Issue #19 - Breaking Records: What's Fueling The Unstoppable Run?

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What’s in this issue;

This week, we witness U.S. stocks reaching new heights as the S&P 500 and Nasdaq Composite achieve record levels, help up by strong economic data and a promising start to the second-quarter earnings season.

We look at how easing inflationary fears and strong consumer spending are driving market confidence amidst geopolitical and trade uncertainties.

We dive into global economic developments, including Germany's secured EU backing for expansive investment, Bitcoin's sensational surge to over $120,000 driven by ETF inflows, and tech stocks soaring high with Nvidia's momentum.

We also explore transformative mergers in the AI industry with Cognition's acquisition of Windsurf, presenting a new M&A blueprint that prioritises team unity and innovation.

Looking forward to next week, prepare for pivotal earnings reports and key economic indicators that will shape investment strategies ahead.

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Weekly Movement - Heatmaps

U.S. stocks had a strong week, with the S&P 500 and Nasdaq Composite both achieving multiple record highs, driven by better-than-expected economic data and a strong start to the second-quarter earnings season.

Key inflation readings for June eased concerns that tariffs would sharply push up prices, while June retail sales exceeded forecasts, indicating continued consumer strength despite ongoing trade tensions.

Big banks like JPMorgan and Bank of America described the U.S. economy as “resilient,” and technology shares surged on strong results from chipmakers and Netflix, which topped earnings expectations.

Markets were also influenced by political developments, including speculation around President Trump potentially firing Federal Reserve Chair Jerome Powell, though Trump later downplayed this possibility.

Despite renewed tariff threats on goods from the European Union and Mexico, equities remained buoyed: for the week, the S&P 500 climbed about 0.6% and the Nasdaq added 1.5%, reflecting Wall Street’s confidence in corporate and consumer resilience amid current policy and trade uncertainties.

What is Moving the Markets This Week

Germany Secures EU Backing for Major Investment Plan

Germany has won approval from the European Commission for a multi-year fiscal agreement allowing the country to significantly boost spending until 2029 while committing to subsequent budget tightening.

The arrangement charts a course for increased public investment, including in infrastructure and security, within reformed EU fiscal rules designed to safeguard stability in the bloc.

Following intensive negotiations, Berlin and Brussels agreed on a timeline for Germany’s government expenditure growth between 2025 and 2029, ensuring compliance with the latest EU fiscal framework.

Bitcoin Surges Past $120,000 to New Record, Driven by ETF Investment Inflows

Bitcoin reached a new all-time high above $120,000 on July 14, 2025, propelled by substantial inflows into spot Bitcoin exchange-traded funds (ETFs).

This milestone underscores renewed investor enthusiasm for crypto assets, with ETF approval making digital currencies more accessible to mainstream investors and drawing significant capital into the market.

The surge is being attributed to a combination of increased liquidity and rising demand, reinforcing Bitcoin’s continued position as a leading speculative investment in the financial markets.

Inflation and Tariff Concerns Remain in Focus

Investors are closely watching June’s consumer price index amid worries that new tariffs may escalate inflation.

President Trump’s threats to impose 30% tariffs on imports from Mexico and the EU have revived uncertainty over trade policy, raising fears about potential pressures on costs and corporate margins.

Higher-than-expected inflation could also delay any potential interest rate cuts by the Federal Reserve.

Tech Stocks Rally, Led by Nvidia’s Momentum

The Nasdaq recently hit a new all-time high, propelled by a robust rally in the tech sector, particularly Nvidia, which surged 4.5% after announcing it would resume shipments of its H20 AI chips to China following eased export restrictions. This continued strength in tech is a key driver of overall market performance.

Top Economic News

US Retail Sales Rebound and Fed Rate Outlook

US retail sales rose more than expected in June and jobless claims declined, signaling steady economic activity. This resilience, along with stable job growth, has given the Federal Reserve reason to delay any interest rate cuts as policymakers monitor inflation linked to recent import tariffs.

China Stimulates Foreign Investment Amid Slowing Growth

China introduced new measures to encourage foreign investors to reinvest profits domestically, aiming to reverse a decline in foreign direct investment (FDI). Despite stronger-than-expected growth in early 2025, projections indicate a slowdown in the second half due to higher tariffs and waning stimulus effects.

