Barron's : 2 Utilities That Stand to Gain From Big Tech’s Power Play

2 Utilities That Stand to Gain From Big Tech’s Power Play

Utility stocks have been on a tear for the past year, rising 17% as they benefit from surging power demand from artificial-intelligence data centers. Now the industry is facing a tricky balancing act—how to provide affordable service to its regular customers while also meeting the needs of technology companies.

Utilities like the data-center deals for the boost they give to earnings. Regulators and politicians, however, are worried that rising demand from Big Tech will cause electricity prices to spike for regular customers, like small businesses and homeowners. Research groups like Wood Mackenzie say that consumers are likely to foot much of the bill to expand the electricity grid to power data centers.

Already this year, utilities have asked regulators for a record $29 billion in rate increases, according to the nonprofit Powerlines. Consumer bills are poised to jump, after already rising more than 20% between 2021 and 2024. A political backlash against data centers has been growing.

A few utilities, however, have found a sweet spot—they’re making money from data centers while pushing much of the cost of new generation and transmission onto the tech companies rather than their normal customers. Two of the standouts in that area are Ohio-based American Electric Power and Louisiana’s Entergy, both of which reported better-than-expected earnings on Wednesday and saw their stocks rise. The companies have inked major deals with tech companies to set up data centers in their service areas.

Entergy, at a recent $90, is planning to power one of the largest data-center campuses in the world for Meta Platforms in Louisiana, building three massive natural-gas power plants. Meta agreed to pay to reserve natural-gas equipment, fund transmission costs, and make minimum monthly payments to cover generation costs for 15 years, regulatory documents show. Entergy also has a deal with Amazon.com for a major data center campus in Mississippi.

On Wednesday, it lifted its annual industrial sales growth rate, which includes data centers, to 13% for the next four years—a big growth rate for a company in a supposedly sleepy sector. “They’ve certainly been one of the data-center darlings out there, and a name we continue to like,” said David Grumhaus, chief investment officer at investment firm Duff & Phelps.

AEP is in a similar position. It operates in 11 states, including Ohio and Texas, and has seen booming demand from tech companies hoping to operate data centers in its service territory, enough to double total electricity load in central Ohio by 2030.

To accommodate those customers—without piling costs onto existing electricity users—AEP convinced the Ohio public utilities commission to sign off on a special rate structure. Data-center operators would need to pay for at least 85% of the energy they’re expected to use, even if they don’t use it in a given month. That would help fund the transmission lines and other infrastructure that AEP needs to build.

AEP’s special rate “provides clarity to go to the negotiating table with these data centers” and “mitigate concerns of who’s paying,” said Morningstar analyst Andrew Bischof. Other utilities are now working on similar arrangements.

For now, though, AEP, at a recent $113, is the one that is benefiting from the flood of data-center deals that are on the way. The company boosted its expected five-year capital spending budget last year by about 25%, and said on Wednesday that it expects to add another 30% on top of that. It is on track to get paid handsomely for all these investments, with analysts expecting earnings to grow 28% by 2028.

That should pay off for shareholders too.

Barron's : Trump Will Remake the Fed. Lower Rates Are Just the Start.

Trump Will Remake the Fed. Lower Rates Are Just the Start.
A bubbling movement to overhaul the Fed is ready to seize the moment. Big changes are in store for the central bank.

President Donald Trump wants “one thing” that should be “very simple,” he said during his recent visit to the Federal Reserve in Washington, D.C. He wants interest rates to come down by a lot, quickly.

He will get that, and probably much more, under the next Fed chair. To win Trump’s nomination and the Senate’s confirmation, the candidates in line to replace current Fed Chair Jerome Powell, whose term ends on May 15, 2026, are wrapping their proposals for interest-rate cuts in far-reaching plans for change. The result is likely to be an overhaul on a scale the Fed hasn’t seen in decades.

Changes on the table include re-examining the central bank’s fundamental mission, changing the way it thinks about inflation and interest rates, cutting staff, and reorganizing or even reducing the number of regional reserve banks.

Exactly how these changes will affect markets and the economy is difficult to project at this stage, in part because each of the candidates would put their own spin on any plans. But the structural changes coming to the Fed are likely to amplify the economic uncertainty that has marked the second Trump presidency. Economists and investors who have become accustomed to hearing the Fed chair deliver an analysis of the economy every six weeks or so will be in for something different—perhaps radically so.

Fed Gov. Adriana Kugler’s decision to step down ahead of schedule gives the president an immediate opening on the Fed’s board. With the ear of the president, a supportive Senate, and buoyant markets, the new Fed chair could begin rewiring the institution in just a matter of months. “Rate cuts are the place to begin. They’re not the place to end,” said Kevin Warsh, one of the prominent candidates to replace Powell, in a recent TV interview.

What needs to happen is nothing less than “regime change” at the Fed, Warsh said.

A Fed in Flux
The case for regime change depends on who is making it, but a broad critique of the Fed has emerged during the Powell era, which began in 2018. The Fed has grown from an institution narrowly focused on setting interest rates to one whose execution of monetary policy now supports fiscal policy and influences the U.S. economy in unintended ways, say opponents of its recent actions. The Fed’s giant asset purchases, most recently executed during the Covid-19 pandemic, have held down bond yields and enabled more government spending, while simultaneously lining Wall Street’s pockets. The central bank believes itself to be unaccountable to the president on monetary policy, even as it has made critical mistakes such as allowing Covid-era inflation to spike.

Fed officials have become economic sages of a sort, publicly rendering opinions about the course of the economy without committing to any particular economic theory. What the Powell Fed sees as institutional nimbleness and intellectual flexibility, its critics see as poorly disciplined thinking and overreliance on a powerful research staff. The problems have gone so deep that the entire institution needs to be overhauled, they argue.

Trump said during his July 24 visit to the Fed that he has “two people, maybe three” in mind for the next chair. Warsh, a former Fed governor who works with investor Stanley Druckenmiller, is one. Another is National Economic Council Director Kevin Hassett, an experienced macroeconomist who specializes in taxation and is a close ally of Trump’s. The Senate would probably easily confirm either of them.

The dark-horse candidates include Treasury Secretary Scott Bessent, who is frequently mentioned but has said he is happy with his current job. Sitting Fed Gov. Christopher Waller has said he supports cutting rates immediately and would take the job if the president offered it. “But he’s not talking to me,” Waller told Bloomberg on July 18.

Other possible contenders include former World Bank President David Malpass, recently confirmed Fed Vice Chair of Supervision Michelle Bowman, and prominent conservative economist Arthur Laffer. More may yet emerge.

Since taking charge, Powell has presided over a run-up in inflation that the Fed initially described as transitory, and a rapid run-up in rates has brought inflation back down, albeit not to the Fed’s 2% annual target. Powell’s defenders see the slide down in the consumer price index, from a peak of 9.1% in June 2022 to 2.7% in June 2025, all without a recession, as a legacy-defining success.

Meanwhile, the Fed’s balance sheet remains swollen at $6.7 trillion—but down from a peak of nearly $9 trillion after it conducted an emergency expansion during the Covid crisis.

The Fed’s staff has grown, too, to nearly 25,000 as of 2024, spread among the Washington D.C.–based Board of Governors and the 12 regional reserve banks. That reflects a rise of about 20% since 2010, according to research by Andrew Levin, a former Fed official now at Dartmouth College. Employment at other large federal agencies has fallen 9% in the same period, Levin found.

Powell said in May that he intends to reduce the Fed system’s staff by 10% over the next few years through attrition. “We are careful stewards of public resources, and sometimes you need to show that,” he later said, explaining the cuts.

A DOGE Moment for the Fed
Cuts of just 10% may not be enough to satisfy the Fed’s critics. “All these Ph.Ds over there, I don’t know what they do,” Bessent said in a recent CNBC interview. “This is like universal basic income for academic economists.”

Bessent also called for a review of the Fed’s non-monetary-policy operations, saying the Fed has experienced “mission creep and institutional growth” that have led to questions about whether it can stick to its core business of managing monetary policy.

Former Trump adviser Larry Kudlow made a similar demand recently on his Fox Business show. “Where is the downsizing? Where is the reforming? Where is the auditing of the Fed?” Kudlow asked his guest, Hassett, on July 10.

“I think that you’re right, Larry,” Hassett responded. “Government has gotten very big throughout Washington, and one of the places that hasn’t really responded yet to the downsizing we’re talking about is the Federal Reserve.”

The White House didn’t respond to requests to make Hassett available for an interview or to emailed questions. The Fed declined to comment.

The Fed’s Board of Governors would need to approve staff cuts, and it isn’t clear how far they might go. Still, caution is merited, said William English, a former senior official at the board who is now a professor of finance at Yale University. “I’m not sure that’s an experiment I’d want to run, how much can I cut before I really do damage to the institution,” English said.

An Audience of One
The candidates for Fed chair are conducting an informal campaign in financial TV studios and think-tank auditoriums, but ultimately they need to win Trump’s favor. “I do worry about a public campaign with an audience of one, and everybody knowing what it is that that audience wants to hear,” says former Sen. Pat Toomey, a Republican from Pennsylvania who was the ranking member of the Senate Banking Committee, which has jurisdiction over the Fed.

