Trade Relations - Canada's senior officials advocate repairing trade relations with China [1] - US tariff policy is seen as a factor pushing Canada towards dealing with China [1] Geopolitical Strategy - Canada is considering strengthening economic ties with Asia's largest economy [1]

Core Viewpoint - Steel Dynamics Inc. reported second quarter 2025 earnings with slight misses on revenue and earnings per share, but investors remain optimistic about future growth due to expanding economic activity and operational expansions [2][3][5]. Financial Performance - Revenue for the quarter was $4.57 billion, missing expectations of $4.82 billion, but up from $4.37 billion in the previous quarter and only down about 1% year-over-year [2]. - Earnings per share (EPS) were $2.01, which was 21% lower than analysts' forecasts of $2.56 and down 26% year-over-year [2]. Operational Developments - The company has completed a new steel plant in Texas and is ramping up operations at its $2.7 billion aluminum plant in Mississippi, anticipating renewed economic activity [3]. - Steel Dynamics' steel fabrication business saw a decline of approximately 50% year-over-year and 20% from the prior quarter, but there is a backlog that is up 15% extending into 2026 [6]. Market Context - The Trump administration's tariffs on foreign steel are expected to make U.S. steel manufacturers like Steel Dynamics more attractive, particularly in flat-rolled steel, which is essential for infrastructure projects [4]. - Current analyst sentiment has a consensus price target of $149.33, indicating a potential upside of 14.16% from the current price [5][10]. Stock Performance - Steel Dynamics stock has been trading above its 50-day simple moving average, and if it can maintain this level, it may indicate a potential upward movement [9]. - The stock has gained 17% year-to-date, with a dividend yield of 1.5%, suggesting it may be approaching its three-year average total return of around 33% [10].

Market Overview - Pre-market futures indicate a positive start to the trading week, with the Dow up 70 points, S&P 500 up 10 points, Nasdaq up 25 points, and Russell 2000 up 13 points, although all indexes are off their all-time highs from earlier in the month [1] Company Earnings - Cleveland-Cliffs (CLF) reported a loss of -$0.50 per share, better than the projected -$0.68, with revenues of $4.93 billion exceeding Zacks consensus by +0.62%, leading to a +4.5% increase in shares [2] - Domino's Pizza (DPZ) missed earnings expectations by -3% with earnings of $3.81 per share, marking its second miss in three quarters, but revenues of $1.15 billion were above expectations, reflecting a +4.3% year-over-year increase, resulting in a +3% rise in shares [2] Economic Indicators - The U.S. Leading Economic Indicators (LEI) report for June is expected to show a decline to -0.2% from May's -0.1%, with negative LEI numbers observed over the past six months, indicating potential recession signals [3][4] Upcoming Earnings Reports - More than 20% of S&P 500 companies are set to report Q2 earnings this week, with Alphabet (GOOGL) and Tesla (TSLA) being key highlights [5] - Alphabet is expected to see a +13.2% increase in earnings and +11.1% in overall revenues, while Tesla is projected to experience a -23.1% decline in earnings year-over-year and -11.9% in revenues [6] Economic Data Releases - This week will also see the release of Existing & New Home Sales, S&P flash Services and Manufacturing PMI, and Durable Goods Orders, with mixed expectations for these data points [7]

