Trump picks Ohio Senator JD Vance as VP

Good morning. Here's what happened overnight and what you need to know today.

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1.

Trump pick: Donald Trump has chosen Senator JD Vance of Ohio as his vice-presidential running mate for the upcoming election. In a post on his social media site ahead of the Republican National Convention in Milwaukee, Trump said the Yale graduate was “best suited” for the position. A political newcomer who once criticised Trump but gained his support by embracing his political stance and false election claims, Vance views align closely with Trump's ideologies, including his hardline immigration stance. Praising Vance's service in the Marine Corps, his academic achievements and business career, Trump said Vance would focus on campaigning in the key states of Pennsylvania, Michigan, Wisconsin, Ohio and Minnesota. His youth and ability to energise donors are seen as assets to the Republican ticket, The New York Times reported. However, his extreme views, especially on abortion, could pose challenges among moderate or independent voters. The announcement came shortly after the RNC began amid heightened security measures following an assassination attempt against Trump on Saturday. Both Trump and President Joe Biden both called for unity in response to the political violence. Trump said he had changed his nomination acceptance speech to focus on national unity. Meanwhile, Homeland Security Secretary Alejandro Mayorkas labelled the shooting at Trump’s rally a “failure” of security. (The New York Times)

2.

Rate watch: Federal Reserve Chair Jerome Powell said the US economy has performed “remarkably well” with inflation slowing in line with the central bank’s expectations, but declined to say whether that meant it was time for the Fed to cut rates at its meeting later this month. Speaking in Washington, Powell said recent data had boosted the bank’s confidence that inflation is moving toward its 2% target. “Our test has been for quite some time that we want to have greater confidence that inflation was moving sustainably down toward our 2% target, and what increases confidence in that is more good inflation data,” he said. “And lately, we have been getting some of that.” Investors anticipate interest rate cuts in September, after the Fed raised rates to a 20-year high last year to combat high prices. With inflation easing last month and a cooling labour market, some traders are ramping up bets the first cut could be as large as half a percentage point, double the standard 25 basis point cut, according to Bloomberg. (The Wall Street Journal)(Bloomberg)

3.

Case dismissed: A US federal judge dismissed the criminal case accusing Donald Trump of mishandling classified national defence documents, ruling it should be thrown out because Attorney General Merrick Garland’s appointment of Special Counsel Jack Smith, who brought the case, was unconstitutional. Judge Aileen Cannon, a Trump appointee, ruled Smith’s assignment violated the Constitution’s appointments clause since he was neither appointed by a president nor confirmed by the Senate. The ruling, which contradicts decades of legal precedent dating back to the Watergate era, was delivered on the opening day of the Republican National Convention, where Trump will become the party's official presidential nominee. Nearly two years after the FBI searched Trump’s Mar-a-Lago estate for national secrets, the dismissal adds to a series of recent legal victories for the former President, including the Supreme Court’s decision granting him partial immunity. Smith’s team is expected to appeal the ruling, The New York Times reported. Trump celebrated the dismissal in a post on his social media platform, calling for all criminal and civil cases against him to be dropped “as we move forward in Uniting our Nation” after the assassination attempt against him on Saturday. (Capital Brief)(The New York Times)

4.

Stocks surge: Stocks surged near all-time highs as an assassination attempt on Donald Trump was seen as boosting his chances of returning to the White House, and the Federal Reserve chair said recent data boosted the bank's confidence inflation is heading towards its target. The S&P 500 index was track for its 38th record this year, Apple shares rose almost 3% to a record high and Trump’s Media & Technology Group soared 30%. Investors turned to comments from Federal Reserve Chair Jerome Powell, who acknowledged the economy's resilience and balanced labour market. Apple reached a record high after Morgan Stanley named it a top pick, predicting the launch of its artificial intelligence platform will trigger a surge in device upgrades. Meanwhile, Trump-aligned sectors like oil, firearms and private prisons saw gains, while solar and cannabis stocks dropped. US 30-year yields surpassed two-year ones for the first time since January on expectations a Trump administration would pursue an expansive fiscal policy. Tesla rallied following Elon Musk’s endorsement of Trump over the weekend. The Dow Jones Industrial Average and the Nasdaq rose slightly, while The Russell 2000 of smaller firms added 2%. Bitcoin surged as much as 10% to USD63,270. (Bloomberg)

5.