Trump’s campaign to bully Powell into lowering rates “happens to be the wrong outcome for this moment, in my view,” says Toomey. “But it also neglects the structural changes that I think are necessary.”

While in Congress from 2011 to 2023, Toomey pushed for legislation he argued would make the Fed more accountable. One bill would have cut the ranks of regional reserve banks from 12 to five, among other changes. The regional banks are quasi-private institutions whose directors choose their leadership, unlike Fed governors who are appointed by the president and confirmed by the Senate.

Warsh has been especially vocal about the change he wants to see at the Fed. He wants to see “regime change in how we’re thinking about inflation, how we’re conducting policy, how we’re communicating. It is also regime change in terms of how we’re supervising and regulating banks,” Warsh recently told CNBC.

Making that happen will require, as he put it in another recent interview, “breaking some heads” at the Fed, “because the way they’ve been doing business is not working.” He believes that the Fed is allowing inflation to fester because it misunderstands what drives sustained price increases.

Changes to how the Fed thinks about inflation and conducts monetary policy would be consequential. The changes it makes to the federal-funds rate can spur or hinder lending, driving expansion or contraction across the economy. Its discretion in determining rates is the heart of its independence, and its power.

It’s also the source of some of the Fed critics’ loudest complaints. Instead of allowing market forces to set rates, they are “fixed by a committee where 12 people vote eight times a year on what should be the interest rate,” says economist Judy Shelton.

Shelton was nominated for a Fed governorship by Trump in 2020, during his first term, but the Senate voted against advancing her nomination. She remains close with many Senate Republicans.

Rewiring the Fed’s Policy Brain
The Fed has long since moved away from a “black box” approach to monetary policy, as former Chair Ben Bernanke described it, when Fed officials used economic rules linking interest rates to growth and inflation without a clear understanding of how policy transmitted throughout the economy.

The Fed under Powell and other recent chairs isn’t bound by any particular rule in making its policy decisions. Powell frequently refers to the Fed’s decisions as being “data dependent.” He is driven by a profound sense of caution about the risks to the economy of policy errors: Tighten too soon and you snuff out growth; too late, and you allow inflation to accelerate.

In a 2018 speech, Powell described the Fed’s job as “navigating by the stars,” a reference to economic variables such as the natural rate of inflation, or R*, known as R-star. The problem with those variables is that they can’t be observed directly and can change over time. After reviewing literature on uncertainty, Powell concluded, “no single, simple approach to monetary policy is likely to be appropriate across a broad range of plausible scenarios.”

That caution may have gotten the best of Powell and other Fed officials on the Federal Open Market Committee as post-Covid inflation took off. The Fed initially judged that Covid-driven price increases would quickly subside—they would be “transitory.” But waiting to be sure also meant that the Fed didn’t start raising interest rates until inflation was already well under way.

“There’s only two problems with data dependence, the data and the dependence,” Warsh said in a speech to central bankers in April.

Powell and his colleagues try to apprise the markets and the public of their thinking and strategy through news conferences, speeches, and published forecasts of officials’ estimates of future economic trends and interest rates. The Fed’s critics see those efforts as merely compounding the Fed’s mistakes. “The Fed should stop publishing its forecasts, and go back behind the curtain,” Hassett wrote in 2023.

Warsh would do away with them, too, saying they hurt the Fed’s ability to take in new facts.

Congress gave the Fed a “dual mandate” to ensure price stability and full employment, a pair of policy goals that in practice provide the Fed with significant discretion. A chapter in the Project 2025 policy agenda written by economist Paul Winfree and hailed by some conservatives urged the Fed to abandon the labor side of its dual mandate (that would require congressional approval). Winfree called for “major reform of the Federal Reserve’s core activity of manipulating interest rates and money,” which could be accomplished by returning to the gold standard, among other possibilities, in his view.

The Trump administration has said it had nothing to with drafting Project 2025, which is essentially a conservative policy wish list. But the section on the Fed endorses ideas drawn from a bubbling reform movement that is ready to seize the moment.

“President Trump’s focus on the renovation [of the Fed’s headquarters] is an attempt to put the Fed on the map for everyday Americans,” Winfree wrote in an email. He is president of the conservative Economic Policy Innovation Center.

The Return of Monetarism
Winfree’s chapter makes the case that the Fed has foolishly abandoned considerations of the size of the money supply in assessing inflation. That idea, known as monetarism, has a lot of support among the now-ascendant Fed reformers. They often make reference to economist Milton Friedman’s claim that “inflation is always and everywhere a monetary phenomenon,” a view that can be oversimplified to mean that printing too much money raises prices.

To a prominent set of Friedman’s modern-day acolytes, quantitative easing is the Fed’s greatest sin. That program was created in stages after the 2008-09 financial crisis and saw the Fed purchase trillions in Treasury securities, and later, certain mortgage securities, to help keep markets functioning and boost banking activity in times of stress. The effectiveness of the program is much debated even among the Fed’s defenders.

To the Fed’s critics, its effects are obvious: Trillions of dollars in new money has produced sharply higher inflation. Hassett, then working at a Washington, D.C., think tank, signed a 2010 open letter along with other prominent economists opposing the start of quantitative easing. It cited the risk of “currency debasement and inflation.”

Warsh, who was on the FOMC when the program was created, defends it as an emergency measure but says the Fed should have wound it down when the financial crisis ended. Tapering the Fed’s assets now would help it ease inflation, he argues, a position he describes as “practical monetarism.”

Powell’s defenders see the idea of a return to monetarism as somewhere between a benign distraction and a dangerous risk that might lead the Fed to needlessly overtighten monetary policy and prompt a recession. “On the issue of monetarism, Milton Friedman won the war but lost the battle,” says Frederic Mishkin, a former Fed governor who served with Warsh.

The End of Fed Unity
Trump’s choice of chair may not only usher in reforms to the Fed’s mission and structure, but also disrupt the operations of an institution that has prided itself on consensus. For critics who fear that the next Fed chair will simply dictate Trump’s wishes, the crucial question is, can the chair yoke the FOMC to his will?

“The chair has a lot of power in the sense that they set the agenda for FOMC meetings,” says Bill Dudley, a former president of the New York Fed and vice chair of the FOMC.

A particularly persuasive chair, like Greenspan, can use that agenda-setting power to bring the committee along when it is skeptical of his views. “But in terms of the actual monetary-policy decision, the chair can’t force the policy decision on the committee,” says Dudley.

Were the chair to attempt to force analytical conclusions on the staff, “at that point you just start having an exodus of talent out of the Federal Reserve,” he says.

Turmoil at the Fed would rile financial markets. The dollar sold off by nearly 9% in the first half of the year as global investors adjusted for the risk of institutional instability in the U.S. Changes at the Fed could reignite those trends.

Imagine that the next Fed chair attempts to take Trump’s rate-cutting demands at his word, says Alan Blinder, a former Fed vice chair who teaches economics at Princeton University. A new chair may succeed in pushing through a quarter-point cut, but Trump is demanding that the federal-funds rate come down three full percentage points. “I can well imagine a vote on the FOMC where there are nine or 10 dissents, and the chairman loses the vote,” Blinder says. “That in turn could cause pretty big reactions in the markets.”

Inflation expectations would rise, bringing interest rates up with them.

Dissents among FOMC voting members are “rare, and therefore loud,” Blinder says. “The Fed has often thought it important to speak and vote with one voice.”

Trump’s appointment could end that, opening up a challenging new era in which the Fed is less predictable. The just-concluded July meeting saw the first two dissents by Fed governors since 1993. Bessent, the Treasury secretary, described it as a schism and sign that with just two more votes, Trump-aligned voices could have a majority of the board’s seven governors. (They could still be overruled with support of the regional bank presidents.)

Another unusual scenario could also unfold, Blinder notes. The Senate-confirmed Fed chair acts as the CEO of the Fed’s board of governors, but that position is technically distinct from the chair of the FOMC, which has the power to set rates. The FOMC chair “is always the chairman of the Fed, but it doesn’t have to be. It’s not in the law, it’s not in the rules, or anything like that,” says Blinder.

Were the Fed chair to be consistently in the minority on monetary-policy decisions, the other board members could seize power for themselves and appoint a new FOMC chair.

“I think there are very few people in the markets who know that fact,” Blinder says.

How it would play out is impossible to predict.

And that may be the biggest change that Trump will bring to the Fed. The U.S. central bank is set to transform into something resembling the modern-day Supreme Court, where polarized rulings have become the norm. Control of the FOMC seats would become an object of partisan warfare. Trump is scheduled to have only two appointments during his term, raising the stakes in the election to succeed him, much as the open Supreme Court seat in 2016 galvanized Republicans.

The Fed is a creation of the political system, and can be changed by it. And starting on May 16, 2026, someone new will have the chance to do just that.

