Country Music Television just went full Budweiser after pulling the singer Jason Aldean’s “Try That in a Small Town,” which makes reference to the right to self-defense and firearms.

CMT aired the video for a few days before removing it last Monday, sparking backlash over censorship.

Critics of the video also pointed to the fact that part of Aldean’s video was shot outside a courthouse where a black teenager was allegedly lynched around 100 years ago.

“In the past 24 hours I have been accused of releasing a pro-lynching song (a song that has been out since May) and was subject to the comparison that I (direct quote) was not too pleased with the nationwide BLM protests. These references are not only meritless, but dangerous,” said Aldean in a Twitter post.

In the past 24 hours I have been accused of releasing a pro-lynching song (a song that has been out since May) and was subject to the comparison that I (direct quote) was not too pleased with the nationwide BLM protests. These references are not only meritless, but dangerous.…

— Jason Aldean (@Jason_Aldean) July 18, 2023

Aldean says the lyrics also refer to his childhood, when “we took care of our neighbors, regardless of differences of background or belief,” because “they were our neighbors, and that was above any differences.”

“My political views have never been something I’ve hidden from, and I know that a lot of us in this country don’t agree on how we get back to a sense of normalcy where we go at least a day without a headline that keeps us up at night. But the desire for it to—that’s what this song is about,” the statement continues.

The production company behind Aldean’s video said that the courthouse was nothing more than a “popular filming location outside of Nashville” which has been used for a number of other productions and shows.

“Any alternative narrative suggesting the music video’s location decision is false,” said the company, adding that Aldean had nothing to do with picking the location.

“I’ve seen a lot of stuff suggesting I’m this, suggesting I’m that,” Aldean told concertgoers recently. “Here’s one thing I feel, I feel everybody’s entitled to their opinion. You can think something all you want to, it doesn’t mean it’s true. What I am is a proud American … I love our country. I want to see it restored to what it once was before all this [expletive] started happening to us. I love my country, I love my family and I will do anything to protect that.”

“CMT just murdered their own brand and for what? Because a bunch of leftist[s] who don’t even listen to country music complained about Jason Aldean’s music video? Let’s give CMT the Target and Disney treatment. Hold the line!” wrote influencer Charlie Kirk on Twitter.

CMT just murdered their own brand and for what? Because a bunch of leftist who don’t even listen to country music complained about Jason Aldean’s music video?

Let’s give CMT the Target and Disney treatment.

Hold the line!

— Charlie Kirk (@charliekirk11) July 19, 2023

 Meanwhile Rep. Ronnie Jackson (R-TX) tweeted: “CMT has gone WOKE! Do they know who their viewers are? Guess not!! I’ll tell you this … I’ll NEVER watch CMT ever again. BOYCOTT CMT!!”

Authored by Jack Phillips via The Epoch Times (emphasis ours),

FBI employees and agents inappropriately searched foreign surveillance data for the last names of a state senator and a U.S. senator, said a court opinion that was released Friday.

The newly disclosed finding is included in the release of a 117-page order (pdf) declassified on July 16 by the federal judiciary’s foreign intelligence surveillance court in April—a rare move as that court generally issues rulings in secret.

In the court document, issued by Judge Rudolph Contreras, an unnamed FBI analyst in June 2022 conducted four separate searches of information that was collected via the warrantless surveillance program under the Foreign Intelligence Surveillance Act (FISA) “using the last names of a U.S. Senator and a state senator.” Their names were not disclosed in the unsealed ruling.

It also showed the FBI analyst possessed information that showed the lawmakers were being targeted by a foreign intelligence operation. However, according to the court filing, the Justice Department’s national security division reviewed their searches and found they didn’t meet the FBI’s internal standards.

Another FBI employee improperly queried the Social Security number of a state judge who alleged civil rights violations by a municipal chief of police, according to the opinion of the chief judge of the Foreign Intelligence Surveillance Court. The judge’s Social Security number was accessed in October of last year, but the agency also found the analyst didn’t have enough evidence to be authorized to carry out the search.

In the case of the state judge, an FBI specialist searched a database using the Social Security number after the judge “had complained to FBI about alleged civil rights violations perpetrated by a municipal chief of police,” said the filing.

Other than names, the surveillance court opinion also did not disclose the states or party affiliations of the individuals whose names were searched by FBI staff. Few other details were provided, including that foreign entities were targeting the aforementioned officials.

The unnamed U.S. senator has been notified of the search. The state senator and state judge have not, an FBI official told news outlets.

Other Details

The total number of searches for Americans appears to have dropped, the filing said. Over a year-long period ending in March, the FBI ran about 180,000 searches of U.S. citizens and other American entities, the court said.

That’s well below the roughly 2 million searches reported just between December 2020 and February 2021, something the foreign surveillance judge wrote “should indicate less intrusion into the private communications of U.S. persons.”

But despite the FBI’s and Mr. Contreras’ assurances, the improper searches of the Section 702 surveillance collection program could imperil a push by the White House to have the tool reauthorized before it is scheduled to expire by the end of this year.

Read more here…

The tornado that caused extensive damage at a large Pfizer pharmaceutical plant in North Carolina last Wednesday appears to have disrupted drug supply chains. 

In an email to customers, Pfizer explained sixty-five different formats and formulations of products, including the anesthetic lidocaine; the painkiller morphine; and other essential hospital medicines, “may experience continued or new supply disruptions in the near-term,” according to Bloomberg. The email provides a list of several different dosages or formulations of at least 32 drugs, plus two sizes of empty glass vials. The Food and Drug Administration said forty-six of the products were already in short supply. 

On Friday, FDA Administration Commissioner Robert Califf said he “does not expect there to be any immediate significant impacts on supply given the products are currently at hospitals and in the distribution system.” But the newly released letter from New York-based Pfizer appears to show otherwise. 

The Rocky Mount Pfizer plant makes up about 8% of all injectable drugs used in US hospitals. The plant sits on 250 acres with more than 1.4 million square feet of manufacturing space. 

Pfizer’s initial assessment of the plant found the tornado primarily damaged the warehouse facility, which stored raw materials, packaging supplies, and finished medicines. It said there appears to be no significant damage to the drug manufacturing area of the plant. 

Before the tornado hit the plant, there were drug shortages across the US, including ADHD drugs, antibiotics, and cancer treatments. Recall this note we penned in June, “Drug And Food Shortages Are Here, And They Will Get A Lot Worse.” 

Erin Fox, who runs the University of Utah’s drug information service, told Bloomberg that Pfizer’s large market share for certain drugs raised concerns that the drug shortage could worsen. 

However, Fox said hospitals wouldn’t see immediate effect after the Rocky Mount weather-related incident because drugs were already stockpiled at hospitals, wholesalers, and distribution centers. 

Russia’s Foreign Ministry has denounced “an act of international terrorism” by Ukrainian forces after a drone attack on Moscow which damaged multiple buildings in the city’s center.

The defense ministry had described that “electronic warfare systems jammed two Ukrainian drones, causing them to crash,” and that no one was hurt, however with images showing significant damage to at least one non-residential building. 

TASS observed that UAV fragments were also found in a center district not far from the Defense Ministry headquarters, with the ministry further calling it at “attempt by the Kiev regime to carry out a terrorist attack using two unmanned aerial vehicles” in the early hours of Monday morning.

“While the drone itself hit a non-residential building, several windows in residential buildings in the area were reportedly blown out by the blast wave,” state media reporting described. 

