Breakfast Bites - Fed, GDP, and Big Tech Earnings in Focus
Meta and Microsoft report after the close
Rise and shine everyone
Happy everything day! Obviously, a big focus is on the Fed at 2 pm ET, but we also have the second quarter US GDP growth coming out at 8:30 am ET. The consensus estimate is 2.4% QoQ.
We know that last quarter the number came in at -0.5% because of net exports and inventory building ahead of tariffs. However, underlying spending numbers were resilient. It remains to be seen what changes we see in the underlying numbers this quarter.
We also have the BoJ rate decision at 11 pm ET (early tomorrow in Asia).
GDP growth numbers for the EA came in at 0.1% QoQ, just above the consensus of 0% growth. Germany’s number came in line with estimates - a contraction of -0.1%.
US-China trade talks in Stockholm concluded without a breakthrough, though both sides called discussions on rare earth exports “constructive.” Friction continues over China’s ongoing imports of sanctioned Russian crude. Treasury Secretary Bessent signaled another round of talks is likely within 90 days. Meanwhile, France is pushing for carve-outs for wine and spirits in the EU-US trade agreement, complicating negotiations ahead of a joint statement expected Friday.
Finally, we also have earnings from Meta and Microsoft after the close tonight. A preview from JPM:
Meta (Q2 Results - July 30):
Meta reported Q2 revenue at or above the top end of guidance, reaching over $45.5B (vs. guidance of $42.5–45.5B), with Q3 revenue guidance of $47–48B—above consensus expectations of $46.1B. Operating expense guidance is expected to remain steady at $114–119B. Following Google’s results, Meta is likely to revise its capex outlook upward toward the high end of its current $64–72B range (raised last quarter from $60–65B).
Microsoft (FQ4 Results - July 30):
Azure’s FQ4 growth came in at or above the high end of guidance (+35–36% constant currency), with a similar outlook for FQ1 (+34–35% cc). There is upside risk to the consensus FQ4 capex forecast of ~$23B (including capital leases), as well as for FY26 capex, which may track closer to commercial cloud revenue growth (~20% cc). Microsoft also issued an internal letter addressing recent layoffs, reiterating its firm commitment to continued AI investment across talent and infrastructure.
Quote of the Day
"If you're an SMB customer sourcing from China alone, you could see that your cost could increase by 55%; And they're now at a point where they need to replenish their inventories, but some SMB customers are finding that credit conditions have tightened up a bit, limiting their access to capital compared to prior years" - UPS earnings call
Chart of the Day - Squeeze Sentiment
“Our Squeeze sentiment indicator reached GME highs have shown a pause at this level.”
Calendars
(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)