Barron's : Tariffs Are Just Tip of the Iceberg for China. These Are the Bigger P

Tariffs Are Just Tip of the Iceberg for China. These Are the Bigger Problems.

As the U.S. and China extend their tariff truce, and appear to be in a de-escalatory lull for now, there’s another risk brewing in China for investors to focus on: Beijing’s efforts to curtail deflationary forces spreading through the world’s second-largest economy.

Chinese stocks have been a standout this year, with the MSCI China up 26%, trouncing the 9% gain in the S&P 500. Those returns were sparked in part by the excitement over DeepSeek’s artificial-intelligence models that put a spotlight on the innovation bubbling up in China.

But beneath the excitement about the technology sector is a persistent economic rout. Economists think China’s growth is under the 5% target Beijing has set for this year and headed lower. The property market is four years into a slump. Gradual efforts to stabilize the economy have done little to lift consumer spending in a sustained way. Businesses are still hesitant to spend, even more so as deflation has gripped the economy.

Investors have been waiting for officials to change their tack on stimulus efforts, but those moves have been incremental, creating spurts of growth that quickly lose momentum. Beijing has leaned on stimulus only when necessary—and lately things aren’t that bad.

That was reinforced in this week’s Politburo meeting, where officials left the door open for incremental and targeted measures but led economists to think measures may be smaller than some expected. The U.S. and China dialed back trade-related tensions in recent weeks, and analysts expect a detente to pave the way for an in-person meeting President Donald Trump wants with China’s Xi Jinping this fall. That has taken further pressure off China to act.

Indeed, on a recent trip to China, Michael Hirson, head of China research for 22V Research, found confidence in China’s ability to navigate the trade situation.

That confidence is twofold: China’s demonstration that it indeed has leverage with its control of rare earths such as critical magnets used by U.S. auto makers, industrials, and for defense purposes; and Chinese exporters’ ability to mitigate the tariff impact by shifting production and selling to other markets.

Also helping exporters: the Chinese yuan’s weakness against the euro and other nondollar currencies. There are still risks, including the U.S. penalizing China for its purchase of Russian oil, as it just did with India. Policymakers are turning their attention to deflation, a byproduct of years of aggressive manufacturing investment that has fueled the one bright spot in the economy—exports—but created intense competition and pricing pressures in industries such as electric vehicles, solar panels and e-commerce.

TS Lombard’s head of China research, Rory Green, expects Beijing to focus efforts to curb overcapacity on traditional heavy industry—steel, cement, and copper. While EVs and other areas of technology could see increased scrutiny on pricing, Green says those might be offset with some sort of policy support.

Officials so far have leaned toward enforcing existing regulations to limit capacity rather than implementing a batch of new rules or mass closures of facilities.

Green expects that to continue, and for Beijing to offset some of the impact with investments in infrastructure and spurts of other stimulus. But there is the risk that Beijing goes too far in curtailing manufacturing investment, resulting in a more pronounced economic slowdown.

The improvement in U.S.-China relations may buffer the stock market for a while, as could the view that Beijing’s efforts to cut capacity will help profits, Green says.

But the economic problems will eventually catch up with the market—especially if Beijing stays on this course in its approach to stimulus.

Barron's : Train Stocks Could Fare Well as Union Pacific and Norfolk Southern Me

Train Stocks Could Fare Well as Union Pacific and Norfolk Southern Merge. Picking Winners.
The deal could lift Union Pacific shares by nearly 50%—but it could be a long haul until then.

When Union Pacific and Norfolk Southern announced their merger deal Tuesday to form “America’s first transcontinental railroad,” it puzzled some who recalled the golden spike driven in 1869 at Utah’s Promontory Summit. That last spike only connected two railroads from Omaha, Neb., to Sacramento, Calif.

The proposed Union Pacific Transcontinental Railroad will link every corner of the country. And it may spur a second transcontinental network if Union Pacific’s western rival, BNSF—a unit of Warren Buffett’s Berkshire Hathaway —feels forced to bid for Norfolk’s eastern counterpart, CSX.

The resulting freight traffic could get rail stocks unstuck. That would be quite an achievement.

A combination of Union Pacific’s western reach with Norfolk’s East Coast network would cross 43 states and more than 50,000 miles. It would connect the ports of Seattle, Oakland, Calif., and Long Beach, Calif., with those in Houston, New Orleans, Norfolk, Va., and New York.

Union Pacific says a single train could take freight coast to coast without spending two days in Chicago shuffling cars between railroads. The time saved could let the railroad win freight business away from truckers—ending years of flat rail volumes and flat rail stock prices.

“We’re going to cut a day or two off every transit time,” Union Pacific CEO Jim Vena told listeners on a call to discuss the deal. He will run the combined company.

Though the deal will take two years to go through the approval process, there’s a strong case that it could lift Union Pacific stock nearly 50% in the next five years.

Union Pacific stock has slipped 3.2%, to $222, since Tuesday’s announcement. Norfolk has slid 2.9% to $278, which is $42 shy of the $320 announced value of the deal—a share of Norfolk swapped for a share of Union Pacific, plus $88.82 cash. That $42 spread implies that traders put a 60% probability of the deal going through.

The discount makes sense for now. The companies say it could take until early 2027 for the merger to win approval from shareholders and the Surface Transportation Board, or STB, that oversees the rail industry. Investors in short-term Treasuries could earn a guaranteed 5% in that time frame, while the deal could hit delays along the way.

The STB adopted rules in 2001 that raised high hurdles to large-scale rail mergers. Objections may come from shippers and from rivals such as CSX and BNSF. Unions have already criticized Union Pacific’s labor and safety record.

But Vena is betting that Washington has gotten more comfortable with mergers. The STB’s new chair, Patrick Fuchs, has scheduled meetings that may reassess the 2001 merger rules. And President Donald Trump can appoint a fifth board member to the STB, tilting the body that’s now evenly split between Republicans and Democrats.

On the Tuesday call, Union Pacific and Norfolk executives contended that their combination would help U.S. port cities by winning away some of the “intermodal” container shipments now carried by Canadian National Railway and Canadian Pacific Kansas City.

Vena said the merger will improve service and expand options for shippers. The two companies currently hand off a million cars a year in Midwest rail yards. By eliminating that friction, rail freight will become faster, cheaper, and more competitive with the $400 billion trucking market.

“One intermodal train removes more than 550 trucks from the highway and is 75% more fuel efficient than trucks,” Vena said.

The resulting company will also offer significant upside to today’s shareholders, said Norfolk CEO Mark George. “[It] will be a must-own large-cap stock and should trade at a robust multiple.”

He may be right. Rather than worrying about the spread between the two stocks, long-term investors should be weighing how Union Pacific’s transcontinental railroad—and its rivals—will fare.

The terms of Union Pacific’s deal value Norfolk at a generous 22-times estimates for Norfolk’s 2026 earnings, handing over more Union Pacific stock in order to leave the combo with less debt. J.P. Morgan analysts figure the deal will add about $24 billion in debt to the $46 billion that the two railroads will have when the deal closes.

The combined 2024 revenue of the two railroads was $36.4 billion, with $18 billion in combined earnings before interest, taxes, depreciation, and amortization, or Ebitda. In a Wednesday note, J.P. Morgan analyst Brian Ossenbeck forecast that 2030 Ebitda could be $27 billion, with net profit of $16 billion, or $20 a share. Free cash flow would be $13.6 billion.

If an investor put a 13-times multiple on that 2030 Ebtida—comparable to what Union Pacific rates today—the enterprise value of the transcontinental railroad would be around $350 billion in 2030, compared with $245 billion for the two companies today. The 2030 market capitalization would be $280 billion, or some 47% above today’s combined market caps.

Ossenbeck has Hold ratings on both Union Pacific and Norfolk, citing their long haul to a closed deal. But he thinks the transcontinental combo could generate substantial free cash.

“[Union Pacific] looks like it will be the most interesting way to play the first transcon railroad theme when the dust settles,” Ossenbeck concludes.

Buffett’s Berkshire may be having thoughts about CSX, so that its $100 billion investment in BNSF isn’t left at a competitive disadvantage. Bloomberg reported Thursday that CSX had hired Goldman Sachs for advice on its future. In combination, those two railroads would rival the reach, revenue, and profit of a Union Pacific/Norfolk combo.

The J.P. Morgan analyst figures that could lead Berkshire to an offer of at least $43 a share for CSX, which currently trades for $35.50.

Barrons: M&A Is Back. These Stocks Could Be Targets.

M&A Is Back. These Stocks Could Be Targets.
Dealmaking is in style again under President Donald Trump. Potential takeover targets include C3.ai, Viking Therapeutics, and Lyft.

Mergers and acquisitions are back in a big way, and stocks—big and small—should benefit.

It didn’t always look that way. Despite predictions for an M&A revival in 2025, dealmaking looked DOA at the start of the year. The dollar value of announced deals globally in January and February was down 14% from the same period in 2024, according to London Stock Exchange Group, as companies waited for Donald Trump to take office. And companies pulled back again in April, as panic over the administration’s tariff policies took hold.