“The second drone apparently hit a high-rise building in southern Moscow which hosts the office of French home improvement chain Leroy Merlin,” the report detailed. The attack resulted in traffic halted and road closured in the area as emergency vehicles responded.

The company Leroy Merlin, located at one of the buildings which came under attack, has been accused of supplying the Russian military…

🚨 BREAKING: A Ukrainian kamikaze drone has attacked a civilian high-rise in Moscow.

The building contained a Leroy Merlin, the French equivalent of Home Depot.

The chain was recently accused of supplying the Russian army: a likely the motive for the attack. 🚨 pic.twitter.com/d1LtZyXujS

— Clint Ehrlich (@ClintEhrlich) July 24, 2023

While Moscow has been subject of small drone attack at sporadic points throughout the Ukraine war, such attacks on the capital have remained rare.

Andriy Yusov, spokesperson for Ukraine’s military intelligence, in a rare moment of Kiev taking responsibility for an operation deep inside Russian territory said the drones “testify to the fact that the Putin regime is unable to fully control the sky even for the protection of the most important facilities.”

“Obviously, this situation will continue and increase in scale,” Yusov added.

Belgorod and other border regions, as well as Crimea, have continued to be subject of much more frequent attack by Ukrainian forces.

Smoke billows from business building in Moscow after drone attack#Moscow #MoscowDroneAttack #Russia pic.twitter.com/EHIELaND4j

— Ruptly (@Ruptly) July 24, 2023

Russian Security Council Deputy Chairman Dmitry Medvedev on Monday called for severe retaliation for the attempted Moscow attack, saying the military should select “non-standard targets” to exact revenge.

A well-known Ukrainian presidential adviser to Zelensky is meanwhile celebrating the drone attacks…

A boomerang always returns to its throwers. Even if they are convinced of their own impunity, hiding under the cover of anonymity in the safe houses of special organizations thousands of kilometers away from the active front. Justice has long arms. What do the mysterious “drones”…

— Михайло Подоляк (@Podolyak_M) July 24, 2023

He angrily denounced what he called the “Banderite bastards” who are increasingly “choosing peaceful civilian targets for their despicable attacks.”

“We also need to select non-standard targets for our strikes, not just storage sites, energy hubs and oil bases. There are other places where nobody would be expecting us and where strikes would have a widely felt impact,” Medvedev added.

Last week we presciently discussed the somewhat dystopian outlook for an iris-scanning ‘World ID’ project to identify every human online:

“Something like World ID will eventually exist, meaning that you will need to verify [you are human] on the internet, whether you like it or not,” WorldCoin CEO Alex Blania said.

Over the weekend that threat (or promise) became a reality as Worldcoin, a project partly created by OpenAI CEO Sam Altman, launched the project’s ecosystem token on July 24.

The project provides a decentralized and private way to verify human identity online amid the rise of artificial intelligence technologies.

As CoinTelegraph.com’s Exra Ruguerra reports, the project has continuously split opinions from within the crypto space to Silicon Valley, with some praising the project’s ambition and others calling it creepy and dystopian. Despite these comments, the project continues to pursue its goal of solving income inequality and online identity authentication.

It’s time. 24.7.23 pic.twitter.com/9oHW4DIMJX

— Worldcoin (@worldcoin) July 23, 2023

The project was first launched on March 14, along with a waitlist for its software development kit (SDK). According to its team, the World ID will be a global digital passport that users can store on their phones. The project also claims that the World ID will prove they are not robots without needing to provide personal identifying information to websites, such as their phone number. 

On May 8, the project released its gas-free crypto wallet for verified humans. This allowed users to take advantage of gas-free transfers by registering for a World ID, where they would be asked to provide a phone number or an iris scan.

According to the developers, the project does not store the data provided by the users. It generates a zero-knowledge proof to verify that the user is human without revealing the data used to create the proof.

Various crypto exchanges also announced that they will be listing the token on their trading platforms. Binance, Bybit, OKX, Gate and Huobi were some of the crypto exchange platforms that mentioned the listing of the token as it was launched.

#Binance will list @worldcoin $WLD.

👉 https://t.co/WmsuRY8YJc pic.twitter.com/7Bja3w7kxF

— Binance (@binance) July 24, 2023

Meanwhile, blockchain security firm PeckShield has detected that a fake Worldcoin token has already performed a rug pull. 

While many expressed support for the project, various community members have also opposed the idea. Former Twitter CEO and Bitcoin supporter Jack Dorsey tweeted that “at no time should a corporation or state own any part of the global financial system.“

The project also recorded over 2 million sign-ups to its World ID project on July 14. During its token launch, Altman tweeted his hopes of bringing this number to 2 billion.

Sam Altman hopes to bring the number of World ID users to 2 billion. Source: Twitter

On May 25, the project secured $115 million to support its decentralized identification system and crypto wallet, the World App. Its team took advantage of the rise of artificial intelligence technology to pitch a “decentralized, privacy-preserving solution” that will protect humanity online and allow people to take control of their identities. 

At the time of writing, WLD token was up over 50% at $2.50, according to data from Coingecko.

Futures rose as we enter a very heavy macro and earnings week highlighted by the Fed, ECB, BOJ, global PMIs and GDPs, US PCE, as well as earnings by GOOGL, MSFT and META. Global bond yields are lower after sharp declines in manufacturing and services gauges across Europe fanned concerns about economic growth. At 7:45am ET, S&P futures were 0.2% higher at 4,572 while Nasdasq 100 futures were up 0.3%. The USD was higher as cable slumped after a big miss in UK PMIs, commodities were in the green with gold, iron ore and oil prices all climbing. Today’s macro focus will be the US PMIs release (consensus expects 46.2 on mfg and 54.0 in services). Keep an eye on the price/inflation discussion in the detailed PMI report.

In premarket trading, megcap tech stocks including Nvida and Microsoft also rose. The Nasdaq special rebalancing is unlikely to solve the problem of high market concentration, and index will remain too concentrated to be considered an actively managed diversified fund, according to Goldman Sachs strategists. Mattel rose as much as much as 2.5% in premarket trading on Monday after Barbie became the top-grossing picture in US and Canadian cinemas, taking in $155 million in ticket sales. Warner Bros. Discovery the parent of the Hollywood studio that produced the movie, also advanced. Here are some other notable premarket movers:

• American Express (AXP US) falls as much as 2% in US premarket trading as Piper Sandler downgrades the global payments company to underweight from neutral after its second- quarter revenue missed estimates on Friday. The broker expects further headwinds to revenue growth given the re-start of federal student debt repayments in its core customer base and a slowdown in network volume.
• Chevron edges higher, rising as much as 0.5% in premarket trading on Monday, after the oil giant reported better-than-expected earnings as output in the Permian Basin soared to a record. Analysts note that Chief Financial Officer Pierre Breber’s retirement was a surprise, but it should not cause much investor concern as the transition seems orderly.
• Gilead Sciences shares drop 3% in premarket trading after the biopharmaceutical company said the Phase 3 Enhance study evaluating magrolimab in combination with azacitidine in higher-risk myelodysplastic syndromes (MDS) had been halted. Cantor noted the move dealt “another hit” to the firm’s onocology business.
• Lam Research Corp. (LRCX) shares are up 1% after Stifel upgraded the semiconductor capital equipment company to buy from hold.
• Shopify advances (SHOP) 2.6% trading after MoffettNathanson raises the cloud-based commerce platform to outperform from market perform on the expectation that it will gain increasing traction with enterprise customers.
• Quince Therapeutics (QNCX) gains 13% in premarket trading Monday after the company agreed to acquire biotech company EryDel SpA in a stock-for-stock upfront exchange and potential downstream milestone cash payments.
• Tesla drops 2% in premarket trading as UBS cuts its rating on the electric carmaker to neutral from buy, based on limited further upside with strong execution seemingly priced in.
• Twilio shares dropped 3.1% in US premarket trading after cloud computing platform operator was downgraded to underperform from sector perform at RBC Capital Markets, with the broker saying the shares reflect “too much optimism” with an unfavorable risk-reward.
• Zions Bancorp (ZION) falls 1.4% after being downgraded to neutral from overweight at JPMorgan, which says the recent bounce in the stock corrects a previous mispricing and leaves the lender looking fairly valued.
• ZoomInfo Technologies drops 5% in premarket trading as RBC flags concerns over GenAI and competition for the software company, and downgrades to sector perform.

