What better way to close a deal than with a weekend of golf in Scotland? The United States has once again demonstrated its ability to negotiate from a position of strength. Washington secured a major win as the European Union agreed to a 15% tariff on most goods shipped to U.S. ports - while committing to purchase American natural gas and step up investment in the U.S. economy. In return? Virtually nothing. This is less a compromise and more a testament to America’s negotiating power.

The agreement reinforces what’s been clear for months: the U.S. is setting the terms of global trade. For Wall Street, this is good news. An agreement on U.S. terms provides clarity and confidence at a time when markets value stability. It also validates the strategy the administration has been pursuing: start tough, demand more, and walk away with favorable terms. So far, that strategy is working. Import prices remain under control, meaning inflation hasn’t spiked despite tougher trade measures.

The bigger story now shifts to monetary policy. The Fed meets Wednesday, and while rates are likely to stay unchanged, the market will be laser-focused on any hint of easing later this year. Inflation concerns have kept the central bank cautious, but investors are hoping for signals of a September cut. That could add more fuel to an economy that remains resilient despite global headwinds.

Earnings season is also entering its most critical phase. Over the next two weeks, the bulk of S&P 500 companies will report. So far, a third of the index has delivered mixed results - plenty of beats, but margins remain tight and annual earnings growth is still at its weakest since early 2024.

Key information to start the week:

  • The United States and China will resume trade negotiations today in Stockholm to extend their tariff truce by three months before the August 12 deadline.

  • Thailand and Cambodia have agreed to hold immediate talks on a ceasefire under U.S. pressure.

  • Corporate calendar: U.S. tech will take center stage with earnings reports from Microsoft, Meta, Apple, and Amazon. In Europe, L’Oréal, AstraZeneca, Hermès, Airbus, Shell, Schneider, and UBS will release their figures.

  • Macro agenda: It will be just as busy. In addition to the Fed meeting (decision on Wednesday) and the Bank of Japan meeting (Thursday), investors will have to digest nearly every major data point - employment, inflation, and GDP - particularly in the United States.

In Asia-Pacific markets, the week is off to a messy start. Japan is down 1% amid rumors of the prime minister's resignation and ahead of the BOJ's rate decision. India and mainland China are close to equilibrium. Modest gains have taken over in Australia, South Korea, and Taiwan. 

Today's economic highlights

No major indicators are scheduled for today, except for the Dallas Fed manufacturing index. See the full agenda here.

  • USD/GBP: 0.7448 GBP
  • Bund/OAT spread: 67 points (-0.3%)
  • VIX: 14.9 (-0.5%)
  • Gold: $3,227
  • Brent: $68.87
  • 10-year US: 4.396%
  • Bitcoin: $118,850

In corporate news:

  • Boeing – Union members assembling Boeing fighter jets in the St. Louis area “overwhelmingly voted” Sunday against the company’s contract offer, setting the stage for a potential strike.
  • Cheniere Energy, NextDecade, Venture Global – U.S. liquefied natural gas (LNG) suppliers are up 7% to 8% pre-market after the European Union committed to buying $750 billion worth of the fuel over the next three years as part of a trade agreement announced Sunday with the United States.
  • KKR – Is in talks to acquire Singapore-based ST Telemedia Global Data Centres in a deal that could value the Asian infrastructure provider at more than $5 billion, Bloomberg reported Saturday, citing sources familiar with the matter.
  • McDonald’s – Plans to sell eight prime commercial properties in Hong Kong, with a total market value of about HK$1.2 billion, JLL announced Monday, as it was appointed exclusive sales agent.
  • Meta Platforms – Has appointed Shengjia Zhao, co-creator of ChatGPT, as chief scientist of its Superintelligence Lab, CEO Mark Zuckerberg announced Friday, as the company accelerates its expansion into advanced AI.
  • Nike – Rises 2.7% pre-market after J.P. Morgan upgraded the stock to “overweight” from “neutral.”
  • Paramount Global – Said Friday it expects to finalize its merger with Skydance Media by August 7 after obtaining government approval for the $8.4 billion deal.
  • Sarepta Therapeutics – The FDA said Friday it is investigating the death of an eight-year-old boy who received the company’s Elevidys gene therapy for a muscular disease.
  • Tesla – CEO Elon Musk said Monday the company signed a $16.5 billion chip supply deal with Samsung Electronics, a move expected to boost the South Korean tech giant’s contract manufacturing business. Tesla shares rise 1.7% pre-market.
    The company also plans to offer a human-driven private chauffeur service to a limited number of people in the San Francisco Bay Area, according to a California regulator, contrary to media reports suggesting a robotaxi service. Tesla sent robotaxi users an updated terms-of-service agreement detailing the planned rollout in the Bay Area, Business Insider reported Saturday.
    In addition, Tesla said Friday it received several shareholder proposals regarding its plan to invest in xAI, Elon Musk’s artificial intelligence startup.
  • Union Pacific – The largest U.S. railroad operator could reach a deal to acquire rival Norfolk Southern as early as next week, Bloomberg reported Friday, citing sources close to the matter.

Analyst Recommendations:

  • Coinbase Global : Monness Crespi Hardt downgrades to neutral from buy.
  • Comfort Systems USA : Sidoti & Company maintains its buy recommendation and raises the target price from USD 563 to USD 795.
  • First Citizens Bancshares : Janney Montgomery Scott maintains its buy recommendation and raises the target price from USD 2175.0029 to USD 2399.998.
  • Flex : Argus Research maintains its buy recommendation and raises the target price from USD 55 to USD 75.
  • Ge Aerospace : Jefferies maintains its buy recommendation and raises the target price from USD 300 to USD 320.
  • General Dynamics : Barclays maintains its overweight recommendation and raises the target price from USD 285 to USD 350.
  • L3Harris Technologies : Barclays maintains its overweight recommendation and raises the target price from USD 255 to USD 305.
  • Las Vegas Sands : Argus Research upgrades to buy from hold with a target price of USD 60.
  • Moody's : Argus Research maintains its buy recommendation and raises the target price from USD 510 to USD 550.
  • Northrop Grumman : Barclays maintains its equalweight recommendation and raises the target price from USD 500 to USD 580.
  • Nov : Capital One Securities maintains its equalweight recommendation with a price target reduced from USD 19 to USD 16.
  • Paccar : Argus Research upgrades to buy from hold with a target price of USD 121.
  • Raymond James Financial : Argus Research maintains its buy recommendation and raises the target price from USD 160 to USD 185.
  • Regions Financial : 22V Research maintains its sector outperform recommendation with a target price raised from USD 25 to USD 29.
  • Rocket Lab : Craig-Hallum initiates a Hold recommendation with a target price of USD 51.
  • Saia : Susquehanna maintains its neutral recommendation with a price target raised from USD 275 to USD 340.
  • Texas Roadhouse : Gordon Haskett maintains its hold recommendation with a price target raised from USD 175 to USD 186.
  • Textron : Barclays maintains its overweight recommendation and raises the target price from USD 95 to USD 105.
  • United Rentals : Raymond James maintains its outperform recommendation and raises the target price from USD 850 to USD 1000.
  • Vertiv Holdings : William Blair maintains its outperform rating.