes.From an investor perspective, closer corporate engagement will be key to navigating these debates. Ensuring firms have clear documentation of their algorithms and decision-making processes, human in the loop systems, transparency around data sets used to train the AI models are some of the engagement points we mention in our note.Ultimately, I think the key is balance. On the one hand, we have to recognize the legitimate security needs that defense technologies address. And on the other hand, there's the need to ensure appropriate safeguards and oversight.Ross Law: Arushi, thanks for taking the time to talk.Arushi Agarwal: It was great speaking with you, Ross,Ross Law: And thank you all for listening. If you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

A 3-year Treasury auction today and a 10-year note auction tomorrow, along with Wednesday's Fed minutes, could drive stocks after Monday's drop. Tariffs remain front and center.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0131-0725)

Henry Song is a portfolio manager for Diamond Hill, a asset manager headquartered in Columbus Ohio with approximately $30 bn in AUM. He joined the firm in 2016. Prior to joining Diamond Hill, Henry was a portfolio manager at J.P. Morgan Asset Management from 2005 to 2016.  He specializes in securitized credit. Our conversation races Henry's somewhat unorthodox background and path into running money in fixed income. We discuss the interviews conducted in asset management firm and question whether they are optimized for the right characteristics and strengths. We look at how they might be done differently and how that would improve the cognitive mix within firms. We spend a little time on personality types, especially as assessed by the various psychometric tests that are conducted on teams, and note how certain traits are under-represented. Returning to his own career path we reflect on the importance of living through financial crises and the invaluable petri dish that presents and then discuss market conditions in fixed income today and how investor needs are evolving. In the reflection section we turn to the importance of humanistic approaches in finance, understanding the counterparty, and not making irrational decisions based on fear and greed. Thank you to GCM Grosvenor and Resolute Investment Managers, Inc. for sponsoring Series 3 of 2025. GCM Grosvenor is a global alternative asset management firm with a longstanding commitment to supporting small, emerging, and diverse investment managers. For over 30 years, the firm has developed expertise in funding and guiding these managers as part of its broader activity across alternative investments. With over $20 billion in AUM dedicated to small and emerging managers and $16 billion in AUM dedicated to diverse managers, GCM Grosvenor leverages its experienced team, broad network, and proprietary sourcing capabilities to support their success. Through the Small, Emerging, and Diverse Manager Program, the firm creates opportunities for investors to access a wide range of talent while seeking to drive strong returns and impact. For more information, visit www.gcmgrosvenor.com Resolute Investment Managers, Inc. is a diversified, multi-affiliate asset management platform that partners with more than 30 best-in-class affiliated and independent investment managers. Its unique platform delivers strategic value through a full suite of distribution, operational and administrative services available to affiliates and partners.  

The House of Medici, which ruled over Florence for much of the Renaissance period, established a political dynasty with influence built on successful ventures in commerce and banking. The Medicis predated the concept of geoeconomic power, or governments' ability to wield economic might to achieve geopolitical and economic goals. Today, soft power might be giving way to intensifying competition between great powers. Government leaders are increasingly focused on solidifying economic security through trade leverage, tariffs, sanctions and other measures. As a result, potential new investment risks and opportunities are emerging. This episode of The Outthinking Investor discusses how investors can measure their portfolio's exposure to geoeconomic shifts, which economies and sectors could benefit amid a realignment in supply chains, whether the US dollar can maintain its global dominance, and investment strategies that could potentially mitigate risk and capitalize on new opportunities. Our guests are: Matteo Maggiori, finance professor at the Stanford Graduate School of Business Joseph Nye, political scientist and former Dean of Harvard University's Kennedy School of Government Mehill Marku, Lead Geopolitical Analyst at PGIM Do you have any comments, suggestions, or topics you would like us to cover? Email us at thought.leadership@pgim.com, or fill out our survey at PGIM.com/podcast/outthinking-investor. To hear more from PGIM, tune into Speaking of Alternatives, available on Spotify, Apple, Amazon Music, and other podcast platforms. Explore our entire collection of podcasts at PGIM.com.