Investors have been wary of making big equity at the start of a week packed with major central bank policy decisions and corporate earnings as some 48% of the S&P reports. In Europe, advance readings of the Purchasing Managers’ Indexes showed the private-sector economy contracted more than anticipated in July in the euro area and slowed sharply in Britain.

The data highlights the quandary for policy-setters, with traders positioning for the Federal Reserve and the European Central Bank to raise interest rates this week and to signal whether more hikes are likely after record tightening campaigns. Meanwhile, equity markets are looking into their busiest earnings week this season, with more than 500 major companies worldwide due to report quarterly results, including 48% of the S&P with such megacaps as Alphabet, and Meta Platforms on deck. The next few days will be crucial for investors, who will be watching to see if slowing economic momentum shows up on profit margins.

“Markets have entered a phase of anxious waiting, with two factors coming into play, central banks and earnings,” said Jeanne Asseraf-Bitton, head of research and strategy at BFT IM. “I’m not sure there will be a lot of surprises coming from the central banks so it’s really earnings that will be key. Valuations are expensive so earnings need to hold, margins need to hold.”

Later this week, the Bank of Japan is expected to stick to ultra-loose policy settings at its Friday meeting. The yen strengthened, however, with officials expected to consider sharply increasing their inflation forecast for this fiscal year.

In Europe, the Stoxx 600 index traded modestly firmer, though Spanish equities underperformed after an inconclusive outcome in the election on Sunday. Some European corporate results highlighted weakening consumer demand. Among movers, Philips plunged as much as 7.7% as analysts said the Dutch medical tech firm’s beat on 2Q earnings and FY guidance were expected, while a continued drop in order intake may put pressure on sales growth. Ryanair Holdings Plc fell after lowering its traffic prediction. Here are some other notable European movers:

• Ocado rallies as much as 12% to the highest since Jan. 18 after robotics firm AutoStore agreed to pay the UK company £200 million to settle a dispute over patent infringements regarding automated warehouses
• Vodafone rises as much as 5.1% after the telecom operator returned to positive service revenue growth in European markets following quarters of disappointment that had sent its shares to lowest levels in 25 years
• Julius Baer shares jump as much as 8.7%, the most since March, as analysts said better-than-expected inflows of client funds in the first half should reassure investors
• SGS shares rise as much as 4.1%, the most since March 2022, after the Swiss industrial inspection company’s strong organic growth triggered a guidance increase, says Vontobel
• Orsted shares rise as much as 3.1% after the Danish wind-farm operator agreed to sell its remaining 25% stake in the London Array offshore farm for £717 million
• Plastic Omnium shares rise as much as 8.2%, the most since March 2022, after the French auto supplier reported first-half results that beat analyst estimates
• Cranswick rises as much as 2.9%, taking the stock to its highest since April 2022, after the meat producer said its full-year results are likely to come in ahead of previous expectations
• Bavarian Nordic falls as much as 29%, the most since 2017, after the Danish vaccines maker said it would shelve plans to develop a vaccine for respiratory syncytial virus (RSV)
• Ryanair shares drop as much as 5.4%, the most since March 15, after the low-cost airline provided a cautious outlook as consumers are faced with higher mortgage bills and price inflation
• Meyer Burger shares tumble as much as 10%, the most intraday since May. The Swiss solar-equipment manufacturer’s first-half results were characterized by price pressures, which had a significant impact on Ebitda
• S4 Capital slumps as much as 26%, the most in about a year, after the digital advertising agency issues what Jefferies calls a “frustrating” guidance downgrade

Earlier, the MSCI Asia Pacific Index nudged modestly higher as equities regain composure following last week’s selloff. Japanese stocks lead winners with Nikkei about 1.4% stronger; it was underpinned after reports on Friday that the BoJ is leaning towards keeping its yield curve control policy unchanged at the upcoming meeting and sees little need to act on YCC for now. Hang Seng and Shanghai Comp were mixed with Hong Kong pressured by weakness in the property sector and tech, while the mainland was indecisive as the NDRC’s notice to promote high-quality development of private investment counterbalanced the reduced hopes for aggressive stimulus from China’s politburo meeting where the top officials will review the economic performance for H1. Australia’s ASX 200 was rangebound as outperformance in the energy sector was offset by losses in mining names and with sentiment also clouded after Australian flash PMIs all printed in contraction territory. Indian stocks declined for a second consecutive session, a first for this month, after hitting record after hitting record after relentless record, as earnings of heavyweight companies disappoint and due to a late sell off in ITC. The S&P BSE Sensex fell 0.5% to 66,384.81 in Mumbai, while the NSE Nifty 50 Index declined 0.4%. Indian stocks underperformed the regional index MSCI Asia Pacific, which was little changed for the day.

Emerging-market stocks extended losses to a sixth day and most currencies slid amid a contraction in euro-area manufacturing and services and darkening gloom for Chinese stocks despite the country’s latest support pledge.

In FX, a gauge of the dollar traded in a narrow range after last week’s 1.1% jump, its biggest gain since February. EUR/USD falls 0.5% to day’s low of 1.1066, while EUR/GBP slips 0.4% to 0.8619 low. The pound fell and gilts extended a rally after S&P Global Market Intelligence said its index tracking sentiment among purchasing managers fell to 50.7 in July. That compares to a consensus estimate of 52.3. GBP/USD slips 0.2% to 1.2835, trimming earlier fall of 0.4%. USD/JPY down 0.5% to 141 after climbing for four days. Trading in China’s yuan was muted even after the country’s leaders signaled they will ease property policies.

