EU firms slash outlook as US earnings season picking up

EU mid-market update: Former Pres Trump still expected to speak at RNC and could announce VP pick this week despite assassination attempt; Fed's Powell to be interviewed as markets see small chance of 50bps in cuts by end-Sept; Key China Third Plenum meetings start; EU firms slash outlook as US earnings season picking up.

Notes/observations

- US Former Pres Trump survived assassination attempt at a rally in key swing state Pennsylvania, which some analysts for long time saw as the most important state to decide the fate of 2024’s US elections; In his first interview since the incident, Trump said he still to deliver his RNC keynote address on Thursday, July 18th, but his speech now reportedly will be re-written; Hours after the shooting, betting agencies’ chances for Trump win during Nov’s elections hit highest level in the cycle around 65%; Also, Elon Musk and Bill Ackman formally endorsed Trump for president; Note: Trump still to announce VP pick as soon as this week.

-Fed’s Chair Powell set to deliver his first remarks on last week’s US inflation data today around 12:30ET at the Economic Club of Washington; Fed futures started to price 5% chance of 50bps in cuts by Sept's meeting and now price 92% chance (v 74% d/d) for 25bps rate cut by Sept 18th's meeting; Fed's Daly also scheduled to speak later on Monday.

- Ahead of key China Third Plenum meetings this week with focus at reforms, China economic data overnight mostly came worse than expected with its annual growth hitting slowest in 5 quarters and retail sales pace dropping to slowest growth since last year.

- Almost all notable EU companies which reported quarterly results or provided trading update this morning cut outlook and now trading sharply down, including Burberry (noted slowdown continued into July, changed CEO and halted dividends), Swatch (cited sharp drop in demand for luxury goods in China), UK recruitment firm Robert Walters (highlighted new job flow in June was weaker than expected) and TomTom.

- Goldman Sachs and Blackrock set to report results during US premarket session.

- Newly elected French parliament expected to convene by Thursday, July 18th in accordance with Article 12 of the French Constitution.

- Boeing's International Association of Machinists & Aerospace Workers (IAM) District 751 (represents ~31K Boeing workers) to hold "Strike Sanction Vote" on Wed, July 17th.

- Alphabet said to be in advanced talks to acquire cybersecurity firm Wiz for ~$23B, which would be Alphabet's largest acquisition ever.

- Asia closed mixed with Hang Seng underperforming at -1.5%. Japan markets closed for holiday; EU indices are -0.8% to +0.2%. US futures +0.3-0.5%. Gold -0.2%, DXY 0.0%; Commodity: Brent +0.0%, WTI +0.2%; Crypto: BTC +2.9%, ETH +3.0%.

Asia

- (CN) TTN Reminder: China's CCP to hold delayed Third Plenum this week from today, July 15-18th.

- (CN) China Q2 GDP Q/Q: 0.7% V 0.9%E; Y/Y: 4.7% V 5.1%E (lowest y/y since Q1 2023).

- (CN) China Jun industrial production Y/Y: 5.3% V 5.0%E [slowest growth since Mar].

- (CN) China Jun Retail Sales Y/Y: 2.0% V 3.4%E [slowest growth since 2023].

- (CN) China PBOC conducts CNY100B in 1-year medium term lending facility (MLF) monthly setting at 2.50% VS. 2.50% prior.

-(CN) China NBS [Stats Bureau] Spokeswoman Liu Aihua comments on Jun data: Reiterates economic recovery still needs to be consolidated; H1 GDP growth was 'hard won'.

-(CN) JPMorgan cuts China 2024 GDP growth forecast from 5.2% to 4.7%.

- (CN) China reportedly asks WTO to set up expert team on US NEV subsidy dispute - press.

-(NZ) New Zealand PM Luxon: New Zealand to increasingly disclose cases of Chinese espionage - FT interview in Washington DC.

- (KR) South Korea said to consider delaying tax plan on crypto income - Korean press.

Mid-East

- (IL) US Pres Biden: Still more work to do in ceasefire, but both Hamas and Israel agree to framework - X post.

Ukraine war

-(UR) Hungary PM Orban reportedly sent Ukraine peace proposals to EU leaders after meeting Ukraine Pres Zelenskiy, Russia Pres Putin and Former US Pres Trump during last few weeks - press.

Europe

(EU) Eurozone May industrial production M/M: -0.6% V -0.8%E; Y/Y: -2.9% V -3.6%E.

-(FR) French Audit Court chief Moscovici: Budget deficit is unacceptable [**Note: The newly elected members of the National Assembly will convene by July 18th in accordance with Article 12 of the French Constitution].

