Reported Japan Trade Deal and Earnings Take Markets Higher

Indices

• Dow 44,901, +559or +1.26%.
• Nasdaq 21,108 (new record high), +213 or +1.02%.
• S&P 6,388 (new record high), +92or +1.46%.
• MSCI EAFE 2690.97, +50.34 or+1.91%.
• USD10Y 4.386%, -4.6bp or -1.04%.
• WTI Crude $65.07/bbl, -$2.27 or-3.37%.

Reported Japan Trade Deal and Earnings Take Markets Higher

On Tuesday the administration announced a trade deal with Japan whereby current 25% tariffs on Japanese aluminum and steel would remain in place while other Japanese products would face a 15% tariff including imported autos. Japanese autos made in the U.S. will be exempt from the duties. In addition, Japan is reportedly investing$550 billion in the U.S. whereby they will only receive 10% of the profits. It is worth noting that the Japanese government immediately disagreed with this last interpretation of the deal. It is also interesting that the markets rallied on this news when consumers will now be paying a 15% surcharge on Japanese goods vs the prior rate of 10%.

Earnings have been stellar so far and that is the real impetus to this rally. Of the 34% of S&P companies that have reported, 80% have surpassed both their earnings and revenue expectations.

The UpcomingWeek: July 28 – Aug1

It is a huge week for economic releases with June JOLTS (Job Openings and Labor Turnover Survey) July Consumer Confidence, ADP Private Payrolls, the Fed’s interest rate decision, the June PCE (Personal Consumption Expenditure) report, and finally June’s Non-Farm Payroll report.

Q2 Earnings season continues in earnest with multiple magnificent seven stocks reporting; Meta (META), Microsoft (MSFT), Amazon (AMZN) and Apple (APPL). Other firms of note include Proctor and Gamble (PG), United Parcel Service (UPS), Starbucks (SBUX), and Visa (V).

Economic Calendar