Good morning,

The Fed is taking fire from all sides this week. Trump wanting Powell gone isn’t exactly breaking news, but now Wall Street is piling on, saying the central bank is way behind the curve.

Powell, for his part, isn’t blinking ahead of tomorrow’s policy meeting.

Meanwhile, Big Tech will drop a barrage of earnings this week, which could swing the market in any direction... and traders are speculating like it’s 1999 all over again.

On the macro front, the EU’s new 15% tariff deal with Trump gave European indexes a morning boost. But experts are calling it window dressing because both sides offer very different takes on what they just agreed to.

Let's dig in.

Quote of the day 

Six things to know before opening bell

🇪🇺 US-EU tariff truce (kind of)

The EU struck a deal with Trump to accept 15% tariffs on most exports, including cars. Sounds like a major breakthrough, but Trump and Ursula von der Leyen already have their own versions of the deal. Teneo’s research director Carsten Nickel says “major uncertainties are likely to persist,” leaving plenty of room for whiplashes.

🚕 Tesla’s robotaxi mulligan

After a flop debut in Austin and earnings that tanked the stock 8% in one day, Tesla’s trying again. The company says robotaxis will soon roll out in San Francisco. Whether it’s redemption or just another curb check is anyone’s guess.

🧾 Tariff clock ticking

Economists are sweating Friday’s PMI report as a tariff deadline looms. The White House has admitted it won’t seal deals with every trading partner in time, and Yale’s Budget Lab says Americans are effectively paying 20.2% in tariffs already — the highest since 1911 — and that's before the next wave hits.

💻 Big Tech earnings barrage

Amazon, Apple, Meta, and Microsoft — more than half of the Magnificent Seven — are dropping Q2 numbers this week. Traders are bracing for fireworks as analysts dig into tariff risks and whether AI bets are finally paying off. The Roundhill Mag 7 ETF is up 6% in a month, but the Nasdaq’s reaction will tell the real story.

🏭 Texas factory watch

Today’s Dallas Fed survey kicks off a big week for economic data. Last month’s read showed flat output, negative utilization, and new orders still in the red despite a small bump. With tariff uncertainty weighing on shipments, markets will be watching 9:30 a.m. Central for signs of life or more stagnation.

🛢️ Oil dips on Venezuela supply boost

Chevron is cleared to pump Venezuelan crude again, which added to supply and pushed oil lower. WTI and Brent futures slipped into the weekend, and CVX opens down after Friday’s 0.6% dip. Portfolio manager Rob Thummel says the deal “removes another uncertainty,” but traders aren’t rushing in just yet.

🎰 Speculation back at dot-com/post-Covid levels

Speculative fever is back in a big way, and traders are swinging at long shots like it’s 1999 all over again.

According to Goldman Sachs' Speculative Trading Indicator, a lot of trading is going into penny stocks, unprofitable companies, and wild high price-to-revenue bets.

📊 How big is it?

It’s the third-highest reading on record. Only two other periods were hotter: the dot-com bubble and the post-COVID mania five years ago.

Goldman says part of the surge is a classic short squeeze. 

Bears are scrambling to buy back stock, which sends prices even higher. And it’s not just tiny names, bigger stocks like Lucid and Plug Power are part of the frenzy, too.

⚠️ Euphoria with a catch

Citi’s Levkovich Index, a market sentiment gauge, spiked to 0.65 last week. 

For context, analysts usually start calling it “euphoric” at 0.38. History says rallies like this can run for a year or more… but gains usually fizzle within two years.

Verdence CIO Megan Horneman thinks the market’s “pricing in the perfect situation,” even as rate cuts look less likely and tariff risks loom. 

If anything goes wrong, a valuation reset wouldn’t be shocking, she said.

Meanwhile, Goldman strategist Ben Snider says it's a double-edged sword. While speculative bets could push stocks even higher, it also “increases the risk of an eventual downturn.”

🔥 Powell under heat ahead of tomorrow's meeting

Trump went after the Powell over rates, and now Wall Street is chiming in, too. A growing chorus of analysts and economists say it’s time to cut, but the Fed chair isn’t budging just yet.

📅 High-stakes week

Powell is walking into tomorrow’s policy meeting fresh off that tense face-to-face with Trump at Fed HQ. 

Odds are the Fed holds rates steady for now, but the timing is awkward: the two-day meeting lands right as new GDP numbers drop, followed by jobs and inflation data later in the week.

Bloomberg’s survey shows what markets expect:

• +1.5% consumer spending (still the weakest back-to-back quarters since COVID)

• +2.4% annualized GDP, even with Q1’s -0.5% hit

• Smallest private payroll bump in eight months

• Unemployment ticking up to 4.2%

⚠️ Pressure from all sides

The Trump-Powell feud grabs headlines, but even some Fed officials admit that recent labor market data could justify a cut or two. 

Just don’t expect fireworks this week. CME’s FedWatch — a gauge of market rate expectations — puts the odds of a move now at 3%, climbing to nearly 65% by September.

JPMorgan’s chief U.S. economist Michael Feroli says traders shouldn’t overreact to a couple of hawkish Fed voices, calling it “more about auditioning for the Fed chair appointment than about economic conditions.”

🇺🇸🇪🇺 EU truce (kind of) and "big, beautiful rebalancing"

European stocks rallied this morning after word broke that the U.S. and EU had struck a major trade deal ahead of Friday’s Trump-imposed tariff deadline.

📜 What’s on paper

The agreement includes:

• $750B in EU purchases of U.S. energy

• A $600B boost in American investments and military equipment sales

• A 15% blanket tariff on most EU exports (with higher rates for pharma and metals)

• Brussels dropping plans for retaliatory tariffs

⚠️ Conflicting Stories

The catch is Trump and European Commission President Ursula von der Leyen are contradicting each other over how pharma and metals will be treated. 

Analysts warn this disconnect could create political headaches when tariffs actually kick in.

Meanwhile, Deutsche Bank expects late-stage breakthroughs, warning that “we might not know the outcome until hours before the deadline,” just like February’s surprise delay on Canada and Mexico tariffs.

🌍 All eyes on China

This adds to deals with the UK, Japan, the Philippines, Indonesia, and Vietnam. The White House says several more are likely before tariffs ramp on August 1.

Even with those wins, China remains the big wildcard. 

Negotiators meet in Sweden today, and Treasury Secretary Scott Bessent hinted at a 90-day extension, saying there’s potential for a “big, beautiful rebalancing.”