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So much for that imports-driven mini recession in Q1.

One quarter after liberal economists cried with delight when the US economy contracted as a result of a surge in imports (even as consumption remained solid), moments ago the Bureau of Econ Analysis reported that the first estimate of Q2 GDP came in at an unexpectedly brisk 3.0%, a complete reversal of the -0.5% decline in Q1...

... and well above the 2.6% estimate, if inside the 1-sigma upper distribution band.

The increase in real GDP in the second quarter reflected a decrease in imports, which are a subtraction in the calculation of GDP (and thus boosted bottom-line GDP), and an increase in consumer spending. These movements were partly offset by decreases in investment and exports. 

Developing

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

In our recent article, “The Magnificent Seven Are Mediocre,” we pondered whether the stock market is entering a melt-up phase, where investors driven by extreme speculative behavior and hopes for exponential returns favor volatile stocks with high betas.

To be clear, we do not know whether we are in a melt-up phase. The market could simply be showing a short-term appetite for risk. Importantly, even if this is a melt-up phase, we don’t know whether we are close to the end or if it still has plenty of gains ahead.

What we do know is that, starting from the April lows, the market’s attitude toward riskier, more speculative activities has become much more intense. We also know this phase will eventually end. It could end with a broad market meltdown and a high beta bust, similar to the dot-com era. Alternatively, the broader stock indexes might hold up reasonably well as the lower beta, more value-oriented stocks offset the losses from the more speculative assets.

To help us better assess the situation, we review the 1999 dot-com melt-up for clues, as there are some striking similarities between then and today worth studying.

Party Like It’s 1999

They say, 2000-00, party over
Oops, out of time
So tonight I’m gonna party like it’s 1999
Yeah, yeah

Prince’s lyrics, written in 1982, describe a party ending at the turn of the millennium. While he was not writing about stocks, the lyrics turned out to be insightful, as the stock market party ended shortly after the year 2000 began.

The economic benefits, potential profits, and hype from the internet became increasingly evident to investors in the second half of the 1990s. From 1995 to its peak in early 2000, the S&P 500 rose by over 200%. It wasn’t a straight line up. In the summer and fall of 1998, the failure of the Long Term Capital hedge fund and the Russian default caused the market to decline by approximately 20%.

From the low point on October 8, 1998, to its peak in March 2000, the market experienced a meteoric rebound, gaining nearly 70%.

Lifetime Returns In One Year

While the returns for the indexes and some of the larger, more established tech stocks were impressive, what stood out was the sudden shift in market sentiment. After the downturn in 1998, the riskiest and most speculative stocks with the highest betas became the leaders. Consider the following one-year percentage gains for 1999:

• Qualcomm (QCOM) +2,619%

• Commerce One (CMRC) +2707%

• BroadVision (BVSN) +1,494%

• Metricom (MCOM) +1,416%

Investors flipped a switch in October 1998 and poured money into stocks with “dot.com” in their names or investments in the internet. Some investors who took profits, realizing the party was getting long in the tooth, made stupendous profits. However, most investors chasing the leaders stayed at the party too long and ultimately paid a dear price.

Of the four examples listed above, Commerce One and Metricom filed for bankruptcy shortly after the dotcom bust. BroadVision was delisted as it could not meet NASDAQ reporting requirements. Qualcomm is the only company among those that is still in operation. However, as the graph below illustrates, it took 20 years for the stock price to return to its record high from January 2020. Even Microsoft, the largest stock by market capitalization in 1999, and one that also saw tremendous returns in the late 1990s, spent the next 13 years before regaining its record highs.

1999 – The Chase For Beta

From 1995 to September 1998, the market experienced a broad rally with healthy participation from all types of stocks. The graph below breaks out the percentage returns over that period by deciles of stock beta. As shown, the returns were relatively comparable to one another. Interestingly, the stocks with the lowest and highest betas were below the average.  

Following the 20% decline in the summer and early fall of 1998, the market tone shifted significantly. The graph below shows investors flocked to the highest beta stocks while avoiding the lowest beta stocks. The 10% of stocks in the highest decile increased by over 100% on average. Meanwhile, the lowest 20% of stocks by beta declined slightly.

Another way to illustrate the stark return differential is through the ratio of a price index of the lowest beta decile to that of the highest beta decile. As we share below, the ratio was little changed from 1995 through September 1998. By March 2000, one and a half years after the melt-up began, the ratio had been halved, as high beta stocks had significantly outperformed low beta stocks. It’s worth adding that the ratio reversed meaningfully after March 2000. While a story for another article, that does provide a clue on how to shift assets when a melt-up nears midnight.

The Current Melt Up: Low vs. High Beta

Having witnessed the 1999 melt-up and subsequent melt-down of high beta stocks, there is something eerily familiar about the current environment. Similar to 1998, the market recently experienced a sharp decline following a period with a strong upward trend. The culprit for the drawdown was the imposition of tariffs. From mid-February to early April, the S&P 500 fell by nearly 15%. The decline and recovery happened quickly.

However, what has become clear in the rebound is that the market leaders of 2023 and 2024, including many of the Magnificent Seven and some other large-cap stocks with strong earnings and revenue growth, are no longer in control. Speculative stocks involved in AI and cryptocurrencies seem to be in favor. While some of these companies are profitable, many are losing money or are highly indebted. Regardless, investors are captivated by their potential earnings and revenue growth. Even more likely, they are rushing to chase impressive gains and the hope of more to come.

2025 Melt Up Analysis

The graphs above from the 1990s relied on monthly data from Kenneth French and Dartmouth. Because the period we are studying now is much shorter and the monthly data we used previously is delayed by a month, we instead rely on the daily prices of the Invesco High Beta ETF (SPHB) and Low Volatility (SPLV) ETFs. We understand that using different data sources compared to the experience of the 1990s is not ideal. Still, we are confident that the two ETFs and their daily data provide an accurate representation of the current environment.

The graph below charts the relative performance of the high and low beta ETFs (SPHB and SPLV) and large-cap growth (IVW). It shows that the large-cap growth ETF has outperformed the market since 2023 while the low and high beta ETFs generally underperformed. However, since the market low on April 8, 2025, high beta has outperformed the market by over 20%. Further, it beat the once-leading high-growth ETF by 13% and the low-beta ETF by nearly 40%.

The pursuit of high beta and the avoidance of low beta began at that April low.

A Few High Beta High Fliers

We highlight a few high beta stocks and their gains since April 8, 2025, to illustrate what the new speculative market leadership looks like.

Additionally, the ARK Innovation ETF (ARKK) holds many high-beta stocks that have performed exceptionally well over the past few months. To wit, ARKK has beaten the S&P 500 by 59.70% since April 8, 2025. Its top five holdings (TSLA, COIN, ROKU, RBLX, HOOD, CRSP, and TEM), which account for nearly 50% of its assets, are up significantly, as shown in the screenshot from SimpleVisor below.

Summary

Is this period different from the high beta boom-and-bust cycle during the dot-com era? Only time will tell. While there are some similarities, key differences exist. For one, the internet is now mature, and AI is fueling much of the stock trading. Information moves much faster today, and trading patterns and sentiment are monitored in real-time and acted upon.

From an economic point of view, our economic growth is slower today than it was 25 years ago. The Fed is conducting QT and keeping rates unusually high currently. In 1998, they cut rates by 3% to help Long Term Capital’s creditors and ease fears from Russia’s default. However, they gradually raised them throughout 1999. Additionally, to prepare against a potential technological failure when the year 2000 arrived, they added substantial liquidity to the banking system. This liquidity probably fueled the high beta market rally late in 1999.

