July 7, 2025

(TRUMP, MUSK, TARIFFS, & THE BILL – WELCOME TO AN ECONOMIC UPHEAVAL)

July 7, 2025

Hello everyone

WEEK AHEAD CALENDAR

July 8-9 Tariff deadline

MONDAY, July 7

9:30 p.m. Australia Business Confidence

Previous: 2

Forecast: -5

TUESDAY JULY 8

12:30 a.m. Australia Rate Decision

Previous: 3.85%

6:00 a.m. NFIB Small Business Index (June)

3:00 p.m. Consumer Credit (May)

U.S. Treasury Auction 3-year note

WEDNESDAY JULY 9

10:00 a.m. Wholesale Inventories final (May)

2:00 p.m. FOMC Minutes

U.S. Treasury Auction 10-year note

THURSDAY JULY 10

8:30 a.m. Continuing Jobless Claims (06/28)

8:30 a.m. Initial Claims (07/05)

4:30 p.m. US Fed Balance Sheet

Previous: $6.7T

Forecast: $6.8T

U.S. Treasury Auction 30-year bond

Earnings: Conagra Brands, Delta Air Lines

FRIDAY JULY 11

8:30 a.m. Canada Unemployment Rate

Previous: 7.0%

Forecast: 7.0%

2:00 p.m. Treasury Budget (June)

MARKET UPDATE

S&P500

The index makes all-time highs after breaking the Feb. peak at 6147. There is strong upside momentum and still no confirmation of even a short-term peak. This argues for continued gains ahead. Risks to be aware of include an overbought market, which is very evident since its surge from the April low (up 30% in just 3 months). Also, sentiment is slowly shifting to the bullish side (even though this is a much hated move the market has been making, and some are still sitting on the side lines).

Resistance: 6285, 6350/75

Support: 6225/35 and 6140 area

GOLD

Gold is the temperamental dingo, Criss-crossing a patch of land multiple times in its search for food. It will probably find its oasis when it crosses a border on the horizon (representing $3000). Until then, the dingo will continue its unpredictable movements, which are controlled by the macro environment.

Resistance: $3365/75 and $3455-65

Support: $3287/97 and $3247

BITCOIN

Choppiness is the theme with Bitcoin lately. And there is scope for this behaviour to continue. In fact, don’t be surprised if we chop in the range between 95k and 112k for a few weeks/months. We may not see a new high in Bitcoin until close to year-end or early next year.

Resistance: 112k

Support: 106k/107.2k and 104-105k + 96k-98k

The S&P500 futures have fallen early this week after the market reached all-time new highs last week before July 4^th Independence Day holiday.

Nevertheless, we must admit that the second half of the year has started strongly.

There appears to be a broadening of the market beyond the tech-heavy Mag 7, which is a sign of a healthier market.

Despite some hiccups along the way, we should finish the year at a new all-time high.

Democrats, Republicans and maybe… the America Party

Elon Musk says he wants to launch another political party after President Trump signed a historic spending bill that Musk opposed.

After his stint as the leader of DOGE, Musk has taken aim at Trump’s legislative centrepiece by likening it to an exercise in “debt slavery”. He went on to say that it would destroy millions of jobs, give handouts to industries of the past and damage the industries of the future.

The Committee for a Responsible Federal Budget last week said it was the most expensive reconciliation bill in history and would add “$US4.1 trillion to the national debt through 2034. If its temporary provisions are extended permanently, that total would rise to $US5.5 trillion.”

The Committee pointed out that the bill would lift the national debt from about 100 per cent of the economy today to 127 per cent by 2034. The sugar high would wear off after a couple of years. And often what comes next is a crash.

Musk was the largest individual donor to the Trump campaign leading into the 2024 election, providing more than $US250m to the cause.

The July 9 deadline for tariffs has been extended

The Trump administration has extended a freeze on sweeping US tariffs, pushing the July 9 deadline back to August 1.

Trump announced his “reciprocal tariffs” on April 2 but paused them for 90 days to give countries time to negotiate deals with Washington.

Those countries that do not make a deal before August 1 will boomerang back to the April 2 tariff level.

So, August 1 is when “it’s happening”, not a deadline.

So far, only the UK and Vietnam have negotiated a deal with the US.

There is a long way to go.

In Down Under land, Aussies are waiting for the RBA to cut rates on Tuesday, which would lighten the grip on wallets, and give breathing room to those with a mortgage. It is widely expected that the Reserve Bank will cut again in September and again in December. The one downside to this is it will send house prices on a tear again, preventing first home buyers from securing a reasonably priced home. An auction observed on television today showed bidding for a two-bedroom unit started at $400,000. The final sale price was $770,000. Prices are already over the top.

HISTORY CORNER

On July 7