Then Trump started backtracking—and dealmaking took off. From April 8 through July 22, companies struck over $1 trillion worth of deals, up 34% from the same stretch last year, according to LSEG. For the entire year, deals are up to $2.16 trillion—and on pace to reach $3.8 trillion, almost 8% above last year’s level.

Even that may be underestimating the potential increase. The combination of a resilient economy, less tariff uncertainty, and an easier regulatory regime looks to be putting dealmaking front and center once again. Just this week, Union Pacific and Norfolk Southern announced a $71.5 billion merger that would create the nation’s first coast-to-coast railroad.

“I’m expecting the [M&A] markets to improve tremendously,” says Michael Mufson, managing partner at investment bank Mufson Howe Hunter & Company. “It’s not ‘if,’ it’s ‘when.’ ”

That a little more certainty on trade would be a prerequisite for M&A shouldn’t be all that surprising. What is surprising is that the economy—and corporate earnings—have held up as well as they have. The Atlanta Fed’s GDPNow tool estimates second-quarter GDP should come in at 2.4% when it is released on Wednesday, while second-quarter earnings continue to come in much better than expected—some 86% of companies reporting have topped estimates.

“When it comes to the business cycle, the [M&A] trends seem like they’re going to be positive for the next 12 months,” says Jay Hofmann, co-head of North American M&A at J.P. Morgan.

The bigger change might be on the regulatory front. Companies sense that the Trump administration will be more lenient about approvals—and they’re trying deals that never would have passed muster under President Joe Biden. Bank M&A has skyrocketed, and it’s impossible to imagine a Union Pacific and Norfolk Southern deal under the previous administration. “That has been a tailwind for deals,” says Adam Reilly, partner with Deloitte’s M&A business.

Lower regulatory hurdles could be great news for Big Tech companies. Many are looking for smaller assets that will help them expand faster than they could on their own. Google’s $32 billion acquisition of Wiz will enhance its cloud offerings, while Salesforce’s $8 billion all-cash purchase of Informatica will help it manage data in the cloud. Other potential acquirers include Microsoft, Amazon.com, and Oracle, which said on its quarterly earnings call in early June that it wants to pursue “strategic acquisitions.”

And the potential targets? Look for companies with market caps below $5 billion; a low percentage of analyst Buy ratings; net debt that’s less than three times expected earnings before interest, tax, depreciation and amortization, or Ebitda; and businesses in crowded industries, according to Wolfe Research Strategist Chris Senyek. He screened for stocks matching those criteria and came up with Zoom Communications, RingCentral, DocuSign, and Dropbox, among others.

C3.ai stock looks particularly interesting. Shares of the company, which sells a platform to develop new artificial-intelligence applications, are down 80% from their 2020 trading debut. A deal that happens at any kind of significant premium to its current price might be a welcome reprieve for suffering shareholders.

Healthcare also looks ripe for more mergers. Many large pharmaceutical companies need to bolster their drug pipelines—and have the cash to do it. On May 27, Eli Lilly announced a $1 billion all-cash purchase of SiteOne Therapeutics and its nonaddictive pain killer that’s moving through the trial process. Merck, meanwhile, announced its acquisition of Verona Pharma for $10 billion on July 9, a move to gain a treatment for various lung diseases. Other companies on the prowl include Gilead Sciences, Biogen, and Pfizer, according to Jefferies analyst Michael Yee.

That makes some of the hundreds of publicly traded small healthcare and biotech companies in the U.S. potential targets. Biotechnology companies where analysts project at least $1 billion in annual revenue over the long term, and with strong data on Phase 2 trials for new drug candidates, are potential targets, Yee writes. Stocks that fit the bill include Cytokinetics, Scholar Rock Holding, and Viking Therapeutics. Viking is developing treatments for metabolic and endocrine disorders such as obesity, and has begun Phase 3 trials for a GLP-1 drug. With a $3.8 billion market cap, it could attract an offer from a larger pharma company looking to enter that market.

Industrial M&A is also making a comeback. Acquisitions in the sector this year through mid-June totaled $177 billion, more than double the amount during the same period in 2024. Investors don’t have to fear big acquisitions, says J.P. Morgan analyst Stephen Tusa. He recommends looking for acquirers that have a history of dealmaking but have kept their net debt below three times Ebitda. Some large potential acquirers, Tusa says, are Eaton, Roper Technologies, and Danaher.

Potential industrial targets that meet Wolfe’s target of having at least 10% expected sales growth, less than $25 billion market caps, and less than four times net debt to Ebitda include Construction Partners, which builds and maintains roads and other infrastructure, and ride-sharing company Lyft.

Also making the list: $7 billion Casella Waste Systems, which provides waste management services. It has been stumbling, missing earnings estimates in five of the past eight quarters, according to FactSet.

Expect a lot of handshakes in the coming year—and some happy investors.

>>> Weekly Market Update

President Trump’s tariff endgame drew closer this week as a flurry of new deals and measures were announced ahead of the August 1st deadline. Most notably, the EU reached terms allowing it to buy down the tariff rate to 15%, Mexico got a 90 day extension for talks, Treasury Secretary Bessent proposed a similar extension for China after constructive talks, and copper goods was slapped with a 50% import tariff. Trump also set a 60 day clock on the pharmaceutical industry to cut prices or else face sanctions. Meanwhile, despite withering criticism from the White House, the Fed kept rates on hold again, as expected. Chair Powell also didn’t seem convinced that a cut was on tap for September, even with a rare two dissenters calling for an immediate rate reduction. For much of the week, the data bore out Powell’s cautious stance: The advance reading on US Q2 GDP indicated robust growth, while the Core PCE Price Index and University of Michigan 1-year inflation outlook indicated higher than expected inflation. Friday’s employment report cast things in a different light, however, as Nonfarm Payrolls missed the mark by about 30K while the June and May payrolls were revised down by a whopping 258K, putting the 3-month average growth at a paltry 35K jobs per month. Trump claimed the numbers were manipulated to make him “look bad” by a Biden appointee at the BLS and immediately fired her. Following the employment data, Fed fund futures bumped up expectations of a Fed rate cut in September to 75% (from 45% before the data) and fully priced in a cut by October. Late Friday afternoon Fed Gov Adriana Kugler, a Biden appointee in 2023, said she would resign from Fed Board, effective Aug 8th, leaving an open seat for Trump to fill as he continues to press for lower rates.

Treasury markets experienced some of their biggest movements in a while this week, culminating in the 10-year yield falling over 14 bps after Friday’s jobs report, to end the week below 4.22% for the first time in three months. The dollar index continued a 3% rise that started last Wednesday, topping the century mark before slipping back on Friday’s data. Crude oil prices rose through the first half of the week, but then fell back, following the stock market lower and on a report that OPEC+ will go ahead with approving another production increase this weekend. Equity indices made several new highs early in the week, but couldn’t hold gains in the face of Powell’s comments, coupled with the reality of new tariffs going into effect and the weak payrolls data. For the week, the S&P lost 2.4%, the DJIA was off 2.9%, and the Nasdaq fell 2.1%.

Earnings reports from the largest US tech names continued to hold mixed results, as Microsoft and Meta’s positive breakout to the upside were offset by lackluster prints from Amazon and Apple. European consumer-focused stocks also contributed positive and negative details for markets as they continue to work through tariff expectations. Puma warned materially to the downside, citing tough China and North America markets and US tariff headwinds. Stellantis and Heineken downplayed worries about trade turbulence seeping into H2 2025. Luxury names Kering and LVMH also tempered concerns about Chinese and global upmarket consumer weakness. Ford, UPS, and Old Dominion Freight were among this week’s blue chip stocks to give lukewarm views on tariff outcomes for the rest of the year. UnitedHealth Group, American Airlines, and Oshkosh Corp were among companies that reinstated 2025 guidance metrics after suspending them earlier in 2025. Changes in US healthcare market continue to create winners and losers, as CVS rode strong sales and outlook higher, while UnitedHealth saw its cost ratio rising with a return to profitability only coming next year. The largest integrated oil & gas names Exxon, Chevron, Shell, and Eni made output expansion in liquids and LNG a key theme of their earnings prints, while also lamenting the outlook for global chemicals. As the market heard from bank CEOs during earnings calls last month, the IPO market should be heating up, and shares of design software maker Figma proved them right, indicating over 2.5 times above its IPO price before trading opened on Thursday. On the M&A front, Union Pacific confirmed it would acquire Norfolk Southern in an $85B deal, while long expected consolidation in the cybersecurity space was realized as Palo Alto laid out $25B of stock and cash for CyberArk.