In rates, treasury yields were lower by as much as 3.5bps on the 5-year, trailing steeper declines for UK and euro-zone yields spurred by weaker-than-expected PMI readings; the yield on German 10-year notes slid as much as seven basis points. UK yields fell 8 basis points, while Treasury yields also edged lower. Yields remain inside last week’s ranges, the 10-TSY yield was around 3.80%, holding above 50-day average level breached last week for the first time since May; Treasury curve flattened last week as swaps fully priced in a Fed rate hike on July 26 while auctions of 20-year bonds and 10-year TIPS drew strong demand (the inverted 2s10s curve is slightly flatter on the day at around -103bp; Thursday’s low -105bp was deepest inversion since July 6). The yield on Germany’s 10-year debt slipped as much as 7bps to 2.40% after the country’s manufacturing and services data flashed a warning sign over the health of the economy. Today’s $42BN 2-year note auction at 1pm New York time will draw the highest yield since 2007, with WI trading around 4.77%; cycle also includes $43b 5-year notes Tuesday and $35b 7-year notes Thursday, with a gap for the Fed decision. S&P Global’s July preliminary US PMIs follow during US morning. 2-year sector underperforms ahead of Treasury auction cycle beginning Monday with sale of that tenor. Fed swaps continue to fully price in a 25bp rate hike for this week’s policy meeting, with decision to be announced Wednesday at 2pm in Washington, and about a third of an additional quarter-point hike this year. Dollar IG issuance slate is blank so far, though syndicate desks expect $20b-$25b of supply this week. Australian curve a touch steeper with 3-year yield down 2bps. JGB futures trim opening gains but remain higher after Friday’s sharp rally

In commodities, crude futures advanced with WTI rising 0.4% to trade near $77.40. Spot gold is up 0.2%.

Bitcoin spent the first half of the morning with a negative bias but relatively steady; however, more recently we have seen a bout of pressure in the space with Bitcoin moving to just below its 50-DMA at USD 29.02k. Currently, BTC is holding just above the level. Binance says it will list Worldcoin (WDC), a Cryptocurrency project founded by OpenAI CEO Sam Altman.

It’s an extremely busy week but it starts off rather modestly with just the Chicago Fed PMI and US S&P prints n deck.

Market Snapshot

• S&P 500 futures up 0.2% to 4,574.25
• MXAP little changed at 165.95
• MXAPJ down 0.5% to 522.66
• Nikkei up 1.2% to 32,700.94
• Topix up 0.8% to 2,281.18
• Hang Seng Index down 2.1% to 18,668.15
• Shanghai Composite down 0.1% to 3,164.16
• Sensex little changed at 66,730.08
• Australia S&P/ASX 200 down 0.1% to 7,306.41
• Kospi up 0.7% to 2,628.53
• STOXX Europe 600 little changed at 465.63
• German 10Y yield little changed at 2.42%
• Euro down 0.4% to $1.108
• Brent Futures down 0.2% to $80.87/bbl
• Gold spot down 0.0% to $1,961.36
• U.S. Dollar Index up 0.24% to 101.32

Top Overnight News

• Chinese regulators met with global investors on Friday, according to people familiar with the matter, stepping up the government’s bid to boost market confidence as the country’s economic recovery loses steam. BBG
• Eurozone inflation cools further – “the rate of input cost inflation fell again in July, down for a tenth straight month to its lowest since November 2020 and dropping further below the survey’s long-run average. Average prices charged for goods and services meanwhile rose at the slowest rate for 29 months”. S&P
• Europe’s flash PMIs fall short of expectations for July, with Manufacturing coming in at 42.7 (down from 43.4 in June and below the Street’s 43.5 forecast) and Services at 51.1 (down from 52 in June and below the Street’s 51.6 forecast), as demand faltered further (although inflation continued to cool). S&P
• Spain’s election fails to deliver a clear winner as PM Sanchez outperforms expectations, meaning weeks or even months of messy negotiations to form the next gov’t (it’s even possible the country may need to hold another round of elections). FT
• Ukraine’s Zelensky insists his country’s counteroffensive will accelerate in the near-term as he pushes back against critics who claim the operation is taking too long. FT
• Ukraine has already recaptured about 50% of the territory initially seized by Russia, but the current counteroffensive still has a lot more to play out. RTRS
• Sen. Chris Coons (D-Del.) warned on Friday that a government shutdown appears likely, as Congress faces down a September deadline to pass its annual spending bills. The Hill
• US sees prime-age worker participation jump to a multi-decade high, a trend that’s helping to cool tight labor markets. WSJ
• Apple is asking suppliers to produce about 85 million units of the iPhone 15 this year, roughly in line with the year before despite tumult in the global economy and a projected decline in the smartphone market, according to people familiar. Even so, it’ll probably see an increase in revenue overall because Apple is considering raising the price for Pro models. BBG
• Investors have been surprised at the resilience of equity valuations in recent months despite higher real rates. S&P 500 valuations traded in lockstep with real yields between 2020 and 2022. The NTM P/E multiple in 2020 expanded by 25% alongside a 120 bp decline in the real 10-year UST yield, and then contracted by 20% in 2022 alongside a 260 bp rise in the real yield. However, this relationship has broken down since September 2022, with the S&P 500 P/E expanding by 28% despite real yields that are roughly unchanged on net. Since the start of April, the P/E multiple has expanded from 18x to 20x alongside yields that have risen by nearly 34bp. GIR

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly positive but with gains capped ahead of upcoming key risk events including the FOMC, ECB  and BoJ monetary policy meetings, as well as several big tech earnings results. ASX 200 was rangebound as outperformance in the energy sector was offset by losses in mining names and with sentiment also clouded after Australian flash PMIs all printed in contraction territory. Nikkei 225 was underpinned after reports on Friday that the BoJ is leaning towards keeping its yield curve control policy unchanged at the upcoming meeting and sees little need to act on YCC for now. Hang Seng and Shanghai Comp were mixed with Hong Kong pressured by weakness in the property sector and tech, while the mainland was indecisive as the NDRC’s notice to promote high-quality development of private investment counterbalanced the reduced hopes for aggressive stimulus from China’s politburo meeting where the top officials will review the economic performance for H1.

Top Asian News

• China called for better financial support for private investment and is seeking private investment in thousands of projects worth CNY 3.2tln, while the state planner issued a notice to promote high-quality development of private investment. NDRC said it is to spur the activity of private investment and encourage private investment in some projects of transport, water and clean energy, while it will encourage private investment in new infrastructure and modern agriculture. NDRC said it will give 20 cities funding support each year with high private investment growth, as well as guide and strengthen financing support for private-invested projects and will encourage private investment projects to issue real estate investment trusts in the infrastructure sector, according to Bloomberg and Reuters.
• China CSRC Vice Chair Fang Xinghai led a meeting with global funds which included representatives from HongShan, Temasek, GIC and Warburg Pincus, according to Bloomberg.
• China’s top diplomat Wang Yi proposed high-level official talks among China, Japan and South Korea in a meeting with the Japanese Foreign Minister this month, according to Kyodo.
• UK Foreign Secretary Cleverly postponed a planned trip to Beijing this month, according to Bloomberg.
• Hong Kong strengthened radiation inspections on seafood imports from Japan, according to Kyodo.
• China’s MOFCOM undertook a meeting with semiconductor names to discuss the impact of US/allies sanctions on the domestic semiconductor industry, via Caixin; Cos called for the gov’t to take measures to counter the sanctions.
• BoJ is said to mull a large increase in its 2023 inflation outlook, reportedly mulling raising FY23 forecast to around 2.5%, according Bloomberg sources. Reminder, Friday’s Reuters sources included reports that the BoJ is expected to revise up core inflation forecasts for FY23, via source; though, FY24 & FY25 expected to be largely in-line with current projections.

European bourses are mixed with Flash PMIs flagging increased recession risks, Euro Stoxx 50 -0.2%; Spain lags following a political stalemate in Sunday’s elections, IBEX 35 -0.7%. Sectors are also mixed but with a negative tilt given the above. Telecom names outperform after strong Vodafone results while Travel & Leisure lags given PMIs, Ryanair earnings and the European heatwave causing disruptions. Stateside, futures are modestly firmer and picked up to incremental highs following the Politburo readout, ES +0.2%; today’s docket is headlined by PMIs alongside a front-loaded supply schedule given Wednesday’s FOMC. NQ in-fitting ahead of the special rebalancing taking place.

