NATO's New Defense Spending Target Is a Big, Beautiful Number
NATO wrapped up two days of meetings in the Hague yesterday, with members of the security pact agreeing to one of President Donald Trump's longtime demands. Bloomberg TV's Oliver Crook examines the deal. Plus: America's top consumer-sentiment economist says the vibes are off.
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34 minutes ago
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Coinbase Shares Hit First Record Since 2021 on Stablecoin Fervor
(Bloomberg) -- Coinbase Global Inc. shares closed at the highest level ever, capping off a rally fueled by growing acceptance of the cryptocurrency industry on Wall Street and in Washington. US Renters Face Storm of Rising Costs Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares Mapping the Architectural History of New York's Chinatown Squeezed by Crowds, the Roads of Central Park Are Being Reimagined US State Budget Wounds Intensify From Trump, DOGE Policy Shifts The crypto-exchange operator's stock rose 5.5% on Thursday to $375.07. The previous high was $357.39 in November 2021, just months after the company went public through a direct listing. Coinbase shares have surged more than 1,000% from a record low in late 2022, which came as the collapse of FTX raised questions about the future of digital assets. The stock's comeback occurred as cryptocurrency prices rebounded and the industry won powerful new allies, including US President Donald Trump. Just last month, Coinbase was added to the prestigious S&P 500 Index. The rally's final leg occurred after the US Senate passed legislation for stablecoins pegged to the dollar, which are seen as a promising payment method. Revenues from sources like stablecoins will likely allow the company to reduce its reliance on trading revenue that is coming under pressure as competition grows, Benchmark analyst Mark Palmer said. The stock's performance serves as 'validation of the road map that Coinbase management had laid out to diversify its platform and position itself for long-term growth,' Palmer said. 'It also signals that the market is acknowledging that crypto is here to stay.' Coinbase shares are up more than 45% since the Senate bill passed last week. The exchange has a revenue-sharing agreement with newly public stablecoin issuer Circle Internet Group Inc., which also staged a furious rally. Shares of traditional payment firms Mastercard Inc. and Visa Inc. have been under pressure lately, even though the companies have their own stablecoin initiatives. Crypto-linked stocks are notoriously volatile, and Coinbase shares will likely remain vulnerable to another downturn in token prices. Wall Street's predictions suggest the stock is overpriced, with the average target sitting at just $287, according to data compiled by Bloomberg. Yet Palmer, who has a buy rating on the shares, sees a further surge to $421. In a note dated Wednesday, Bernstein analyst Gautam Chhugani raised his price target to a Street-high of $510 — above the stock's intraday record of $429.54 on the day of its 2021 debut. 'The US government intends to bring in a new digital assets framework including the stablecoin bill and a digital asset market structure bill, which would bring crypto capital markets back to the US,' wrote Chhugani, who rates the shares as outperform. 'As the regulatory headwinds for the crypto industry have receded, Coinbase has emerged as the premier crypto financial platform,' he said. --With assistance from Dave Liedtka. (Updates shares throughout to reflect market close.) How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push America's Top Consumer-Sentiment Economist Is Worried Apple Test-Drives Big-Screen Movie Strategy With F1 Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags ©2025 Bloomberg L.P.