MON 07-28
(CL) Chile Fin Min Marcel: Expect copper tariff exemption; Chile won't retaliate against US tariffs - Chilean press
(UR) US Pres Trump: Very disappointed in Russia Pres Putin; I'm reducing 50 days (deadline) I gave Putin (original was to expire Sept 2nd)
(UR) Pres Trump on geopolitics: Making new deadline with Russia for 10-12 days, We see no progress being made, 'no reason in waiting' (original was to expire Sept 2nd); Will confirm new deadline or tonight or tomorrow; Reiterates plan to use secondary sanctions in absence of Ukraine-Russia peace deal
(US) JULY DALLAS FED MANUFACTURING ACTIVITY: +0.9 V -9.5E
(US) TREASURY $70B 5-YEAR NOTE AUCTION DRAWS 3.983% V 3.879% PRIOR, BTC 2.31 V 2.36 PRIOR AND 2.39 OVER THE LAST 12 AUCTIONS
(US) TREASURY QUARTERLY FINANCING ESTIMATES: TO BORROW $1.007T IN JULY-SEP QUARTER V $980BE AND $554B PRIOR ESTIMATE; OCT-DEC TO BORROW $590B V $650BE
(TW) US Senators said to be planning bill supporting Taiwan against China human rights abuses – press
TTN Research Alert: Japan’s $550B trade deal headline set to meet $USD reality - a loan book built on yen creation and carry; Capex by cross‑currency swap; Debt at 260%+, yet financing America
HEIA.NL TTN Summary of 08:00ET Earnings Call: We ended up at the upper end of our expected range due to strong sales in June; For now limited impact of trade tariffs and we accelerated savings projects in anticipation; Reaffirmed FY25 Adj Op +4-8% despite macroeconomic headwinds
HEIA.NL Reports H1 adj Op €2.03B v €2.01Be, Rev €16.9B v €16.9Be; Expects volume to be broadly stable for the full year 2025, following the customer disruptions in Europe in H1 and softer markets in the Americas than originally anticipated
NUE Reports Q2 adj EPS $2.60 v $2.62e, Rev $8.46B v $8.41Be; Sees Q3 results "nominally lower" q/q
TSLA CEO Musk: The $16.5B number is just the bare minimum. Actual output is likely to be several times higher.
WMT *Jefferies analysts after discussion with Walmart's Head of IR Wissink: Walmart sees the next wave of price increases; Following our conversation with WMT, we would categorize the US consumer as consistent. However, the company did note that there are emerging signs of trade down and substitution

TUES 07-29
(CN) US Treasury Sec Bessent: Will talk with Pres Trump tomorrow on China tariff pause; Some technical details remain; Final decision up to Trump (ahead of China trade deadline of Aug 12th); Probably another China meeting in 90 days; No discussion of Trump-Xi meeting at these talks - comments to media
(CN) China trade negotiator Li: US-China trade talks were candid and in-depth; Both sides agreed to extend pause of reciprocal measures and China countermeasures
(DE) GERMANY SELLS €3.409B VS. €4.5B INDICATED IN 2.2% OCT 2030 BOBL; AVG YIELD: 2.28% V 2.02% PRIOR; BID-TO-COVER: 1.53X V 3.22X PRIOR
(EU) US Treasury Sec Bessent: Threatens to increase EU tariffs if the deal isn't held up
(EU) ECB Jun Consumer Expectation Survey: 1-year ahead CPI Expectations: 2.6% v 2.8% prior
(IN) India reportedly preparing for US tariffs between 20-25%; See deal by Sept/Oct - press
(UR) US Pres Trump: The new Russia deadline is 10 days from today; New tariffs may or may not impact Russia (vs 10-12 days threatened yesterday); Deadline has not yielded a response from Russia
(US) Commerce Sec Lutnick: Pres Trump to announce pharma policy in two weeks; Will be 'massive tariff' if pharmaceuticals not made in the US; Will have (trade) things done by Fri (Aug 1 trade deadline) – CNBC
(US) JUN JOLTS JOB OPENINGS: 7.437M V 7.500ME
(US) JUN ADVANCE GOODS TRADE BALANCE: -$86.0B V -$98.0BE (lowest deficit in ~2 years)
(US) JULY CONSUMER CONFIDENCE: 97.2 V 96.0E
(US) TREASURY $44B 7-YEAR NOTE AUCTION RESULTS: DRAWS 4.092% V 4.022% PRIOR, BID-TO-COVER RATIO: 2.79 V 2.53 PRIOR AND 2.63 OVER THE LAST 12
AMT Reports Q2 AFFO $2.60 v $2.60e, Rev $2.63B v $2.59Be
BXP Reports Q2 FFO $1.71 v $1.67e, Rev $869M v $801Me; Raises lower end of guided FFO
CAR Reports Q2 $0.10 v $2.02e, Rev $3.04B v $3.07Be
CYBR Palo Alto reportedly near ~$20B deal for CyberArk; Deal could be finalized as soon as later this week - WSJ
GPK Reports Q2 $0.42 v $0.40e, Rev $2.20B v $2.18Be
GLW Reports Q2 $0.60 adj v $0.57e, Rev $3.86B v $3.85Be; Notes it is positioned to deliver durable growth that will serve well through 2026 and beyond
GTLS Baker Hughes to buy company for $210/shr cash at EV $13.6B; Boxes out FLS
JPM Apple said to tell JPMorgan that bank is preferred choice to take over credit card program (from Goldman Sachs) – WSJ
KER.FR Reports H1 Net €474M v €878M y/y, Recurring Op €969M v €1.58B y/y, Rev €3.70B v €3.77Be; Tariffs manageable, may be another wave of price inreases in autumn
LOGI Reports Q1 $1.26 v $1.08e, Rev $1.15B v $1.11Be
MRK Reports Q2 $2.13 v $2.01e, Rev $15.8B v $15.8Be; Cuts jobs, expects $3B annual savings by end of 2027
NSC Union Pacific confirms to acquire Norfolk Southern at $320/shr in $85B deal, mostly in stock with cash part; Union Pacific will issue a total of ~225M shares to Norfolk Southern shareholders; targeting closing the transaction by early 2027
PG TTN Summary of 08:30ET Earnings Call: Plans to raise prices by mid-single digits on ~25% of its US goods to counter tariff impact; FY26 tariffs to be mitigated via sourcing shifts, productivity gains and targeted pricing; Sees up to $5 billion growth opportunity in North America by increasing household penetration among currently unserved or underserved consumers.
PPG Reports Q2 $2.22 v $2.22e, Rev $4.20B v $4.13Be; Affirms guidance
QRVO Reports Q1 $0.92 v $0.62e, Rev $819M v $775Me
SBUX Reports Q3 $0.50 v $0.65e, Rev $9.46B v $9.30Be; CEO notes turnaround ahead of schedule
STLA Reports final H1 Net -€2.26B v -€855Me, Rev €74.3B v €75.0Be; Expects continued sequential improvement in H2 2025 and more 'tough decisions'; Signs of progress are evident when comparing H1 2025 to H2 2024
UNH Reports Q2 $4.08 adj v $4.84e, Rev $111.6B v $111.6Be; Reinstates outlook lower; Expects to return to earnings growth in 2026
UNH Raises FY25 Medical cost ratio 89-89.5% (prior 87-88%) - earnings slides
UPS Reports Q2 $1.55 v $1.56e, Rev $21.2B v $20.9Be; Keeps Rev and Op outlook suspended while affirming other FY25 metrics; Completed $1.0B share buyback planned for FY25
UPS TTN Summary Earnings Call: Looking at our China to U.S. trade lane, an increased tariff and the elimination of de minimis exceptions, resulted in a year over year drop in average daily volume of 34.8% for the months of May and June
TMV.DE Reports Q2 EBITDA €84.0M v €71.6M y/y, Rev €190.7M v €164M y/y; Notes latest budget cuts on IT spending in the US public sector and slower decision-making of customers affected our newly acquired 1E business, due to its significant exposure to the US market and the public sector; Was able to retain key federal customers like the US Department of Veterans Affairs due to the relevance of its solutions
V TTN Summary of 17:00ET Earnings Call: We see no meaningful impact from tariffs; Saw July volume acceleration due to retail strength and USD moves; Through July 21, U.S. payment volume was up 9%, processed transactions grew 11%, and cross-border volume accelerated more than 1 point in July
V Reports Q3 $2.98 v $2.86e, Rev $10.2B v $9.87Be