Top European News

• UK MPs urge for changes to tax relief to boost the country’s regional start-ups, according to FT.
• UK Treasury will summon the heads of Britain’s largest banks for a meeting on new free-speech rules and to explain how they intend to ensure customers are not “de-banked” for their political views after former UKIP leader Farage’s account was closed by Coutts, according to FT.
• None of the individual parties, nor the left or right blocs were able to secure a majority in the Spanish parliamentary election in which the conservative People’s Party won 136 seats of the 350-seat parliament and PM Sanchez’s socialists PSOE was in second place with 122 seats, while far-right Vox was third with 33 seats and left-wing Sumar won 31 seats, according to Reuters.
• Bank of Italy is reportedly to propose Cipollone as the candidate to replace Panetta as an ECB executive board member, via FT citing sources.
• Greece’s Emergency Communications Service issued evacuation orders for part of Corfu due to wildfires, according to Sky News.

FX

• Euro and Sterling undermined by weak PMIs and Buck benefits, EUR/USD retreats from just under 1.1150 to sub-1.1070 and Cable from circa 1.2883 towards 1.2800, while DXY pops from 100.880 to 101.410.
• Kiwi tops 0.6200 vs Greenback after mixed NZ trade data as AUD/NZD cross reverses through 1.0900 and AUD/USD is capped around 0.6750 in wake of sub-50 Australian services and composite PMIs.
• Yen regroups after sharp slide against Dollar amidst reports that the BoJ could raise FY 2023 inflation forecast markedly to 2.5%, USD/JPY towards base of 141.19-81 range.
• PBoC set USD/CNY mid-point at 7.1451 vs exp. 7.1795 (prev. 7.1456)
• Israel judicial compromise talks have collapsed according to N12 News.

Fixed Income

• Disappointing PMIs out of the Eurozone and UK give flagging debt futures a decent lift.
• Bunds top 134.01 marginally from a 132.97 bottom and Gilts rebound from 96.43 to 97.57 at best.
• T-note follows suit with a lag between 114-14/03 bounds ahead of US national activity index, prelim. PMIs and USD 42bln 2 year supply.

Commodities

• WTI and Brent futures have been edging higher after the release of the Chinese Politburo statement, with prices at session highs as the time of writing.
• Spot gold trades in tandem with the Dollar and trades on either side of its 100 DMA (USD 1,961.55/oz) with the 50DMA seen at USD 1,947.73/oz today, with traders keeping powder dry ahead of a risk-packed week.
• Base metals are mixed with little direction and minimal impetus thus far from the Chinese Politburo statement.
• IEA’s Executive Director Birol said they will revise global oil demand growth projections based on the economic growth prospects of China and some other countries, while he reiterated the view that oil markets are expected to tighten in H2.
• UAE Energy Minister said the role of OPEC+ is crucial in the energy market for producers and consumers, while OPEC+ actions are crucial for the stability of markets and what it is doing is adequate.

Geopolitics

• Belarusian President Lukashenko met with Russian President Putin and claimed that Wagner fighters want to invade Poland, according to euronews.
• Russian Defence Ministry said Ukraine launched an artillery strike on a group of journalists, according to Reuters.
• Moscow’s Komsomolsky Avenue near the Defence Ministry building was closed after drone fragments were found and two explosions were heard before the fragments were found, according to witnesses cited by Reuters. It was also reported that a drone hit a high-rise office building on Moscow’s Likhachev Street, according to TASS.
• Russia’s FSB says traces of explosives were detected at a vessel which was in transit from Turkey to Rostov, Russia for gain shipment, via Tass; in May, the vessel was in Kiliya, Ukraine. Subsequently, Kremlin says the discovery of explosive traces on Grain ship shows there is a danger and requires increased vigilance.
• US Secretary of State Blinken said Ukraine has taken back 50% of land Russia seized and noted that Ukraine’s counteroffensive against Russia is tough and will play out over several months, according to a CNN interview.
• North Korea fired “several” cruise missiles into the Yellow Sea early Saturday morning, according to the South Korean military cited by Japan Times.
• G7, EU, Australia, New Zealand and South Korea urged China to help stop North Korea from evading UN sanctions by using Chinese territorial waters, according to a letter.

US Event Calendar

• 08:30: June Chicago Fed Nat Activity Index, est. -0.16, prior -0.15
• 09:45: July S&P Global US Manufacturing PM, est. 46.2, prior 46.3
  • July S&P Global US Services PMI, est. 54.0, prior 54.4
  • July S&P Global US Composite PMI, est. 53.0, prior 53.2

DB’s Jim Reid concludes the overnight wrap

I spent most of the weekend downloading new weather apps until I found one with a forecast that suited me. First for my own golf on Saturday and then for the Ashes cricket. Alas, even as I found one that suggested a decent break in the rain for both, the eventual outcome was 4 hours of constant rain for my own round of golf on Saturday and a weekend of mostly heavy rain for the cricket which robbed England of a glorious chance to level the Ashes at 2-2. A through gritted teeth congratulations to our Australian readers for retaining the Ashes.

Hopefully I won’t be searching through financial markets this week until I find a forecast that fits my market view. As I’m sure you’re all fully aware, the big event will be the 11th, and possibly final, Fed hike of this cycle on Wednesday. However the ECB (Thursday) and BoJ (Friday) meetings are also big events. In a busy week, some other highlights include the global flash PMIs today, the ECB bank lending survey (tomorrow), US Q2 GDP (Thursday), US core PCE, US ECI alongside German and French CPI (all Friday).

In terms of earnings, big tech, oil majors and notable semiconductor firms will be the highlights with 165 S&P 500 and 200 Stoxx 600 companies reporting this week. Watch out for Microsoft, Alphabet (tomorrow) and Meta (Wednesday) after some slightly disappointing tech earnings last week.

Going through the three big central bank meetings and other highlights in more detail now. The Fed will almost certainly hike +25bps on Wednesday which we and the market expect to be the final hike in the cycle. A September hike is priced at 33%, albeit up from 22% the previous week. With two CPIs and payrolls to come before then there is plenty of incoming data to confirm or dispute that assumption. The key for this meeting is if and how much the Fed messaging changes given recent softer inflation data. Our economists in their preview here, suggest that there is little downside at this stage for the Fed to do anything other than maintain a hawkish bias even if they acknowledge the progress. You can listen and watch Matt Luzzetti and rates strategist Matt Raskin, alongside our US rates traders, today at 830am ET / 130pm London for their latest thoughts ahead of the FOMC. Register here. In additions, various heads of DB research teams and trading desks will have a call on broader global markets at 2pm London time tomorrow. Click here to register.

Over in Europe, the ECB will also decide on rates on Thursday. Our European economists expect the ECB to deliver a +25bps hike, taking the deposit rate to what they see as a terminal level of 3.75%, even if they see a hike in September as a genuine possibility. Their preview here looks at this potential hike in more detail. Aside from the ECB meeting, the Eurozone bank lending survey tomorrow is important in order to see how lending standards have moved from what are currently tight and restrictive levels. The Fed’s SLOOS equivalent is out next week and is also very important. These are key pillars in the recession argument and if they stay tight risks continue to build. A surprise big improvement will put a dent in the argument.