US President Trump said the August 1st tariff deadline is firm, but he is open to other ideas.European bourses began on the front foot, digesting the deadline pushback and reports that the US offered the EU a 10% tariff deal, via Politico.Since, benchmarks have eased off best with the tone now mixed, Euro Stoxx 50 +0.1%. Stateside, non-tariff updates limited, ES +0.1%.DXY is giving back some of Monday's gains. AUD outperforms on a surprise RBA hold. EUR and GBP both firmer, but off best.Fixed benchmarks hit by the tariff deadline extension and a packed supply docket.Crude in the red but within familiar ranges, pressure intensified on reports that Doha talks recommenced. Metals follow the risk tone.Looking ahead, highlights include US NY Fed SCE, NFIB Business Optimism, EIA STEO, ECB's Nagel & de Guindos, Supply from the USClick for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

US President Trump sent tariff letters to 14 countries, including Japan, South Korea, South Africa, and Thailand, with tariff rates ranging between 25%-40%.Trump also warned against retaliation, although he also delayed the tariff deadline to August 1st - leaving room for negotiation.APAC stocks mostly traded with cautious gains as participants digested the Trump letters; Wall Street closed lower.RBA defied the broad consensus and instead decided to pause on rates through a 6-3 majority vote.European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.2% after the cash market closed with gains of 1.0% on Monday.DXY is steady, AUD is the clear outperformer across the majors, USD/JPY sits on a 146 handle.Looking ahead, highlights include German Trade, US NY Fed SCE, NFIB Business Optimism, EIA STEO, RBA's Bullock, ECB's Nagel & de Guindos, Supply from Netherlands, UK, Germany & US.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

In this episode of Actualizing Success, we delve into the dynamic and often underserved agricultural finance market. Our experts from Actualize Consulting—Partner Matt Seu, Director John Pomeranski, Senior Manager Jon Cooper, and Senior Consultant Caroline Pickering—share their extensive experience and insights into this crucial sector. The conversation looks at the intricacies of the Farm Credit System and its pivotal role in supporting farmers, ranchers, and rural communities through a network of borrower-owned financial institutions. They explore how entities like the USDA and Farmer Mac interconnect within this ecosystem and examine the challenges of market fragmentation and the diverse needs of agricultural financing. With a focus on innovation and the increasing relevance of younger generations in agriculture, this episode highlights opportunities for growth and improvement in ag finance, emphasizing Actualize Consulting's commitment to making significant strides in the ag finance market.Listen to learn more about:The structure and purpose of the Farm Credit SystemThe role of the USDA and Farmer Mac in agricultural financeSpecific challenges within the ag finance market, including fragmentation and varying lending needsOpportunities for innovation in the sectorThe impact of an aging workforce and outreach initiatives for young farmers   About Matt Seu Matt is a Partner at Actualize Consulting, managing the Mortgage & Fixed Income practice. With three decades of experience in the mortgage industry, Matt is a wealth of information and a true thought leader committed to moving the industry forward through digital transformation and standardizing how the mortgage industry communicates. Matt is a two-time winner of MISMO's prestigious Outstanding Contribution Award and the 2023 Industry Titans Award.  Email: mseu@actualizeconsulting.com  About John Pomaranski: John is a Director at Actualize Consulting with over 19 years of experience. His expertise includes project management, business requirements, and UAT for accounting system implementations. He specializes in financial system implementations, mortgage loan accounting and communication, and software development life cycle standards. He is a member of MISMO's Community of Practice. Email: jpomaranski@actualizeconsulting.com  About Jon Cooper  Jon is a Senior Manager at Actualize Consulting with extensive experience in requirements analysis, project management, process modeling/redesign, and systems conversions. He has in-depth knowledge of the mortgage industry from originations through Servicing, Securitization, and REO/default management.  Email: jcooper@actualizeconsulting.com  About Caroline Pickering:Caroline is a Senior Consultant at Actualize Consulting with a strong track record in digital transformation, project management, and process optimization. She has experience in rural lending, affordable housing, and loan origination. With experience managing risk logs and defect reporting, Caroline effectively oversees cross-functional teams to resolve issues and ensure project success. Email: cpickering@actualizeconsulting.com Get in touch with Actualize at www.actualizeconsulting.com. If you have any questions, comments, or would like to collaborate on a future episode, contact us at podcast@actualizeconsulting.com.     