Earnings beat: Goldman Sachs second quarter earnings more than doubled compared to a year ago, rising to USD3 billion ($4.49billion) and beating market expectations, thanks to a recovery in dealmaking and strong performance in bond and equities trading. Analysts had expected USD2.8 billion in quarterly profit. Overall Q2 revenues climbed 17% to USD12.7 billion, also ahead of forecasts. Investment banking revenues rose 21% to $1.7 billion, though this was below expectations and less than the 50% increase reported by JPMorgan Chase a day earlier. “From what we’re seeing, se are in the early innings of a capital markets and M&A recovery,” CEO David Solomon told analysts in a call. Goldman is focusing on expanding its investment banking and money-management operations after stepping back from consumer banking. The asset and wealth management division saw revenue increase 27% to USD3.9 billion with a pre-tax profit margin of 23%. Fixed income trading revenues grew 17% to USD3.2 billion, while equities trading was up 7% to USD3.2 billion, both exceeding forecasts. (Financial Times)

6.

CEO swap: Burberry moved to replace CEO Jonathan Akeroyd with Joshua Schulman, former head of Coach and Jimmy Choo, as the luxury fashion retailer suspended its dividend and warned of a possible loss for the half and lower-than-expected annual profits. Akeroyd's departure is "by mutual agreement" following his two-year tenure focused on upmarket branding and Britishness under creative director Daniel Lee. Burberry shares plumetted 16%. Burberry Chair Gerry Murphy said Lee would stay, and Schulman will not overhaul the strategy but will aim to stabilise the brand with a broader price range and focus on staple items like trenchcoats and the Burberry check. First-quarter sales, excluding in Japan, fell 21%. (Financial Times)(Reuters)

7.

ETF surge: BlackRock's assets under management hit a record USD10.65 trillion ($15.76 trillion) in the second quarter, driven by rising client asset values and strong inflows into its exchange-traded funds. The surge in AI-linked stocks helped drive the S&P 500 index about 4% during the quarter, boosting BlackRock’s assets from USD9.43 trillion a year earlier and USD10.5 trillion in the first quarter. In a conference call CEO Larry Fink spoke of “unbelievable growth opportunities” in 2024 and beyond, particularly for investment in the energy transition and AI data centres. In fixed income, Fink said investors were favouring low-cost ETFs and alternative assets rather than traditional bond funds. BlackRock’s revenue rose 8% to USD4.81 billion, and net income increased to USD1.50 billion. Net quarterly inflows of USD82 billion missed expectations of USD112 billion from analysts polled by Bloomberg. Equity inflows fell, dragged down by institutional clients rebalancing, while fixed income inflows were depressed by the loss of a single institutional client that pulled USD20 billion.(Reuters)(Financial Times)

8.

OneStream IPO: KKR-backed financial tech company OneStream Software is targeting a valuation of approximately USD4.38 billion ($6.48 billion) at its upcoming Nasdaq IPO. The company and its selling shareholders plan to offer 24.5 million shares, priced between USD17 and USD19 each, to raise up to USD465.5 million, Reuters reported citing a regulatory filing. The targeted valuation is below its USD6 billion valuation in 2021. Founded in 2010, OneStream sells financial reporting, forecasting, budgeting and financial planning software. KKR acquired a majority stake in the company, which has over 1,400 customers, including Toyota, UPS, News Corp and General Dynamics, in 2019. Morgan Stanley, JPMorgan and KKR are lead underwriters of the listing. (Reuters)