Yahoo
34 minutes ago
- Yahoo
Trading Day: Markets 'run it hot'
ORLANDO, Florida (Reuters) -TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist The dollar slid and stocks surged on Thursday as investors ramped up bets that U.S. interest rates will soon be cut, after President Donald Trump, in his latest attack on Fed Chair Jerome Powell, reportedly said he may name his replacement early. In my column today I look at where the "pain trades" for investors may lie in the second half of the year. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. 1. Trump decision on Fed not imminent, source says 2. Investors shore up defences against another Augustmarket rout 3. Wall Street forecasts windfall for big U.S. banks fromFed plan to ease leverage rule 4. BoE echoes central banks' long bond sensitivity: MikeDolan 5. EU leaders meet to decide on whether to back quick deal or seek better terms Today's Key Market Moves * World stocks hit a fresh record peak, the S&P 500 andNasdaq both get to within a whisker of their all-time highs. * Dollar index falls to a 3-year low, the euro and sterlinghit highest since 2021, the Swiss franc hits a decade high. * Soaring FX caps stocks in Europe, where indices lag In Asia, Japanese, Chinese stocks hit 5-month and 7-monthhighs, respectively. * U.S. Treasury yields fall to lowest since early May, alsopressured by weak U.S. economic data. Curve bull steepens. * Platinum rises another 4%, now up 34% this month - itsbest month in nearly 40 years and second best ever. Markets 'run it hot' Juice the economy. That seems to be the Trump administration's broad plan, which will be achieved in time by tax cuts, deregulation, and loose fiscal policy. And loose monetary policy. Most definitely loose monetary policy. Pressure from the White House on the Fed to cut interest rates is nothing new. The president has unleashed several verbal tirades towards Chair Jerome Powell for not doing so, branding him "very stupid", "very dumb" and of "low IQ". Powell's term as chair expires in May next year, and he insists he can't be fired. So Trump is now considering naming his replacement early, who could operate as a "shadow" Fed chair, undermining Powell's influence. It remains to be seen how effective or even viable this would be. But the fact it's being floated is pouring fuel on market moves that were already beginning to catch fire - the dollar is tumbling, Fed rate cut bets are being ramped up, stocks are flying, and "Big Tech" is getting its mojo back. The dollar on Thursday slumped to its lowest in more than three years against a basket of major currencies - performing especially poorly against European currencies - and is on track for its worst first half of any year in over half a century. The Trump administration will likely be quite happy with the way markets are reacting - a more export-competitive dollar, lower short-term yields, and higher stocks. And if you look further out, higher nominal growth and above-target inflation to inflate away the debt. The danger is these moves snowball and the dollar goes into a more rapid freefall, triggering widespread market dislocation. But we're not there yet, and investors are running with it. Hawkish Fed could inflict markets' biggest 'pain trades' As the first half of the year closes, financial markets are in limbo, waiting to see how the kaleidoscope of global trade deals will – or won't – come together after July 9, when Washington's pause on its "reciprocal tariffs" expires. But if investors are wrong-footed, which trades will be the most vulnerable? The state of suspended animation in today's markets isremarkably bullish. U.S. growth forecasts are rising, S&P 500earnings growth estimates for next year are running at a punchy14%, corporate deal-making is picking up, and world stocks areat record highs. The uncertainty immediately following President DonaldTrump's April 2 "Liberation Day" tariffs seems a distant relief rally has ripped for nearly three months, only takinga brief pause during the 12-day war between Israel and Iran. It's a pretty rosy outlook, some might say too rosy. If wedo see a pullback, what will be the biggest "pain trades"? The major pressure points are, unsurprisingly, in assetclasses and markets where positioning and sentiment are mostoverloaded in one direction. As always with crowded trades, asudden price reversal can push too many investors to the exitdoor at once, meaning not all will get out in time. To identify the most overloaded positions, it's useful tolook at the Bank of America's monthly global fund managersurvey. In the June survey, the top three most-crowded tradesright now are long gold (according to 41% of those polled), long"Magnificent Seven" tech stocks (23%), and short U.S. dollar(20%). This popularity, of course, means these three trades havebeen highly profitable. The "Mag 7" basket of Nvidia, Microsoft, Meta, Apple,Amazon, Alphabet and Tesla shares accounted for well over halfof the S&P 500's 58% two-year return in 2023 and 2024. TheRoundhill equal-weighted "Mag 7" ETF is up 40% this year, andthe Nasdaq 100 index, in which these seven stocks make up morethan half of the market cap, this week hit a record high. Meanwhile, the gold price has virtually doubled in the lasttwo-and-a-half years, smashing its way to a record high $3,500an ounce in April. And the dollar is down 10% this year, ontrack for its worst first half of any year since the era offree-floating exchange rates was established more than 50 yearsago. SLASH AND ... BURN? In some ways, these three trades are an offshoot of onefundamental bet: the deep-rooted view that the Federal Reservewill cut U.S. interest rates quite substantially in the next 18months, a scenario that would make all these positionsmoney-spinners. Even though the Fed's revised economic projections last weekwere notable for their hawkish tilt, rates futures markets havebeen upping their bets on lower rates, largely due to dovishcomments from several Fed officials and a sharp fall in oilprices. Traders are now predicting 125 basis points of rate cutsby