This year's disruptive jolt from developer DeepSeek showed that the cost of training and using AI models can be trimmed significantly. Listen to our podcast with Portfolio Manager Derek Glynn as he tells Chief Market Strategist Daniel Morris that use cases are set to expand far beyond personal assistants and chatbots to include even robotics and augmented reality glasses.For more insights, visit Viewpoint: https://viewpoint.bnpparibas-am.com/Download the Viewpoint app: https://onelink.to/tpxq34Follow us on LinkedIn: https://bnpp.lk/amHosted by Ausha. See ausha.co/privacy-policy for more information.

The American consumer isn't simply pulling back. They are changing the way they spend – and save. Our U.S. Thematic and Equity Strategist Michelle Weaver digs into the data. Read more insights from Morgan Stanley.----- Transcript -----Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, Morgan Stanley's U.S. Thematic and Equity Strategist.Today, the U.S. consumer. What's changing about the ways Americans spend, save and feel about the future?It's Monday, July 7th at 10am in London.As markets digest mixed signals – whether that's easing inflation, changing politics, and persistent noise around tariffs – U.S. consumers are recalibrating. Under the surface of headline numbers, a more complex story is unfolding about the ways Americans are not just reacting but adapting to macro challenges.First, I want to start with a big picture. Data from our latest consumer survey shows that consumer sentiment has stabilized, even as uncertainty around tariffs persists, especially into these rolling July deadlines. Inflation remains the top concern for most. But the good news is that it's trending lower. This month more than half of respondents cited inflation as their primary concern, a slight decrease from last month and a year ago. Now, that's a subtle but a meaningful decline suggesting consumers may be adjusting their expectations rather than bracing for continued price shocks. At the same time though political concerns are on the rise. More than 40 percent of consumers now list the U.S. political environment as a major worry. That's slightly up from last month; and not surprisingly concern around geopolitical conflicts has also jumped from a month ago.Now, when we break this down by income levels, we see some interesting trends. Inflation is the top concern across all income groups, except for those earning more than $150,000. For them, politics takes the top spot. Lower income households, though, are more focused on paying rent and debts, while higher income groups are more concerned about their investments.As for tariffs, concern remains high but stable. About 40 percent of consumers are very worried about tariffs and another 25 percent are moderately so. But if we look under the surface, it's really showing us a political divide. 63 percent of liberals are very concerned, compared to just 23 percent of conservatives who say they're very concerned.Despite these worries, though, fewer people overall are planning to cut back on spending. Only about a third say they'll spend less due to tariffs, which is down quite a bit from earlier this year. Meanwhile, about a quarter plan to spend more, and roughly a third don't expect to change their plans at all.This resilience points to the notable behavioral trend I mentioned at the start. Consumers are not just reacting, they're adapting. Looking at the broader economy, consumer confidence is holding steady according to our survey, although it's slightly down from last month. But when it comes to household finances, the outlook is more positive with a significant number expecting their finances to improve and fewer expecting them to worsen – a net positive.Savings are also showing some resilience. The average consumer has several months of savings, slightly up from last year. Spending intentions are stable with nearly a third of consumers planning to spend more next month while fewer planned to spend less. And when it comes to big ticket items, more than half of U.S. consumers are planning a major purchase in the next three months, including vehicles, appliances, and vacations.Speaking of vacations, summer travel season is here and I'm looking forward to taking a trip soon. Around 60 percent of consumers are planning to travel in the next six months, with visiting friends and family being the top reason.So, what's the biggest takeaway for investors?Despite ongoing concerns about inflation, politics and tariffs, U.S. consumers are showing remarkable resilience. It's a nuanced picture, but one that overall suggests stability in the face of uncertainty.Thanks for listening. I hope you enjoyed the show, and if you did, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

Well-rested investors will try to build on last Thursday's better-than-expected jobs report. However, Trump's tariff deadline and national debt concerns loom over markets.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0131-0725)