Despite the similarities and differences between the two periods, we can be certain that investors’ behavior has become distinctly more speculative since the April lows. The most urgent questions now are how much longer this wave of risk-taking can continue and how much damage it will cause when it finally ends.

With the August 1st tariff pause deadline looming, President Trump has taken to his Truth Social account to lambast India for continuing to buy oil (on the cheap) from Russia. (emphasis ours)

Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World...

...and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country.

But, it's clear what is really pissing President Trump off...

Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD!

INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST.

THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!

Any rate 20% or higher would come as a disappointment for India, which had been seeking a better deal than the 19% that Trump offered Indonesia and the Philippines.

Bloomberg reports that India and the US have already signed terms of reference for a bilateral trade deal and have agreed to a fall deadline for that.

The two sides have been negotiating an interim agreement that New Delhi hoped would give it a reprieve from higher US import duties due to kick in on Friday.

Officials in India are still awaiting word from the White House on the extent of tariffs the South Asian nation will face this week, an official told reporters in New Delhi earlier this week, asking not to be identified as the discussions are private.

The most immediate reaction was selling pressure in equity futures...

But how long that weakness will last is anyone's guess as today's avalanche of headlines and data is just starting.

The Indian rupee extended a three-day decline on the tariff threat, while the BSE Sensex gave up early gains to trade flat.

The local currency fell as much as 0.5% to 87.24 to the dollar.

The American economy added a larger than expected 104k jobs in July according to ADP Employment data released this morning.

This is better than the 76k expected and June's 33k job loss was revised up to a 23k job loss...

Source: Bloomberg

Hiring gains were led by a resurgence in services, with the exception of education and health, which has posted a net loss of jobs so far this year.

"Our hiring and pay data are broadly indicative of a healthy economy. Employers have grown more optimistic that consumers, the backbone of the economy, will remain resilient," said Dr. Nela Richardson Chief Economist, ADP

Year-over-year pay growth in July was 4.4 percent for job-stayers (lowest since May 2021) and 7 percent for job-changers.

Finally, as a reminder, this data point is literally worthless...

Hey ADP and Nela Richardson: delete your account.

180K difference between payrolls and ADP, highest in three years https://t.co/g5CNHKHfAf pic.twitter.com/TWU4h9jHG1

— zerohedge (@zerohedge) July 3, 2025

So, trade accordingly.

US equity futures were modestly higher in the hours before Wednesday’s Fed rate decision (where Powell is expected to keep rates unchanged) as traders also braced for the restart of Mag7 earnings with META and MSFT reporting after the close, while also bracing for an avalanche of macro news. As of 7:45am, S&P 500 futures rose 0.1% and Nasdaq 100 contracts add 0.2%, with all Mag7 names (ex-GOOG) higher premarket with Semis also bid up.Expectations are for the Fed to hold rates steady, with as much as 2 governor dissents (for the first time since 1993), with a focus on the Powell press conference for any hints of what the Fed will do in Sept. The Treasury’s refunding announcement is today which may add some bond vol. The yield curve is seeing bear steeping (10Y trading 4.33%, up 1bps) with the Bloomberg Dollar Index snapping a 4-day rally that followed trade pacts with the European Union and Japan. Commodities are mixed with profit-taking in Energy, Ags/Base higher, and gold up but silver down. There is a flood of data: first at 8:30am, we get US GDP (Q2 advance; consensus +2.4%, last -0.5), ADP employment (GS +90k, consensus +80k, last -33k), and Treasury QRA (GIR sees a 50–100% increase in buybacks. The key: a) Will coupon sizes be reduced? (low chance) b) How much of the buyback is aimed at long-dated paper? This afternoon, all eyes are on FOMC decision (no change expected // watch for 2 dissenters in Bowman + Waller // mkt pricing in 1.86 cuts through YE). Tonight, watching MSFT + META earnings (positioning in both remains elevated). 

In premarket trading, Meta leads gains among Mag 7 ahead of its earnings report. Microsoft is also slated to report after the market closes (Meta +1.%, Nvidia +0.5%, Tesla +0.2%, Microsoft +0.3%, Apple +0.2%, Amazon +0.1%, Alphabet -0.1%). Here are some other notable premarket movers: 

• AtriCure (ATRC) jump 10% after the medical-device firm forecast full-year adjusted Ebitda and revenue ahead of Wall Street’s expectations.
• Etsy (ETSY) climbs 6% after the online marketplace for crafts and vintage items posted 2Q gross merchandise sales that beat the average analyst estimate.
• Harley-Davidson (HOG) rises 8% after the motorcycle company also confirmed a deal where HDFS agreed to sell a 4.9% interest to KKR and PIMCO.
• Humana (HUM) rises 7% after the health insurer raised its profit guidance for the year, bucking a trend in the US health-insurance industry after most other companies cut their forecasts in recent months.
• LendingClub (LC) soars 24% after the financial services company forecast new originations for the third quarter, and its guidance beat the average analyst estimate. JPMorgan and Piper Sandler raise their price targets for the stock.
• Mondelez International Inc. (MDLZ) slips 1% after management said unease around the economy drove a bigger-than-expected decline in North American sales in the second quarter.
• Peloton Interactive (PTON) shares rise 7% after UBS upgraded to buy, citing upside to full-year 2026 Ebitda expectation supported by top line growth and further cost cuts.
• Qorvo (QRVO) rises 9% after the Apple supplier reported stronger-than-expected earnings and gave an upbeat forecast.
• Seagate Technology (STX) falls 6% after the computer-hardware manufacturer gave an outlook that was described as disappointing. It also reported fourth-quarter results that beat expectations.
• SoFi Technologies Inc. (SOFI) drops 8% after the provider of consumer financial services said it’s selling $1.5 billion of stock.
• Starbucks (SBUX) is up 4% after the coffee chain reported net revenue for the third quarter that beat the average analyst estimate. The report also showed that comparable sales came in better-than-expected in China and North America, two of the company’s key markets.
• Teradyne (TER) rises 6% after the chip manufacturer reported adjusted earnings per share for the second quarter that beat the average analyst estimate. Analysts noted that management now sees greater visibility into the second half of the year.
• VF Corp. (VFC) soars 15% after the the apparel and shoe company reported fiscal first-quarter earnings that beat Wall Street expectations, signaling that turnaround efforts are beginning to show results.
• Visa Inc. (V) is down 1.5% after the world’s biggest payments network left its earning outlook unchanged for the rest of the fiscal year.

In other corporate news, Tesla is said to have signed a $4.3 billion agreement to source lithium iron phosphate batteries from LG Energy in the second tie-up for the EV maker in South Korea this month. Anthropic is said to be nearing a deal to raise as much as $5 billion in a new round of funding that would value the AI startup at $170 billion.

The Fed is almost unanimously expected to hold rates steady for a fifth consecutive meeting in the face of sustained pressure from President Donald Trump on Powell to lower borrowing costs, but watch out for the number of dissenting rate-setters and Chair Jerome Powell’s commentary, as well as Trump’s undoubtedly angry response to it all. There is just a 3% market implied chance of a 25 rate cut today (our full preview is here).

Investors will watch for any signs of a greater openness from the Fed to easing when it next gathers in September as they take stock of the number of dissenting policymakers. Swap markets have priced around 100 basis points of easing over the next 12 months.

