Economic Data and Q2 Earnings (July 7th-12th)

Ray Marce

Alright, welcome back to the Equity Research Podcast, lets cover whats to come for this weeks economic information. I’m Ray Marce, here with Mark Dalli. Mark, it’s a bit of a strange week, isn’t it? Not all that much on the economic calendar, but somehow it feels like everyone’s on edge.

Mark Dalli

Yeah, it’s one of those weeks where the lack of data almost makes the market more twitchy. I mean, we’ve got the FOMC minutes coming out Wednesday, and that’s really the main event. But with all the trade noise—tariffs, negotiations, the EU commissioner flying in—it’s like everyone’s waiting for the next shoe to drop.

Ray Marce

Exactly. And the FOMC minutes, they’re from the June meeting, right? So, we’re looking for any hints about what the Fed’s thinking, especially with the Q1 GDP decline and that trade deficit widening. I think the GDP was down, what, 0.5% in Q1?

Mark Dalli

That’s right, 0.5% down, and the trade deficit hit $71.5 billion in May. It’s not a disaster, but it’s not great either. The Fed’s got to be watching that, especially with the Leading Economic Index ticking down again. I always say, the minutes are where you find the nuance. The statement’s the headline, but the minutes are the footnotes that move markets.

Ray Marce

Yeah, and sometimes it’s the little things, isn’t it? Like, you remember that FOMC surprise a few years back—what was it, 2018? Or maybe 2019? Where they hinted at a rate hike and bank stocks just, like, shot up overnight. I remember waking up and thinking my portfolio had glitched.

Mark Dalli

Oh, absolutely. I think it was 2018, but don’t quote me on that. The point is, the market can pivot on a single phrase in those minutes. Especially now, with the Fed walking a tightrope—do they stay patient, or do they react to the weaker data? And with tariffs looming, it’s a bit of a minefield. Investors are looking for any sign of which way the wind’s blowing.

Ray Marce

And it’s not just the Fed, right? The whole tariff thing—potential 50% tariffs on EU imports, the EU-China summit coming up, all these negotiations. It’s like, even with no big data releases, there’s this undercurrent of tension. I mean, we saw in previous episodes how quickly sentiment can shift on a headline.

Mark Dalli

Yeah, building on what we talked about last week, it’s not always the data that moves markets—it’s the anticipation, the policy risk, the geopolitics. And this week, with the FOMC minutes and tariff deadlines, it’s all about reading between the lines. Investors need to stay nimble, because the reaction could be outsized compared to the actual news.

Ray Marce

Speaking of reactions, let’s talk about earnings. We’ve got about a quarter of the S&P 500 reporting this week, right? Even with the light macro calendar, earnings could be the real driver.

Mark Dalli

Yeah, roughly 25% of the index. And it’s not just the number of companies—it’s which ones. You’ve got the big industrials, some of the banks, and a few consumer names. The sectors most exposed to global trade and the economic slowdown are the ones I’m watching. If you look at something like Caterpillar—classic bellwether—how they talk about demand, supply chain, and tariffs could set the tone for the rest of the season.

Ray Marce

Yeah, Caterpillar’s a great example. Their Q1 numbers already showed some cracks, and with GDP down and the trade deficit widening, I wouldn’t be surprised if they guide a bit more cautiously. It’s not just about the numbers, it’s about the outlook. Are they seeing orders slow? Are they passing on costs, or eating them?

Mark Dalli

Exactly. And it’s not just industrials. The banks, for instance, could be interesting. If the Fed’s signaling caution, and the economy’s slowing, you might see more conservative loan growth or higher provisions. But then again, as we saw in previous quarters, sometimes the market’s already priced in the bad news, and any upside surprise gets rewarded.

Ray Marce

Yeah, and I think with so much focus on tariffs and trade, companies that can show resilience—maybe those with more domestic exposure, or strong pricing power—could outperform. But it’s tricky, because the macro backdrop is so uncertain. I mean, even the Conference Board’s Leading Index ticked down again in May. It’s not a collapse, but it’s a warning sign.

Mark Dalli

Right, and with so much noise, investors need to look past the headlines. It’s about fundamentals, execution, and, honestly, a bit of luck. I’d say, keep an eye on management commentary—how are they framing the risks, what are they saying about the second half of the year? That’s where you’ll find the real signals.

Ray Marce

Couldn’t agree more. Alright, I think that’s a good place to wrap for today. We’ll be back next week to break down the first wave of Q2 earnings and see how all this tariff drama plays out. Mark, always a pleasure.

Mark Dalli

Likewise, Ray. Thanks everyone for listening. Stay sharp out there, and we’ll catch you next time.