APAC stocks were mostly subdued with the region cautious ahead of upcoming key events, including central bank announcements and the July 9th tariff deadline.US President Trump said 12 nations will receive tariff letters on Monday (deliveries to start from 17:00BST). Also, threatened 10% additional tariff for those aligned with BRICS.US Treasury Secretary Bessent said letters to trading partners will notify them that if no deal is reached, they will revert to April 2nd tariff levels; tariffs to take effect on August 1st.European equity futures indicate a quiet open with Euro Stoxx 50 future flat after the cash market closed with losses of 1% on Friday.DXY has kicked the week off on the front foot, antipodeans lag alongside the soft risk tone, EUR/USD remains on a 1.17 handle.Crude pressured after OPEC+ accelerated its output hike with an increase of 548k bpd for August (prev. 411k bpd increase).Looking ahead, highlights include German Industrial Output, Swedish CPIF (Flash), EZ Sentix & Retail Sales, BoE Gilt sale operation.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

US President Trump said 12 nations will receive tariff letters on Monday (deliveries to start from 17:00BST). Also, threatened 10% additional tariff for those aligned with BRICS.US Treasury Secretary Bessent said letters to trading partners will notify them that if no deal is reached, they will revert to April 2nd tariff levels; tariffs to take effect on August 1st.European bourses began the day with modest gains but action is tentative, Euro Stoxx 50 +0.3%; ES -0.4% amid trade uncertainty, NQ -0.5% underperforms on TSLA -6.5%USD firmer vs all major peers. Antipodeans hit by the tone, JPY on the USD strength and soft domestic wage data, Cable below 1.36 and EUR/USD at a 1.1723 lowFixed benchmarks contained and experiencing two-way trade into the tariff letters, USTs near-enough unchanged, Bunds lower but off worstCrude began on the backfoot after OPEC+ eight agreeing to increase output by 548k (prev. 411k); since, benchmarks off lows and modestly firmer. Metals dented by the USD.Looking ahead, highlights include supply from the UK (BoE Gilt sale), US President Trump meeting Israeli PM Netanyahu & US tariff lettersClick for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

For a special Independence Day episode, our Head of Corporate Credit Research considers a popular topic of debate, on holidays or otherwise – national debt.Read more insights from Morgan Stanley.----- Transcript -----Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.Today on a special Independence Day episode of the podcast, we're going to talk a bit about the history of U.S. debt and the contrast between corporate and federal debt trajectories.It's Thursday, July 3rd at 9am in Seattle.The 4th of July, which represents the U.S. declaring independence from Great Britain, remains one of my favorite holidays. A time to gather with friends and family and celebrate what America is – and what it can still be.It is also, of course, a good excuse to talk about debt.Declaring independence is one thing, but fighting and beating the largest empire in the world at the time would take more than poetic words. The borrowing that made victory possible for the colonies also almost brought them down in the 1780s under a pile of unsustainable debt. It was a young treasury secretary Alexander Hamilton, who successfully lobbied to bring these debts under a federal umbrella – binding the nation together and securing a lower borrowing cost. As we'd say, it's a real fixed income win-win.Almost 250 years later, the benefits of that foresight are still going strong, with the United States of America enjoying the world's largest economy, and the largest and most liquid equity and bond markets. Yet lately there's been more focus on whether those bond markets are, well, too large.The U.S. currently runs a budget deficit of about 7 percent of GDP, and the current budget proposals in the house and the Senate could drive an additional 4 trillion of borrowing over the next decade above that already hefty baseline. Forecast even further out, well, they look even more challenging.We are not worried about the U.S. government's ability to pay its bills. And to be clear, in the near term, we are forecasting at Morgan Stanley, U.S. government yields to go down as growth slows and the Federal Reserve cuts rates more than expected in 2026. But all of this borrowing and all the uncertainty around it – it should increase risk premiums for longer term bonds and drive a steeper yield curve.So, it's notable then – as we celebrate America's birthday and discuss its borrowing – that it's really companies that are currently unwrapping the presents. Corporate balance sheets, in contrast, are in very good shape, as corporate borrowing trends have diverged from those of the government.Many factors are behind this. Corporate profitability is strong. Companies use the post-COVID period to refinance debt at attractive rates. And the ongoing uncertainty – well, it's kept management more conservative than they would otherwise be. Out of deference to the 4th of July, I've focused so far on the United States. But we see the same trend in Europe, where more conservative balance sheet trends and less relative issuance to governments is showing up on a year-over-year basis. With companies borrowing relatively less and governments borrowing relatively more, the difference between what companies and the government pay, that so-called spread that we talk so much about – well, we think it can stay lower and more compressed than it otherwise would.We don't think this necessarily applies to the low ratings such as single B or lower borrowers, where these better balance sheet trends simply aren't as clear. But overall, a divergent trend between corporate and government balance sheets is giving corporate bond investors something additional to celebrate over the weekend.Thank you as always for your time. If you find Thoughts on the Market useful, let us know by leaving a review wherever you listen, and also tell a friend or colleague about us today.