WEDS 07-30
(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 4.25-4.50%; AS EXPECTED; Vote was 9-2
(US) Q2 ADVANCE GDP ANNUALIZED Q/Q: 3.0% V 2.6%E (biggest Q/Q rise since Q3 2024; imports recorded big drop); PERSONAL CONSUMPTION: 1.4% V 1.5%E
(US) Q2 ADVANCE GDP PRICE INDEX: 2.0% V 2.2%E; CORE PCE PRICE INDEX Q/Q: 2.5% V 2.3%E
(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 15.00%; AS EXPECTED; UNANIMOUS DECISION
(BR) US White House: Implements additional 40% tariff on Brazil, effective total tariff rate is 50%, citing Bolsonaro 'persecution' as cause; New tariff rate will take effect in seven days
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 2.75%; AS EXPECTED
(CN) CHINA JULY MANUFACTURING PMI (GOVT OFFICIAL): 49.3 V 49.7E (4th month of contraction)
(DE) GERMANY Q2 PRELIMINARY GDP Q/Q: -0.1% V -0.1%E; Y/Y: 0.4% V 0.2%E (1st positive Y/Y growth since Q4 2022)
(ES) SPAIN JULY PRELIMINARY CPI M/M: -0.1% V -0.4%E; Y/Y: 2.7% V 2.4%E (highest annual pace since Feb and 4th straight month of reacceleration)
(KR) US Pres Trump: South Korea agrees to 15% tariffs and to invest $350B in the US; US will have 0% tariffs charged by South Korea
(US) BCA Research's chief global strategist Berezin: Still sees recession coming, but could take longer; Moving to “a somewhat more agnostic" view on our US recession call
(US) JUN PENDING HOME SALES M/M: -0.8% V 0.2%E; Y/Y: -0.3% V -2.1%E
(US) JULY ADP EMPLOYMENT CHANGE: +104K V +76KE; Notes its hiring and pay data are broadly indicative of a healthy economy
(US) TREASURY QUARTERLY FUNDING ANNOUNCEMENT: TO SELL $58B IN 3-YEAR NOTES; $42B IN 10-YEAR NOTES AND $25B IN 30-YEAR NOTES;
(US) Fed Chair Powell: Economy is in a solid position; Inflation is somewhat above target; Tariffs are pushing up some goods prices, but the wider impact remains uncertain -post rate decision press conference
(US) Fed Chair Powell: Have not made a decision on the Sept meeting; We've two full rounds of employment and inflation data to examine before the Sept meeting; Really hard to say if data will be clear by the next meeting -post rate decision Q&A
(US) PRES. TRUMP: INDIA WILL BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR RUSSIA SUPPORT, STARTING ON AUGUST 1ST (**Note: higher end of prior reports; earlier India reportedly was preparing for US tariffs between 20-25%)
(US) White House: Pres Trump suspends de minimis exemption for commercial shipments globally
2454.TW TTN Summary of 03:00ET Earnings Call: Our first two nanometer tape out is scheduled for September, positioning us to be among the leading group launching two nanometer chips
005930.KR Reports Final Q2 (KRW) Net 4.93T v 5.3Te, Op 4.68T v 4.6Te (v 10.4T y/y); Rev 74.6T v 74.1Te
ADP Reports Q4 $2.26 v $2.22e, Rev $5.13B v $5.05Be
ADS.DE Reports Q2 Op €546M v €503Me, Rev €5.95B v €6.21Be; Affirms FY25 outlook
AEP Reports Q2 $1.43 v $1.23e, Rev $5.09B v $4.76Be
AIR.FR Reports H1 €1.93 v €1.04 y/y, Adj EBIT €2.2B v €1.39B y/y, Rev €29.6B v €28.8B y/y; Affirms guidance; Notes supply chain challenges and backloaded deliveries
ALL Reports Q2 $5.94 v $3.32e, Rev $16.6B v $17.3Be
ARM Reports Q1 $0.35 v $0.34e, Rev $1.05B v $1.04Be
ARCB Discloses prelim July metrics: Asset-Based segment saw 4.0% average price increase on 2Q contract renewals - filing
BAS.DE Reports final Q2 €0.48 adj v €0.17e, Adj EBIT €810M v €758Me, Rev €15.8B v €15.78Be; Global industrial production will see slowed growth
BN.FR Reports H1 Recurring Net €1.04B v €1.22B , Recurring Op €1.81B v €1.75B , Rev €13.7B v €13.6Be
CHKP Reports Q2 $2.37 v $2.37e, Rev $665M v $661Me; Q3 is shaping up well with strong July indicators
CHKP Reports Q2 $2.37 v $2.37e, Rev $665M v $661Me; Q3 is shaping up well with strong July indicators
CYBR Palo Alto Networks announces to acquire identity security company CyberArk for mostly stock-funded $25B deal ($45/shr cash and 2.2M shares of Palo Alto), +25% ahead of rumored deal value just days ago
CYBR Reports Q2 $0.88 adj v $0.79e, Rev $328.0M v $315Me
CVNA Reports Q2 GAAP $1.28 v $1.10e, Rev $4.84B v $4.58Be
F Reports Q2 $0.37 v $0.34e, Rev $50.2B v $41.7Be; Sees FY25 tariff impact of $2B; Scheduled an event on Aug. 11 in Kentucky where we will share more about our plans to design and build breakthrough EVs in America (update)
FE Reports Q2 $0.52 v $0.50e, Rev $3.4B v $3.41Be
FNMA Reports Q2 Net $3.32B v $3.66B y/y, Rev $7.24B v $7.34B y/y
GNRC Reports Q2 $1.65 v $1.33e, Rev $1.06B v $1.02Be; Raises guidance
HOOD Reports Q2 $0.42 v $0.31e, Rev $989M v $922Me; Raises FY25 Adj Opex $2.15-2.25B (prior: $2.1-2.2B)
HUM Reports Q2 $6.27 v $6.32e, Rev $32.4B v $31.8Be; Raises outlook; Confident in 2025 pricing strategy; Continues to strategically expand the company's footprint in CenterWell and Medicaid
HUM Current 2025 outlook contemplates minimal share repurchase activity (prior "no activity"); Patient growth expected to be driven organically, by modest M&A, and through the continued expansion of our ACO Reach program (Original Medicare patients) - prepared remarks
HSY Guides FY25 adj Gross margin -700bps to -675bps; Incremental pricing, the successful execution of cocoa procurement strategies are more than offset by the impact of higher taxes and current tariff policy - prepared remarks
HST Reports AFFO Q2 $0.58 v $0.51e, Rev $1.55B v $1.50Be
LRCX Reports Q4 $1.33 v $1.20e, Rev $5.17B v $4.96Be; Guides Q1 strong
META Reports Q2 $7.14 v $5.83e, Rev $46.6B v $44.8Be; Guides Q3 strong; Raises Capex outlook
MSFT Reports Q4 $3.65 v $3.35e, Rev $76.4B v $73.7Be; Azure growth accelerates
PAG Reports Q2 $3.78 v $3.56e, Rev $7.66B v $7.87Be; Raises quarterly dividend 4.8% to $1.32 from $1.26 (indicated yield 3.14%)
QCOM Reports Q3 $2.77 v $2.70e, Rev $10.4B v $10.4Be
RIO.AU Reports H1 Underlying Net $4.81B v $5.2Be, Underlying EBITDA $11.6B v $11.1Be, Rev $26.9B v $27.1Be
RIO.UK Notes energy transition driving >1.6× faster growth in electricity vs. energy demand - earnings call
VRT Reports Q2 $0.95 v $0.83e, Rev $2.64B v $2.28Be; Raises outlook; Guides Q3 strong; "What we're seeing in the data center industry today goes well beyond the next few years"
VRT Q2 Book-to-bill 1.2x v 1.4x q/q; Pricing continues to be favorable. 2025 pricing expected to exceed 2025 inflation including any projected secondary impact from tariffs - earnings slides
WDC Reports Q4 $1.66 v $1.48e, Rev $2.61B v $2.45Be