The BoJ will close out the busy week for central banks with a decision on Friday and will also release their quarterly Outlook Report. Our Chief Japan economist previews the meeting here and sees some policy revision as a c.40% probability event, but continues to expect no change in monetary stance as his baseline. For the Outlook Report, he expects the BoJ to increase the inflation outlook for FY2023 but lower it for FY 2024, continuing to emphasise downside risks, but with no changes to the growth outlook.

Turning to the week’s economic indicators, several important gauges will be out in the US. This includes the preliminary Q2 GDP reading on Thursday as well as the employment cost index and personal income and spending on Friday along with the all important monthly core PCE. Other data in focus will include Conference Board’s consumer confidence gauge (tomorrow), new home sales (Wednesday) and durable goods orders (Thursday).

Outside of the global flash PMIs today, a number of sentiment gauges will also be out in Europe, including the Ifo survey for Germany (tomorrow) and consumer confidence for France (Wednesday) and Germany (Thursday).

Germany and France publish preliminary CPI releases for July on Friday. Q2 GDP for France will be due that day as well. Our European economists’ inflation chartbook looks at the recent trends in data here, highlighting uncertainty regarding the speed of normalisation and persistence of the core measure as some of the key themes, emphasising ECB’s focus on stickiness of domestic services inflation. The team expects the headline gauge for the Eurozone to come in at 5.3% YoY (vs 5.5% YoY in June) and core at 5.4% (5.5%).

Corporate earnings releases will also compete for investors’ attention with key big tech players, oil majors, semiconductor companies as well as some large European corporates, including those in healthcare and luxury, all reporting this week. The highlight will be big US tech, with Microsoft, Alphabet (tomorrow) and Meta (Wednesday). The three companies make up almost $5tn in market cap, or c.12% of S&P 500, and have enjoyed YTD gains ranging from around 36% for Alphabet to c 145% for Meta, helping propel the Nasdaq 100 to +41% YTD. Elsewhere in tech, Samsung, NXP semiconductors, Intel, Lam Research and SK Hynix will be among the companies reporting. Our US equity analysts preview the earnings season for semiconductors here, cautioning on the AI optimism.

Another notable group to release earnings will be the big oil firms. The list of companies reporting includes Exxon and Chevron on Friday in the US as well as Shell, TotalEnergies on Thursday and Eni on Friday in Europe. Elsewhere, Rio Tinto, Anglo American and Vale will be on investors’ radars.

In terms of Consumer stocks, results are due from Coca-Cola, P&G, Mondelez and McDonald’s, among others. Automakers releasing earnings include GM and Ford in the US and Porsche, Mercedes-Benz and Volkswagen in Europe. Otherwise, Raytheon, GE and Honeywell will be among notable industrials firms reporting.

Other European corporates reporting include healthcare firms AstraZeneca, Roche and Sanofi as well as a number of key European luxury firms such as LVMH tomorrow. Nestle and BASF will also report. The earnings and data highlights are in the day-by-day calendar at the end as usual. It’s certainly a busy week all round.

Asian equity markets have started the week with what has become a common China versus the rest of the region divide. The Hang Seng (-1.47%) is sharply lower with the CSI (-0.28%) also losing ground while the Shanghai Composite (+0.08%) is struggling to gain traction as concerns over the Chinese economy continue to dampen sentiment. Elsewhere, the Nikkei (+1.23%) is seeing gains after a report late on Friday suggesting the BoJ see little urgency to change their YCC policy. The KOSPI (+0.73%) is also higher. S&P 500 (-0.03%) and NASDAQ 100 (+0.06%) future are fairly flat ahead of a bumper week of earnings.

Early morning data showed that the manufacturing sector in Japan continued to slightly contract in July as the Jibun bank’s preliminary manufacturing PMI declined to 49.4 from June’s reading of 49.8. Meanwhile, the flash estimate of the services PMI dipped slightly to 53.9 in July from 54.0 in June with the Composite PMI, indicative of the overall health of the economy, remaining unchanged at 52.1.

Elsewhere, service sector activity in Australia shrank for the first time since March as the Judo Bank’s flash estimate of services PMI came in at 48.0 in July down from 50.1 in June. In contrast, manufacturing activity recorded a softer contraction at 49.6 in July against 48.2 in June.

In political news, Spain appears to be heading for a hung parliament after national elections on Sunday showed no clear winner emerging in a nail-biting finish. As per media reports, incumbent Pedro Sánchez is slated to remain the Spanish prime minister as a consequence of inconclusive national election in which the center-right Popular Party (PP) won 136 seats against the ruling Socialist Workers party (PSOE’s) tally of 122. Both parties were short of the 176 seats needed to control the Spanish parliament but Sánchez’s coalition can potentially muster 172 seats with the right wing block only 170, after being slated to be able to get to 180 in the last polls before the blackout early last week. So at this stage it feels like a Sánchez controlled hung parliament with fresh elections later in the year perhaps.

Looking back on last week now. On Friday, markets struggled for direction, though the earlier better-than-expected economic data resulted in risk-on moves for the week as a whole. Expectations for an additional 25bp hike following this weeks’ 25bps near certain rise were dialled back marginally on Friday, down from 35% to 33%, but were up from 22% a week earlier. Expectations for rates for the December 2024 meeting were up +0.5bp on Friday to 4.035%, a gain of +10.7bps in weekly terms.

US 10yr Treasuries rallied by -1.4bps on Friday, leaving yields up +0.5bps week-on-week. Real yields and breakevens saw contrasting moves, with the 10yr real yield down -10.7bp on the week, while the 10yr breakeven rose +11.2bp to 2.35% (+3.2bps on Friday), its highest level since the SVB crisis. So the strengthening of the soft landing narrative has added to perceptions of firmer long-term inflation. In contrast, the interest-rate sensitive US 2yr yield gained +7.4bps week-on-week (-0.15bps on Friday). Resultingly, the 2s10s curve flattened -7.3bps over the course of the week (and -2.3bps on Friday) to -101.5bps. Every time it resteepens, the flattening trade seems to make a comeback pretty soon after at the moment.

While US markets priced in a greater chance of an additional rate hike after July last week, European markets reduced their expectations of another 25bps rate hike by the ECB largely after hawkish governor Knot suggested that September’s meeting wasn’t a foregone conclusion. Terminal rate pricing for December 2023 fell -4.2bps week-on-week (-1.4bps Friday), with 47bp of hikes now priced until year-end. German 10yr bund yields thus declined -1.8bps on Friday (-4.4bps in weekly terms) to 2.47%, with the rally more pronounced for the 2yr (-3.0bp on Friday and -11.7bp on the week).

In equities, the S&P 500 was near flat (+0.03%) on Friday after losses on Thursday and ended the week up +0.69%, closing off its second consecutive week of gains. A similar Friday performance for the Dow (+0.01%) saw the index rise for the 10th session in a row, only the fourth such run of gains since 2000. The megacap-driven tech underperformance continued on Friday, with the NASDAQ down -0.22% on the day and down -0.57% in weekly terms. The index was dragged down after underperformance from big tech players like Netflix (-2.27% on Friday and -3.26% week-on-week) and Tesla (-1.10% on Friday and -7.59% week-on-week) following worse-than-expected earnings. Over in Europe, the STOXX 600 gained +0.99% last week (and +0.32% on Friday).