Today's payrolls report dominates the scenery, with unemployment seen at 4.2%. Weak jobs growth might raise rate cut hopes but chances of one before fall remain relatively low.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0130-0625)

Our analysts Michael Zezas and Ariana Salvatore discuss the upcoming expiration of reciprocal tariffs and the potential impacts for U.S. trade.Read more insights from Morgan Stanley.----- Transcript -----Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, global Head of Fixed Income Research and Public Policy Strategy.Ariana Salvatore: And I'm Ariana Salvatore, US Public Policy Strategist.Michael Zezas: Today we're talking about the outlook for US trade policy. It's Wednesday, July 2nd at 10:00 AM in New York.We have a big week ahead as next Wednesday marks the expiration of the 90 day pause on reciprocal tariffs. Ariana, what's the setup?Ariana Salvatore: So this is a really key inflection point. That pause that you mentioned was initiated back on April 9th, and unless it's extended, we could see a reposition of tariffs on several of our major trading partners. Our base case is that the administration, broadly speaking, tries to kick the can down the road, meaning that it extends the pause for most countries, though the reality might be closer to a few countries seeing their rates go up while others announce bilateral framework deals between now and next week.But before we get into the key assumptions underlying our base case. Let's talk about the bigger picture. Michael, what do we think the administration is actually trying to accomplish here?Michael Zezas: So when it comes to defining their objectives, we think multiple things can be true at the same time. So the administration's talked about the virtue of tariffs as a negotiating tactic. They've also floated the idea of a tiered framework for global trading partners. Think of it as a ranking system based on trade deficits, non tariff barriers, VAT levels, and any other characteristics that they think are important for the bilateral trade relationship. A lot of this is similar to the rhetoric we saw ahead of the April 2nd "Liberation Day" tariffs.Ariana Salvatore: Right, and around that time we started hearing about the potential, at least for bilateral trade deals, but have we seen any real progress in that area?Michael Zezas: Not much, at least not publicly, aside from the UK framework agreement. And here's an important detail, three of our four largest trading partners aren't even scoped for higher rates next week. Mexico and Canada were never subject to the reciprocal tariffs. And China's on a separate track with this Geneva framework that doesn't expire until August 12th. So we're not expecting a sweeping overhaul by Wednesday.Ariana Salvatore: Got it. So what are the scenarios that we're watching?Michael Zezas: So there's roughly three that we're looking at and let me break them down here.So our base case is that the administration extends the current pause, citing progress in bilateral talks, and maybe there's a few exceptions along the way in either direction, some higher and some lower. This broadly resets the countdown clock, but keeps the current tariff structure intact: 10% baseline for most trading partners, though some potentially higher if negotiations don't progress in the next week. That outcome would be most in line, we think, with the current messaging coming out of the administration.There's also a more aggressive path if there's no visible progress. For example, the administration could reimpose tariffs with staggered implementation dates. The EU might face a tougher stance due to the complexity of that relationship and Vietnam could see delayed threats as a negotiating tactic. A strong macro backdrop, resilient data for markets that could all give the administration cover to go this route.But there's also a more constructive outcome. The administration can announce regional or bilateral frameworks, not necessarily full trade deals, but enough to remove the near term threat of higher tariffs, reducing uncertainty, though maybe not to pre-2024 levels.Ariana Salvatore: So wide bands of uncertainty, and it sounds like the more constructive outcome is quite similar to our base case, which is what we have in place right now. But translating that more aggressive path into what that means for the economy, we think it would reinforce our house view that the risks here are skewed to the downside.Our economists estimate that tariffs begin to impact inflation about four months after implementation with the growth effects lagging by about eight months. That sets us up for weak but not quite recessionary growth. We're talking 1% GDP on an annual basis in 2025 and 2026, and the tariff passed through to prices and inflation data probably starting in August.Michael Zezas: So bottom line, watch carefully on Wednesday and be vigilant for changes to the status quo on tariff levels. There's a lot of optionality in how this plays out, as trade policy uncertainty in the aggregate is still high. Ariana, thanks for taking the time to talk.Ariana Salvatore: Great speaking with you, Michael.Michael Zezas: And if you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