THRS 07-31
(US) US PRES TRUMP ANNOUNCES TARIFFS ON COUNTRIES RANGING FROM 15% TO 40%
(CN) CHINA JULY S&P PMI MANUFACTURING: 49.5 V 50.2E (moves back into contraction)
(CA) CANADA MAY GDP M/M: -0.1% V -0.1%E; Y/Y: 1.2% V 1.1%E
(CA) Trump signs EO increasing tariffs on Canada from 25% to 35%; Transshipped goods that evade the 35% rate will be subjected to 40% tariffs
(DE) GERMANY JULY PRELIMINARY CPI M/M: 0.3% V 0.2%E; Y/Y: 2.0% V 2.0%E
(DE) GERMANY JULY NET UNEMPLOYMENT CHANGE: +2.0K V +15.0KE; CLAIMS RATE: 6.3% V 6.3%E
(FR) FRANCE JULY PRELIMINARY CPI M/M: 0.2% V 0.2%E; Y/Y: 1.0% V 1.0%E
(MX) US Pres Trump: Finished call with Mexico Pres Sheinbaum; To extend current trade deal for 90 days as talks continue; Mexico to pay a 25% Fentanyl Tariff, 25% Tariff on Cars, and 50% Tariff on Steel, Aluminum, and Copper - Truth Social post
USD/JPY Tests 149.59 level (200-day MA) after Ueda comments that tightening monetary policy to deal with too-high inflation works nicely when inflation is driven by strong demand, but what's happening in Japan now is price rises driven by supply factors.
(UR) US to UN Sec Council: Pres Trump has made clear that must be deal to end war in Ukraine must be done by Aug 8th; US prepared to implement additional measures to secure peace in Ukraine
(US) Atlanta Fed GDPNow: Initial estimate for Q3 GDP at 2.3% (update)
(US) BOFA INSTITUTE: IN THE WEEK ENDING JUL 26TH TOTAL CARD SPENDING +0.9% Y/Y V +1.8% Y/Y PRIOR WEEK AND +0.2% ON AVERAGE IN JUNE; Relative to last week, in our categories, department stores, entertainment & transit saw the biggest decline in y/y spending.
(US) Q2 EMPLOYMENT COST INDEX (ECI): 0.9% V 0.8%E
(US) JUN PERSONAL INCOME: 0.3% V 0.2%E; PERSONAL SPENDING: 0.3% V 0.4%E
(US) JUN PCE PRICE INDEX M/M: 0.3% V 0.3%E; Y/Y: 2.6% V 2.5%E
(US) July Challenger Job Cuts: 62.1K v 48K prior; Y/Y: +139.8% v -1.6% prior; AI and Tariffs increasingly blamed for U.S. job cuts
(US) JULY CHICAGO PURCHASE MANAGERS INDEX (PMI): 47.1 V 42.0E
(US) US Circuit Court of Appeals judges panel expresses skepticism over White House’s justification for sweeping tariff authority (UPDATE)
(US) SEC Chair Atkins: Launching project crypto initiative to modernize securities rules and move markets on-chain
(US) US Pres Trump sent 17 letters to US major drug and pharma companies regarding Medicaid pricing; Calls on pharma companies to take action within 60 days (Sept 29th deadline) - Posts letter on Truth Social
(US) US PRES TRUMP ANNOUNCES TARIFFS ON COUNTRIES RANGING FROM 15% TO 40%
(US) White House: US Pres Trump signs EO maintain minimum reciprocal tariff at 10%, which modifying rates for certain countries
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) CUTS INTEREST RATES BY 25BPS TO 7.00%; AS EXPECTED
8035.JP Reports Q1 Op ¥144.7B v ¥165.7B, Rev ¥549.6B v ¥555.1B y/y; Cuts outlook citing chip makers' investment plans; semiconductor production equipment market is expected to keep expanding
AAPL Guides Q4 Rev 'grow mid-to-high single digits' y/y v +1.6%e; Gross margin 46-47%; $B opex - earnings call comments
AAPL Reports Q3 $1.57 v $1.42e, Rev $94.0B v $88.9Be; China Rev +4% y/y
AAPL CEO Cook: We’re open to M&A that accelerates our roadmap; Chinese subsidy for some devices helped Apple in the region; Saw some evidence of consumers pulling purchases forward amid tariff announcements in fiscal third quarter - pre-recorded interview
ABI.BE Reports Q2 Underlying $0.98 v $0.94e, Rev $15.3B v $15.3Be
ACA.FR Reports Q2 Net €2.39B v €1.82B y/y, Rev €7.01B v €6.80B y/y
AMZN TTN Summary Earnings Call: No meaningful tariff-driven price inflation or demand drop in H1 despite uncertainties around China; the marketplace’s 2 M+ sellers provide diverse strategies on cost absorption
AMZN Reports Q2 $1.68 adj v $1.33e, Rev $167.7B v $162.3Be; Guides Q3 Rev strong; WW shipping costs Y/Y +6% v +3% q/q
BB.FR TTN Summary of 02:30ET Earnings Call: Notes H1 unexpected contraction across all three core US markets; Back-to-school outlook: consumers remain cautious and value-seeking; retailers plan limited price increases; confident in solid year-end result through strong in-store execution.
BE Reports Q2 $0.10 v $0.00e, Rev $401.2M v $381Me
BMW.DE Reports H1 Net €1.84B v €2.71B, EBIT €2.66B v €8.88B y/y, Rev €67.7B v €73.6B y/y
CLX Reports Q4 $2.87 v $2.24e, Rev $1.99B v $1.93Be
COIN Reports Q2 $0.12 v $1.19e (unclear if comp), Rev $1.50B v $1.50Be; Expect July transaction revenue to be ~ $360M
CI Reports Q2 $7.20 v $7.14e, Rev $67.0B v $62.7Be
CVS Raises FY25 Rev ~$391.5B v $385.5Be, Capex $2.9-3.1B (prior: at least ~$382.6B v $388.1Be, Capex $2.8-3.0B) - earnings slides
CVS Reports Q2 $1.81 v $1.47e, Rev $98.9B v $93.7Be; SSS material beat of consensus; Raises outlook
DE Launches enhanced digital self-repair tool to enhance how equipment owners use, maintain, diagnose, repair, and protect their equipment [addresses company's approach to the 'right to repair' debate that has been plaguing Deere's relationship with dealers and customers as it withheld access to software and other tools necessary for customers to work on their own machines]
FIG IPO opens for trade at $85
FNMA Pres Trump said to request that bank CEOs pitch stock offerings for Fannie and Freddie – press
MA July-to-date Switched volume +11% v +9% in June and +12% in May; Raises FY25 Rev growth 'high-end of mid-teens" (implied $33-33.6B v $32.0Be) (prior: 'high-end of low-double-digits to low-teens', (implied $31.5-32.7B)), Affirms Op expenses growth 'Low end of low double digits' y/y (prior: 'low-end of low-double-digits'- earnings slides
MA TTN Summary of 09:00ET Earnings Call: Consumer spending remains healthy, underpinned by low unemployment and wage growth outpacing inflation; Macro uncertainty persists but fundamentals support a positive growth outlook
MT.NL Reports Q2 EPS adj $1.32 v $0.85 y/y, Rev $15.9B v $15.7Be
NCLH Reports Q2 $0.51 v $0.51e, Rev $2.52B v $2.56Be; Bookings now ahead of historical levels in recent months
NVDA China Cyberspace Administration summoned Nvidia representatives to discuss alleged security risks linked to its H20 AI chips, including claims of location tracking and remote shutdown capabilities – press
RR.UK Reports H1 Adj Pretax £1.69B v £1.07Be, Adj Op £1.73B v £1.2Be, Adj Rev £9.06B v £8.8Be
UNA.NL Reports H1 Underlying Op €5.8B v €5.72Be, Rev €15.4B v €15.6Be; Ice Cream operational separation completed, on track for demerger in mid-November
VMC Reports Q2 $2.45 v $2.55e, Rev $2.10B v $2.19Be

FRI 08-01
(US) Fed's Bowman (voter, dovish dissenter): Gradual cuts appropriate; Labor market showing increasing signs of fragility
- Greater confidence that tariffs won't cause persistent inflation
(US) Fed's Waller (voter, dovish dissenter): Private sector hiring near 'stall mode'; Fed should be moving rates closer to neutral - statement
(US) Fed's Bostic (non-voter for 2025 & 2026): Still expecting one rate cut this year; Jobs data today were significant, revisions were a bigger story; Risk to inflation much greater than risk to employment – CNBC
(US) Reportedly Fed begins discussions on more relaxed version of Basel III endgame – press
(US) Fed Gov Adriana Kugler to resign from Fed Board, effective Aug 8th [her term had been set to end Jan 31, 2026]
(US) Reportedly thousands of license applications from US exporters are in limbo because turmoil at the Commerce Dept; Backlog of export licenses said to be longest in over three decades – press
(CA) Canadian trade team may abandon discussions following Pres Trump's new 35% tariff - CBC cites Canadian official
(RU) US Pres Trump: Orders two Nuclear Submarines to be positioned in 'appropriate regions' due to threatening words by Russia former Pres Medvedev - Truth Social post
US) Pres Trump: Learned that jobs numbers produced by Biden appointee; Directed staff to fire and replace Bureau of Labor Statistics Commissioner McEntarfer - Truth Social post
(US) JULY CHANGE IN NONFARM PAYROLLS: +73K V +104KE; June and May payrolls revised sharply lower to almost no growth
(US) JULY UNEMPLOYMENT RATE: 4.2% V 4.2%E
(US) JULY AVERAGE HOURLY EARNINGS M/M: 0.3% V 0.3%E; Y/Y: 3.9% V 3.8%E
(US) JULY ISM MANUFACTURING: 48.0 V 49.5E
(US) JULY FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 61.7 V 62.0E
(US) JULY FINAL S&P MANUFACTURING PMI: 49.8 V 49.7E (confirms 1st contraction in 7 months)
(EU) EURO ZONE JULY ADVANCE CPI ESTIMATE Y/Y: 2.0% V 1.9%E; CPI CORE Y/Y: 2.3% V 2.3%E
(EU) EURO ZONE JULY FINAL MANUFACTURING PMI: 49.8 V 49.8 PRELIM (confirms 37th month of contraction)
(DE) GERMANY JULY FINAL MANUFACTURING PMI: 49.1 V 49.2 PRELIM (confirms 37th month of contraction, highest reading since Aug 2022)
(US) Atlanta Fed GDPNow: Cuts Q3 GDP estimate from 2.3% to 2.1%
(US) Medicare and Medicaid reportedly plans experiment with covering weight loss drugs, expected to start in Jan 2027 - WaPo
XOM Reports Q2 $1.64 adj v $1.49e, Rev $81.5B v $82.8Be
CVX Reports Q2 $1.77 adj v $1.66e, Rev $44.8B v $47.1Be; Notes Permian Basin production increased to 1M boe/d; Effective July 1, began implementing a simplified organizational structure designed to realize greater efficiencies through standardization and centralization
FLR Reports Q2 $0.43 v $0.59e, Rev $3.98B v $4.82Be; Cuts guidance citing reflection of client hesitation around economic uncertainty and its impact on new awards and project delays

NY Time : After a Weak Jobs Report, Trump Says He’s Firing That Agency’s Commiss

After a Weak Jobs Report, Trump Says He’s Firing That Agency’s Commissioner
Hours after data showed cracks in the U.S. economy, President Trump implied that Erika McEntarfer manipulated the data for political reasons.