Japan’s Inflation Remains Above Target

Japan’s core inflation, while slowing in June, continues to run above the Bank of Japan’s 2% target. This persistent inflation keeps expectations alive for further interest rate hikes from the BOJ, highlighting ongoing price pressures in the economy.

Things I’m Paying Attention To

VodafoneThree

Vodafone and Three UK completed a £16.5 billion merger in May 2025, forming VodafoneThree, now the UK’s largest mobile operator with around 27 million customers; Vodafone owns 51% of the new company and CK Hutchison owns 49%.

VodafoneThree plans to invest £11 billion over the next decade, including £1.3 billion in the first year, to build a leading 5G network, improve coverage, and accelerate digital infrastructure, with the aim of challenging rivals like EE and Virgin Media O2 while also targeting annual cost synergies of £700 million by year five.

Space Rivals Join Forces—Musk’s SpaceX Launches Satellites for Bezos’ Amazon

In a twist to their long-standing space rivalry, Elon Musk’s SpaceX recently launched 24 of Amazon’s Project Kuiper satellites into orbit, giving Jeff Bezos’ ambitious satellite internet project a crucial boost.

This event underscores the unusual circumstance of arch-competitors cooperating in their race to dominate low Earth orbit communications. Amazon’s constellation now stands at 78 satellites, still far behind Musk’s Starlink, which boasts nearly 8,000 satellites and around 5 million customers worldwide.

Initially, Amazon planned to rely on Bezos’ Blue Origin and United Launch Alliance for launches, but delays—New Glenn has flown only once—forced the company to turn to SpaceX’s highly reliable Falcon 9 rockets. With a license from the FCC requiring Amazon to have at least half of its planned 3,200 satellites launched by August 2026, the pressure is on.

While catching up to Starlink will be difficult, analysts estimate Project Kuiper could generate $7.1 billion in annual revenue for Amazon by 2032 if it captures roughly 30% of the consumer market. This massive investment is also seen as a long-term driver for Amazon’s broader tech ecosystem, including its cloud business, as the satellite internet market itself could approach $40 billion in global revenue by 2030.

Cognition + Windsurf: The New Blueprint for AI Acquisitions?

The Cognition acquisition of Windsurf marks a new era for AI industry mergers, fusing not just intellectual property but entire product teams in one swift, transformative move.

After a dramatic 72-hour stretch—during which Google lured away Windsurf’s key executives in a $2.4 billion licensing and talent deal—Cognition swooped in to claim what remained: Windsurf’s still-formidable team, products, and customer base.

Rather than a traditional “acquihire” focused on talent alone, this deal retained all 250+ Windsurf employees and tightly integrated its product suite—an AI developer platform—into Cognition’s own, led by their flagship “AI software engineer,” Devin.

Importantly, the acquisition was crafted to give direct equity to all remaining Windsurf employees, forgoing founder and investor shares—a pioneering structure built around employee ownership and team continuity.

This hybrid approach signals a new M&A playbook for the AI sector, where high-stakes talent wars and rapidly evolving technology push companies toward creative, team-centric mergers.

The integration of Windsurf’s development tools with Cognition’s automation-focused agent opens the door for deeply automated, scalable software engineering—already attracting enterprise customers like Goldman Sachs and Citi.

As tech giants aggressively chase elite AI talent and commoditised IP, this “clean-cut” combination—merging complete teams and products for shared mission and upside—is poised to be a model for future consolidations, particularly as start-ups face sudden crises amid intense competition.

The Cognition-Windsurf deal demonstrates how preserving core teams, rewarding employees, and integrating best-in-class products could become the new blueprint for thriving in the AI acquisition frenzy.

Portfolio Updates (Bought or Sold) – 90 Days

I know this section is currently dry, but as the saying goes, “the best investors master doing nothing for long periods of time.”

Now is the time to reap what we sowed during the market downturn.

I’m sure you have all seen markets are at an all-time high right now, so this is the time to either take profit or let your investments sit and grow.

Looking Forward: What We Anticipate Next Week

Wall Street enters a key week for the Q2 earnings season, with hundreds of major companies reporting results.

Investors are especially focused on upcoming results from Alphabet (Google’s parent) and Tesla, both set for Wednesday, as well as household names like Coca-Cola and Intel.

The past week saw banks kick off reporting, and so far, 83% of companies have beaten earnings estimates, boosting optimism and supporting all-time highs in the S&P 500.