“They’ll want to see what happens on the inflation side, so the speed of those cuts may not be as much as risk assets might want,” Priya Misra, portfolio manager at J.P. Morgan Asset Management, told Bloomberg TV. “Interest rates are still restrictive. How much do they need to cut to get into accomodative territory? They have to cut a lot.”

Inflation and jobs data since the Fed’s June meeting, as well as trade-policy developments, haven’t moved the Fed any closer to a cut, according to Bloomberg Economics’ Anna Wong, “If anything, the core PCE inflation data release due July 31 — which we expect to be a hot print – and July’s nonfarm payrolls, due Aug. 1 and also likely to be strong — may divide the committee even further,” she wrote.

Before the Fed, GDP figures will offer an update on the health of the American economy in the buildup to Friday’s key payrolls report. The relentless rush of big earnings continues in the US later, with Microsoft and Meta both reporting. Theire results will be a crucial barometer for growth stocks — which have supercharged gains for US equities this year. Meta’s ad impressions and pricing could see some pressure amid a spending pullback among Chinese advertisers, according to Bloomberg Intelligence. Microsoft is expected to post a 14% rise in sales when it reports results Wednesday, driven by growth in its Azure cloud-computing unit.

“Earnings and data matter more than Wednesday’s Fed meeting, and that’s why stocks will likely nudge higher again this week, despite any possible short-term disruption from the central bank decision" said BBG macro strategist Mark Cudmore.  "This year is primarily about trade policy, and the most important issue for markets and consumers is, when will the impact of tariffs show up in prices and profits? It’s the answer to that question that will dictate the future US rate path more than any sell-side generated excitement over the number of dissents.”

On the trade front, there were signs of rapprochement between the US and China. Trump is set to make the final call on maintaining their tariff truce before it expires in two weeks, an extension that would mark a continued stabilization in ties between the world’s two biggest economies. Chinese trade negotiator Li Chenggang told reporters in Stockholm the two sides had agreed to prolong the pause, without providing further details.

“It’s clear both sides want to do a deal,” said Justin Onuekwusi, chief investment officer at St James’s Place in London. “That willingness at the moment is enough to appease markets.”

Elsewhere, the US West Coast and countries in the Pacific braced for tsunamis in the wake of a powerful earthquake in Russia’s Far East, although the initial waves to hit Japan were small. The yen gained 0.4% against the dollar after a tsunami warning for areas including the Tokyo Bay.

According to Barclays strateeegists, the US stock rally has been fueled by retail traders, while institutional buying has been more measured. CTA and vol target funds’ exposure has increased only modestly, suggesting more room for upside, while hedge funds trimmed long bets.

In Europe, the Euro Stoxx 600 edges higher, reversing earlier losses after data showed the euro-area economy unexpectedly grew in the second quarter. Gains in consumer goods, food, and construction offset losses in chemicals and retail. Mercedes-Benz and Porsche fall after cutting profit forecasts, citing tariff pressure, while HSBC drags on banks after missing estimates.  Luxury group Kering and food giant Danone jumped following their respective earnings, while HSBC and Adidas fell on theirs. Amplifon plunges most on record after posting weak results and cutting its full-year outlook. Here are the biggest movers Wednesday:

• Danone rises 7.3% after the packaged food company reported recurring operating income for the first half-year that met the average analyst estimate. Analysts view outperformance in Specialized Nutrition as key to strong results
• Kering shares jumped as much as 4.8% after the luxury-goods maker reported better-than-expected operating profit. Sales however plunged at its key unit Gucci which is undergoing a second design revamp in three years
• JDE Peet’s shares gained as much as 13%, the most since October, after the coffee company reported revenue for the first half-year that beat the average analyst estimate and raised its outlook
• Grifols shares jumped as much as 10% as the Spanish blood plasma company resumed dividend payment after four years and beat 2Q estimates; Renta 4 says company continues to demonstrate strength in underlying business
• Porsche shares rise as much as 4.1% as analysts highlight free cash flow and revenue strength in second-quarter results, despite another outlook cut. Shares are still down more than 20% so far this year
• L’Oreal shares rise as much as 2.9% to the highest in almost eight weeks, reversing a fall in early trading. Analysts note significant phasing effects which impacted the cosmetics company’s second quarter results
• Nexans shares gained as much as 6.2% to highest level since November, after cable manufacturer reported earnings that analysts say are strong and boosted its adjusted Ebitda guidance for the full year
• Amplifon plunges as much as 27%, their biggest drop on record, after the hearing care specialist posted results significantly below expectations and cut its FY outlook. Banca Akros and Mediobanca both downgraded the stock
• Adidas plunges as much as 8.6% after the footwear giant reported weaker than expected revenue growth which offset a margin beat. The lack of guidance upgrade is said to be driven by increased tariff uncertainty
• HSBC slumps 5.1% in London trading, the worst performing stock among Stoxx 600 banks, after its 2Q pretax profit missed the consensus analyst estimate. The lender reported an increase in expenses and took a $2.1b impairment
• Inficon shares fall as much as 10% after the Swiss vacuum instruments maker reported second-quarter earnings that missed estimates, and cut its operating margin forecast for the year
• AUTO1 shares fall as much as 4.8% as the firm’s guidance raise failed to enthuse the market, with the stock already up over 50% this year, with UBS noting the company’s investments in Autohero, though Ebitda still beat estimates

Earlier in the session, Asian stocks eked out small gains as investors looked past some tariff developments and turned their focus to key monetary policy decisions from Japan and the US. The MSCI Asia Pacific Index gained as much as 0.6%, poised to snap a three-day decline, with chipmakers TSMC and Samsung Electronics among the top contributors. Equities advanced in tech-heavy South Korea and Taiwan. The regional benchmark has slipped slightly after climbing to a four-year high last week.  Markets in Hong Kong traded lower as trade talks between Beijing and Washington were set to continue ahead of the expiry of a tariff truce in two weeks. Adding an extra 90 days is one option, Treasury Secretary Scott Bessent said, while President Donald Trump will make the final call. Separately, the US also said that India may be hit with a tariff rate of 20% to 25%. Stocks were mixed in Tokyo ahead of Bank of Japan’s policy decision Thursday. The central bank is expected to keep rates unchanged this time, while the market gauges prospects for another hike this year. Investors have also moved to the sidelines as they await the August 1 tariff deadline after Japan forged a trade deal with the US last week.

In FX, the Bloomberg Dollar Spot Index slips 0.1%. The yen leads G-10 FX, up 0.3% against the dollar, while the Aussie lags, down 0.2% after softer-than-expected inflation.

In rates, treasuries dip ahead of the quarterly refunding and Fed decision, with US 10-year yields up 1bp to 4.33%.
Bunds hold gains, with German 10-year yields down 2bps to 2.69%. Gilts outperform, pushing UK 10-year yields 4bps lower.

In commodities, oil falls 0.6%, with WTI near $68.80, while spot gold gains $6 to around $3,332/oz. 

Bitcoin is a little lower and trades just above the USD 118k mark; Ethereum posts deeper losses and holds just above USD 3.8k.

