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1. Earnings estimates plunge for tariff-exposed companies.

Tariff-exposed companies have seen heavy earnings downgrades since March, as analysts started pricing the impact of at least 10% broad duties across sectors and the potential consequences for global economic growth.

By contrast, Europe’s domestic-oriented stocks have seen estimates rising steadily over the past three months.

2. Q2 Earnings momentum favors the US.

It’s still early in the Q2 earnings season across both sides of the pond, but US companies have surprised positively far more than European peers.

Out of the S&P 500 companies that reported, 83% beat estimates, compared with only 46% for those in the MSCI Europe.

Analysts forecast Q2 US profits to have risen 3.3% versus a 4.8% drop in Europe. Tariffs are a clear culprit in the downbeat expectations as the European Union is facing a 30% levy if it doesn’t manage to strike a deal with the Trump administration before the start of August.

3. But the expectations for 2H are quite elevated.

Investors may find comfort in the low expectations for Q2, but the problem is the elevated projection for the second half of the year.

Q4 earnings for this year are expected to grow by 11% from the Q2 level, which is significantly higher than the average 2.7% increase in earnings recorded over the past 15 years.

4. Sentiment is turning positive for clean energy.

After RWE and Orsted, this time it’s Vestas turn to get an upgrade from JPMorgan.

“Looking forward, the latest BNEF outlook suggests that wind installations (ex China) are set to grow at a double-digit CAGR through 2030 and with the passage of OBBB, subsidies will remain in place in the US until mid-2030 which should drive higher order activity. In offshore, we believe the risks are receding as Vestas has made good progress on ramp up and first installations of the V236 turbine. Furthermore, price/cost management appears to be more disciplined and should drive margins higher alongside this growing revenue base. The net risk/reward is attractive given the improved earnings outlook at a time of trough multiples and sentiment. Target is 161 DKK.”

Here is the ETF Global Clean Energy year-to-date.

5. The US federal debt has hit $36.66 trillion, an all-time high.

The public debt has skyrocketed $441 billion over the last 2 weeks after the statutory debt limit was extended.

Over the last 2 years, the US debt has risen $5 trillion.

Trump’s tax law will add another $3.4 trillion to the US deficit, CBO says.

Source: Global Markets Investor, Wolfstreet

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