Ron Kamdem, our U.S. Real Estate Investment Trusts & Commercial Real Estate Analyst, discusses how GenAI could save the real estate industry $34 billion and where the savings are most likely to be found.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Ron Kamdem, Head of Morgan Stanley's U.S. Real Estate Investment Trusts and Commercial Real Estate research. Today I'll talk about the ways GenAI is disrupting the real estate industry.It's Tuesday, July 1st, at 10am in New York.What if the future of real estate isn't about location, location, location – but automation, automation, automation?While it may be too soon to say exactly how AI will affect demand for real estate, what we can say is that it is transforming the business of real estate, namely by making operations more efficient. If you're a customer dealing with a real estate company, you can now expect to interact with virtual leasing assistants. And when it comes to drafting your lease documents, AI can help you do this in minutes rather than hours – or even days.In fact, our recent work suggests that GenAI could automate nearly 40 percent of tasks across half a million occupations in the real estate investment trusts industry – or REITs. Indeed, across 162 public REITs and commercial real estate services companies or CRE with $92 billion of total labor costs, the financial impact may be $34 billion, or over 15 percent of operating cash flow. Our proprietary job posting database suggests the top four occupations with automation potential are management – so think about middle management – sales, office and administrative support, and installation maintenance and repairs.Certain sub-sectors within REITs and CRE services stand to gain more than others. For instance, lodging and resorts, along with brokers and services, and healthcare REITs could see more than 15 percent improvement in operating cash flow due to labor automation. On the other hand, sectors like gaming, triple net, self-storage, malls, even shopping centers might see less than a 5 percent benefit, which suggests a varied impact across the industry.Brokers and services, in particular, show the highest potential for automation gains, with nearly 34 percent increase in operating cash flow. These companies may be the furthest along in adopting GenAI tools at scale. In our view, they should benefit not only from the labor cost savings but also from enhanced revenue opportunities through productivity improvement and data center transactions facilitated by GenAI tools.Lodging and resorts have the second highest potential upside from automating occupations, with an estimated 23 percent boost in operating cash flow. The integration of AI in these businesses not only streamline operations but also opens new avenues for return on investments, and mergers and acquisitions.Some companies are already using AI in their operations. For example, some self-storage companies have integrated AI into their digital platforms, where 85 percent of customer interactions now occur through self-selected digital options. As a result, they have reduced on-property labor hours by about 30 percent through AI-powered staffing optimization. Similarly, some apartment companies have reduced their full-time staff by about 15 percent since 2021 through AI-driven customer interactions and operational efficiencies.Meanwhile, this increased application of AI is driving new revenue to AI-enablers. Businesses like data centers, specialty, CRE services could see significant upside from the infrastructure buildout from GenAI. Advanced revenue management systems, customer acquisition tools, predictive analytics are just a few areas where GenAI can add value, potentially enhancing the $290 billion of revenue stream in the REIT and CRE services space.However, the broader economic impact of GenAI on labor markets remains hotly debated. Job growth is the key driver of real estate demand and the impact of AI on the 164 million jobs in the U.S. economy remains to be determined. If significant job losses materialize and the labor force shrinks, then the real estate industry may face top-line pressure with potentially disproportionate impact on office and lodging. While AI-related job losses are legitimate concerns, our economists argue that the productivity effects of GenAI could ultimately lead to net positive job growth, albeit with a significant need for re-skilling.Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