Financial Data and Key Metrics Changes - Net earnings for Q3 2025 increased to $15.2 million or $0.78 per share compared to $6.6 million or $0.34 per share in the prior year, with adjusted earnings at $0.81 per share excluding non-recurring charges [6][12] - Average selling prices rose 11.7% year over year and 8.2% sequentially from Q2 2025, reflecting pricing actions taken to manage rising raw material costs [6][10] - Gross profit for the quarter increased to $30.8 million, with gross margin expanding by 650 basis points to 17.1% [9][10] Business Line Data and Key Metrics Changes - Shipments for the quarter increased by 10.5% year over year and 3.5% sequentially, driven by recent acquisitions and improving demand in construction markets [8] - SG&A expenses rose to $10.6 million or 5.9% of net sales compared to $7.9 million or 5.4% of net sales in the prior year, primarily due to increased compensation expenses [10][11] Market Data and Key Metrics Changes - The U.S. wire rod market remains tight, with public prices for steel wire rod increasing by approximately $190 per ton since January [7] - The architectural billing index increased to 47.2, indicating early signs of stabilization in nonresidential construction, although it remains below the growth threshold [15] - Nonresidential construction spending declined by 3.5% compared to the prior year, reflecting a softer demand environment [18] Company Strategy and Development Direction - The company aims to capitalize on improving demand trends while managing working capital and maintaining strong customer relationships [19] - The administration's tariff strategy is seen as a work in progress, with only about 10% of revenue directly affected by imports, indicating a cautious approach to import competition [21][22] - The company plans to continue its share buyback program and has reduced its full-year capital expenditure target to $11 million from $17 million [14][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about ongoing demand recovery despite macroeconomic uncertainties, noting that customer confidence remains strong [20] - The company is well-positioned to navigate near-term challenges while building long-term value for shareholders [19] - Management acknowledged risks related to the administration's tariff policies and the future performance of the U.S. economy but remains focused on maximizing shipments and optimizing costs [30] Other Important Information - The effective tax rate for the quarter fell to 23.3% from 24.7% a year ago, with expectations to remain around 23.4% for the remainder of the year [12] - The company ended the quarter with $53.7 million in cash and is debt-free, providing financial flexibility for growth opportunities [14] Q&A Session Summary Question: Have quoting levels for newer projects followed the same trajectory as strong business activity? - Management noted that raw material constraints have caused backlogs to grow, but they remain optimistic about project inquiries, particularly in data centers [35][36] Question: What is the potential timeline to resolve the recent Section 232 tariff disconnect? - Management believes the administration's intent is for the tariff to be on the full value of the product, and they are actively engaging with commerce to address ambiguities [37][38] Question: How is the integration of engineered wire products progressing? - Management expressed satisfaction with the integration, noting that the facility is productive and they are learning from each other [40][41] Question: Do you anticipate being able to maintain current margin levels? - Management expects to pass through higher costs and does not anticipate margin deterioration in the current market [54] Question: What needs to occur for the housing market to improve? - Management indicated that while they do not solely rely on housing, infrastructure investments are expected to drive demand for their products [56] Question: What is the outlook for cash balance at year-end? - Management stated that they are not dissatisfied with the current cash balance and will assess the situation as the year progresses [57] Question: Can you quantify the domestic wire rod supply shortage? - Management estimated that they will have imported 25% to 30% of their steel requirements, approximating the domestic shortfall [58]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Debt sustainability analysis often overlooks critical contexts such as monetary system structure, non-sovereign alternatives, and investor psychology, leading to a narrow understanding of the issue [9][12][15] - Investors, rather than models, determine debt sustainability through a multi-factor equation that includes more variables than just interest rates and growth [9][37] - The report highlights that government debt does not exist in isolation but within a complex landscape of alternative investments, which influences perceptions of sustainability [15][31] Summary by Sections Debt Sustainability Analysis - The analysis of debt sustainability is often simplified to one or two dimensions, neglecting the multi-dimensional nature of the investment landscape [9][12] - Concerns about US debt sustainability have been ongoing for over a decade, with significant events like the Moody's downgrade and the One Big Beautiful Bill Act reigniting discussions [11][12] Market Reactions - Market pricing of government bond yields is influenced by various risks, making it challenging to isolate the impact of debt sustainability concerns [14][19] - The report notes that yields on 30-year government bonds in countries with high debt-to-GDP ratios do not necessarily rise with increasing debt levels, indicating a complex relationship [14][16] Global Context - The report emphasizes the importance of understanding debt sustainability within the broader context of global investments, particularly the differences between hard-currency and local-currency debt [26][28] - Emerging market local-currency bonds have proliferated since the pandemic, potentially reducing investor concerns about debt sustainability risks [28] Investor Behavior - Investors play a crucial role in assessing debt sustainability, often applying a broader perspective than traditional models, which can lead to different conclusions about risk [19][37] - The report suggests that academic approaches to linking debt levels with bond yields may miss important contextual factors, such as investor expectations and central bank responses [39][40]

Market Reaction to Tariff Threats - The Dow Jones Industrial Average is down 250+ points in reaction to President Trump's new tariff threats [1] - The market's reaction to the new tariffs is described as "boredom," a "giant yawn" [2][4] - The S&P 500 is up approximately 0.1% for the week, indicating a flat market [7] Tariff Policy Analysis - Previous tariff announcements (Liberation Day part one) caused a 12% drop in the S&P 500, a significant crash [6] - The current tariffs are largely the same as previous ones [7] - The market's lack of reaction to the tariffs may lead the President to actually implement them [8] Economic and Political Implications - Economists predict that tariffs will eventually impact consumer prices [10] - Democrats are unified in criticizing the President's erratic tariff policies [11][12] - The President's actions are seen as unpredictable and disruptive to small businesses and consumers [12]