Looking ahead to today, the main event will be the Fed rate decision at 2pm ET. Before the decision, the main data releases will be the ADP’s employment change data for July at 8:15am. At 8:30am, markets will pay close attention to readings of GDP, personal consumption and core personal consumption expenditures prices for the second quarter. Pending home sales for June are due at 10am, before the day’s main event — the Fed’s latest policy decision at 2pm.  On the earnings side, we will hear from two of the Mag-7 with Microsoft and Meta reporting after the US close. Other US results include Qualcomm and Ford, while in Europe the highlights include Airbus, BAE, Mercedes-Benz and Porsche

Market Snapshot

• S&P 500 mini +0.1%,
• Nasdaq 100 mini +0.2%,
• Russell 2000 mini +0.4%
• Stoxx Europe 600 little changed,
• DAX little changed
• CAC 40 +0.5%
• 10-year Treasury yield +1 basis point at 4.33%
• VIX -0.1 points at 15.88
• Bloomberg Dollar Index little changed at 1209.31
• euro little changed at $1.1552
• WTI crude -0.5% at $68.89/barrel

Top Overnight News

• Tsunami waves of 3.6ft seen at Crescent City in California, according to NTWC.
• The Fed is expected to hold rates, despite Donald Trump’s calls for cuts. Any policymaker dissent may send the message that some prefer to cut sooner rather than later, but with an onslaught of data due before their next meeting, Jerome Powell will probably keep his options open.  BBG
• Chinese leaders signaled they would refrain from rolling out more major stimulus for now, as authorities pivot to addressing excess capacity in the economy. Instead of announcing more policy support to bolster growth, the ruling Communist Party’s Politburo, pledged Wednesday to better execute policies that are already in place. WSJ
• Trump’s recent trade deals with Japan and the EU boast big investment numbers, but lack crucial details, raising questions about the deals’ true impact. BBG
• L/S hedge funds have  made a comeback during this year’s market turbulence, with sizeable gains helping attract fresh cash from investors after nearly a decade of outflows. These funds took in $10bn from investors in the first half of the year, following more than $120bn of withdrawals since 2016. FT
• China’s gold-backed ETFs are seeing record outflows this month as investors shift into local equities. BBG
• Australia’s inflation continued to ease in the second quarter, raising bets that the central bank will deliver its third interest rate cut next month. WSJ
• India is skeptical it can reach a deal w/the US by the 8/1 deadline and plans to continue negotiating even if its hit w/higher tariffs for a period of time. BBG
• The euro-area economy unexpectedly eked out 0.1% growth last quarter, benefiting from better-than-predicted performances in France and Spain. But the resilience masked contractions in Germany and Italy. BBG
• Companies are making it clear how they intend to deal with tariff costs - passing them on to American consumers. Throughout the spring, big retailers and consumer product makers warned that levies on imported goods would squeeze their operations, forcing them to choose between lower earnings and passing on higher costs to customers. RTRS

Trade/Tariffs

• Taiwan trade delegation will continue talks with the US on tariffs in Washington, according to three people familiar with the matter cited by Reuters.
• Brazil's Vice President Alckmin said they are working towards a tariff reduction in all sectors and should not rush into discussions on big tech regulation.
• India is said to be eying a deadline in the autumn for a US deal, according to Bloomberg sources

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed following the subdued handover from Wall St, where the S&P 500 snapped a six-day win streak and as participants braced for approaching key events, including the FOMC and several megacap earnings releases. ASX 200 advanced with gains led by strength in Real Estate and Consumer Staples, while stocks also benefited from the softer yield environment after CPI data either matched or printed below forecasts. Nikkei 225 lacked conviction amid little pertinent catalysts, and as the BoJ kicked off its two-day policy meeting. Hang Seng and Shanghai Comp were mixed with the mainland underpinned following the conclusion of the two-day talks between the US and China, where negotiators were pushing for a 90-day truce extension and await a sign-off from US President Trump.

Top Asian News

• Chinese Finance Minister Lan said China will continue to enhance consumption and will make good use of more proactive fiscal policies, while he added that the uncertainty of China's development environment is rising. Lan stated China will promote healthy development of the property market and actively address local government debt risks.
• Monetary Authority of Singapore maintained its FX-based policy as it kept the prevailing rate of appreciation of the SGD NEER policy band, while it made no change to the width and level at which the band is centred. MAS said prospects for the Singapore economy remain subject to significant uncertainty, especially in 2026, and Singapore’s GDP growth is projected to moderate in the second half of 2025 from its strong pace in H1. Furthermore, it stated that inflationary pressures should remain contained in the near term and the MAS is in an appropriate position to respond to risks to medium-term price stability.
• A magnitude 8.7 earthquake struck Petropavlovsk-Kamchatsky, Russia region, while the Russian regional governor said the earthquake off Kamchatka was the strongest in decades, with a tsunami threat declared, and people were urged to move away from the coastline. Japan's government also issued an emergency warning and ordered an evacuation, while it expected a tsunami as high as 3 metres to arrive along large coastal areas along Pacific Ocean, although Japan's Chief Cabinet Secretary Hayashi later stated there were no casualties or damage reported so far after the quake of Kamchatka triggered a tsunami and NHK reported a tsunami of 30 centimetre reaching Japan's northern Hokkaido. Furthermore, the Honolulu Department of Emergency Management called for evacuation of some coastal areas after the earthquake in Russia and warned destructive tsunami waves were expected, while USCG Oceania issued an order for all commercial vessels to evacuate all commercial harbours in Hawaii with all harbours closed to incoming vessel traffic and California Governor Newsom confirmed that a tsunami warning is in effect for California, particularly the north coast.
• China's Politburo held a meeting on the economy; says economy still faces challenges, says China should accelerate the issuance of government bonds; calls to implement more proactive fiscal policy, via Xinhua. President Xi says China "must break down over-competition", urges measures to boost consumption and the expansion of domestic demand in all directions.
• Nissan (7201 JT) Q1 (JPY): Net loss 115.8 (prev. profit 28.56bln Y/Y). Operating loss 79.12bln (prev. profit 995mln). Notes of impairment loss of JPY 40.6bln, recorded as an extraordinary loss in statement; forecasts JPY 180bln operating loss for Apr-Sep.
• United Microelectronics (UMC) Q2 (TWD): net 8.9bln (prev. 13.79bln Y/Y), revenue 58.76bln (prev. 56.80bln Y/Y).

European bourses (STOXX 600 +0.1%) opened mixed and have continued to trade sideways throughout the morning; though more recently, some upside has been seen. European traders have had French GDP (marginally beat expectations), German Retail Sales (beat), Spanish CPI (mixed), German GDP (Q/Q in-line; Y/Y firmer), EZ Sentiment (stronger-than-expected), EZ GDP (above expectations) - little move seen across the equities complex. European sectors are mixed and with the breadth of the market fairly narrow, aside from the day’s underperformer. Chemicals is weighed on by post-earning losses in Symrise (-6%), where the co. reported a rev. slowdown. Consumer Products is found around the middle of the pile, given the mixed earnings from within the sector; in Luxury, Kering (+4%) and Hermes (-4%) are playing tug-of-war, whilst Adidas (-7%) adds to the downside after its H1’25 update. The German sportswear giant reported strong profits, attributed to resilience in the retro shoe market – though it was still shy of expectations; further adding to the pressure is the co. flagging a USD 231mln tariff-related hit.

