Ten Stories Moving the Market

Ten Stories Moving the Market:

Federal Reserve Vice Chair Philip Jefferson suggested the central bank current rate setting will likely allow inflation to fall while supporting the labor market; he said the current policy stance leaves the central bank well positioned to respond to economic developments – Bloomberg. (Why you should care – Jefferson, a monetary policy voter, doesn’t sound like he’s in favor of raising interest rates)

U.S. President Donald Trump is betting that reimposing the blockade on Iran and revoking its right to sell oil will throttle the regime’s economy and convince it to release its hold on the Strait of Hormuz. Tehran is betting it can hold out - WSJ. (Why you should care – while the White House is trying to get Iran back to the negotiating table, investors are underestimating Trump’s transactional resolve)

Iran has asked Yemen’s Houthi movement to stand ready to close the Red Sea oil route if the United States strikes Iranian power infrastructure; the idea has been discussed within the Islamic Republic's leadership, and the message has been conveyed to Iran's Houthi allies, according to Iranian ‌sources – Reuters. (Why you should care – if such a scenario were to play out, it could hinder Asian access to Saudi Arabian oil supplies)

Netflix said it expects revenue and profit gains to slow in the third quarter, exacerbating investor fears that the company’s growth is topping out; the company forecast revenue growth of 11.7%, its smallest year-on-year increase of any quarter since late 2023 – WSJ. (Why you should care – investors are increasingly worried about a lack of customer and hours spent on the service growth)

Federal Reserve Bank of Dallas President Lorie Logan called for higher interest rates, saying inflation does not appear to be heading sustainably back to the central bank’s 2% target; Logan said additional policy restriction is necessary if inflation has been rising – Bloomberg. (Why you should care – Logan, a policy hawk, has repeatedly called for rate hikes and is likely to vote that way at the next FOMC meeting)

Taiwan Semiconductor, the world's main producer of ​advanced AI chips, pledged to invest a further $100 billion in the U.S. state of Arizona; the company raised its capital expenditure plan by 14% due to strengthening customer demand – Reuters. (Why you should care – the capital expenditure announcement stoked speculation by short sellers that AI companies will have a difficult time producing a return on these investments)

Federal Reserve Bank of Kansas City President Jeff Schmid said inflation is his biggest worry given the risk of a further acceleration in the months ahead; while inflation data for June was better than expected, Schmid cautioned it would be premature to call that the beginning of a trend – Bloomberg. (Why you should care – Schmid, who is not a voter, has been an outspoken monetary policy hawk since he assumed his current role)

A new law aims to make Wall Street investors feel unwelcome in the market for existing homes, while at the same time urging them to build more supply; under the 21st Century ROAD to Housing Act, investors who already own more than 350 family homes can’t buy any more from the existing housing stock – WSJ. (Why you should care – the ability for investment firms to buy large swaths of housing helped to stabilize the housing market and the economy during and after the financial crisis)

China can stabilize economic growth this year by accelerating already-budgeted national infrastructure investment projects, according to economists and government advisers; that would reduce the likelihood of large-scale ​fiscal stimulus – Reuters. (Why you should care – recent Chinese GDP data was well below the government’s guidance range, implying stimulus would be necessary to reach growth targets)

PayPal’s board sees a $53 billion takeover bid by rival Stripe and private equity firm Advent ​International as undervaluing the company and facing regulatory and financing hurdles, potentially setting the stage for ‌negotiations over the future of the U.S. payments giant - Reuters. (Why you should care – the board is signaling it’s willing to discuss a takeover at a higher price)

Economic Calendar:

Earnings – FITB, RF, TFC, TRV

Eurozone – CPI (Final) for June (5 a.m.)

U.S. – Building Permits for June (8:30 a.m.)

U.S. – Export, Import Price Index for June (8:30 a.m.)

U.S. – Housing Starts for June (8:30 a.m.)

U.S. – Industrial Production, Capacity Utilization for June (9:15 a.m.)

U.S. – Michigan Consumer Sentiment (Preliminary) for July (10 a.m.)

U.S. - Baker Hughes Rig Count (1 p.m.)

U.S. - CFTC’s Commitment of Traders Report (3:30 p.m.)

Fed Releases Balance Sheet Updates on Commercial Banks (4:15 p.m.)