Tariff Landscape & Trade Policy - The US administration is considering raising tariffs on Canada to 35%, up from the current 25%, though exemptions for USMCA-compliant goods and a lower 10% tariff for energy are likely to remain [2] - The US President is considering raising the universal baseline tariff from 10% to 15% or even 20%, potentially increasing the cost of all imported goods by at least 15% [4] - The US has postponed the July 9th deadline for reciprocal tariffs but has introduced new tariff threats for Canada and Brazil, including a potential 50% tariff on copper and a possible 200% tariff on pharmaceuticals [5][6] - The US President believes that uncertainty is the best negotiating leverage and is keeping it up [9] - A potential doubling of the universal baseline tariff to 20% on all imports could bring the US back to pre-post-war economy levels, impacting the US services economy and increasing the cost of goods [13][14] Geopolitical & Company Strategy - Canada is strengthening its partnerships throughout the world, signaling a shift in trade relations amid tariff disputes [3] - Nvidia's CEO Jensen Huang's visit to the White House and subsequent trip to China amid tariff discussions and export controls suggest potential negotiations for lifting export controls, which would benefit Nvidia [15][16][17][18] - The US President's rhetoric towards China has become more upbeat, with potential trade negotiations on the horizon [17]

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the economic and trade dynamics in Emerging Asia, focusing on the implications of the 90-day tariff deadline and its potential outcomes for various countries including China, Japan, India, and South Korea [2][11]. Core Insights and Arguments 1. **Tariff Deadline Scenarios**: The 90-day tariff pause is set to expire on July 9, with three potential outcomes: - Announce deals/frameworks with some trade partners - Extend deadlines with certain partners - Set new tariff rates for remaining partners [2][5]. 2. **Base Case Scenario**: The most likely outcome is an extension of the current status quo, maintaining a 10% baseline tariff for a longer period. This scenario suggests limited market reactions, with a slight risk-on sentiment but constrained upside [3][5]. 3. **Bull Case Scenario**: If trade deals are announced, effective tariffs may decrease, leading to a more optimistic market outlook. This could result in equities outperforming and a stronger performance from export-oriented currencies like KRW and TWD [6][9]. 4. **Bear Case Scenario**: If tariffs increase significantly, particularly above 15%, it could lead to a risk-off market reaction, with a stronger USD and concerns about global growth impacting Asia FX negatively [7][9]. 5. **Market Reactions**: The actual announcements regarding tariffs may be complex, potentially incorporating elements from all scenarios. The focus will remain on effective tariff rates and the risks of subsequent increases, alongside ongoing diversification from USD overweight positions [8][9]. Important but Overlooked Content 1. **Japan's Industrial Production**: Japan's industrial production increased by 0.5% MoM in May, which was below expectations. Companies are reportedly curbing production in anticipation of potential negative impacts from US tariffs [11]. 2. **China's Economic Indicators**: Both manufacturing and non-manufacturing PMIs in China exceeded expectations in June, indicating continued growth momentum. However, domestic demand, particularly in property sales, may be waning [11][12]. 3. **India's Trade Dynamics**: Reciprocal tariffs have led to a front-loading of exports to the US, with a notable 25% YoY increase in Indian exports to the US from January to May 2025. However, this has not improved the overall trade balance due to a decline in exports to other regions [12]. 4. **South Korea's GDP Forecast**: The GDP forecast for South Korea has been adjusted downwards for Q2 2025 to 0.3% QoQ, but expectations for Q3 and Q4 have been revised upwards due to anticipated recovery in consumption and positive fiscal measures [12]. 5. **Inflation and Interest Rate Forecasts**: The report includes projections for inflation and interest rates across various countries in the region, indicating a cautious outlook for monetary policy adjustments in response to evolving economic conditions [20][21]. This summary encapsulates the critical insights and data points discussed during the conference call, providing a comprehensive overview of the current economic landscape in Emerging Asia.

[Music] On June 18th, the Federal Reserve wrapped up its most recent FOMC meeting where they left the Fed funds rate unchanged for the fourth straight time and gave the largely expected comments about continuing to monitor inflation and labor market data amid ongoing economic uncertainty. The chairman mentioned particular uncertainty around the inflationary effects of tariff policy. It takes some time for tariffs to work their way through the chain of distribution to the end consumer.we're beginning to see ...

Group 1 - General Mills reported mixed Q4 results, with earnings of $0.74 per share beating expectations by 3 cents but down 25% from $1.01 per share in the same quarter last year [3][4] - Revenues for General Mills were $4.56 billion, missing estimates by 1.04%, and the stock is trading down 3% following the news [4] - Year-to-date, General Mills' stock is down 16% [4] Group 2 - Micron is set to report fiscal Q3 results, with expectations of a 156% year-over-year increase in earnings and a 30% rise in revenues [7] - Pre-market trading shows Micron down 1% at the moment but up more than 50% year to date [7]