• A China deal!  (and UK, Saudi, Qatar, UAE sorta)

• Positioning was bearish

• Earnings keep accelerating

• No deal for Europe?

• Event-driven shock or cyclical downturn?

• Inflation keeps cooling, but we might see an uptick in the back half of the year

• Quick Hits

• Where did all the crypto money go?

• Chart Crime of the week

We have recently noted how the market was powering higher despite the lack of real progress on the tariff front.  The other market dynamics all pointed to strength.  Earnings were (and still are) accelerating higher.  Economic data had inflected better (not hearing as much about the bad “soft data”).  This includes inflation still moving lower (so much for the stagflation argument).  Investor sentiment was still pretty sour…be it qualitatively (extreme levels of Bearishness from Retail investors) or quantitatively (hedge funds and quant funds had degrossed (sold) right at the bottom).  Geopolitics have moved to the backburner, as well.  This includes, Israel, (the) Ukraine, and Taiwan.  Even the flare up in Kashmir went away as quickly as it appeared.  All this market was missing was a small trade deal to prove that Trump really was moving forward.  The market got what it wanted with the deal cut with the United Kingdom.  Even though this was the lowest hanging fruit possible (we have a trade surplus with our longest running ally, after all), it was a positive sign.  But then came the deal with China.  While it is still just a “pause” at this point, we do not think anybody expected any real progress other than some glad-handing at the meet-up in Switzerland.  In fact, Treasury Secretary Bessent had indicated that the real villain in all this trade remaking was China.  Then again, Trump always says he personally likes communist leader Xi.  Of course, Trump seized on the positive momentum and announced deals with Saudi, Qatar, and the UAE.    These are not fully structured deals (none of them are, of course).  But they are planned investments akin to coercing the global Tech giants to reshore more manufacturing (and Pharma, too).  He also announced that many of the semiconductor chip export curbs would be lifted or retooled (meaning Tech can sell to the aforementioned countries that also play a pivotal role in keeping a lid on gasoline prices).

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