The U.S. housing market appears to be stuck. Our co-heads of Securitized Product research, Jay Bacow and James Egan, explain how supply and demand, as well as mortgage rates, play a role in the cooling market.Read more insights from Morgan Stanley.----- Transcript -----James Egan: Welcome to Thoughts on the Market. I'm Jim Egan, co-head of Securitized Products Research at Morgan Stanley.Jay Bacow: And I'm Jay Bacow, the other co-head of Securitized Products Research at Morgan Stanley. And after getting through last week's blistering hot temperatures, today we're going to talk about what may be a cooling housing market. It's Monday, June 30th at 2:30pm in New York. Now, Jim, home prices. We just got another index. They set another record high, but the pace of growth – the acceleration as a physicist in me wants to say – appears to be slowing. What's going on here?James Egan: The pace of home price growth reported this month was 2.7 percent. That is the lowest that it's been since August of 2023. And in our view, the reason's pretty simple. Supply is increasing, while demand has stalled.Jay Bacow: But Jim, this was a report for the spring selling season. I know we got it in June, but this is supposed to be the busiest time of the year. People are happy to go around. They're looking at moving over the summer when the kids aren't in school. We should be expecting the supply to increase. Are you saying that it's happening more than it's anticipated?James Egan: That is what we're saying. Now, we should be expecting inventories today to be higher than they were in, call it January or February. That's exactly the seasonality that you're referring to. But it's the year-over-year growth we're paying attention to here. Homes listed for sale are up year-over-year, 18 months in a row. And that pace, it's been accelerating. Over the past 40 years, the pace of growth from this past month was only eclipsed one time, the Great Financial Crisis.Jay Bacow: [sighs] I always get a little worried when the housing analyst brings up the Great Financial Crisis. Are you saying that this time the demand isn't responding?James Egan: That is what we're saying. So, through the first five months of this year, existing home sales are only down about 2 percent versus the first five months of 2024. So they've basically kind of plateaued at these levels. But that also means that we're seeing the fewest number of transactions through May in a calendar year since 2009. And that combination of easing inventory and lackluster demand, it's pushed months of supply back to levels that we haven't seen since the beginning of this pandemic. Call it the fourth quarter of 2019, first quarter of 2020, right before inventory has really plummeted to historic lows.Jay Bacow: All right, so 2009, another financial crisis reference. But you're also – you're speaking around a national level, and as a housing analyst, I feel like you haven't really spoken about the three most important factors when we think about things which are: Location. Location. And location.James Egan: Absolutely. And the deceleration that we're seeing in home price growth – and I would point out it is still growth – has been pervasive across the country. Year-over-year, HPA is now decelerating in 100 percent of the top 100 MSAs, for which we have data. In fact, a full quarter of them, 25 percent of these cities are now actually seeing prices decline on a year-over-year basis. And that's up from just 5 percent with declining home prices one year ago.Jay Bacow: As a homeowner, I do like the home price growth. And is it the same story when you look more narrowly around supply and demand?James Egan: So, there might be some geographical nuances, but we do think that it largely boils down to that. Local inventory growth has been a very good indicator of weaker home price performance, particularly the level of for-sale inventory today versus that fourth quarter of 2019. If we look at it on a geographic basis, of 14 MSAs that have the highest level of inventory today compared to 2019, 11 of them are in either Florida or Texas. On the other end of the spectrum, the cities where inventory remains furthest away from where it was four and a half years ago, they're in the Northeast, they're in the Midwest.Jay Bacow: As somebody who lives in the Northeast, I'd like to hear that again. But you're also; you're quoting existing prices, which that's been the outperformer in the housing market. Right?James Egan: Exactly. New home prices have actually been decreasing year-over-year for the past year and a half at this point. It's actually brought the basis between new home prices, which tend to trade at a little bit of a premium to existing sales; it's brought that basis to its tightest level that we've seen in at least 30 years. And that's before we take into account the fact that home builders have been buying down some of these mortgage rates. But Jay, you've recently done some work trying to