the end of next year. Economists at Morgan Stanley are even more dovish,forecasting no change this year but 175 basis points of cutsnext year. That would take the Fed funds range down to2.5%-2.75%. Lower borrowing costs would be especially positive forshares in companies that can expect high future growth rates,like Big Tech. Low rates are also, in theory, good for gold, anon-interest-bearing asset. But, on the flip side, it's difficult to construct ascenario in which the economy is chugging along, supportingequity performance, while the Fed is also slashing rates by 175bps. Easing on that scale and at that speed would almostcertainly signal that the Fed was trying to put out a ragingeconomic fire, most likely a severe slowdown or recession. Whilerisk assets may not necessarily collapse in that environment,over-extended positions would be exposed. Granted, this isn't the first time investors have banked onFed cuts in the past three years, and we have yet to see a majorblow-up as a result. Markets have handled "higher-for-longer"rates much better than many observers warned, soaring to newhighs in the process. Still, if "pain trades" do emerge in the second half of theyear, it will likely be because of one sore spot: a hawkish Fed. What could move markets tomorrow? * Japan retail sales (May) * Japan unemployment (May) * Japan Tokyo inflation (June) * Japan Softbank AGM * Euro zone sentiment indexes (June) * U.S. PCE inflation (May) * U.S. University of Michigan consumer sentiment, inflationexpectations (June, final) * Cleveland Fed President Beth Hammack and Fed Governor LisaCook participate in 'Fed Listens' event Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (By Jamie McGeever) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
34 minutes ago
- Yahoo
EU Briefs Divided Leaders on Trump's Counterproposal on Tariffs
(Bloomberg) -- European Union leaders are discussing their response to President Donald Trump's latest proposal on trade after a briefing from Ursula von der Leyen. US Renters Face Storm of Rising Costs Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares Mapping the Architectural History of New York's Chinatown Squeezed by Crowds, the Roads of Central Park Are Being Reimagined US State Budget Wounds Intensify From Trump, DOGE Policy Shifts The European Commission president told EU leaders at summit talks in Brussels on Thursday evening that she had received the latest US tariff offer, according to officials briefed on the discussion who declined to give any more detail. The question dogging the leaders and the commission, which handles trade matters for the bloc, is whether to accept an asymmetrical trade deal with the US or risk escalation by striking back, provoking Trump's ire. Several member states argued against retaliation, with most suggesting that reaching a quick deal with the US is better than holding out for a perfect one, even if many of Trump's tariffs remain in place, according to two people briefed on the discussions. But there's still division, with Paris categorically rejecting any deal skewed in favor of the US and pushing for a complete removal of tariffs, another official said. The EU needs to reach an agreement with Trump by July 9, when tariffs on nearly all of the bloc's exports to the US increase to 50%. The US president says the EU takes advantage of US with its goods surplus and perceived barriers to American trade. 'We hope that the discussions with the US continue in an energetic mood in the coming days — the July deadline is coming soon,' Luxembourg Prime Minister Luc Frieden told reporters on his way into the summit. 'I wish the commission good luck.' Detailed discussions with the US are taking place on both tariffs and non-tariff barriers, as well as on key sectors, strategic purchases and regulatory matters the EU is hoping to address through its simplification agenda, said the people, who spoke on the condition of anonymity. The US is asking the EU to make what the bloc's officials see as unbalanced and unilateral concessions, Bloomberg reported earlier. Discussions on critical sectors — such as steel and aluminum, automobiles, pharmaceuticals, semiconductors and civilian aircraft — have been particularly difficult. Officials believe the best-case scenario remains an agreement on principles that would allow the negotiations to continue beyond an early July deadline. Alongside a 10% universal levy on most goods — which is currently facing a US court challenge — Trump has introduced 25% tariffs on cars and double that on steel and aluminum based on a different executive authority. He's also working to expand tariffs on other sectors, including pharmaceuticals, semiconductors and commercial aircraft. Many of those duties are expected to stay, regardless of an agreement with the Trump administration, according to the people. The EU, which has been seeking a mutually beneficial deal, will assess any end-result and at that stage decide what level of asymmetry — if any — it's willing to accept. The EU's industry chief, Stephane Sejourne, told Bloomberg this week that the EU would need to respond to any tariffs — including a baseline 10% levy — with countermeasures. But some EU leaders, including Italy's Giorgia Meloni have indicated that they could live with some levies if it allows for a rapid deal that avoids an escalation in the conflict. 'When we discussed 10% with companies, it isn't particularly impactful for us,' Meloni told reporters in The Hague Wednesday after the NATO summit. 'I think a decision at 10% would enable us, as far as we're concerned, to keep working on things that we care about.' --With assistance from Charlie Duxbury, Olivia Fletcher, Michal Kubala, Lyubov Pronina, Maxim Edwards, Suzanne Lynch, Andrea Palasciano, Samy Adghirni, Donato Paolo Mancini, Jan Bratanic, Katharina Rosskopf and Sanne Wass. How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push America's Top Consumer-Sentiment Economist Is Worried Apple Test-Drives Big-Screen Movie Strategy With F1 Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