-(UK) BOE’s Dhingra (dovish dissenter): Demand is too soft for inflation to rise sharply; Now is the time to start normalising interest rates so we can finally stop squeezing living standards - financial press, citing podcast interview.

- (IT) Scope Ratings affirms Italy sovereign rating at BBB+; Outlook Stable.

- (GR) Scope Ratings revises its outlook for Greece’s long-term credit ratings from Stable to Positive.

- (EU) JPMorgan analysts: It is too early to overweight EU equities v the US; For Europe to gain traction, the growth style needs to stop leading, French politics needs to stabilize, and the dollar and tariffs should not become headwinds.

- (RU) Russia govt again eases requirement for mandatory FX sales by major exporters; Russia exporters are now allowed to deposit into their accounts 40% of FX received from exports (v 60% prior) - press.

- (UK) July Rightmove House Prices M/M: -0.4% v 0.0% prior [first m/m decline since 2023]; Y/Y: 0.4% v 0.6% prior.

Americas

- (US) Former US Pres Trump survives assassination attempt while giving speech at campaign rally in butler, Pennsylvania; One spectator killed, two others critically injured after "multiple shots" were fired.

-(US) Former Pres Trump confirms he still to attend and speak at four-day Republican National Convention in Milwaukee starting on Mon, July 15th - press [**Note: Trump was expected to announce his VP pick during upcoming week].

(US) Former US Pres Trump reportedly has rewritten his RNC speech to focus on unity - US press [**Note: Trump set to address 2024 Republican National Convention on Thurs, July 18th].

(US) Pres Biden: Do not know motive of shooter yet, or if he had help or support; Violence has never been the answer; Political rhetoric has gotten very heated - Oval Office comments following Trump assassination attempt.

(US) US Betting odds for 2024 Presidential Election show bump for former Pres Trump up to a record-high 65.0% post-attempted assassination attempt - US polling averages.

-(US) Reportedly 20-years old suspected gunman Thomas Matthew Crooks had explosive devices in the car he was driving - WSJ citing people briefed on the investigation.

-(US) Last week's Bloomberg News/Morning Consult poll noted that, among swing states, Biden was farthest behind Trump (44% v 51%) in key swing state Pennsylvania, where assassination attempt took place; Goldman Sachs analysts during last few months saw Pennsylvania as a key state to decide the outcome of US elections in Nov 2024.

-(US) US VP Harris has postponed a trip planned for Tue, July 16th to Palm Beach County to talk abortion rights due to attempted assassination of Donald Trump - press
(US) Former First Lady Melania Trump: When I watched that violent bullet strike my husband, Donald, I realized my life, and Barron's life, were on the brink of devastating change... Dawn is here again. Let us reunite. Now.

-Super Micro confirmed to replace Walgreens Boots Alliance in Nasdaq-100 index; effective from Mon, July 22nd.

Energy

-(US) Texas Gov Abbott: Will require CenterPoint Energy to take immediate action to improve its hurricane preparation; Ask Public Utility Commission (PUC) of Texas to launch an investigation into CenterPoint over its failure to restore power promptly after the hurricane.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.19% at 523.08, FTSE -0.16% at 8,240.09, DAX -0.28% at 18,717.55, CAC-40 -0.34% at 7,698.30, IBEX-35 -0.53% at 11,191.38, FTSE MIB -0.28% at 34,482.00, SMI +0.18% at 12,394.61, S&P 500 Futures +0.42%].

Market focal points/key themes: European indices open lower across the board, but moderated some of the losses through the early trading hours; all sectors start the day in the red; less negative sectors include communication services and technology; among sectors leading the way lower are consumer discretionary and energy; reportedly Thales and Airbus are considering merging space units; luxury subsector dragged by updates from Burberry and Swatch; Sierra Rutile gets takeover offer from LeonOil; reportedly Spanish government in talks with Skoda over Talgo takeover; focus on Powell interview on Bloomberg later in the day; earnings expected in the upcoming US session include BlackRock and Goldman Sachs.

Equities

- Consumer discretionary: Burberry Group [BRBY.UK] -13.0% (July trading update; expects H1 loss; halts dividend; new CEO), Swatch [UHR.CH] -11.5% (earnings; notes sharp drop in demand for luxury goods in China), LVMH [MC.FR] -2.0% (China economic data; Burberry update).

- Healthcare: Fresenius Medical Care [FME.DE] -0.5% (FTC in early stages of antitrust probe that includes DaVita and Fresenius Medical Care).