However, this quarter’s projected earnings growth for S&P 500 companies is the slowest since late 2023, at just around 5–5.6%.

Federal Reserve Chair Jerome Powell will speak at a conference Tuesday, drawing attention amid heightened concerns over central bank independence following President Trump’s public criticism and speculation about Powell’s future.

On the economic front, it’s a relatively quiet week, with scheduled updates on existing home sales, initial jobless claims, and S&P Global’s flash PMIs expected to provide insight into the broader economy.

Key Events and Earnings Next Week

Tuesday 22nd July

• RBA Meeting Minutes: Insights into Australia’s central bank focus.

• Fed Chair Powell Speech: Investors will watch closely due to recent political pressure.

• Earnings spotlight: Coca-Cola, Philip Morris, Lockheed Martin, General Motors.

Wednesday 23 July

• Existing Home Sales forecast at 4m (previous 4.03m), showing housing market health and consumer confidence.

• Earnings spotlight: Alphabet, Tesla, IBM, AT&T.

Thursday 24 July

• ECB Interest Rate Decision expected at 2.15% with likely no change; statement may hint at future policy.

• Earnings spotlight: Blackstone, Honeywell, Intel, Nasdaq.

Friday, July 25

• UK Retail Sales (MoM) forecasted at +2% (previous -2.7%), important after weak recent data.

• US Durable Goods Orders forecasted to drop -9% (previous +16.4%), signaling possible slowdown in business investment.

• Earnings spotlight: Phillips 66, Centene.

Ongoing: Q2 Earnings Season Week 2

Big names reporting this week include Alphabet, Tesla, Coca-Cola, IBM, Blackstone, RTX Corp, ServiceNow, and Texas Instruments.

ICYMI

Severe Weather & Disasters

• Deadly flooding in Central Texas: Death toll rises to 104, including 28 children, with dozens still missing. More flash flooding expected as warnings persist.

• Major earthquake in Guatemala (magnitude 5.7): At least six fatalities and widespread damage.

• Ha Long Bay tragedy: Over 30 killed as a tourist boat capsizes in Vietnam.

Emergencies & Accidents

• Karachi, Pakistan: At least 16 people die in a building collapse.

• Cairo, Egypt: Fire at Ramses Exchange building kills four, severely disrupts national connectivity (banking, communication, trading halted).

• Gujarat, India: Gambhira Bridge collapse claims 13 lives, with more injured.

• North Carolina, US: Small plane crash kills four, including two children.

Politics & Law

• US President Donald Trump announces a 50% tariff on most imports from Brazil, effective August 1.

• Additional tariffs imposed on multiple countries, with new rates from 20-30%.

• President Trump inks a new major trade deal with Indonesia—$19.5 billion in goods and 50 Boeing jets; Indonesia to lift tariffs on US imports, but US maintains a 19% tariff on Indonesian goods.

• In the UK (East of England), hospital waiting lists have only slightly dropped since the 2024 Labour landslide, with unemployment up to 158,000 as of May 2025.

Conflicts & Security

• Deadly violence at a Gaza aid site: At least 21 Palestinians killed in a crowd crush, with conflicting accounts on the cause.

• The Israeli Air Force bombs Damascus targets in Syria; continued clashes in southern Syria despite ceasefire talks.

• Protests persist in Los Angeles against ICE raids under the Trump administration, with National Guard troops ordered to stand down.

• Bangladesh: Military clashes with supporters of the ousted PM result in several deaths.

• Nigeria: Armed attack on village in Plateau State leaves at least 27 dead.

• Somalia-Kenya border: Al-Shabaab militants claim to have killed three Kenyan soldiers.

Crime & Justice

• Major arrests in the Philippines over the disappearance and murder of cockfighters, with 15 police officers detained.

• High-profile “mushroom murders” verdict in Australia: Erin Patterson found guilty of fatal poisonings.

• Amnesty International reports record executions in Saudi Arabia (345 in 2024), mostly for drug offenses.

• US DOJ confirms there is no “Epstein client list,” reiterates Epstein’s death was suicide.

• Notable Stories & Culture

Sports Highlights

• New Zealand rugby sweeps France in test series, overcoming a spirited challenge.

• Domestic football: Sheffield United routs Rotherham 5-0; Manchester United makes headlines with high-profile signings and transfer rumours.

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