Top European News

• ECB Blog: "China-US trade tensions could bring more Chinese exports and lower prices to Europe"

FX

• DXY is a touch softer as the recent recovery in the USD pauses for breath. The USD has been bolstered in recent sessions by developments on the trade front following the recent EU-US agreement and expectations of an extension to the 90-day truce between the US and China; subject to Trump's approval. Market pricing places the odds of a September reduction at 68% with a total of 46bps of loosening priced by year-end. DXY is currently tucked within Tuesday's 98.58-99.14 range. Ahead, a slew of US data points and the FOMC announcement.
• EUR is attempting to atone for recent losses following the downside seen in the wake of the recent EU-US trade deal, which has been framed by many as a "win" for the US and subsequently drawn objections from various European leaders. Note, the agreement still requires ratification from the EU and national parliaments. Focus today turned back to the data slate following national and EZ-wide GDP metrics; the latter saw growth slow to 0.1% from 0.6% following an unwind of the front-loading seen in Q1 ahead of expected tariffs. Elsewhere, the ECB's wage tracker passed with little in the way of fanfare; 2025 metric was revised a touch higher to 3.152% from 3.144%. EUR/USD remains within Tuesday's 1.1519-99 range and below its 50DMA at 1.1574.
• JPY is attempting to claw back some lost ground vs. the USD with some tailwinds seen overnight after Japan's government issued an emergency warning and ordered an evacuation following a powerful 8.7 magnitude earthquake in Russia's far east region. Attention now turns towards the upcoming BoJ policy announcement, which is set to see policymakers stand pat on current policy settings. USD/JPY has slipped below the 148 mark with a session low at 147.81.
• GBP is marginally firmer vs. the USD after a run of four consecutive losses. UK-specific newsflow light, more focus on US developments today. Cable remains on a 1.33 handle and trades in close proximity to Tuesday's 1.3364 peak.
• AUD sits at the foot of the G10 leaderboard following a soft outturn for Australian CPI overnight, which saw headline Y/Y CPI slow to 2.1% from 2.4%. Oxford Economics writes that the data clears the way for another rate cut in August (currently priced at 92%). AUD/USD has slipped back below its 50DMA at 0.6513.
• CAD is flat ahead of the BoC rate announcement, which is expected to see the policy rate left unchanged at 2.75%. Additionally, the BoC is likely to leave out forward guidance again, given uncertainties in the economy. USD/CAD remains on a 1.37 handle and within Tuesday's 1.3731-88 range.
• PBoC set USD/CNY mid-point at 7.1441 vs exp. 7.1742 (Prev. 7.1511).

Fixed Income

• USTs are contained ahead of a packed day. In a 111-10 to 111-13 band, matching the WTD peak from Tuesday. A number of key events today, including US ADP National Employment, GDP/PCE (Q2), BoC/Fed Policy Announcements. Also in focus is US President Trump who may provide some US-China trade updates, following the meeting between the two countries in Sweden. Into the packed docket, given the contained benchmark action, yields are also near-enough unchanged but with a very marginal steepening bias. An upward move for USTs brings last week’s 111-14+ high into view. On the flip side, 111-00 is the first support point before 110-24+ and 110-24 from earlier in the week.
• Bunds spent much of the European morning a touch firmer having picked up gradually throughout the European morning but action is still relatively muted into the above US risk events. As high as 129.84 with gains of c. 20 ticks at best. The morning has been dominated by earnings (see Equities) with the European risk tone largely contained but with some earnings-driven regional variation. Equities aside, the first readings of Q2 GDP saw stronger-than-forecast quarterly French release, in-line German and weaker Italian (Y/Y outside forecast range) & Dutch readings. No move to these. Thereafter the EZ wide figures (beat both Q/Q and Y/Y) - again no reaction.
• Gilts are managing to eek some marginal outperformance vs peers, with gains of 21 ticks at best vs 19 at most in Bunds. If the current 91.96 high is breached then we look to last week’s 92.15 peak and then 92.24 from the week before.
• UK DMO sells GBP 300mln 3.75% 2052 Gilt via tender; b/c 4.62x, average yield 5.383%
• Italy sells EUR 7.0bln vs exp. EUR 5.5-7.0bln 2.70% 2030, 3.60% 2035, 1.35% 2030 BTP & EUR 2.0bln vs exp. EUR 1.5-2.0bln 2034 CCTeu

Commodities

• Flat/subdued trade across the crude complex as prices take a breather following Tuesday's hefty gains. This morning, some downticks in the complex coincided with comments from Polish PM Tusk, who sees a chance that the Russia-Ukraine conflict could be paused in the near future, via Bloomberg. That being said, Tusk is not involved in any Russia-Ukraine talks. WTI resides in a USD 69.01-69.79/bbl range with its Brent counterpart in a USD 72.52-72.24/bbl range.
• Precious metals are mixed today with spot palladium/silver marginally lower whilst gold is flat. Spot gold resides in a USD 3,321.79-3,333.77/oz range, and within Monday's USD 3,308.16-3,334.27/oz parameter.
• Mixed trade across base metals with newsflow on the lighter side ahead of the aforementioned risk events. This morning, China's Politburo held a meeting on the economy, and said the economy still faces challenges, adding that China should accelerate the issuance of government bonds, and called to implement more proactive fiscal policy, via Xinhua. 3M LME copper resides in a USD 9,726.35-9,826.65/t range at the time of writing.
• US Private inventory data (bbls): Crude +1.5mln (exp. -1.3mln), Distillate +4.2mln (exp. +0.3mln), Gasoline -1.7mln (exp. -0.6mln), Cushing +0.5mln.

Geopolitics

• Polish PM Tusk sees a chance that the Russia-Ukraine conflict could be paused in the near-future, via Bloomberg; “There are many signs pointing to the fact that the Russia-Ukraine war may be at least suspended in the nearest time” Tusk said.
• "A senior Israeli official briefed the Saudi Al-Arabiya channel that there are warnings that elements backed by Iran are planning to attack Israel from southern Syria.", according to journalist Elster.
• Kremlin spokesman says a meeting between the Presidents of Russia and the US is not on the agenda, according to Russian representative Ulyanov on X
• China Defence Ministry says Chinese and Russian navies will hold joint military exercise in waters and airspace near Vladivostok in August.

US Event Calendar

• 7:00 am: Jul 25 MBA Mortgage Applications, prior 0.8%
• 8:15 am: Jul ADP Employment Change, est. 75.5k, prior -33k
• 8:30 am: 2Q A GDP Annualized QoQ, est. 2.6%, prior -0.5%
• 8:30 am: 2Q A Personal Consumption, est. 1.5%, prior 0.5%
• 8:30 am: 2Q A GDP Price Index, est. 2.2%, prior 3.8%
• 8:30 am: 2Q A Core PCE Price Index QoQ, est. 2.3%, prior 3.5%
• 10:00 am: Jun Pending Home Sales MoM, est. 0.2%, prior 1.8%
• 2:00 pm: Jul 30 FOMC Rate Decision est. 4.5%, prior 4.5%

DB's Jim Reid concludes the overnight wrap

The main story over the last 24 hours has been a reversal from Monday’s divergent price action in transatlantic fixed income markets, and a jaw-dropping intraday -30% plunge in Novo Nordisk — Europe’s second-largest company, now relegated to sixth with the move. The stock eventually closed -23.11% lower. What’s remarkable is that indices including Novo, like the Stoxx 600 (+0.33%), still managed to finish higher, outperforming the S&P 500 (-0.30%). Imagine if one of the top two or three S&P 500 names dropped that much in a single session—it would be absolute chaos. For context, Microsoft, the second-largest US company, has a market cap of $3.81trn, while Novo fell from $313bn to $240bn yesterday. Talking of Microsoft, they report after the closing bell today, alongside Meta. 

