GM and BRRR.

Big week ahead - we’ll get revealing data from both individual companies and central banks.

Earnings reports from Microsoft, Google, Visa and Meta arrive on Tuesday and Wednesday and coincides with Federal Reserve meetings and their interest rate decision for July.

Expectations for strong earnings are baked in, as tech has surged this year and valuations for the largest companies remain elevated.

On the macro side, it’s a foregone conclusion that the Fed raises rates one final time this week. Expectations for a subsequent raise in September sit at around 30%.

We expect last week’s weakness to continue into this week - so we’re more defensive than we’ve been at any point this year. Not financial advice.

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Central Banking

Interest Rate Roulette: World Awaits Moves from Major Central Banks

In the upcoming week, significant interest rate decisions are expected from the U.S. Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Japan (BoJ), marking a potentially pivotal point in global monetary policy. The Fed, after a sequence of ten consecutive rate hikes, might make what could be the cycle’s final increase due to the cooling inflation and labor market. The ECB, facing stubbornly high inflation, is anticipated to hike its main interest rate further, signaling an end to its cycle out of negative rates. The BoJ, despite increasing inflation and strong economic growth, is expected to maintain its negative short-term interest rate target as it has since 2016.

• According to the CME Group FedWatch tool, a 25 basis point increase by the Federal Reserve is almost certain, which will take the target federal funds rate to between 5.25% and 5.5%. Despite the anticipation of this hike, ongoing data may lead to the end of constant monetary policy tightening if inflationary and wage pressures consistently subside to levels in line with the Fed’s target.

• The ECB, dealing with inflation surpassing its 2% target, is expected to raise its main interest rate by 25 basis points to 3.5%, according to Refinitiv data. The outcome of the ECB’s policy meeting will focus on the future path of policy rates, and the guidance issued will determine market bias towards tightening, neutrality, or a pause.

• While inflation in Japan has remained above the BoJ’s 2% target for 15 straight months and first-quarter growth was revised to 2.7%, the bank is still expected to hold its short-term interest rate at -0.1%. Speculation is rising that the BoJ may need to reverse its ultra-loose monetary policy, but no changes are expected in the upcoming announcement.

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Tech Equities

Tesla Pitches New Factory & $24,000 Car for Indian Market

Tesla representatives are slated to meet with India's commerce minister to discuss the construction of a factory in India, intended to produce a new $24,000 electric vehicle (EV). The plan marks a turnaround for the company following unsuccessful attempts last year to decrease import taxes on EVs in India. The new factory would manufacture low-cost EVs for the Indian market and for exports.

• The proposed $24,000 EV from Tesla would be 25% cheaper than its current most affordable model, the Model 3, aligning with Tesla's strategy to drastically lower the cost of EVs. The low-cost vehicle is part of Tesla's next-generation vehicle platform, which the company claims will reduce production costs by 50%.

• Currently, electric vehicles constitute less than 2% of total vehicle sales in India, which is now the world's third-largest auto market. Tesla's potential investment could contribute to a shift towards more sustainable transportation in the country.

• Tesla currently operates factories in California, Texas, Berlin, and Shanghai, with a new plant under construction in Mexico. The proposed Indian factory would be an addition to this network, with the Shanghai plant being the largest and accounting for approximately 40% of Tesla's global production capacity.

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Today’s Reader Poll

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AI Art of The Day

Tesla falls. Will it get worse?

The BRRR’s Portfolio Update

Apple diverging to the upside today, as anticipation builds for its August 3rd earnings report.

On Watchlist:
$AMD: NVDA’s strongest competitor
$ASML: They make the machines that make AI machines
$ISRG: Robot Surgeons
$OPRA: Growing web-browsing solution

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The BRRR is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.