Good Morning from #Germany, where industrial production just saw its sharpest drop in almost a year – a sign that the economy may have shrunk more than expected in Q2. In June, output fell by 1.9% MoM, led by declines in machinery, pharmaceuticals, and food production – a much steeper fall than economists had forecast. On top of that, May figures were quietly revised down to show a slight contraction. Altogether, this means that industrial output dropped by 1% in Q2, adding pressure on the already fragile outlook for Europe’s largest economy.

OOPS! OpenAI might soon be worth $500bn – thanks to a potential stock sale for employees. The company is reportedly in early discussions to allow current and former employees to sell their shares, which would value OpenAI at ~$500bn.

Good Morning from Germany, where borrowing is getting more expensive. At today's bond auctions, the Federal Finance Agency had to offer 2.86% interest on 2038 bunds and 3.0% on 2042 bunds to attract investors.

OUCH! The S&P 493 – that’s the S&P 500 excl “Magnificent 7” – is expected to deliver just 2-3% net income growth in Q2, Q3, and Q4. That’s slower than inflation, meaning most of the market is barely growing in real terms. Measured against this, US equities are quite expensive! (via Strategas)

Good Morning from #Germany, which no longer hosts the world’s largest non-CSP (Cloud Service Provider) software company. #Palantir has overtaken SAP, reaching a market value of nearly $380bn, while SAP now trails behind at $350bn. Latest Palantir figures underscore its status as one of clear AI winners.

Good Morning from #Germany, where the stock market’s brief comeback appears to be over – at least for now. The surge in US big tech stocks, the underperformance of German equities, and a weakening Euro have pushed Germany’s share of global stock market capitalization down to 2.2%, from 2.4% in May.

Good Morning from Germany, which has steadily fallen behind in econ growth over the past 5yrs. In the last 20 quarters, Germany has outpaced the broader Eurozone economy only three times – highlighting just how much ground it has lost.

US 2y Treasury yields fell by 28bps on Friday – the biggest one-day drop since 2023. The sharp move came after weaker-than-expected jobs data and the resignation of Fed Governor Adriana Kugler, which now opens the door for a Trump-appointed replacement.

Market expectations for #Fed rate cuts have shifted sharply lower after weaker-than-expected US jobs data. Investors are now pricing in 62bps of rate cuts for the rest of the year, up from ~35bps before the report. The probability of a rate cut at Sep17 meeting has jumped to 92%.

Good Morning from #Germany, which has become a net importer of electricity after shutting down all of its nuclear power plants. So far this year, Germany has imported more electricity than it exported on 148 out of 203 days – that's 73% of the time. For comparison: in 2017 it was just 5 days, 11 in 2018, and 102 in 2019. This trend highlights a key vulnerability: Germany is not well prepared for the AI race, where both the availability and cost of electricity will be critical for staying competitive.