In fixed income, US Treasuries saw a strong rally, as 2yr yields fell -5.8bps, while 10yr (-9.1bps) and 30yr (-10.2bps) yields saw their biggest daily declines since early June. There’s a growing narrative that today’s refunding announcement could include measures aimed at helping to cap yields. See our strategists’ preview here where they don't see much new being delivered. A strong 7yr auction after the European close also helped sentiment, as $44bn of bonds were issued -2.6bps below the pre-sale yield with the highest bid-to-cover ratio for a 7yr auction since 2012. For more context on the drop in yields, see yesterday’s CoTD (link here), which highlighted that we’re in a seasonally strong period for bonds. Our rates strategists are waiting for these seasonal effects to fade before initiating more bearish trades. Interestingly, European yields moved in the opposite direction though, reversing Monday's rally, with 10yr Bunds, OATs, and BTPs rising +1.9bps, +1.4bps, and +1.2bps, respectively.

The large fall in US yields came ahead of the FOMC today with our economists expecting the Fed to keep rates on hold for a fifth straight meeting at 4.00-4.25%. The decision is unlikely to be unanimous, and they expect two governors to dissent for the first time since 1993. Just before the blackout period Governor Waller reinforced his case for a July rate cut, while Vice Chair of Supervision Bowman earlier left open the door to supporting a cut if “upward pressures remain limited to goods prices.” In terms of near-term policy, our economists think Powell is unlikely to remove a September rate cut from consideration nor intentionally raise the probability of that outcome. Even though political pressure on Powell to cut rates remains high, our view is that due to modestly stronger inflation prints over the coming months, the first cut should be in December, after which we expect a further 50bps reduction in Q1 2026. 

The decline in yields came even as breakevens moved higher amid a new spike in oil prices as Trump suggested that he would impose new measures against Russia if Moscow failed to agree to a ceasefire within 10 days. While there was no new detail on what shape sanctions or tariffs would take, Trump said he was not worried about the potential impact on oil prices, saying “I don’t worry about it. We have so much oil in our country. We’ll just step it up, even further”. Brent rose +3.53% to $72.51/bbl, its biggest spike in six weeks and extending a +2.34% rise on Monday.

It was a busy day in the corporate world, especially in pharma, where both tariffs and earnings were in focus. As mentioned earlier, Novo Nordisk had a brutal session after revising its sales growth forecast from 21–24% down to 8–14% amid a slowdown in sales of its weight-loss drug Wegovy, and announcing a new CEO. Shares plunged as much as -30% before recovering slightly to close -23.11% lower, which was still its largest fall since data starts in 1991. Shares in rival Eli Lilly & Co also fell -5.59% as investors worried about broader sector weakness.

US equities retreated more broadly, with the S&P 500 (-0.30%) ending a run six consecutive record highs. Among the post-earnings underperformers, UnitedHealth fell -7.46% on weaker Q2 sales and PayPal dropped -8.66% as volume growth disappointed, though it announced a new feature for merchants to accept crypto payments from consumers while receiving USD for a fee of just 0.99%. The Mag-7 fell -0.68% ahead of results from Microsoft and Meta this evening, with Meta sliding by -2.46%.

Over in Europe, the STOXX 600 (+0.29% after -0.22% Monday) and Germany’s DAX (+1.03% after -1.02%) reversed Monday’s declines but the STOXX Autos & Parts index fell another -0.18% after the -1.82% slump in the fallout from the US-EU trade deal. Another European asset that continued Monday’s decline was the euro, which fell -0.36% to 1.1547, while the dollar index hit a five-week high.

Following the weekend US-EU deal, US Commerce Secretary Lutnick said there’s still “plenty of horse trading left to do” before finalising agreements. He noted that the EU accepted the deal to protect its pharmaceutical and automotive sectors, but said he expected to continue discussing with the EU on issues like digital services taxes and metals tariffs. President Trump is expected to announce pharma tariffs within the next two weeks, which for the EU should now be covered by the 15% tariff level.

In other trade news, US Treasury Secretary Bessent said the US and China were continuing talks on maintaining their current trade truce before it expires in two weeks’ time. He said another 90-day extension, which had been indicated by China’s delegation, was an option but that the final decision lay with Trump. National Economic Council Chair Hassett said Trump would see the final details on the China talks today. Meanwhile, Trump suggested that India could be hit with a tariff rate 20-25%, though he cautioned that the final rate had not yet been finalised as both sides are still negotiating ahead of Friday's deadline. We are yet to hear a response from PM Modi’s government as we go to print.

We are mostly edging higher this morning in Asia led by the KOSPI (+0.87%), buoyed by hopes of a US trade agreement prior to the August 1 deadline, with the S&P/ASX 200 (+0.65%) also benefiting from a soft quarterly inflation report (details below). In other regions, both the CSI and the Shanghai Composite are trading +0.52% higher. Meanwhile, the Nikkei (+0.02%) is flat with the Hang Seng dipping -0.43%. S&P 500 (+0.12%) and NASDAQ 100 (+0.18%) futures are slightly higher. 

Returning to Australia, core inflation eased in the three months leading up to June, reinforcing the argument for the RBA to cut rates as soon as August. The trimmed CPI rose by +0.6% in the second quarter compared to the previous three months, falling short of the 0.7% forecast. On a yearly basis, it increased by +2.7%, only because of higher revisions earlier in the year, aligning with expectations and down from +2.9% in the first quarter. Following the data, yields on the policy-sensitive 3-year government bonds has continued to decline (-5.7bps on the day) as traders have fully incorporated expectations for an RBA rate cut next month, with the likelihood of an additional cut at the September meeting rising to approximately 40%.

Yesterday was also a busy day for US data, which sent a decent signal on the state of the US economy. The Conference Board’s July consumer confidence index came in stronger than expected at 97.2 (vs 96.0), while inflation expectations continued to reverse their spike earlier in the year. And the advance goods trade balance for June came in at -$86bn, less negative than the -$98bn expected. This stronger net exports signal pushed up the Atlanta Fed’s GDPNow for Q2 from 2.4% to 2.9%. There was a slight softness in the June JOLTS job openings at 7.437 million (vs 7.5m expected) but the quits and layoffs rates held steady at low levels of 2.0% and 1.0%, respectively, suggesting a still solid labour market.

In Europe, the ECB’s latest consumer expectations survey showed 1yr inflation at 2.6% and 3yr inflation at 2.4%, both in line with forecasts. Ahead of tomorrow’s flash GDP prints for the Euro Area’s largest economies, Spain reported Q2 GDP growth of +0.7% QoQ (vs +0.6% expected), while Belgium came in at +0.2%. Our economists expect Euro Area GDP to grow +0.1% QoQ (consensus 0.0%) and see upside risks to that forecast.

Looking ahead to today, the main event will be the Fed rate decision at 19:00 LDN time. Before the decision, the main data releases will be US GDP, ADP employment change and personal consumption. In Europe, the focus will be on the eurozone flash GDPs and consumer confidence. On the earnings side, we will hear from two of the Mag-7 with Microsoft and Meta reporting after the US close. Other US results include Qualcomm and Ford, while in Europe the highlights include Airbus, BAE, Mercedes-Benz and Porsche

Slovak Prime Minister Robert Fico at the start of this week lambasted the West's approach to the Russia-Ukraine war in a video message, accusing European leaders of acting recklessly and intentionally misleading Moscow, also while Europe prioritizes calls for peace in Gaza but still remains silent concerning the same for Ukraine. He went so far as to suggest that European leaders are tired of peace.