Only hours earlier, Stephen Miran, the chair of the White House Council of Economic Advisers, offered a much different explanation for the jobs revision. In an appearance on CNBC, he said much of the change was the result of “quirks in the seasonal adjustment process” and even the president’s own policies, particularly on immigration, potentially affecting hiring numbers for May and June. He made no mention of any concerns about manipulated data.

President Trump and his top aides have made a habit of attacking government agencies, researchers and watchdogs when they have produced findings that the president personally did not like.

This year, Trump frequently sought to undermine the Congressional Budget Office, for example, seeking to discredit its projections that Republicans’ new tax law would add to the debt. His administration has similarly derided the Government Accountability Office, which produces widely regarded reports about legislation and spending, because that watchdog has probed the president’s budgetary tactics.

Trump has made no secret of his disdain for the Federal Reserve, part of his campaign to force the independent central bank to lower rates. And, now, he has attacked the Bureau of Labor Statistics, an important source of data for economic policymakers.

SCMP : China’s military warns US containerised launcher ‘poses threats to region

China’s military warns US containerised launcher ‘poses threats to regional security’
PLA mouthpiece says the new weapon system hidden in a shipping container ‘represents strategic preparation for high-end warfare’

China’s military has warned that America’s new containerised missile and rocket launch system could “seriously undermine regional strategic stability”.
A commentary in PLA Daily on Thursday noted that the launcher – hidden inside a shipping container – had appeared in recent footage from the US Army’s Fort Bragg base in North Carolina.

The People’s Liberation Army mouthpiece said the launcher could fire a range of missiles and rockets including those used for the M270 Multiple Launch Rocket System (MLRS) and the M142 High Mobility Artillery Rocket System (Himars).

The containerised system was among the artillery seen in footage from US President Donald Trump’s June visit to Fort Bragg, the US Army’s special operations hub. The roof of the container was open to one side, revealing two ammunition launchers used on the MLRS and Himars.
According to the PLA Daily commentary, the system enabled “any truck that can carry a standard container” to be used as a platform to launch long-range guided rockets and missiles.

It comes after a Ukrainian attack that destroyed Russian aircraft in June – dubbed Operation Spiderweb – in which short-range drones were smuggled into Russia. The drones were hidden in modified shipping containers with detachable roofs which were loaded onto trucks and moved into position before the strikes were carried out on strategic and high-value targets.
The commentary said the launch system could be “mixed in with ordinary containers, camouflaged with civilian paint and maritime freight, and delivered to a designated launch location in secret”.

“This high concealment not only improves the survivability of the system but also enables the US military to achieve tactical surprise when necessary … allowing them to quickly deploy and launch attacks simultaneously at multiple dispersed locations,” it said.

The commentary noted that the US Army revealed a similar containerised launcher in a video on news site MilitaryTimes.com in August last year.

In addition, it said the US military had already fielded the Mk70 containerised vertical launch system that can fire Standard air defence missiles and Tomahawk land-attack missiles with a range of up to 1,600km (990 miles).

It said the US Army’s Typhon medium-range missile system – deployed in 2024 to Luzon Island in the north of the Philippines, from where it could reach all of the South China Sea and Taiwan – was a version of the Mk70.
“The US military’s development and deployment of containerised weapon systems – while framed as equipment upgrades – represents strategic preparation for high-end warfare, which undoubtedly poses potential threats to regional security,” the commentary said.

It also noted that US allies in the region such as the Philippines and Japan had shown strong interest in adopting such systems.
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Manila has said it plans to buy and deploy more Typhon systems to boost deterrence, while Japan’s defence ministry said it was looking for a “containerised anti-ship missile launch system” to improve its long-range maritime strike capabilities.
The PLA Daily commentary said the “trend [of containerised weapon systems] deserves a high degree of vigilance from regional countries and the international community”.

NY Times : Jury Says Tesla Was Partly to Blame for Fatal Crash

Jury Says Tesla Was Partly to Blame for Fatal Crash
Lawyers for the family of a woman struck and killed by a Tesla sedan in 2019 argued that the company’s Autopilot software should have avoided the crash.

A Florida jury on Friday found that flaws in Tesla’s self-driving software were partly to blame for a crash that killed a 22-year-old woman in 2019 and severely injured her boyfriend. The verdict is a significant setback for the carmaker, which is staking much of its future on developing self-driving taxis.

The jury awarded $59 million in compensatory damages to the family of the woman and $70 million to her boyfriend, plus $200 million in punitive damages. Tesla will be required to pay a third of the compensatory damages and all of the punitive damages.

The jury found that Tesla bore 33 percent responsibility for the crash, and blamed the driver, George Brian McGee, for the remainder. Mr. McGee had previously settled with the family for an undisclosed sum.

The decision comes just weeks after Tesla began limited testing of autonomous taxis in Austin, Texas. Elon Musk, the company’s chief executive, said in a conference call with investors in July that the service could cover half the population of United States by the end of the year.

Mr. Musk, who has a history being overly optimistic about how quickly products will become available, has said that Tesla’s growth hinges on revenue from autonomous taxis and humanoid robots rather than car sales, which have been declining.

Tesla said it would appeal the verdict.

“Today’s verdict is wrong and only works to set back automotive safety and jeopardize Tesla’s and the entire industry’s efforts to develop and implement life-saving technology,” the company said in a statement.

The trial, in federal court in Miami, focused attention on Tesla technology, known as Autopilot, and whether the company’s self-driving software is safe.

It was the first federal lawsuit stemming from a fatal accident involving Autopilot to go to a jury. Tesla has settled at least several cases out of court.

Tesla was sued by the family of Naibel Benavides, a college student who died on April 25, 2019, after being struck by a Tesla Model S sedan driven by Mr. McGee on a dark, two-lane road near Key Largo, Fla. Dillon Angulo, her boyfriend, was severely injured and is a plaintiff in the suit, which was filed in U.S. District Court for the Southern District of Florida.

Mr. McGee was approaching a T-intersection with Tesla’s Autopilot software activated when he dropped his phone and bent to look for it. The Tesla blew through the intersection at more than 50 miles per hour and crashed into a black S.U.V. legally parked on the far side, according to testimony.

Ms. Benavides and Mr. Angulo were standing outside the S.U.V.

Mr. McGee told police immediately after the crash that he did not notice the intersection or the stop sign posted nearby. Data from the car showed he hit the brakes 1.65 seconds before impact.

While approaching the intersection, Mr. McGee had his foot on the accelerator pedal, overriding a function of Autopilot that is capable of stopping for objects in the road.

Mr. McGee said on the witness stand that he thought Autopilot would protect him and prevent a serious crash if he made a mistake.

Brett Schreiber, who represented the plaintiffs, accused Tesla of a “misinformation campaign” that exaggerated Autopilot’s capabilities and caused drivers to become complacent. He quoted Mr. Musk as saying that the system was safer than a human being.

“The car they claimed to have invented didn’t exist,” Mr. Schreiber said during closing arguments Thursday. “They knew all along that the Autopilot was defective.”

Tesla’s lawyers sought to lay the blame on Mr. McGee.

Joel Smith, representing Tesla, noted that Mr. McGee had admitted being distracted after dropping his phone. He was a “reckless” and “aggressive” driver who was driving well over the speed limit, Mr. Smith said.

“No car could have prevented” the crash, Mr. Smith said.

They plaintiff’s lawyer said data and video from the car showed that Autopilot recognized the S.U.V., at least one pedestrian and the end of the road before the accident.

Mary Cummings, an expert on autonomous driving technology and a former safety adviser to the National Highway Traffic Safety Administration, testified that Autopilot was defective because it failed to react to obstacles it recognized and failed to ensure Mr. McGee kept his eyes on the road.

Similar driver-assistance systems made by General Motors and Ford Motor have cameras that track a driver‘s eyes to make sure they are looking at the road. The version of Autopilot in Mr. McGee’s Tesla would keep operating as long as the driver touched the steering wheel occasionally, whether his eyes were on the road or not. Newer versions of Tesla’s system have cameras that monitor drivers.

Mr. Smith, the lawyer for Tesla, said the company never claimed its cars could drive without human oversight. He showed jurors excerpts from the car’s owner’s manual that warned, “It is the drivers’ responsibility to stay alert, drive safely and be in control of the vehicle.”

Federal safety officials were aware of at least 211 accidents from 2018 to 2023 involving Tesla cars operating with Autopilot engaged, according to evidence presented during the trial.

The lawsuit also claimed Tesla withheld crucial data and video from Mr. McGee’s car, and only produced it after the plaintiffs recovered the data and video from the car’s computer on their own.

Mr. Smith said the data was deleted by mistake.