- Industrials: Airbus [AIR.FR] +0.5% (raises jets demand forecast; Airbus and Thales are "seriously considering" merger deal for their Space units).

- Technology: Atos [ATO.FR] +5.5% (successful funding of financial restructuring plan), Darktrace [DARK.UK] +0.5% (Alphabet said to be in advanced talks to acquire cybersecurity firm Wiz for ~$23B).

- Materials: Anglo American [AAL.UK] -1.5% (China economic data).

Speakers

- (TH) Thailand Dep Fin Min Julapun: Digital Wallet Panel agrees on new funding source structure.

- (FR) French Audit Court chief Moscovici: Budget deficit is unacceptable.

- (IN) India Trade Sec Barthwal: India exports in positive territory.

Currencies/fixed income

Economic data

- US 30-year yield rises above 2-year yield for the first time since JAN 2024.

- (EU) Eurozone May industrial production M/M: -0.6% V -0.8%E; Y/Y: -2.9% V -3.6%E.

- (IT) Italy May General Government Debt: €2.919T v €2.906T prior (record high).

- (PL) Poland Jun Final CPI M/M: 0.1% v 0.1% prelim; Y/Y: 2.6% v 2.6% prelim.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 458.9B v 453.4B prior.

- (ID) Indonesia Jun Trade Balance: $2.4B v $2.9Be.

- (NL) Netherlands May Trade Balance: €11.6B v €12.6B prior.

- (FI) Finland Jun CPI M/M: 0.0% v -0.1% prior; Y/Y: 1.3% v +1.5% prior.

- (DK) Denmark Jun PPI M/M: +0.5% v -0.5% prior; Y/Y: -0.5% v -1.0% prior.

- (CH) Swiss Jun Producer & Import Prices M/M: 0.0% v -0.3% prior; Y/Y: -1.9% v -1.8% prior.

- (IN) India Jun Wholesale Prices (WPI) Y/Y: 3.4% v 3.6%e.

Fixed income issuance

- (PH) Philippines sells total PHP22.6B vs. PHP15.0B indicated in 3-month, 6-month and 12-month bills.

-(TH) Thailand Central Bank sells THB40B v THB40B indicated in 6-month bills: Avg Yield 2.37909% v 2.50490% prior ; bid-to-cover: 1.39x v 1.85x prior (July 3rd, 2024).

-(AU) Australia sells A$300M v A$300M indicated in 1.75% Jun 2051 bonds; Avg Yield: 4.743% v 4.1617% prior; bid-to-cover: 3.35x v 2.20x prior.

Looking ahead

- 05:30 (DE) Germany to sell 12-month BuBills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel Jun Unemployment Rate: No est v % prior.

- 06:00 (IL) Israel to sell bonds.

- 07:00 Iceland to sell 3-month and 6-month bills.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (PL) Poland May Current Account: No est v -€0.2B prior; Trade Balance: No est v €0.2B prior; Exports: No est v €28.0B prior; Imports: No est v €27.8B prior.

- 08:00 (BR) Brazil May Economic Activity Index (Monthly GDP) M/M: No est v 0.0% prior; Y/Y: No est v 4.0% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:30 (US) July Empire Manufacturing: No est v -15.6 prior.

- 08:30 (CA) Canada May Manufacturing Sales M/M: No est v 1.1% prior; Wholesale Sales (ex-petroleum) M/M: No est v 2.4% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell 3-month, 6-month and 12-month bills.

- 10:30 (CA) Bank of Canada (BoC) Q2 Overall Business Outlook Survey: No est v -2.4 prior; Future Sales Outlook: No est v 1 prior.

- 11:00 (PE) Peru May Economic Activity Index (Monthly GDP) Y/Y: No est v 5.3% prior.

- 11:00 (CO) Colombia May Industrial Production Y/Y: No est v 3.4% prior; Manufacturing Production Y/Y: No est v 4.1% prior.

- 11:00 (CO) Colombia May Retail Sales Y/Y: No est v -1.6% prior.

- 11:00 (PE) Peru Jun Unemployment Rate: No est v % prior.

- 11:30 (IL) Israel Jun CPI M/M: No est v 0.2% prior; Y/Y: No est v 2.8% prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 12:30 Fed Chair Powell at the Economic Club of Washington, D.C., Washington, D.C.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea Jun Import Price Index M/M: No est v -1.4% prior; Y/Y: No est v 4.6% prior; Export Price Index M/M: No est v -0.6% prior; Y/Y: No est v 7.5% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v # prior.