"It seems some European leaders have grown weary of eight decades of peace," Fico remarked, highlighting how easy a broader NATO-Russia war could be sparked.

He emphasized that smaller countries like Slovakia have no interest in being part of such escalation and confrontation while cautioning against the assumption that such a bigger conflict could be managed and restrained.

He said that Russia's decision to invade militarily broke international law, but that context is vital and cannot be ignored, pointing to the Donbass civil war and constant NATO expansion over the decades.

Below are more of his criticisms as translated and presented in Russia's RT:

Whereas dozens of countries backed a call for ceasefire in Gaza, “no joint call … for an immediate end to the war and for peace” was organized concerning Ukraine, he lamented.

According to Fico, his attempt to initiate a comparable declaration at the European Council has failed. “It seems that the leaders of some countries in Europe are already tired and bored of 80 years of peace.”

“Artificially provoking a conflict between one of the NATO member states and Russia is easy. History gives us thousands of examples of how to do it. And what happens then?” he questioned, warning that those thinking they could control such a clash are gravely mistaken.

Fico also accused European leaders of strategic failure concerning their efforts to punish and isolate Russia through sanctions, stating that the Russian economy is now perceived by many to be stronger than Germany’s, something unimaginable within just years ago.

"The Ukraine conflict has no military solution...the West had no interest in ending the war back in April 2022 when such a real possibility existed. The West naively believed that it could use Ukraine as a battering ram to weaken Russia." —PM Fico

Slovakia’s???? PM Robert Fico:

‘The Ukraine???? conflict has no military solution...the West had no interest in ending the war back in April 2022 when such a real possibility existed. The West naively believed that it could use Ukraine as a battering ram to weaken Russia????.’

The… https://t.co/UitgsOZ2dn pic.twitter.com/naLmX8OTwr

— Afshin Rattansi (@afshinrattansi) July 28, 2025

The outspoken prime minister, who has survived an assassination attempt, has in the recent past asserted that Ukraine will never join NATO "on my watch" - adding that Kiev's membership the Western military alliance "would be a good basis for a World War III."

Authored by Roger Kimball via American Greatness,

Sitting here in London, I wonder what Ross Parker and Hughie Charles would think if they could join me for a pint. I suspect that the authors of the famous 1939 song “There’ll Always Be An England” would be puzzled, not to say alarmed, over some recent developments in this green and pleasant land.

“There’ll always be an England,” these songsters wrote, “and England shall be free/if England means as much to you/as England means to me.”

But the question is, does it?

Does England mean as much to the ruling establishment as it once did?

The words “free” and “freedom” are repeated several times in “There’ll Always Be An England.”

That’s the theme, the hope, the conviction: that Britain would triumph because of its native love of freedom.

How do things look now?

Let me introduce you to two recent developments that would have astonished Messrs. Parker and Charles—police tracking of “non-crime hate incidents” and a so-called “banter ban” that is on the threshold of becoming the law of the land.

The practice of recording “non-crime hate incidents” by the police became law in June 2023.

Ponder this:

Where there is no criminal offence, but the person reporting perceives that the incident was motivated wholly or partially by hostility, the incident will be recorded as a non-crime hate incident. Police officers may also identify a non-crime hate incident, even where no victim or witness has done so.

I added the italics to underscore the surreal, Orwellian nature of the practice.

If you say something mean about somebody, prepare to have your remarks—or even just your “whole or partial” hostility recorded and put into an official database that might then be scrutinized by prospective employers.

Who or what oversees this database?

The College of Policing, a private company that provides guidance for the police forces of England and Wales. Recording such incidents is not required by Parliament. Rather, it is part of the increasingly vast, quasi-governmental surveillance apparatus that has grown up in formerly free countries, such as the UK.

The College of Policing defines “hostility” as the expression of “ill-will,” “ill-feeling,” and “dislike.”

This means, a paper for the Free Speech Union notes, “that certain thoughts are now being policed.”

An NCHI can show up if prospective employers carry out enhanced Disclosure and Barring (DBS) checks. These are common for all sorts of professions—they could mean teachers, doctors, nurses, and many others are kept out of work simply for having made a joke on Twitter. Journalists could easily be recorded without their knowledge.

NCHIs can be recorded against someone’s name whenever an accusation of hate is made, without any further investigation or notification.

This means people are being put on a list, often without their knowledge, when the police know that no crime has taken place.

NCHIs are recorded after anonymous accusations, encouraging a culture of denunciation, like in the Soviet Union. Supposed victims need not justify their opinion, and police officers are told not to challenge accusers on the grounds that it is immaterial whether a “victim’s” feelings are reasonable.

The police have claimed that NCHIs are needed to prevent “escalation,” but can provide no evidence that they do this.

Just in case the recording of people saying mean or “hostile” things is not enough to stifle free speech, Britain is about to pass a Labour-sponsored law banning hurtful or possibly hurtful “banter” in pubs and other public places. “Under Labour’s new law,” an article in The Express reports,

…employees will be able to take offence on behalf of one of their colleagues. Given that we live in an age in which some are hyper-sensitive, the implications for the hospitality sector of turbo-charging the Equality Act in this way are mind-boggling. What “reasonable steps” will a publican be expected to take to protect his or her staff from overhearing conversations between customers that might upset them?

Will it be sufficient to include a notice on the wall warning customers to keep their opinions to themselves, on issues such as gender neutral toilets, mass immigration and the Israel-Gaza conflict? Or will publicans need to go further and employ “banter bouncers” to eavesdrop on customers and eject anyone for saying something “inappropriate” or “problematic”, such as telling a saucy joke?

Good questions.

Already, some 37 pubs a week are closing in Britain. Can there be any doubt that the criminalization of banter will accelerate the trend?

Or that those that remain will be transformed into “sanitized ‘safe spaces’ in which no one dares express a controversial opinion or tell a joke.”

And of course, it is not only pubs that will be targeted. There is plenty of banter elsewhere in British society. For example,

In football grounds, it’s not unusual for fans to shout “Are you blind?” at the linesman for failing to rule a goal offside or spot a handball. Once this new law is on the books, a partially sighted steward who overhears this could sue the club for not taking “all reasonable steps” to protect him from being “harassed,” i.e., overhearing that expostulation. Indeed, any of his colleagues could sue the club on his behalf. That, in turn, means football clubs will have to clamp down on any expostulations or chants that might cause offence. … Expecting employers to police the speech of customers in this way will have a hugely chilling effect on free speech. The fearful atmosphere that prevails in so many workplaces since the passing of the Equality Act, with people looking over their shoulders before whispering what they really think about a controversial issue, will be extended to the venues people go to in their leisure time.

Will there always be an England? Not if Keir Starmer’s Labour government has its way.

Prayer is one of the most common forms of spiritual expression worldwide. Yet, how often people pray varies widely across cultures, religions, and regions.

This chart, via Visual Capitalist's Niccolo Conte, ranks countries by the number and share of people who pray daily, using data from a survey by the Pew Research Center and population figures from the World Bank.

The dataset covers 35 countries and represents around 50% of the global population, excluding countries where data was unavailable (such as China).

Where Prayer is Most Common

Daily prayer is woven into the social and cultural fabric of many predominantly religious countries across Asia, Africa, and Latin America. In contrast, people in secular Western nations tend to pray less often.