Oil gained last week against a backdrop of tight supply, as Russia’s crude shipments fell to a six-month low in the four weeks to mid-July. Brent crude rose +1.50% week-on-week to $81.07/bbl (and +1.80% on Friday). WTI crude outperformed, up +2.19% in weekly terms to $77.07/bbl (and +1.90% on Friday). Both closed up for their fourth consecutive week.

Finally, geopolitical tensions resurfaced via the grain market. Wheat prices grappled with the collapse of the Black Sea grain deal and growing concern that Ukraine’s ability to substitute shipments via the Danube has been compromised by central Europe’s heatwave. There was some relief in the market on Friday after confirmation of the size of the world’s wheat stockpiles and other avenues for Ukraine grain exports, with grain prices falling -4.06%. However, this was not sufficient to erase earlier price increases. Overall, wheat prices were up +8.73% week-on-week.

By Peter Tchir of Academy Securities

Time may change me, but unlike David Bowie, we can trace time (or at least what went on over time). Let’s look at some weekly performance data for the Nasdaq 100 (NDX), the equal weighted Nasdaq 100 (NDXE), the Russell 2000 (RTY), the S&P 500 (SPX), and the equal weighted S&P 500 (SPW).

The Nasdaq has been leading the charge, but while it went up every week from late April until early June, the performance has been more inconsistent as of late. For the past 3 weeks, the Nasdaq 100 has provided the lowest return of the group (around 1.5% versus almost 4% for the Russell 2000).

What I find most interesting is the performance of the “equal weighted” indices. The Nasdaq equal weighted index outperformed the Nasdaq by 1.8% on the week (its largest weekly outperformance going back to at least the beginning of April). It was the 2nd week in a row (and 3 out of 4) where the equal weighted index did better. We are seeing a similar story line in the S&P 500, where the equal weighted index has also outperformed 3 out of the last 4 weeks after an extended period of underperformance.

Between the outperformance of the Russell 2000 and the equal weight indices, I’m optimistic that piling into the “compression” trade described last week is the correct trade.

Both the S&P 500 and the Nasdaq 100 indices were changed at Friday’s close. The index providers were attempting to reduce the concentration risk of the largest holdings. If you pulled up QQQ (a Nasdaq 100 ETF), MSFT and AAPL were both over 12% of the portfolio. While index providers likely had to buy in that proportion, it made it very difficult (for those trying to run a diversified portfolio) to hold the “appropriate” amount of the mega-caps. For example, the concentration risk of a handful of names at market weight could violate their bylaws. So, what should have happened (as I understand it) was that at the close of trading on Friday, there should have been a large selling of a handful of names offset by an equal amount of buying across the other names.

Most indexing companies (which focus on “tracking error”) presumably waited until near the end of the day on Friday to execute their trades. Some may have tried to add “alpha” by getting ahead of the re-weightings, but I suspect that this group is only a small portion of index funds. This strategy introduces tracking error, which causes more harm than any “incremental good” created by adding “alpha”.

So, my working assumption is:

• The weakness in the Nasdaq 100 (down 0.9%) can be partially attributed to many investors selling the big names ahead of Friday’s re-weighting.
• The bulk (but not all) of the outperformance of the equal weighted indices last week can be attributed to this change in weightings (and investors getting ahead of it), but the trend seems to be bigger than just this.

We will have to watch how the market behaves early next week to determine if practitioners will continue to sell the big stocks and buy the smaller stocks or if what we saw recently was just asset managers getting ahead of the rebalancing. I think that it will be the former rather than the latter.

One weird “paradox” in this so-called passive world is that if we see outflows from Nasdaq 100 funds, the selling of shares will now hit the laggards more than the behemoths. It seems like a paradox to me, since that is not the intention of the rebalancing, but it will be a consequence if we see outflows.

The debate between equal weight and market weight shines a light on how “passive” following an index strategy truly is. Sure, following the index is passive, but picking the index to track is far from passive and it is not without total return repercussions.

I continue to like the laggards and I am pretty neutral on the market as a whole. I’m reluctant to bet against the market, even though it is now crowded from the long side. However, during the slow summer trading sessions, the likelihood is that the current trends will continue.

Is There a Fed Meeting This Week?

Yes, there is a Fed meeting, but I expect to learn very little. We will get a 25 bp hike, lots of chatter about data dependency, and questions about the long and variable lags. I’d be shocked if anything changes my view that:

• The Fed has a high hurdle to hike again this year.
• The Fed has an extremely high hurdle to cut this year.

Moving forward, I just don’t see monetary policy as the market force that it has been for the past year and a half.

The MOVE index (a measure of bond market implied volatility) continued to decline and I think that it will drop significantly after the Fed meeting.

The yield curve actually inverted more last week (2s vs 10s is now back to more than 100 bps negative). The 2-year Treasury yield crept moderately higher, while the 10-year did very little.

The only “excitement” that we could get out of the Fed is if they change their balance sheet reduction plans, but I cannot see them doing that at this meeting.

Credit Doing Well

Credit spreads tightened a touch across the board and there is more room for spread tightening. Once banks are done with their post-earnings issuance, the calendar should be quite slow into August and there is so much “cottage industry” chatter about how credit is overpriced that the pain trade seems to be marginally tighter spreads.

Bottom Line

I think that the Fed meeting will be (relatively) a non-event.

On the economic data front, I think that we will see signs of weakness, but it won’t be universal and won’t start sinking in until next month’s jobs numbers start coming out. This week, unless there is something “shocking”, it will have been “baked into” the Fed decision so the meeting shouldn’t move markets.

I really think that the “compression” trade or the “laggard rally” has legs, but we will be keeping a close eye on that.

Earnings will be key. Earnings will determine whether the overall market rally continues (or not) more than anything else (unless there is some unexpected geopolitical event). Given it is late July, I think that the rally continues, but the leadership changes.

On a separate (and less pleasant) note, please see our recent SITREP – Russia Threatens Shipping, which fits well with our recent pieces on Commodity Wars.

In the meantime, I’m hoping to be able to include “Young Americans” by Bowie in a “thought piece” later this week (which, interestingly, mentions Barbie). I hope that you have a great weekend whether or not you participated in “Barbenheimer.”

The eurozone’s downturn deepened at the start of the third quarter as the region’s composite flash PMI decreased by 1.0pt to 48.9, below consensus expectations, on the back of a broad-based decline across sectors., with weakening demand triggered the steepest decline in manufacturing orders since 2009, while the services sector suffered its first drop in orders for seven months.

• Euro Area Composite PMI (July, Flash): 48.9, consensus 49.6, last 49.9.

• Euro Area Manufacturing PMI (July, Flash): 42.7, consensus 43.5, last 43.4.

• Euro Area Services PMI (July, Flash): 51.1, consensus 51.6, last 52.0.

“The eurozone economy will likely move further into contraction territory in the months ahead, as the services sector keeps losing steam,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, adding that there was “an increased probability” of the German economy sliding into recession in the second half of this year.

The composition of the July report showed a broad-based moderation across new orders, new export orders, backlogs, and employment. Firms’ future output expectations also declined further, reflecting a more pessimistic outlook in both sectors. Turning to price pressures, both input and output price components continued to decline in both sectors, although the pace of this moderation remains slower and the level of the these component series remains much higher in the services sector.