size this.Jay Bacow: Yeah. First it might help to explain what a buydown is.A home builder might have a new home listed at say, $450,000. And with mortgage rates in the context of about 6.5 percent right now, the home buyer might not be able to afford that, so they offer to pay less. The home builder – often many of them also have an origination arm as well. They'll say, you know what? We'll sell it to you at that $450,000, but we'll give you a lower mortgage rate; instead of 6.5 percent, we'll sell it to you for $450,000 with a 5 percent mortgage rate. Then maybe the home buyer can afford that.James Egan: And so, new home prices are actually coming down. And by that we're specifically referring to the median price of new home transactions. They're falling despite the fact that these buy downs might be influencing prices a little bit higher.Jay Bacow: Right. And when we look at how often this is happening, it's a little actually hard to get it from the data because they don't have to report it. But when we look at the distribution of mortgage rates in a given month – prior to 2022, there were effectively no purchase loans that were originated less than one point below the prevailing mortgage rate for a given month.However, more recently we're up to about 12 percent of Ginnie Mae purchases, and those are the more credit constrained borrowers that might have a harder time buying a home. And about 5 percent of conventional purchase loans are getting originated with a rate 1 percent below the outstanding marketJames Egan: And so, this might be another sign that we're seeing a little bit of softening in home prices. But what are the implications on the agency mortgage side?Jay Bacow: I would say there's probably two things that we're keeping an eye out on. Because these are homeowners that are getting below market rate, the investors are getting a below market coupon. And because they're getting sold at a discount, they don't want that, but they're going to stay around for a while. So, investors are getting these rates that they don't want for longer.And then the other thing you think about from the home buyer perspective is, you know, maybe they – it's good for them right now. But if they want to sell that home, because they're getting a below market mortgage rate, they bought the home for maybe more than other people would've. So, unless they can sell it with that mortgage attached, which is very difficult to do, they probably have to sell it for a lower price than when they bought it.Now Jim, what does all this mean for home prices going forward?James Egan: Now, when we think about home prices, we're talking about the home price indices, right? And so those are going to be repeat sales. It's going to, by definition, look at existing prices and not necessarily the dynamics we're talking in the new home price market.Jay Bacow: Okay, so all this builder buy down stuff is interesting for what it means for new home prices – but doesn't impact all the HPA indices that you reference.James Egan: Exactly, and at the national level, despite what we've been talking about on this podcast, we do think that home prices remain more supported than what we are seeing locally. Inventory is increasing, but it also remains near historically low levels. Months of supply that I mentioned at the top of this podcast, it's picked up to the highest level it's been since the beginning of this pandemic. We're also talking about four to four and a half months of supply. Anything below six is a tight environment that has been historically associated with home prices continuing to climb.That's why our base case is for positive HPA this year. We're at +2 percent. That's slower than where we are now. We think you're going to continue to see deceleration. And because of what we're seeing from a supply and demand perspective, we are a little bit more skewed to the downside in our bear case. Instead of that +2, we're at -3 percent than we are towards the upside in our bull case. Instead of that plus two, we're at plus 5 percent in the bull case. So slower HPA from here, but still positive.Jay Bacow: Well, Jim, it's always a pleasure talking to you, particularly when you're highlighting that the home price growth is going to be stronger in the place where I own a home.James Egan: Pleasure talking to you too, Jay. And to all of you listening, thank you for listening to another episode of Thoughts on the Market. Please leave a review or a like wherever you get this podcast and share Thoughts on the Market with a friend or colleague today.Jay Bacow: Go smash that subscribe button.

Got started with Japan executing a serial killer, and China cracking down on popular gay erotic fiction authors. Plus big SCOTUS rulings, Iran admits nuke program damaged, Congo cease-fire, Germany tries to rebuild military, and a Hong Kong guy on shitter for two hours turns up at hospital with a 13-centimeter rectal prolapse. Music: DJ Shadow/"Fixed Income"