📈 Trump’s Japan Trade Deal Sends Futures Higher

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Good Morning!

Markets are moving, crypto is back in the headlines, and Big Tech's moment of truth has arrived.

From Trump’s massive Japan trade deal to China’s $170B megadam and meme stocks going wild, here’s what you need to know this Wednesday.

Grab your Americano and let’s get into it. ☕️ 👇️ 

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Market News

🗾 Dow, S&P 500, Nasdaq futures rise after US strikes a trade deal with Japan
US stock futures climbed Wednesday after a sweeping trade deal with Japan was announced, and markets braced for earnings from Tesla and Alphabet.

Dow futures rose 0.3%, S&P 500 gained 0.2%, and Nasdaq 100 edged up 0.1% after the S&P closed at another record high.

Trump declared, “I just signed the largest deal in history with Japan,” highlighting a 15% tariff on Japanese imports and a $550 billion investment pledge.

Deals were also struck with the Philippines (19% tariff on imports) and Indonesia, where a 40% rate hits transshipped goods, but most US exports remain untaxed.

🎰 The 'Stakes Are High' for Big Tech Earnings
All eyes are on Tesla and Alphabet as they report earnings after the bell Wednesday, kicking off Big Tech's high-stakes earnings season. The “Magnificent Seven” are expected to post over 14% growth, far outpacing the rest of the S&P 500, and investors are demanding results. Tesla, down 19% this year, faces intense pressure, while Alphabet must show AI-related gains to satisfy Wall Street's lofty expectations. With tech stocks trading at premium valuations, anything less than stellar could spark a sell-off.

🇨🇳 China embarks on world's largest hydropower dam
China has broken ground on the world’s largest hydropower project, a $170 billion megadam on the eastern Tibetan Plateau, Premier Li Qiang announced.

The dam, made up of five cascading stations, will generate 300 billion kWh annually, about the same as Britain’s entire yearly consumption.

Markets jumped on the news as a signal of major economic stimulus, with stocks and bond yields rising Monday. Beijing says the project will meet growing power demands while minimizing environmental impact, with operations set for the 2030s.

Why it matters?

• Downstream Impact - India and Bangladesh are already sounding the alarm, warning that altered river flows could disrupt irrigation, fisheries, and the livelihoods of millions downstream.

• And for Americans? Experts warn that electricity, not chips, is AI’s biggest constraint.

  • Over the past 20 years, China has added electricity generation capacity equivalent to building the entire U.S. grid, twice.

  • As of 2024:

    • China has ~3,350 GW of installed capacity (and rapidly rising)

    • U.S. has ~1,330 GW, less than half

  • By 2030, China is expected to have 2,461 GW of renewables alone, more than double the U.S.’s entire current grid.

🍩 Highly shorted Krispy Kreme, GoPro jump as meme stock rally continues
Krispy Kreme and GoPro shares surged Wednesday as the meme stock wave roared back, fueled by social media buzz and retail trader momentum. Krispy Kreme (DNUT) jumped another 16.1% after a 27% rally Tuesday, while GoPro (GPRO) soared 47%, both riding high short interest. Beyond Meat (BYND), with 36.7% of shares shorted, also leapt over 10%, adding fuel to the retail-driven rally.

📈 Vanguard Goes Big on Crypto, Thanks to the Index-Fund Boom It Unleashed
Vanguard owes crypto a surprising thank-you, as its flagship Total Stock Market Index Fund (VTSAX) quietly gained exposure through publicly traded crypto-linked stocks. Despite Vanguard’s public anti-crypto stance, holdings in firms like Coinbase and Strategy helped boost performance.

Invest & Strategies

👶 The Ovarian Lottery
Ben Carlson’s latest post, “The Ovarian Lottery,” dives into how luck, particularly where and to whom you’re born, shapes financial outcomes far more than we like to admit. He reflects on Warren Buffett’s idea that success is often less about hard work and more about winning life’s starting conditions, like being born in a stable, wealthy country. It’s a reminder that humility and perspective matter, especially in finance, where not everyone begins on equal footing.

🤕 Very Bad Advice
Morgan Housel’s “Very Bad Advice” unpacks how terrible financial advice can still work, if you get lucky. He argues that outcomes don’t always prove wisdom, and survivorship bias often masks just how risky certain strategies are. Good decisions aren’t always rewarded, and bad ones aren’t always punished, which is what makes money so hard to manage.

🤔 Blank-Check Company Strikes Cryptocurrency Deal
Blank-check firm Dynamix is merging to form “The Ether Machine,” a $1.5B bet on Ethereum as crypto interest swells under a Trump-friendly regulatory wave. Backed by Kraken, Blockchain.com, and $645M from co-founder Andrew Keys, the new company aims to lead the charge in ether holdings, an uncommon move compared to the usual bitcoin-heavy “treasury” plays. “We’ve amassed the Avengers of Ethereum,” Keys said, signaling confidence that public markets will reward this Ethereum-first strategy, just as they’ve backed bitcoin pivots.

Best of Twitter

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