Across Euro area regions:

• France: The French composite flash PMI decreased by 0.6pt to 46.6, below consensus expectations. The composite decline was broad-based across sectors, with both services activity and manufacturing output remaining in contractionary territory.  

• Germany: The German composite flash PMI decreased by 2.3pt to 48.3, also below consensus expectations. The decline in the composite index was broad-based across sectors, but led by manufacturing as the manufacturing output index fell to a 38-month low; services activity remains in expansionary territory. 

• Periphery: The periphery composite PMI edged down slightly to 50.8, driven by a small decline in manufacturing output—which remains below 50—that was offset partially by a modest improvement in services, which remains in expansionary territory.

• The UK composite flash PMI decreased by 2.1pt to 50.7, also below consensus expectations. The decline in the composite index was broad-based across sectors but skewed towards services.

Goldman sees see three main takeaways from today’s data.

• First, Euro area growth momentum continues to weaken across both sectors, driven in particular by France and Germany, where press releases attributed today’s weak print to a range of factors, including consumer hesitancy, inventory de-stocking, high inflation, and rising interest rates.

• Second, price pressures continue to moderate but the slower pace of moderation in the services sector continues to point towards stickiness in underlying inflationary pressures. This appears to be particularly true in Germany, where the services price components edged up surprisingly in July.

• Third, growth momentum in the UK also appears to be slowing, but remains in positive territory.

“Given what could be a mildly hawkish Fed event risk on Wednesday and the prospect of the ECB less than wholeheartedly backing the idea of a follow-up September rate hike, we see some downside risks to EUR/USD this week,” Chris Turner, head of fx strategy at ING. wrote in a note, forecasting EUR/USD to weaken to 1.1050

And sure enough EURUSD has started to fade…

However, the central bank has said in recent weeks it is concerned high wage growth and rising services prices could keep inflation above its 2 per cent target for too long.

Twitter has officially rebranded to X after months of teasing by its former CEO, Elon Musk (who was formerly Chief Twit and will henceforth be called Chief Nothing Officer). The rebranding saw the popular social media app ditch its recognizable bird logo and replace it with a simple X.

X is here! Let’s do this. pic.twitter.com/1VqEPlLchj

— Linda Yaccarino (@lindayacc) July 24, 2023

The rebranding also saw the social media app change its color scheme from blue to black.

Our headquarters tonight pic.twitter.com/GO6yY8R7fO

— Elon Musk (@elonmusk) July 24, 2023

As part of the rebranding, Twitter’s URL was changed to x.com, a domain name linked to Musk’s 1999 financial services startup, which was sold to PayPal.

Musk replaced his own Twitter icon with a white X on a black background and posted a picture on Monday of the design projected on Twitter’s San Francisco headquarters.

https://t.co/bOUOek5Cvy now points to https://t.co/AYBszklpkE.

Interim X logo goes live later today.

— Elon Musk (@elonmusk) July 23, 2023

The X logo in question was sourced from a user proposal sent out over the weekend.

Lmaooo

— Elon Musk (@elonmusk) July 24, 2023

The X started appearing on the top of the desktop version of Twitter on Monday, but the bird was still dominant across the phone app. Musk had asked fans for logo ideas and chose one, which he described as minimalist Art Deco, saying it “certainly will be refined.”

“And soon we shall bid adieu to the twitter brand and, gradually, all the birds,” Mr. Musk said in a tweet Sunday. The X.com web domain now redirects users to Twitter.com.

In response to questions about what tweets would be called when the rebranding is done, Musk said they would be called Xs, although the term remains nebulous.

We will have no name

— Elon Musk (@elonmusk) July 23, 2023

X.com was an early online bank, and the company was initially funded by Musk and Greg Kouri, who went on to fund Musk’s later ventures, Tesla and SpaceX.

Musk uses the letter X in several of his business interests, including SpaceX and Tesla car models.

Musk established X Corp. in March as the parent company of Twitter, making way for Twitter’s rebranding. The rebranding is part of Musk’s vision to create a “super app” with multiple functionalities. In April, Twitter introduced a new feature that allowed app users to access the crypto market and other financial market services from within the app.

Musk’s plans to transform Twitter began long before the takeover. In a recent interview, Musk reiterated that the main motive behind rebranding to X was to create an “everything app,” a concept popular in China. Chinese social media applications, such as WeChat, are used for text and video calls, and have provisions to pay bills, book cabs, book restaurants and other financial activities without leaving the app.

Musk said if done correctly, X could become a popular platform for finance, banking, payments and data, and over time it has the potential to become “half of the global financial system.”

X is finally arriving! 🔥

X will be an “everything app” i.e. super app for U.S. (like WeChat of China)

• Social: network, msgs, video, content
• Finance: banking, payments, data

“Overtime it would be HALF of global financial system” – Elon Muskpic.twitter.com/wWywAdYRZR

— Brandon Hoffman (@BrandonHoffman_) July 14, 2023

However, The rebranding of Twitter from many users who believed ditching the famous blue bird for a new concept was not a good idea, even though Musk disagreed.

New X logo is great. pic.twitter.com/jouBDEZ3jG

— David H (@dhorsb) July 24, 2023

x

— Elon Musk (@elonmusk) July 24, 2023

Spain’s national election ended in a close finish on Sunday that fell short of a right-wing takeover and prompted predictions of a hung parliament and the need to conduct another election. 

It takes 176 seats to control the Spanish parliament and form a government. With all votes tallied, Reuters reports that the ruling Socialist party won 122 seats, while the center-right People’s Party has 136.

Forming a new government will require the building of a coalition. That puts the spotlight on the next two-strongest finishers: the far-left Sumar party and far-right, anti-immigration Vox party, which won 31 and 33 seats, respectively. Even if one assumes they team up with the major parties on their side of the spectrum, that only adds up to 153 seats on the left and 167 on the right.  

Leading up to the election, the People’s Party was widely expected to win an outright majority and oust incumbent Socialist Prime Minister Pedro Sanchez. Meanwhile, Vox saw a drop in support — from 52 seats in 2019 to 33 — that seems to have doomed the prospect of a conservative-coalition government led by Alberto Núñez Feijóo.

An election that was anticipated to deliver a right-wing sea-change victory has instead left Spain’s political future uncertain.

After the results were tallied, Feijóo said Spain has always been governed by the top vote-getter and argued that Spain’s next government should be formed “in accordance with the electoral victory.” 

Global consulting firm Teneo, however, feels the socialist Sanchez is in the better position to form a coalition. However, the firm only gives him a 45% chance of cobbling a coaltion with Sumar and lesser parties, such as the Catalan Republican Left, which favors independence of the prosperous region of Spain and won 7 seats on Sunday.   

Sanchez’s tenure has spanned five years. After his party suffered devastating defeats in May local elections — fueled in part by discontent with price inflation — he called Sunday’s snap election. The timing — coming in the midst of travel season and a heat wave — wasn’t popular. 

The Socialists have also invited anger with botched criminal justice reform legislation that led to the release of more than 100 sexual offenders and sentence reductions for nearly a thousand more.   

The drive to form a ruling coalition won’t begin until the newly-constituted parliament reconvenes on August 17. In the ensuing days, King Felipe VI will host party leaders to discuss the prospects for the formation of a government.

The king will then select a candidate for prime minister, who will then have several weeks to build a ruling coalition. Given the high stakes of that meeting with the king, Sanchez and Feijoo will both be scrambling to garner support and bring a compelling case to Zarzuela Palace.