Analyst Weekly, July 7, 2025
Tax Reconciliation Invoice Handed: Core Implications
The tax reconciliation invoice (nicknamed the One Large Lovely Invoice, or OBBB) was handed and signed by President Trump on July 4, with the Senate needing a tie-breaking vote by VP Vance.
The invoice contains:
100% instant expensing for capital investments
Greater web curiosity deductibility
Elevated tax credit score (from 25% to 35%) for semiconductor manufacturing investments starting 2026
An enlargement of the Orphan Cures Act, shielding multi-condition orphan medication from Medicare worth negotiations
A $5 trillion enhance within the debt ceiling, permitting new Treasury issuance weighted towards short-term T-bills
Funding Takeaway:
Constructive for capex-heavy sectors: industrials, protection, chemical substances, and telecoms profit from full expensing.
Semiconductors (tools makers and fab-heavy companies) stand to achieve from the improved manufacturing tax credit score.
Pharma/biotech companies with orphan drug pipelines profit from the expanded pricing exemption.
Treasury market impression: Emphasis on short-duration issuance (20% → 30% T-bill share) favors decrease curiosity price however will increase rollover danger – supportive of the quick finish of the curve over lengthy bonds
Firms that profit from a number of provisions of the tax invoice embrace:
Industrials & Supplies: UPS (UPS), Worldwide Paper (IP), Northrop Grumman (NOC), Common Dynamics (GD), Lockheed Martin (LMT)
Pharma/Biotech: Pfizer (PFE), Vertex (VRTX), Novartis (NOVN-CH), Amgen (AMGN), Illumina
Chemical substances: Celanese (CE), Dow (DOW), LyondellBasell (LYB)
Telecom/Media: AT&T (T), Verizon (VZ)
Client & Staples: Altria (MO), Yum! Manufacturers (YUM), Tyson Meals (TSN)
Rising Tariffs, Shifting Provide Chains: Vietnam as a Check Case and North America as a Commerce Winner
Opposite to well-liked perception amongst some traders, latest US commerce offers will not be resulting in decrease tariffs. As a substitute, the Trump administration is locking in a common 10% tariff flooring, with country-specific charges which can be usually considerably increased. Particularly, Asian nations are being focused as a result of their proximity to China and the administration’s give attention to curbing transshipment, the follow of routing Chinese language items by means of third nations to keep away from direct tariffs. This strategy is aimed toward implementing stricter guidelines of origin and shutting longstanding commerce loopholes.
The brand new US-Vietnam commerce deal illustrates this coverage in motion. Vietnam will face a 20% tariff on most of its items and a 40% fee on items imported from China after which shipped to the US This deal additionally exempts US items from Vietnamese tariffs, underscoring its uneven nature.
In distinction, Mexico and Canada are rising as beneficiaries of the administration’s commerce coverage. Each already adjust to stringent guidelines of origin beneath USMCA and face no common tariff, making a widening price benefit over Vietnam. This will speed up onshoring and provide chain migration nearer to the US.
Whereas Vietnam has but to verify the tariff particulars, the coverage framework now has clear boundaries, providing some certainty to Vietnam-exposed equities, which have underperformed since late 2024. India might strike a deal subsequent, with diplomatic strain mounting on Japan, the place negotiations stay stalled. The early completion of the Vietnam deal is seen as a strategic transfer to affect talks with different key buying and selling companions within the Asia-Pacific area.
In abstract, a brand new cope with Vietnam:
Raises tariffs to twenty% on most Vietnamese imports
Hikes to 40% on items made in China and rerouted through Vietnam
US items enter Vietnam tariff-free
Funding Takeaway:
Tariffs are going up, not down, even beneath commerce offers. That is destructive for multinationals sourcing through Asia.
July 9 is the deadline for Trump’s new reciprocal tariff bulletins, focusing on tariffs above 10% beginning August 1.
Vietnam now serves as a take a look at case for “guidelines of origin” enforcement to forestall tariff evasion through transshipment.
Capital rotation towards North American suppliers: We see Mexico and Canada positioned as relative winners. These nations already adjust to stricter origin guidelines beneath USMCA and keep away from the brand new tariffs.
Industrials and logistics companies with publicity to US-Mexico/Canada commerce might profit from commerce re-routing and provide chain onshoring.
Bitcoin on the Verge of a Breakout? This Week Might Be Essential
This week may transform one of the vital necessary for your entire crypto market within the second half of the yr. Bitcoin has lately approached its all-time excessive, which was set in Could at $110,872.
Above this stage, there aren’t any clear technical reference factors on the chart. Nonetheless, instruments like Fibonacci extensions can nonetheless present steerage. The subsequent potential worth goal is close to $130,000, primarily based on the 161.8% retracement of the latest correction.
As is well-known, worth motion within the crypto market can transfer shortly. However solely a transparent breakout above the report excessive would considerably enhance the possibilities of reaching this subsequent goal.
Due to the sharp rally since April, a number of assist zones—so-called Honest Worth Gaps—have fashioned beneath present ranges. The primary of those zones lies between $98,000 and $100,000. This space was efficiently defended three weeks in the past and should act as a assist once more.
If this zone fails to carry, nonetheless, a pullback towards the $86,000 to $92,000 vary may comply with.
Bitcoin, weekly chart
Capital Allocation Dilemma: Structural Strengths of Europe and the US
The place ought to I make investments my cash – in Europe or the US? Few funding matters have sparked as a lot debate in 2025. Many traders stay unsure. To this point this yr, European fairness markets have outperformed their US counterparts. The STOXX Europe 600 is up 7.6%, in comparison with a 5.9% achieve within the S&P 500. The lead is slender, however that’s solely half the story.
Forex results add one other layer of complexity. For the reason that starting of the yr, the US greenback has misplaced round 14% towards the euro. For US traders with European holdings, that’s created a major enhance in returns. Conversely, the weaker greenback has eroded earnings for European traders in US property. From a global perspective, the weaker greenback would possibly truly seem enticing, performing like a built-in low cost for shares.
Structurally, Europe is extra defensively positioned, much less growth-oriented, however presents increased dividend yields on common. In distinction, the US is pushed by innovation, simpler entry to enterprise capital and lighter regulation. In an atmosphere that favors development, the US might have the sting, particularly with megatrends like synthetic intelligence and robotics.
Lengthy-term traders trying to diversify broadly can hardly keep away from allocating to each areas. It’s much less about “either-or” and extra about getting the weighting proper. On a stock-by-stock stage, there are additionally development alternatives in Europe and enticing dividend performs within the US.
Don’t make investments except you’re ready to lose all the cash you make investments. This can be a high-risk funding, and you shouldn’t count on to be protected if one thing goes mistaken. Take 2 minutes to study extra.
This communication is for info and training functions solely and shouldn’t be taken as funding recommendation, a private suggestion, or a suggestion of, or solicitation to purchase or promote, any monetary devices. This materials has been ready with out making an allowance for any specific recipient’s funding aims or monetary scenario and has not been ready in accordance with the authorized and regulatory necessities to advertise unbiased analysis. Any references to previous or future efficiency of a monetary instrument, index or a packaged funding product will not be, and shouldn’t be taken as, a dependable indicator of future outcomes. eToro makes no illustration and assumes no legal responsibility as to the accuracy or completeness of the content material of this publication.
