1. “European earnings are misunderstood and underappreciated”, says Morgan Stanley.

“Our bottom-up analysts are more constructive into earnings than they have been in years.
We have been making the case that European equities benefit in inflationary environments, regardless of lackluster Euro Area GDP growth.

Why?
• 59% of the MSCI Europe earnings pie is made up of real assets + banks + compute = areas which tend to see earnings upgrades in inflationary, post geopolitical escalation environments.
• European equities are not the local economy. 55% of revenues are generated outside of Europe/UK. “

Below: Earnings growth consensus for this year has risen to 16.9%.

2. Gold recovers from two-week low ahead of US inflation figures.

While gold is often viewed as a hedge against inflation, higher rates tend to weigh on the non-yielding metal by increasing the appeal of interest-bearing assets.
Investors will closely watch June U.S. CPI data due later in the day for fresh clues on inflation and the Fed's policy path.
The U.S. central bank may need to raise interest rates "in the near term" if coming data show inflation continuing well above the 2% target, Fed Governor Christopher Waller said on Monday.
Below: China's central bank acquired +15 tonnes of gold in June, the largest monthly purchase in at least 2.5 years. Year-to-date, the country has increased its gold reserves by a total of +40 tonnes. This lifts China's total gold reserves to a record 2,346 tonnes, or 9% of its total FX reserves, near an all-time high.

3. SK Hynix plunges after Nasdaq debut amid profit-taking.

Korean stocks extended losses even as President Lee Jae Myung said on Monday his administration would channel government support into three major projects in chips, artificial intelligence data centres and physical AI.
The world's leading AI memory chipmaker, SK Hynix, raised over $26 billion last week selling American Depositary Receipts, after its Korean shares more than tripled this year. "The current memory upcycle is tracking substantially stronger than expected, but our base case continues to assume normalisation in cycle dynamics, limiting upside at current levels," said Morningstar.
"Despite accelerating artificial intelligence adoption, monetisation remains uncertain and profitability for key players, such as OpenAI, appears to be under pressure”. "Funding is also shifting toward debt or equity, raising concerns about the maintainability of current spending levels."

4. Pipelines could insulate over 75% of Hormuz oil flows by 2028, says Goldman.

Everyone has been dusting off their charts showing shipping through the Strait of Hormuz again, but Goldman Sachs had a note out over the weekend arguing that in the medium to long-term what now is a crucial global chokepoint could lose its significance.
They've taken a look at seven Middle East pipelines that are under construction, being planned or potentially restored, and calculate that by end-2027 those pipelines will insulate over 45% of pre-war Gulf producers' oil exports from a future Hormuz shock, and almost 75% by end-2028.
Below: Even with the new US-Iran tensions, oil is only marginally higher.

5. Advertising agencies sound confident in AI opportunities.

Investors remain cautious on advertising agencies as concerns over artificial intelligence disruption and economic uncertainty linger, but industry executives are increasingly confident AI will strengthen rather than weaken the sector, according to Berenberg.
The debate around AI has evolved, with agencies now increasingly focusing on how the technology can improve productivity and client outcomes rather than replace staff.
"Last year's 'AI replaces people' fear has shifted to 'AI as-an-instrument'," said Berenberg analysts.

Industry experts also stressed that the growing complexity of global advertising campaigns continues to favour large agency networks over smaller rivals.
"As such, we reiterate our positive view on the sector," concluded Berenberg.

Below: Publicis will report earnings this week and could be a good example of Morgan Stanley’s optimism on European earnings. The average broker target for Publicis is 22% higher than today. Publicis is expected to grow at 7% per year and has a P/E of 10.5. It’s cheap.

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