Today's Update 07-16-2025
Key Points and Metrics
Key Points and Metrics:
Economic Data Releases:
United States Producer Price Index (PPI) for June:
PPI Year-over-Year: Actual 2.3% (Forecast 2.5%, Previous 2.6%)
PPI Month-over-Month: Actual 0.0% (Forecast 0.2%, Previous 0.1%, Revised 0.3%)
Core PPI Year-over-Year (Excluding Food and Energy): Actual 2.6% (Forecast 2.7%, Previous 3.0%, Revised 3.2%)
Core PPI Month-over-Month: Actual 0.0% (Forecast 0.2%, Previous 0.1%, Revised 0.4%)
Market Reaction: Stocks rose; the dollar and bond yields weakened.
Canadian Housing Starts for June:
Annualized Housing Starts: Actual 283,734 units (Forecast 262,500 units, Previous 279,500 units, Revised 282,700 units)
United States Mortgage Data:
MBA Mortgage Applications Index: Actual -10% (Previous 9.4%)
MBA 30-Year Mortgage Rate: Actual 6.82% (Previous 6.77%)
United Kingdom Consumer Price Index (CPI) for June:
CPI Year-over-Year: Actual 3.6% (Forecast 3.4%, Previous 3.4%)
CPI Month-over-Month: Actual 0.3% (Forecast 0.1%, Previous 0.2%)
Core CPI Year-over-Year: Actual 3.7% (Forecast 3.5%, Previous 3.5%)
Market Reaction: The British pound strengthened.
Corporate Earnings Reports:
Morgan Stanley (MS) - Q2 2025:
Earnings Per Share (EPS): $2.13 (Estimate: $1.97)
Revenue: $16.79 billion (Estimate: $16.04 billion)
Net Interest Income: $2.35 billion (Estimate: $2.19 billion)
Wealth Management Revenue: $7.76 billion (Estimate: $7.35 billion)
Equities Trading Revenue: $3.72 billion (Estimate: $3.53 billion)
Fixed Income, Currencies, and Commodities (FICC) Trading Revenue: $2.18 billion (Estimate: $2.11 billion)
Investment Banking Revenue: $1.54 billion (Estimate: $1.44 billion)
Goldman Sachs (GS) - Q2 2025:
EPS: $10.91 (Estimate: $9.77; Previous Year: $8.62)
Revenue: $14.48 billion (Estimate: $13.53 billion)
Equities Trading Revenue: $4.30 billion (Estimate: $3.72 billion)
FICC Trading Revenue: $3.47 billion (Estimate: $3.26 billion)
Advisory Revenue: $1.17 billion (Estimate: $852.7 million)
Bank of America (BAC) - Q2 2025:
EPS: $0.89 (Estimate: $0.85)
Net Interest Income: $14.67 billion (Estimate: $14.59 billion)
Investment Banking Revenue: $1.43 billion (Estimate: $1.27 billion)
Total Deposits: $2.01 trillion (Estimate: $1.99 trillion)
Wealth & Investment Management Revenue: $5.94 billion (Estimate: $5.96 billion)
Johnson & Johnson (JNJ) - Q2 2025:
EPS: $2.77 (Estimate: $2.70)
Revenue: $23.74 billion (Estimate: $22.85 billion)
Raised Full-Year Adjusted EPS Guidance: Now $10.80 to $10.90 (Previous Guidance: $10.50 to $10.70)
Medicine Revenue: $15.20 billion (Estimate: $14.52 billion)
MedTech Sales: $8.54 billion
Market Updates and Key Events:
Stock Market:
U.S. equity futures steadied as strong earnings from major banks offset concerns over tariff developments.
S&P 500 futures were little changed after earlier declines.
Tariff Developments:
President Trump indicated potential introduction of tariffs on pharmaceuticals by the end of the month, with possible tariffs on semiconductors to follow.
These measures might coincide with broader reciprocal tariffs set to take effect on August 1st.
Federal Reserve Insights:
Dallas Fed President Lorie Logan:
Suggested that monetary policy needs to remain restrictive for a while longer to reduce inflation.
Acknowledged uncertainty around the impact of tariffs on inflation and consumer prices.
Stated that if the Fed misjudges and cuts rates too soon, it risks prolonging the path to price stability.
Oil Inventory Data (American Petroleum Institute - API):
Crude Oil Stock Change: Actual +0.8 million barrels (Forecast: -2 million barrels, Previous: +7.1 million barrels)
Gasoline Stock Change: Actual +1.9 million barrels (Previous: -2.2 million barrels)
Distillate Stock Change: Actual +0.8 million barrels (Previous: -0.8 million barrels)
Cushing Stock Change: Actual +0.1 million barrels (Previous: +0.1 million barrels)
Exchange Rates:
Currency Strength Ranking (Strongest to Weakest):
Euro (EUR)
Australian Dollar (AUD)
British Pound (GBP)
Japanese Yen (JPY)
Swiss Franc (CHF)
New Zealand Dollar (NZD)
Canadian Dollar (CAD)
U.S. Dollar (USD)
Global Economic Indicators:
Asian Markets:
Slight declines as traders reduced expectations for Federal Reserve rate cuts following U.S. inflation data.
Reduced odds for more than one U.S. interest rate cut this year, with a potential move in September seen as slightly more than 50%.
European Union Budget Proposal:
The EU proposed a €1.98 trillion draft budget for 2028-2034.
Allocation includes €589.6 billion for competitiveness, prosperity, and security.
4. Additional Noteworthy News:
German Finance Minister Statements:
Emphasized that EU fiscal rules offer flexibility.
Received positive support signals from the European Commission regarding Germany's fiscal plans.
Reaffirmed Germany's commitment to a global minimum corporate tax.
Iran Nuclear Deal Deadline:
Reports indicate that if no agreement on Iran's nuclear program is reached by the end of August, reinstatement of sanctions is a possibility.
U.S. and European officials have set the end of August as an informal deadline for negotiations.
House Financial Services Committee:
Chairperson stated that the House possesses the votes to advance three cryptocurrency-related measures.
Trump Trade Policy Updates
Pharma tariffs likely by month-end
Semiconductor tariffs under consideration
August 1st remains key date for broader tariff implementation
Small nations may face 10%+ blanket tariffs
Fed Rate Cut Probabilities
September cut odds: ~50% (down from higher levels)
Full-year cuts: Traders pricing just under 2 cuts
Fed's Logan: Prefers holding rates steady longer
Final Thoughts
The US is seeing encouraging disinflation with PPI coming in well below expectations across all measures, giving the Fed more breathing room and weakening the dollar. Meanwhile, the UK's inflation surprise to the upside has traders scaling back BoE easing bets and strengthening the pound.
The earnings season is off to a strong start with financials absolutely crushing it - Goldman's trading revenues hit records, and the sector is benefiting from higher rates and increased market volatility. This is providing a nice offset to ongoing tariff concerns.
Trump's tariff timeline is becoming clearer, with pharma and semiconductors in the crosshairs before the August 1st broader implementation. Markets seem to be digesting this news relatively well, suggesting either adaptation or hope for negotiated solutions.
The Fed's path forward remains data-dependent, but today's PPI print certainly helps the case for eventual easing. However, with tariff uncertainty and still-elevated services inflation, they're likely to remain patient. Watch for tomorrow's retail sales and industrial production data to confirm the economic trajectory.
Bottom line: Solid earnings are providing market support, but the macro picture remains complex with inflation, trade policy, and Fed decisions all in flux.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.
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Harry