Here’s a look at the countries where people pray the most:

Country	People Who Pray Daily (Millions)	Share of Population Praying Daily
Indonesia ????	269.3	95%
Kenya ????	47.4	84%
Nigeria ????	195.5	84%
Malaysia ????	28.5	80%
Philippines ????	91.5	79%
Brazil ????	161.1	76%
Bangladesh ????	130.2	75%
Ghana ????	25.1	73%
Sri Lanka ????	15.8	72%
Colombia ????	37.6	71%
India ????	1030.1	71%
South Africa ????	40.3	63%
Türkiye ????	53.9	63%
Peru ????	19.8	58%
Singapore ????	2.7	45%
Mexico ????	57.6	44%
U.S. ????	149.6	44%
Chile ????	8.1	41%
Argentina ????	17.8	39%
Greece ????	3.8	37%
Italy ????	20.7	35%
Israel ????	3.4	34%
Thailand ????	22.2	31%
Canada ????	12.4	30%
South Korea ????	13.0	25%
Spain ????	10.7	22%
Japan ????	26.0	21%
UK ????	14.5	21%
Netherlands ????	3.6	20%
France ????	12.3	18%
Poland ????	6.6	18%
Australia ????	4.4	16%
Germany ????	13.4	16%
Hungary ????	1.1	11%
Sweden ????	0.8	8%

Generally, countries where most people pray daily are middle- and low-income or developing countries.

Indonesia tops the list, with 95% of its population—269 million people—praying daily. However, India is at the top in absolute numbers, with more than 1 billion people saying they pray daily, representing 71% of its population.

In Africa, Kenya and Nigeria have the highest rates of daily prayer. Other highly devout countries include Malaysia, the Philippines, and Bangladesh, where Islam and Christianity are dominant religions.

Overall, these countries are also highly religious. For example, 100% of Indonesians and 99% of Indians are affiliated with a religion. These percentages are much lower in developed Western nations.

Although most Western nations see low levels of daily prayer, the U.S. stands out with over 149 million Americans, or 44% of the population praying daily, with a diverse religious landscape. On the other hand, in secular European nations like Sweden, France, and Germany, less than 20% of the population prays daily.

If you enjoyed today’s post, check out The Global Religious Composition Landscape on Voronoi, the new app from Visual Capitalist.

As part of the U.S.-EU trade deal agreed over the weekend, the EU committed to purchasing a mindblowing $750 billion worth of US energy products over three years ($250 per year) including LNG, oil, and nuclear fuel (again this is very big picture: neither side has detailed what was included in the energy deal - or whether it covered items such as energy services or parts for power grids and plants).

There is just one problem: this number is laughably unrealistic because it would require the redirection of most US energy exports towards Europe and the EU has little control over the energy its companies import. 

Indeed, as Rabobank explains, unless energy prices increase materially, that figure remains beyond realistic expectations. The EU imported roughly €65 billion worth of energy products from the U.S. in 2024, including €20 billion (35 million tons) of U.S. LNG and €44 billion of oil and oil products. To reach the required $250 billion per year, the EU would need to import roughly 67% of its energy needs from the US, based on 2024 Eurostat data.

Even if the EU were to purchase all of its LNG from the U.S., the total would rise to only €40–50 billion, based on 2024 prices. This would require countries like Russia, Algeria, Qatar, Nigeria, and even Norway to completely relinquish their market share in the EU, while the U.S. government would need to mandate its LNG exporters to prioritize Europe.

The shift in flows for crude oil and refined products would be even more substantial, as the EU currently imports only around 17% of its needs from the U.S. Existing suppliers in the Middle East and India are unlikely to surrender market share without significant economic incentives, while U.S. refining and export capacity is already stretched. Capacity, cost, and competition will continue to shape energy flows, regardless of political intent.

Reuters adds that "there is strong competition for U.S. energy exports as other countries need the supplies - and have themselves pledged to buy more in trade deals. Japan agreed to a "major expansion of U.S. energy exports" in its U.S. trade deal last week, the White House said in a statement. South Korea has also indicated interest in investing and purchasing fuel from an Alaskan LNG project as it seeks a trade deal."

The flipside is just as laughable: total U.S. energy exports to all buyers worldwide in 2024 amounted to $318 billion. Of that, the EU imported a combined $76 billion of U.S. petroleum, LNG and solid fuels such as coal in 2024, according to Reuters' calculations based on Eurostat data.

More than tripling those imports was unrealistic, analysts said.

Arturo Regalado, senior LNG analyst at Kpler, said the scope of the energy trade envisioned in the deal "exceeds market realities."

"U.S. oil flows would need to fully redirect towards the EU to reach the target, or the value of LNG imports from the US would need to increase sixfold," Regalado said.

Competition for U.S. energy could drive up benchmark US oil and gas prices and encourage U.S. producers to favour exports over domestic supply. That could make fuel and power costs more expensive, which would be a political and economic headache for U.S. and EU leaders. 

Meanwhile, the EU estimates its member countries' plans to expand nuclear energy would require hundreds of billions of euros in investments by 2050. Its nuclear reactor-related imports, however, totalled just 53.3 billion euros in 2024, trade data shows.

The energy pledge reflected the EU's analysis of how much U.S. energy supply it could accommodate, a senior EU official told Reuters, but that would depend on investments in U.S. oil and LNG infrastructure, European import infrastructure, and shipping capacity.

"These figures, again, are not taken out of thin air. So yes, they require investments," said the senior official, who declined to be named. "Yes, it will vary according to the energy sources. But these are figures which are reachable."

There was no public commitment to the delivery, the official added, because the EU would not buy the energy - its companies would. Private companies import most of Europe's oil, while a mix of private and state-run companies import gas. The European Commission can aggregate demand for LNG to negotiate better terms, but cannot force companies to buy fuel. That is a commercial decision.

"It's just unrealistic," ICIS analysts Andreas Schröder and Ajay Parmar said in written comments to Reuters. "Either Europe pays a super high non-market reflective price for U.S. LNG or it takes way too much LNG volumes, more than it can cope with."

The United States is already the EU's top supplier of LNG and oil - thanks to the Biden-inspired war in Ukraine and the CIA blowing up the Nord Stream pipeline from Russia - shipping 44% of EU LNG needs and 15.4% of its oil in 2024, according to EU data. Raising imports to the target would require a U.S. LNG expansion way beyond what is planned through 2030, said Jacob Mandel, research lead at Aurora Energy Research.

"You can add on capacity," Mandel said. "But if you're talking about the scale that would be necessary to meet these targets, the $250 billion, then it's not really feasible." Europe could buy $50 billion more of U.S. LNG annually as supply increases, he said.

Amusingly, higher EU fuel purchases would, however, run counter to forecasts for EU demand to decline as it shifts to clean energy, analysts said. 

"There is no major need for the EU to import more oil from the U.S., in fact, its oil demand peaked a number of years ago," Schröder and Parmar said.

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According to Rabobank, the most plausible outcome of the trade deal’s energy provisions is increased European participation in U.S. LNG projects (which would also have been achieved without the deal). Unlike crude and refined products, LNG offers scalable, long-term opportunities through joint investments in liquefaction capacity and infrastructure.

European firms are likely to commit capital to U.S. terminals to secure future supply and diversify away from Russian gas. However, this will not materially alter market balances over the next five years and by then Trump will be long gone.