Navigating Trade Deals and Earnings: Insights for a Busy Week Ahead

Trump says he's struck his biggest trade deal yet, avoiding a trade war with the EU by setting a 15% tariff on European goods.

As part of the agreement, Europe will buy $750 billion in US energy and invest another $600 billion in the American economy.

Now earnings season is kicking into full gear this week for the magnificent.

And companies report their second quarter results.

We'll have to wait a little longer for our Nvidia watch party.

The AI giant itself is bing toward the $200 mark.

We'll also get a look at the financials of UnitedHealth, a frequent down laggard, along with a read on the consumer from Mastercard and Visa and UPS reporting tomorrow morning.

Join me as we kick off a busy trading week is Chris Versace, CEO of Thematic Research.

Chris, good morning.

Thank you so much for joining us.

Well, the new US EU trade deal averts a major escalation, but it does also come at a cost.

It is also a big week for earnings.

So how do you anticipate trade deals as well as earnings moving the market this week?

Well, Army, I think what folks have to realize is that coming into the week, you know, we've had some nice moves, uh, you know, a continuous stream of new records for the S&P 500, the NASDAQ Composite, and from a technical perspective, both of those market indicators are oversold, sorry, overbought, however, however.

I think what we've seen where companies have been delivering beat and raise guidance as well as the removal of some degree of uncertainty given the flow of trade deals, we're likely to see the market push higher, but I think Remy folks have to start being a little bit mindful that, you know, maybe, maybe.

There's some complacency creeping into the market.

We can see the VIX, you know, 1516, fear and greed index knocking on the door of extreme greed.

That means we have to be careful because we do have Fed Chair Powell coming later this week, as well as roughly 20% of the S&P 500 reporting this week alone.

Yeah, and Chris, as you mentioned, it is the final week of July and we do get their two-day meeting that is the central bank of the Fed.

So what are you watching from the Fed and also from Jay Powell, especially as Trump pressures the central bank.

Well, you know, as I just mentioned, the market's oversold, sorry, overbought.

I don't know why I keep, you know, messing that up, but overbought at current levels.

There's a lot of expectation in the market.

My concern is that even though Trump seems to be pressuring Powell to deliver a rate cut, you know, at some point in the next couple of months, given the data that we saw in the Flash PMI report last week, you know, the economy chugging along.

GDP roughly around a 2.3% print.

Employment accelerating in the month of July, but inflation ticking higher as the impact of tariffs continue to be felt, and that that suggests that Powell may not deliver the dovish comments that the market is hoping for.

So I'm kind of going into the policy decision and really Powell's press conference a little more careful than we normally would be.

Yeah, and speaking of which, at the end of the week, we do kick off the month of August since it is August 1st.

It means we'll be getting the July job report here in the US and also August 1st is a trade deal deadline.

So how are you going into Friday morning?

Well, we're going to be reading the tea leaves of all the jobs data that we get, you know, leading up to that report.

We will get ADP's employment report.

We'll get a couple others as well, so we'll be fine tuning expectations, but the indication right now, Remy, is that that should be a good jobs report.

And if it surprises to the upside, it would be another reason why the Fed can slow walk its way to rate cuts, but you about August 1st and trade deadlines, I think that with the US EU deal happening with the Japan deal happening last week and the news that, you know, the China tariff relationship is likely to be extended 90 days, we'll see how that plays out this week.

But if that happens, I think by and large August 1st from a trade deal perspective is going to come and go, and it really won't be a blip for the market.

And Chris, finally, before I let you go, the S&P 500 had 5 straight record closes last week, so we will be keeping a close eye on technical levels here right now we are looking at the index right below the 6400 level at a time when we're hearing about very lofty price targets for year end.

So what levels are you watching near term?

Well, like I said, Remy, in the very near term, meaning the next couple of days, when we've got an overbought market, just look at the RSI levels, we've got, um, you know, very high levels of complacency in the market, a greedy market.

You know, that's the time, as Warren Buffett would say, it's time to be a little careful, and that's exactly what we're doing.

We want to get through the balance of the current earnings season to see where those second half earnings expectations for the S&P 500 go.

They've come down considerably since the end of March to the extent we start to see them moving higher, then we can start talking about an S&P 500 of 6600, 6700.

So I think we'll have a better sense of that in the next two weeks.

OK, Chris, always great kicking off the trading weekly for you.

Thank you so much for joining us with your insights and your perspective.

Thanks, Remy.